Insiders at housebuilder Vistry have snapped up shares in the company as it deals with a multibillion-pound takeover, post-Grenfell fire safety costs sending its pre-tax profit tumbling, and a possible housing downturn.
Chief executive Greg Fitzgerald bought £198,000-worth of shares and a person closely associated with chief financial officer Earl Sibley bought £50,000-worth on September 8. Both directors traded at 804p a share.
The purchases came in the same week that Vistry revealed its rival Countryside had agreed to a £1.25bn takeover, a deal which the companies said would create a £2.8bn housebuilder with the potential to generate £3bn a year in revenue.
Major Countryside shareholders owning a combined 39.1 per cent of the housebuilder approved of the deal. These included Inclusive Capital Partners, whose two bids to buy Countryside were rejected, and Browning West, who pushed Countryside to put itself up for sale back in June. In a statement voicing his support, Browning West’s founder Usman Nabi said Fitzgerald has “one of the best track records of operating performance and value creation in the UK housebuilding sector”.
Meanwhile, in Vistry’s results for the six months to June 30 published last week, £75mn in cladding remediation and other fire safety costs caused its pre-tax profit to sink 29 per cent against last year’s figure. In the adjusted numbers, which ignore the fire safety costs, pre-tax profit was up 14 per cent on last year. The government has lumped Vistry and its housebuilding peers with these costs, which could yet increase as a result of the fallout from the Grenfell fire tragedy.
A potential housing downturn also threatens UK housebuilders. Estate agent Winkworth recently reported a near 40 per cent fall in sales which it attributed to a rise in interest rates. Back in May, estate agent Savills forecast that house prices would fall 1 per cent next year, with several slow years of growth to follow.
UP Global Sourcing insiders take the plunge
The shares of kitchen and homeware specialist UP Global Sourcing have lost more than half their value over the past 12 months. This is despite an improving outlook around margin-damaging shipping costs, the benefits from the acquisition of sales-driving housewares brand Salter, and a boost to the dividend.
Certain board members clearly think that the share price is due an uplift. On September 1, chair James McCarthy bought £78,000-worth of shares and non-executive director Robbie Bell picked up £120,000-worth, with both transactions completing at 120p a share.
The company’s latest market update, released last month and covering the year to July 31, was a positive one. Revenue, boosted by Salter, was up 13 per cent to a record £154mn. Underlying cash profits and pre-tax profits boomed, respectively, by 41 per cent to £19mn and by 42 per cent to £16mn. Financial year 2023 trading “is in line with market expectations”, said management.
Most of UP Global Sourcing’s sales go to supermarket customers, with discount retailers and online its other key channels. Growing ecommerce revenue is a strategic aim — management wants online sales to take 30 per cent of annual revenues (it currently takes around 15 per cent) in the medium term. But excluding Salter, online revenue fell by 12 per cent in the latest half-year results due to the impact of shipping disruption.
According to FactSet, the company’s shares trade at seven times the consensus analyst earnings forecast for the next 12 months, below the 5-year average of 11 times. The full-year results are expected to be released on November 3.