Chairman’s statement | Ian Tyler

Synergies will total £44m, ahead of As part of our response to Covid we the initially expected £35m and the instigated a temporary salary reduction cost to deliver them will be c. £27m, for 3 months, for all employees other below the initial £35m expectation. than those whose salary was below a The Housebuilding business restructured certain threshold. This was later reversed quickly and with national coverage, the with salaries repaid. We are also pleased operating structure has the capacity to to have repaid all monies received deliver c. 8,000 Housebuilding units. by the Group from the Government’s Job Retention Scheme and have not Vistry Partnerships, a key driver for the benefitted from any Government schemes Acquisition, demonstrated its strong related to supporting businesses and market resilience in 2020, making employees during the Covid-19 pandemic. excellent progress towards delivering its targets of £1billion of revenue and at Covid-safe operating procedures are least a 10% operating margin in 2022. embedded across all areas of the business, productivity is back to normal levels, Our focus is on one Vistry and on A transformational year and we will continue to work with leveraging the capability and relationships There are many positives from Government guidance and protocol across the entire Group. With expertise going forwards. 2020 and despite the obvious in all segments of the housing market, challenges and impact on the Vistry Group is uniquely positioned, and Sustainability year’s financial performance from the combination of Vistry Partnerships We took the opportunity of the Covid-19, the Group has made and our two leading housing brands, merger to reinvigorate and relaunch Bovis Homes and Linden Homes offers an much progress across all areas of our focus on the sustainability of our exciting future. Fully aligned, the Group the business. operations, focusing on the social is set to maximise the significant growth and environmental elements of the As I commented on in the 2019 opportunities ahead. ESG agenda. Our increased scope, Annual Report and Accounts, ther and in particular the focus of our new rationale for the Acquisition(10) Response to Covid-19 Partnerships business on the affordable of Linden Homes and Vistry The health and safety of our employees, marketplace, reinforces and enhances Partnerships which completed on subcontractors, suppliers and customers the Group’s purpose of developing 3 January 2020 (the “Acquisition”), has been and remains our top priority sustainable new homes across all was strong, and one year on I am during the Covid-19 pandemic. I am segments of the UK housing market. pleased to report the benefits, both pleased to report the Group has delivered operational and financial, have a rapid and co-ordinated response During the year we have conducted a exceeded our expectations. to challenges and I wish to thank all full review of our risks and opportunities, our employees for their enormous consulting widely with stakeholders commitment, resilience and hard work (including our people, our customers during what has been a testing period. and our investors), in order to inform our priorities. We are refining our The Group took the decision to close all strategy for sustainability, which will sites and sales offices in launch in March, and which will set out late March, with our sales teams our aims and targets. remaining in contact with customers “The enlargement of on a remote basis. Vistry Partnerships Focusing on our people, our operations the Group enriches our demonstrated its strong market resilience and our homes and communities, this with its high proportion of secured will include a timetable to address the purpose of developing revenue from partner delivery and pre- challenge of Net-Zero, our aims for sustainable new homes sold developments, and led our early biodiversity on our projects and the return to site in late April. Site closures social value of our operations, both in and communities during March and April did however terms of the homes and places we across all sectors of significantly impact the production, create, and the economic and social mobility opportunities we generate the housing market” output and first half performance of the Group, and of our Housebuilding business through building. in particular. We have described our findings and proposals in the Strategic Review on (10) Acquisition by Vistry Group PLC of Linden Homes and pages 22 to 44 and Sustainability Partnerships & Regeneration businesses from , completed on 3 January 2020 (the “Acquisition”). Review on pages 66 to 73.

4 | Strategic report | Business overview Strategic report | Business overview

Quality and service “The benefits of the Acquisition, both High quality build and customer service has remained a top priority in 2020 operational and financial have exceeded and I am pleased to report further our expectations” improvements, with the Group increasing its HBF Customer Satisfaction score in 2020 and achieving the highest Dividends I would like to thank my colleagues on 5-Star rating. In light of the impact of the Covid-19 the Board for their support and guidance pandemic on the Group’s performance, to the leadership team and to me We continue to invest in our customer the Board took the decision not to pay personally in what has been another busy service platform and in the year saw the the Second Interim Dividend declared and significant year for the Group. roll-out of our bespoke customer service with the Acquisition in cash, but to return relationship platform, ‘Keys’ across the Looking ahead value to shareholders by way of a bonus enlarged housebuilding business. Our aim issue to shareholders, who were on the For 2021, our top priority remains the of changing the way we interact with our register on 27 December 2019. health and safety of our employees, customers to provide a seamless single all those that we work with, and our journey with Vistry has been accelerated Following the Group’s strong second half customers, and we are committed by the pandemic. performance, year-end net cash position to operating in a Covid-safe way and and strong forward sales position, supporting our people as best as we can. We have invested in digital content, the Board is pleased to confirm the digital processes and most recently, resumption of dividends with a 20 pence The market fundamentals remain have re-organised our sales teams into per share final dividend in respect of strong and whilst we see lots of great a regional hub structure. This allows FY20 which represents a pre-exceptional opportunity, we are alert to the wider us to best serve our customers whilst dividend cover of 2.8 times. market uncertainty. Housebuilding maximising the sales opportunities is committed to delivering controlled across the entire Vistry product range. Looking forwards, the Group is targeting volume growth and driving its margin This investment continues into in 2021. to maintain a strong balance sheet and towards the 24.2% gross margin reduce this dividend cover to a level embedded in its owned land bank, People towards 1.75 times. and Partnerships is on track to deliver Attracting and retaining high quality accelerated growth and profitability people within the business is a key The Board driven by a significant increase in higher priority and I am pleased to report our As set out in more detail in the margin mixed tenure completions. latest Peakon employee engagement Governance report, other than the very Above all, as one Vistry, the Group study reported a score of 7.9, an welcome addition of Graham Prothero looks to maximise its unique strengths improvement on the previous score to the Board following the Acquisition, and grasp the many exciting growth in August 2020 and ahead of the the Board took a conscious decision not opportunities ahead. I look forward to benchmark at 7.4. to change its composition during 2020 updating you with our progress. to more effectively provide continuity, Mental health has been a key focal support and challenge through the point for this year, with the leadership integration process and then through the team recognising the importance of impacts of Covid-19. One consequence of supporting our people and maintaining this decision has been that we have not good, open lines of communication. Ian Tyler been able to meet the minimum target Chairman Mental Health First Aiders have been for female representation on the Board trained up across the business and a as at the end of 2020 recommended number of new regular online employee by the Hampton Alexander Review. communications platforms have been We remain unequivocally supportive introduced including the weekly of both the recommendations of this ‘Time to Talk’, designed to specially review and its underlying philosophy. address the challenges of working during We are now in a strong position to review the pandemic. our Board composition so that it most effectively supports the enlarged Group I would also like to extend my thanks and we are committed to being fully to our subcontractors, suppliers and compliant with the Hampton Alexander partners who have supported us during recommendations by 31 December 2021. the year, and with the Acquisition, and are such an important and valued component of our business.

Vistry Group PLCBovis | Homes vistrygroup.co.uk Group PLC | 5 Housing market overview

Despite the economic uncertainty of Brexit and the impacts of Covid-19, the demand for housing of all tenures continue to increase

Despite the economic uncertainty of These tenures include: In addition, as a short-term support for Brexit and the impacts of Covid-19, the impact of Covid-19, the government a. Social Rent the demand for housing of all tenures announced a stamp duty holiday ('SDLT') continue to increase. Last year, 243,770 b. Affordable Rent for transactions up to £500,000 until net additional dwellings were added to 31 March 2021 and extended the c. Intermediate Rent the housing stock from April 2019 to timetable for completion of properties March 2020 of which 220,600 were d. Private Rented Sector funded through Help to Buy until new build homes. Although this was 28 February 2021. This followed the e. Right to Shared Ownership the highest number since 1987, this general support for construction sites falls short of the UK government’s f. Right to Buy and the housing market to remain open longstanding target for 300,000 new g. Rent to Buy following the initial shut down in March homes each year. The impact of Covid- and April last year. 19 has inevitably had an impact on the h. Shared Ownership These interventions demonstrate a number of starts in 2020 across the UK i. First Homes/Discount Market Sale strong government commitment to and the resultant short-term impact of support the housing market and meets reduced number of completions will only j. Help to Buy Boris Johnson’s call to ‘build, build, build’. increase the latent demand for housing. Vistry operates across each of these This, coupled with the extension of the tenures and enables us to access all parts Focus of the demand for new homes Help to Buy scheme to March 2023, of the growing housing market directly demonstrates a strong political focus Whilst the demand for new homes is and through our partners. on assisting young and lower income evident across all aspects of the housing households into home ownership. market, affordability remains a key Government Intervention Vistry continue to have a direct concern with average house prices and Investment relationship with government through being c. 6x average incomes raising to For a number of years there has been MHCLG and Homes England, to influence 10x in London. As a result, there is a cross party consensus and support for government interventions to where particular focus of the unmet demand/ new housing across government which they are most impactful. supply deficit on sub-market (affordable has been driving funding and policy and intermediate) housing tenures. support for new housing in England. Open market purchaser appetite estimate that current sub-market In the last 12 months, we have seen 2020 represented a strong sale year housing delivery is 50,000 homes per some significant policy announcements across England despite the impacts annum against an annual demand of which support the delivery of new homes: of Covid-19 and supported by the 100,000 homes. • £11.5bn Affordable Housing Funding government support on SDLT and Help The UK Housing Market has become Programme to build 180,000 new to Buy. Enquiries remain strong and more multi-layered than ever before and homes (of which 50% will be for shared reservations continue at pre-Covid-19 has moved away from the traditional ownership) between 2021 and 2026. levels including for homes to be built three housing options of ‘1. Council This represents annual funding of post March 2021. Despite the economic Housing 2. Private Rent 3.Private Sale’. £2.3bn per annum which is the highest uncertainty of 2020, lender appetite Now there are a variety of tenures which annual amount for 10 years. remains strong and whilst there has a sit alongside private sale and support been a reduction in high loan to value those who cannot access outright sale • Introduction of a new First Homes mortgage for first time buyers, we have which is particularly prevalent in the tenure to support First Time Buyers not seen this as having a material impact. younger generations. access home ownership. Partner capacity and appetite • £10bn Housing Infrastructure funding There remains continued demand from for local authorities to accelerate the purchasing sector to buy housing housing delivery. for affordable housing, private rented • £400m for Combined Authorities to sector (PRS) and housing for the elderly. develop out brownfield sites. This is a strong, active and financially group of segments who want to participate in housing delivery for value driven and commercially driven outcomes.

6 | Strategic report | Business overview Strategic report | Business overview

Housing Associations continue to The combination of a financially strong The size and strength of the Vistry participate in the new supply of housing purchasing sector combined with Group enables us to target larger sites through purchasing S106 affordable business models which operate and where we can develop using both housing and progressing their own support housing delivery across the Housebuilding and Partnerships. developments both for affordable housing economic cycles and a reliance on the and for open market sale. For the 12 private sector for development and Supply chain and months to September 2020, Housing construction expertise places Vistry employment market Associations invested £10.6bn on new Group in a strong position to benefit Following the initial lockdown, our supply of housing which was impacted by from this demand. supply chains have returned to normal Covid-19 in March and April. Whilst the service with efficiency on site close to funding of new supply is being balanced Land availability for new homes pre Covid-19 levels. We will continue to against fire safety and sustainability work Land availability remains good and is monitor the short-term impact of Brexit on existing stock, the new government supported by the overall planning regime on the construction labour market with funding programme will ensure this across the country, with land vendors our subcontractors, and the medium- is a sector which consistently invests a remaining incentivised to bring land term impact of the skills shortage minimum of £12bn per annum in forward as a result of a large number within the construction industry. new supply and relies heavily on the of local authorities still failing tests We are supporting new entrants to private sector for development and set by the National Planning Policy the construction industry directly construction skills. Framework (‘NPPF’). The planning through our apprenticeship and trainee system continue to be complex, time programmes as well as supporting We are also increasingly seeing new consuming and expensive and the our subcontractor and local authority entrants into the affordable housing timescales for planning applications partners through our skills academies to market through ‘for profit’ Housing being determined has been impacted by enable them to invest in new employees. Associations. An example would be Sage Covid-19 in 2020 although we anticipate We recognise that investing in bringing (who are funded by Blackstone) who this returning to normal in 2021. new people into the industry at all levels invested in c. £400m of new affordable is essential for the sustainability of UK housing in 2020 with a target of owning We support the announcement of the construction. 20,000 homes. government’s intention to radically reform the planning system in July Summary Local Authorities continue to grow 2020 and we would welcome clarity on their development programmes to Despite the uncertainties due to how and when this will be introduced build affordable, PRS and open Covid-19 and Brexit, the UK Housing to ensure that it does not create market housing. Further growth is market continues to support the delivery an environment of uncertainty for forecast with 78% of local authorities of new homes across all tenures with a landowners and planning authorities. having local housing companies and strong tail wind of the continued years Public land remains a key part of our 57% of councils operating in a housing of undersupply which supports both our land supply and we are Homes delivery joint venture. Although it is still Housebuilding and Partnerships business England's leading partner on their land a long way to grow to get to the levels models who operate across all of having been successful on 25% of all of local authority housing delivery in the these tenures. land releases under the Delivery 1960s and 1970s, this is an active and Partner Panel. growing source of supply.

Pavillions, Kenilworth

Vistry Group PLC | vistrygroup.co.uk | 7