Annual report
and accounts 2019
Vistry Group PLC
vistrygroup.co.uk
Annual report
and accounts 2019
Vistry Group PLC
Strategic report
A review of our business
model, strategy and
summary financial and
operational performance
Business overview
2 2019 highlights
4 Chairman’s statement
6 What we do
7 Reasons to invest
8 Housing market overview
Our business and strategy
12 Chief Executive’s report
18 Our business model
22 Strategic priorities
32 Risk management
34 Principal risks and uncertainties
Corporate social responsibility
40 Our CSR priorities
Our financial performance
64 Financial review
68 Directors and officers
70 Corporate governance report
88 Remuneration report
108 Audit Committee report
112 Nomination Committee report
114 Directors’ report
118 Auditors’ report
127 Group income statement
127 Group statement of
comprehensive income
128 Balance sheets -
Group and Company
129 Statement of changes in equity -
Group and Company
130 Statements of cash flows -
Group and Company
131 Notes to the financial statements
Our governance
Detailed discussion of our
governance framework and
remuneration policy
Financial
statements
Financial statements
and notes
Supplementary
information
163 Five year record
164 2020 AGM Notice
168 Explanatory notes to the
AGM Notice
171 Shareholder information
172 Principal offices
Contents
Page
4
Chairman’s statement
Page
12
Chief Executive’s report
Page
64
Financial review
Vistry Group PLC | 1
Vistry Group PLC | vistrygroup.co.uk | 1
Vistry Group PLC highlights
Financial highlights
Profit
before tax (1)
12% Up
Ordinary
dividend (3)
8% Up
ROCE (1) (2)
3% Up
Revenue
£1,130.8m
Operating profit margin
Profit before tax
17.0%
(1)
£188.2m
(1)
.
8
4
5
0
,
1
.
2
8
2
0
,
1
.
5
6
4
9
4
.
1
6
0
,
1
.
8
0
3
1
,
1
.
3
7
1
.
2
5
1
.
5
2
1
.
4
6
1
0
.
7
1
17.0
13.6
10.2
6.8
3.4
0.0
.
2
8
8
1
1
.
8
6
1
.1
0
6
1
7
.
4
5
1
.
0
4
1
1
189.0
151.2
113.4
75.6
37.8
0.0
2015
2016
2017
2018
2019
2015
2016
2017
2018 2019
(1)
2015
2016
2017
2018
2019
(1)
2015
2016
2017
2018
2019
(5)
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
Earnings per share
Ordinary dividend
111.5p
(1)
61.5p
(3)
ROCE
22.3%
(1) (2)
89.2
66.9
44.6
22.3
0.0
5
.
1
1
1
6
.
1
0
1
.
4
5
9
1
.
0
9
.
0
8
6
5
.
1
6
.
0
7
5
5
7.
4
.
0
5
4
.
0
0
4
2015
2016
2017
2018 2019
(1)
2015
2016
2017
2018 2019
(3)
22.30
17.84
13.38
8.92
4.46
0.00
.
3
2
2
.
3
9
1
.
3
8
1
.
0
7
1
.
7
3
1
2015
2016
2017
2018 2019 (1)(2)
2015
2016
2017
2018
2019
(8)
2015
2016
2017
2018
2019
(4)(6)
2015
2016
2017
2018
2019
(7)
Notes: (1) Pre exceptional operating profit margin, profit before, EPS tax and ROCE are calculated prior to exceptional costs of £13.5m relating to the Acquisition.
(2) Return on capital employed is calculated as pre exceptional operating profit (2019: £192.6m) divided by the average of opening and closing shareholders’ funds plus net debt or less
net cash, excluding investment in joint ventures (2019: £863.7m). See section 5.11 on page 160 for the full reconciliation.
(3) Excludes special dividend of 45.0p in 2018.
2 | Strategic report | Business overview
Consented land
17,328 plots
(5)
4
1
8
,
9
1
4
0
7
,
8
1
6
9
0
,
7
1
8
2
3
,
7
1
8
2
3
,
7
1
Strategic land
18,358
legal plots
4
9
4
,
5
2
3
8
0
,
3
2
6
5
7
,
0
2
8
7
2
,
9
1
8
5
3
,
8
1
Average sales price
£280,200
0
0
4
,
2
7
2
0
0
2
,
3
7
2
0
0
2
,
0
8
2
0
0
9
,
4
5
2
0
0
6
,
1
3
2
280200
210150
140100
70050
0
19120.5
12747.0
6373.5
0.0
Legal completions
3,867
(8)
4
3
9
,
3
7
7
9
,
3
9
5
7
,
3
7
6
8
,
3
5
4
6
,
3
HBF customer
satisfaction
5 star
(4)(6)
3 3
2
NHBC
reportable items
0.23
(7)
5
4
0.470
7
4
.
0
4
3
.
0
0.235
8
3
.
0
1
3
.
0
3
2
.
0
0.000
19814.0
14860.5
9907.0
4953.5
0.0
3977.000000
2651.333333
1325.666667
0.000000
Strategic report | Business overview
Operational highlights
Legal
completions (8)
3% Up
HBF customer
satisfaction (4)
5H
NHBC
reportable items (7)
28% Down
Consented land
17,328 plots
(5)
4
1
8
9
1
,
4
0
7
8
1
,
6
9
0
7
1
,
8
2
3
7
1
,
8
2
3
7
1
,
Strategic land
18,358
legal plots
4
9
4
5
2
,
3
8
0
3
2
,
6
5
7
0
2
,
8
7
2
9
1
,
8
5
3
8
1
,
280200
210150
140100
70050
0
19120.5
12747.0
6373.5
0.0
Average sales price
£280,200
0
0
4
2
7
2
,
0
0
2
3
7
2
,
0
0
2
0
8
2
,
0
0
9
4
5
2
,
0
0
6
,
1
3
2
19814.0
14860.5
9907.0
4953.5
0.0
2015
2016
2017
2018
2019
2015
2016
2017
2018 2019
(1)
2015
2016
2017
2018
2019
(1)
2015
2016
2017
2018
2019
(5)
2015
2016
2017
2018
2019
2015
2016
2017
2018
2019
3977.000000
2651.333333
1325.666667
0.000000
Legal completions
3,867
(8)
4
3
9
3
,
7
7
9
3
,
9
5
7
3
,
7
6
8
3
,
5
4
6
3
,
HBF customer
satisfaction
5 star
(4)(6)
3 3
2
NHBC
reportable items
0.23
(7)
5
4
0.470
7
4
0
.
4
3
0
.
0.235
8
3
0
.
1
3
0
.
3
2
0
.
2015
2016
2017
2018
2019
(8)
2015
2016
2017
2018
2019
(4)(6)
2015
2016
2017
2018
2019
(7)
0.000
Notes: (4) Based on responses from customers who legally completed between 1 October 2018 to 30 September 2019. Star rating awarded according to the proportion responding ‘yes’ to
the question ‘would you recommend your builder to a friend?’: 5-star rating 90% and above.
(5) Based on owned land including joint ventures and joint arrangements.
(6) Based on HBF star rating announced in March of the following year, relating to the period of 1 October to 30 September.
(7) This shows the average number of reportable items found for each NHBC inspection.
(8) Includes joint venture completions.
Vistry Group PLC | vistrygroup.co.uk | 3
Revenue
£1,130.8m
Operating profit margin
Profit before tax
17.0%
(1)
£188.2m
(1)
8
.
4
5
0
,
1
2
.
8
2
0
,
1
5
.
6
4
9
4
.
1
6
0
,
1
8
.
0
3
1
,
1
3
.
7
1
2
.
5
1
4
.
6
1
0
.
7
1
5
.
2
1
2
.
8
8
1
1
.
8
6
1
.1
0
6
1
7
.
4
5
1
0
.
4
1
1
17.0
13.6
10.2
6.8
3.4
0.0
Earnings per share
Ordinary dividend
111.5p
(1)
61.5p
(3)
ROCE
22.3%
(1) (2)
5
.
1
1
1
6
.
1
0
1
4
.
5
9
1
.
0
9
0
.
8
6
5
.
1
6
0
.
7
5
5
7.
4
0
.
5
4
0
.
0
4
3
.
2
2
3
.
9
1
3
.
8
1
0
.
7
1
7
.
3
1
189.0
151.2
113.4
75.6
37.8
0.0
22.30
17.84
13.38
8.92
4.46
0.00
2015
2016
2017
2018 2019
(1)
2015
2016
2017
2018 2019
(3)
2015
2016
2017
2018 2019 (1)(2)
89.2
66.9
44.6
22.3
0.0
Chairman’s statement | Ian Tyler
Transformational acquisition
Leading partnerships business
It is from this position of strength
that the Group entered into
discussions with Galliford Try
regarding a potential combination
with their housebuilding businesses.
Following a period of detailed due
diligence, the Group agreed to acquire
the Linden Homes and Partnerships &
Regeneration businesses from Galliford
Try for an agreed price of £1.075 billion
(the “Acquisition”) on 7 November 2019.
In order to fund the Acquisition, the
Group completed a placing (the “Placing”)
of 13,472,591 new ordinary shares at a
price of 1130 pence per Placing share with
existing and new institutional investors,
raising net proceeds of c. £150m.
This transformational acquisition was a
unique opportunity for Bovis Homes
to acquire both a top UK housebuilder
in Linden Homes and a leading
partnerships business. The combination
is expected to deliver annualised
pre-tax cost synergies of at least £35m,
with £12m expected to be achieved
in 2020. The Acquisition was completed
on 3 January 2020 and as a first step of
the integration process, the Group was
renamed Vistry Group PLC, with the new
corporate name being used for the
Vistry Partnerships business.
A top five UK housebuilder
Vistry Group is a top five national
housebuilder with the capacity to grow
and deliver c. 14,000 new units p.a.
The enlarged Group has an enhanced
national customer proposition and
coverage, enabling it to compete more
effectively against the major players in
the UK private and affordable
housebuilding sector.
The Acquisition has firmly established
Vistry Group as a leader in the
high growth, counter cyclical
partnerships sector. Vistry Partnerships
is one of the leading and most
established national brands and, with
a very strong track record of growth,
is a partner of choice for housing
associations, local authorities and
government agencies. There remains
a fundamental housing shortage in
the UK, and government support to
increase housing supply is strong, with
a significant increase in investment from
housing associations in particular.
Vistry Partnerships combines contracting
and development capabilities, supplying
new homes across all housing tenures.
As part of Vistry Group with its strong
balance sheet, land supply, and strategic
land capability, our strategy, whilst
retaining the core ethos of the business,
is to accelerate Vistry Partnerships’
revenue growth with an increase in
higher margin, development led revenues.
The business is targeting increasing
volumes to 6,000 units p.a., revenues to
over £1 billion and an operating margin in
excess of 10 per cent.
Two leading housebuilding brands
Bovis Homes and Linden Homes bring
together two high quality, well-recognised
housebuilding brands. For 2020, we are
firmly focused on successfully integrating
the housebuilding businesses and
establishing the best operating structure
from which to maximise the benefits of
the combination, including the significant
cost synergies. For 2021 and beyond, the
strategy is to maximise output through
controlled volume growth, and driving
margin progression. We will maximise the
benefits from dual branding, especially
increasing output and returns on our
larger developments.
Further progress, delivering a
record year of profits
2019 has been another very positive
year for the Group with continued
improvement in build quality and
customer satisfaction, the successful
launch of our new housing range and
the continued investment in people,
systems and infrastructure.
Delivering high quality homes and
excellent customer service has been
an absolute priority for the Group and
at that core of all we have done over
the past three years. As such, I am
delighted to report that the Group has
been awarded a 5-star HBF customer
satisfaction rating for 2019.
The Group delivered another record
year of profits with pre exceptional
profit before tax increasing by
12.0% to £188.2m (2018: £168.1m).
Operating margin improved by 60 basis
points to 17.0% despite a backdrop on
on-going market uncertainty during the
year, and return on capital employed
increased by 300 basis points to 22.3%
(2019: 19.3%).
4 | Strategic report | Business overview
Strategic report | Business overview
Senior management
Greg Fitzgerald, CEO of the Group, is
uniquely positioned to successfully
integrate the businesses having formerly
been CEO and then Executive Chairman
of Galliford Try plc over a period of
11 years until 2016. Greg has established
a strong leadership team across the
enlarged Group bringing the best from
each business, and this continuity of
management will help mitigate risks
arising through the integration process.
I am delighted to welcome Graham
Prothero, former CEO of Galliford
Try plc, Stephen Teagle, Managing
Director of Galliford Try’s partnerships
business (now Vistry Partnerships) and
Andrew Hammond, former Managing
Director of Linden Homes, to our senior
leadership team following the Acquisition
on 3 January 2020. I believe the
combination of our two managements
creates a strong and experienced team to
deliver value from the Acquisition.
People
People remain a key priority and we
continue to invest in the training and
development of our employees and
subcontractors. In the year, there has
been a particular focus on mental health,
and we have rolled out our mental health
first-aid programme across the business.
We remain very committed to our
Vistry Group Apprenticeship and Trainee
Assistant Site Manager Schemes.
On behalf of the Board, I would like to
thank all of our employees for their
commitment and hard work in delivering
the successful performance across all
business areas in 2019, and in particular
the attainment of our 5-star HBF
customer satisfaction rating.
We welcome our new colleagues at
Linden Homes and Vistry Partnerships
and look forward to working with
them and delivering the benefits from
this exciting combination. I recognise
the period of integration will have its
challenges and thank everyone for their
patience, dedication and enthusiasm
through this.
“ Bovis Homes and Linden Homes brings
together two high quality, well-recognised
housebuilding brands”
I would also like to extend my thanks
to our subcontractors, suppliers and
partners who have supported us during
the year, and with this acquisition,
and are such an important and valued
component of our business.
Ordinary dividends
and capital return plan
The Group dividend policy has been, and
will continue to be, to maintain a robust
and efficient balance sheet to deliver
sustainable dividends to our shareholders.
With the Acquisition we announced
the return of a further £60m to our
shareholders by way of a bonus issue of
shares in January 2020 on completion of
the transaction.
The Board recommended that instead
of paying the Bovis Homes 2019 final
dividend, it would pay a second interim
cash dividend of 41 pence per share on
29 May 2020 to shareholders on the
register on 27 December 2019. This takes
the total ordinary dividend for 2019 to
61.5 (2018: 57.0) pence per share, an
increase of 8 per cent.
Going forwards the Group expects
to maximise sustainable dividends to
shareholders through an initial ordinary
dividend cover of 2 times, moving
towards a cover of 1.75 times following a
period of integration and deleveraging.
The Board will also consider the prevailing
strength of the balance sheet and general
economic circumstances, with particular
regard to the cyclicality of the industry.
The Board
I would like to thank my colleagues on
the Board for their support and guidance
to the leadership team and to me
personally in what has been a busy and
significant year for the Group.
I am pleased to welcome Graham
Prothero to the Group and to the Board.
Graham, who was previously the
Chief Executive of Galliford Try plc
joined the Group as Chief Operating
Officer following the Acquisition on
3 January 2020. Graham brings deep
knowledge of the acquired businesses as
well as broad sector experience.
The future
The Group has an exciting future
with very significant opportunities to
be realised from the Acquisition.
The progress, achievements and learning
from the past three years positions us
well, and the integration process, taking
the best from both, is well underway.
The market fundamentals remain strong
and with greater political certainty,
we have seen a welcome increase in
consumer confidence and demand for our
new houses. I look forward to updating
you with our progress.
Ian Tyler
Chairman
Directors Remuneration
Report pages 88 to 106
Vistry Group PLC | vistrygroup.co.uk | 5
Bovis Homes Group PLC | 5
Business overview
What we do
Vistry Group is a top five national
housebuilder incorporating the
operations of Bovis Homes, Linden
Homes and Vistry Partnerships.
With a 5-star HBF customer satisfaction
rating, we are focused on delivering high
quality, sustainable new developments and
communities across England.
We have a high-quality land bank totalling
40,135 plots, and a valuable pipeline of
strategic land plots totalling 31,965.
Housebuilding
Vistry Partnerships
The housebuilding business operates across 13 regions, each
with a regional office. Our housing ranges, The Phoenix
Collection developed by Bovis Homes, and the Linden
Collection are designed to meet today’s consumers needs.
The design and construction blend tradition and innovation,
creating homes and developments with contemporary
living standards. Our product range includes two-bedroom
starter homes to larger four and five-bedroom family homes.
Vistry Partnerships is a market leader in the high growth,
counter cyclical partnerships business. It combines both
contracting and development led capabilities and has a
leading reputation for delivery, quality and sector
knowledge across all housing tenures. The business works
closely with Governmental bodies, housing associations
and local authorities through its 10 operating regions,
each with its own regional office.
1
Yorkshire
2 Mercia
7 Eastern
8 Kent
3 East Midlands
9 South East
4 West Midlands
10 Thames Valley
5 Cotswolds
6
Northern Home
Counties
11 Southern
12 Western
13 South West
6 | Strategic report | Business overview
1 North East
2 Yorkshire
6 East England
7 London
3 North West
8 Drew Smith
4 East Midlands
9 West
5 West Midlands
10 South West
123746512131011981294356,7810 Strategic report | Business overview
Reasons to invest
Uniquely positioned national housebuilder
combining two high quality housebuild brands
with a leading high growth counter cyclical
partnerships business.
Unique market position
Market leader in
Partnership housing
Two leading housing brands
• Combination of a leading national
housebuilder with a market leading
partnerships business
• Diversified, more resilient
revenue base
• Strong growth profile
• Excellent reputation for delivery,
quality and sector knowledge
• Strong growth market, less
connected to the traditional
housing cycle
• Targeting accelerated revenue
and earnings growth
• Two established, leading, high
quality brands: Bovis Homes and
Linden Homes
• Significant opportunity to increase
output and returns from dual
branding strategy
• Economies of scale
High quality owned
Excellent strategic
Significant improvement
land bank
land supply
in financial returns
• Over 40,000 plots of high quality
• Strong track record and expertise
• Strategy of controlled organic
owned land
in strategic land
• Attractive market positioning with
more than 95% of housebuilding
land bank with ASP below £600k
and nearly 45% below £300k
• Significant, deliverable strategic
land pipeline
• Strength in partnerships increases
potential from strategic land
• Balanced portfolio across
the regions
volume growth in housebuilding
and operating margin progression
• Targeting accelerated revenue
growth in Vistry Partnerships to
over £1 billion, with an operating
margin of at least 10%
Vistry Group PLC | vistrygroup.co.uk | 7
Housing market overview
Demand for housing in the UK continues to outstrip supply,
with the market consistently falling short of the 300,000
new homes p.a. now targeted by the Government.
UK planning system
We continue to have a relatively
complex, time-consuming and expensive
land planning system in the UK.
This is compounded by local authorities
not putting in place their housing
supply plans required under
the NPPF. We work very closely with
the local authorities and our established
relationships and in-house knowledge
of the planning system and expertise
are often critical in attaining detailed
planning and technical consents on
development land opportunities.
Shortage of skilled labour
The lack of skilled labour remains a
challenge across our industry and
one that we are very focused on
helping to address. We have a fully
developed apprenticeship scheme and
trainee site manager programme.
Where possible we partner with
our supply chain to develop strong
relationships that allow them to invest in
bringing more people into our industry.
The Government’s extension of the
programme beyond 2021 was welcomed.
Whilst we do not believe the restriction
of the scheme to first time buyers only,
and the introduction of regional price
caps from 2021 will significantly change
the utilisation of the scheme, we are
factoring these future policy changes into
our land buying decisions today.
Good land availability
Land availability remains good and is
supported by the overall planning regime
across the country, with land vendors
remaining incentivised to bring land
forward as a result of a large number of
local authorities still failing tests set
by the National Planning Policy
Framework (‘NPPF’). Under these tests,
local authorities are required to adopt a
Local Plan which is less than five years
old, which has a proven five-year land
supply, and meets a certain rate of
annual housing output. Failure to do so
results in the local authority foregoing
control of planning decisions and the
‘presumption in favour of sustainable
development’ applying. Consequently,
applications which are turned down at a
local level are more likely to be overruled
by central government.
Demand continues to outstrip supply
Demand for housing in the UK
continues to outstrip supply, with the
market consistently falling short of the
300,000 new homes p.a. now targeted
by the Government.
For the 12 months to 31 March 2019,
there were a reported 213,860 new build
completions. Including net additions from
change of use, net additional dwellings in
the same period totalled 241,340(1).
Whilst affordability remains a
challenge, the wider fundamentals
remain supportive. The level of
employment is at a record high and
is accompanied by strengthening
wage inflation.
The lending environment remains
favourable with an increasingly
competitive mortgage market.
Mortgage interest rates have been
decreasing with three, five, and
ten-year fixed rate mortgages now
at record lows.
Government support
The Government continues to be
supportive of the housing industry
recognising the importance of increasing
the supply of new homes to meet the
housing shortage.
The Government’s Help to Buy equity
loan scheme launched in 2013, has
helped thousands of buyers, in particular
first time buyers, purchase a new home.
In 2018, usage of the policy contributed
to 5% of total housing transactions and
31% of new build sales in England.
8 | Strategic report | Business overview
Notes: (1) National Statistics, Housing Statistical Release
13 December 2019
Strategic report | Business overview
Housing
market overview
Demand continues to outstrip supply -
outlook for the industry remains positive
Vistry Group PLC | vistrygroup.co.uk | 9
Building sustainable
communities
10 | Strategic report | Our business and strategy
Strategic report | Business overview
Wixams Retirement Village in Bedford
Vistry Group PLC | vistrygroup.co.uk | 11
Chief Executive’s report | Greg Fitzgerald
“I am pleased to report further significant
operational progress in 2019, resulting in
another year of record profits”
With heightened uncertainty surrounding
Brexit and the general election in
December, we saw downward pressure
on house prices in the second half of 2019.
This was partially mitigated through a
combination of the Group’s own
build cost saving initiatives and a lack
of cost inflation. As a result, we are
pleased to have delivered further
operating margin progression, reporting
an increase of 60 basis points to 17.0%,
pre exceptional items.
On 10 September 2019 we announced
the potential combination between
Bovis Homes and Galliford Try’s
Linden Homes and Partnerships &
Regeneration businesses. Following
detailed due diligence, the Acquisition
exchanged on 7 November when the
Group also successfully raised net
proceeds of c. £150m through a share
placing to help fund the acquisition.
Completion of the Acquisition on
3 January 2020, has firmly positioned
the enlarged Group as one of the UK’s
top housebuilders and established it as
a leader in the highly attractive, high
growth partnerships sector. Our priority
for 2020 is to successfully integrate the
housebuilding businesses and ensure we
maximise the very significant benefits we
are confident can be delivered from this
exciting new combination.
Operational update
Strong sales performance
The Group saw a significant and
sustained step up in its sales rate in
2019 to an average sales rate per outlet
per week of 0.58 (2018: 0.50), an
increase of 16%. Achieved against a
backdrop of market uncertainty for
much of the year, this uplift reflects the
Group’s significantly improved customer
offering and build procedures.
Help to Buy remains an important
scheme and 23% (2018: 27%) of total
completions utilised the scheme in
the year. We continue to use part
exchange in a controlled manner with
7% (2018: 6%) of total completions
utilising this in the period.
The Group completed a total of 3,867
(2018: 3,759) new homes in 2019
including 58 (2018: nil) joint venture
completions, a 3% increase on the
prior year. Private homes totalled 2,678
(2018: 2,567) units with 1,189 (2018: 1,192)
affordable housing units, representing
31% (2018: 32%) of total completions.
Customer service
Customer service remains central to
everything we do, and we are delighted
this is reflected in our HBF customer
satisfaction score being above 90% for Q3
2019, equivalent to a 5-star rating.
In 2019 we implemented our customer
relationship management system, ‘Keys’,
across our Sales and Care teams.
This provides us with a single transparent
view of each customer’s journey, from
reservation through the warranty
period, delivering us greater insight
and information. It also empowers
our customers with self-reporting
functionality, giving them greater
control of the process and access to
report any issues.
Following direct feedback from our Home
Buyers Panel, we launched our first
‘Unwrapped Home’ at Embrook Place in
Wokingham this year. Here customers can
see the different phases of construction
of their home, including the methods and
materials used in the structure, plumbing
and electrics.
We were very pleased to have received
the Ministry of Defence’s Gold Award
in their Employer Recognition Scheme.
The Group first signed the Armed Forces
Covenant in 2016 and has since worked to
ensure that past and present members of
the Forces along with their families receive
outstanding support, from mentoring
placements and trainee programmes, to
assisting military personnel looking to
get on the property ladder. We are proud
to be the only dedicated housebuilder to
have achieved Gold Award status.
2019 in review
The Group has made further significant
operational progress in 2019 resulting
in another year of record profits, with
group profit before exceptional items
and tax up 12.0% to £188.2m.
Building high quality new homes and
providing our customers with excellent
service remains our key priority, and I am
delighted this is reflected in an increase
in our HBF customer satisfaction rating
to 5-star; a very significant step up from
our 2-star rating in 2017. In addition,
2019 saw the roll out of Bovis Homes’
new Phoenix Housing Collection which
incorporates more modern, open plan
designs and has received very positive
customer feedback.
“Customer service
remains central to
everything we do
and I am delighted
this is reflected
in our 5-star
HBF Customer
Satisfaction rating
for 2019”
12 | Strategic report | Our business and strategy
Strategic report | Our business and strategy
High build quality
Delivering high quality new homes is a
key priority and we have seen very
significant progress in this area over the
past couple of years. The Bovis Homes
site teams have been a key area of focus,
and we have invested in recruiting,
developing and retaining a high-
quality workforce on site. As a result,
we have benefitted from an improved
subcontractor base, with whom we have
established strong partnerships.
We continue to strengthen these
relationships as highlighted by the
improving scores from the bi-annual
feedback surveys we facilitate.
We are delighted that in 2019, six of our
site managers were awarded NHBC Pride
in the Job Quality awards and that our
NHBC Construction Quality Review for
2019 highlighted a 26% improvement in
our Group score over the past two years.
Phoenix housing range
We launched the new Bovis Homes
housing range, the Phoenix Collection,
in 2018 and successfully replanned the
Group’s owned land bank during 2018
and 2019 with the new house types
where appropriate. The modern design
and open plan living meet today’s
customer needs, while the design and
specification allow the Group to drive
efficiency and cost reduction.
The first ‘Phoenix’ home was completed
in June 2019, with a total of 358
completions from the range during
the year, representing 14% of private
completions. We currently have 1,040
units under construction using the new
range and expect c. 1,400 of private
completions in 2020 to be Phoenix
house types.
People
People satisfaction remains a key priority
and, in the year, we continued to invest
in the development, training and well-
being of our workforce including
our subcontractors. Through our
dedicated Learning and Development
team we delivered more than 4,500
delegate training days in 2019, including
our trainee assistant site manager
programme and leadership training.
“The Acquisition firmly postitions Vistry
Group as a top UK housebuilder and one
of the leaders in the counter cyclical
partnerships business”
Partnership housing
Excellent progress was made with the
Group’s Partnerships business, launched
in early 2019. We entered into a total of
eight land led partnerships with housing
associations in 2019 including the joint
venture of our development at Stanton
Cross, Wellingborough with Riverside,
joint operations at Alphington and
Comeytrowe with LiveWest, and a joint
venture with Metropolitan Thames Valley
at Cambourne.
Vistry Group
Vistry Group was formed on 3 January
2020 following the acquisition of
Linden Homes and the Partnerships &
Regeneration businesses of Galliford Try
plc for an agreed price of £1.075 billion.
The acquisition presented an excellent
and unique opportunity for Bovis Homes
to acquire both a top UK housebuilder
in Linden Homes, and one of the leaders
in the highly attractive, high growth
partnerships business.
“People satisfaction
remains a key
priority and we
continue to invest
in development
and training”
With the ever-increasing awareness and
prevalence of mental health issues in the
construction industry, one of our key focal
points this year has been the roll-out of
mental health first aid. The Group has also
pledged its support for the Lighthouse
Construction Industry Charity campaign
which aims to tackle mental health issues
across the wider construction industry.
The campaign will deliver vital support
including, the provision of a confidential
24/7 industry helpline, and retraining for
workers who have been injured or who
have suffered from an illness that means
they cannot return to their normal work.
We are pleased to report our employee
engagement level, as measured by our
monthly employee engagement survey,
has remained at a high level and ahead of
the survey benchmark.
Investment in systems
and processes
During the year we continued to invest
in our systems and processes to drive
efficiency and best practice across all
business areas. We have implemented the
Keys system along with a new document
management solution across the whole
business to support employees on site
and in the office as well as our customers.
In addition, we have furthered our
implementation of the COINS software
system with further functionality across
sales, land, build and commercial.
Land acquisition
The Group continued to acquire high
quality land opportunities in the year
with a total of 4,531 (2018: 4,164) plots
added to the owned land bank, with the
land acquired expected to deliver at
least a gross margin of 26% and ROCE
of 25%. Strategic land remains a valuable
source of land for the Group and we
converted 2,146 (2018: 1,958) plots from
our strategic land bank during the year
including 831 plots at Comeytrowe,
Taunton, and 783 plots at Cambourne
near Cambridge.
Vistry Group PLC | vistrygroup.co.uk | 13
Bovis Homes Group PLC | 13
Chief Executive’s report | Greg Fitzgerald
Top five national housebuilder
Synergies
Housebuilding strategy
The acquisition has firmly positioned
Vistry Group as one of the UK’s top five
housebuilders with the capacity to deliver
up to 14,000 new units p.a. With an
enhanced national customer proposition
and coverage, the Group can compete
more effectively against the other major
players in the UK private and affordable
housebuilding sector. It has a high-quality
land bank, with a total of 40,135 plots
including joint ventures, and a valuable
pipeline of strategic land totalling
31,965 plots.
Market leader in
Partnerships Housing
The Group announced the launch of its
own Partnerships business in early 2019,
identifying partnerships housing as a
key sustainable growth area with more
resilient earnings across the cycle and
therefore reducing the Group’s risk profile.
Vistry Partnerships is one of the leading
and most established operators in this
area and, with a very strong record
of growth, is a partner of choice for
housing associations, local authorities
and government agencies. There remains
a fundamental housing shortage in the
UK, and government commitment to
increasing housing supply is strong, with
a significant increase in investment from
housing associations in particular. A key
strength of the Vistry Partnership business
model is the ability to develop across all
housing tenures through both contracting
and development-led partnerships.
“Vistry Partnerships
is one of the leading,
most established
operators with a
very strong record
of growth”
As previously stated, we expect to deliver
a run-rate of pre-tax cost synergies of at
least £35m p.a. by the end of 2021 as a
result of combining the businesses.
Of this, at least £20m p.a. is expected
to come from a reduction in operating
costs though the streamlining of the
regional and operational models.
Within housebuilding, we have
streamlined the regional operations
moving from 17 regional business units
to 13, and we expect a c. 8% reduction
in headcount across the business
including central services.
At least £15m of synergies is to be
achieved from procurement savings and
the optimisation of specification across
our three housing ranges: The Phoenix
Collection, The Linden Collection and
Partnerships housing. We are making
good progress with this, and on
renegotiating our supply contracts for
the enlarged Group.
It is expected that c. £12m of this benefit
will be achieved in 2020, with the
recurring run-rate of at least £35m p.a.
achieved by the end of 2021.
Group strategic priorities
The Group’s strategic priorities remain
investing in our people, ensuring we
retain high levels of customer satisfaction,
ensuring a healthy and safe working
environment, and delivering enhanced
returns to our shareholders.
We will continue to invest in the
development and training of our people
to ensure a committed, motivated and
engaged workforce. We are firmly
focused on increasing the supply of
much needed new homes of all tenures
across England and delivering high
quality new homes and a high level
of customer service that meets the
expectations of our customers throughout
their entire journey with Vistry Group.
Ensuring the health and safety of our
people is unequivocally at the core of
our business. Alongside these priorities,
driving enhanced returns for our
shareholders through increased
profitability, return on capital and total
shareholder returns is our goal.
The housebuilding business of the Group
operates with two leading brands, Bovis
Homes and Linden Homes. The business
has national scale and coverage with
13 operating regions, down from
17 on completion of the acquisition.
Hands on management remains key
and each regional office is located
within easy reach of its developments.
Our housebuilding business has an
expanded geographic reach across
England including operations in
the attractive Yorkshire area, and a
strengthened position in core areas in
the south including along the
South Coast.
The business strategy is to maximise
output through controlled volume growth
in the medium term while maintaining
high quality delivery. Each of the 13
operating regions has the capacity to
deliver c. 550 - 625 new housing units
p.a., giving the housebuilding business
the potential to grow and deliver more
than 8,000 units p.a. The housebuilding
business is divided into a North and South
structure, led by a highly experienced
management team combined from both
Bovis Homes and Linden Homes.
Longer term, potential future geographic
expansion for housebuilding could be
supported by Vistry Partnerships’ greater
geographic reach.
Maximising the opportunities from being
a dual branded housebuilder through
ensuring we provide our customers a
breadth of product choice to best meet
their needs is a priority. Each brand will
retain its own housing range, the
Phoenix Collection for Bovis Homes and
the Linden Collection, with the ranges
currently being reviewed and refined.
We already have both our brands
successfully selling alongside each other
on eight of our sites and see significant
further opportunity. With two brands, we
are more competitive in the land market.
We have a greater appetite for larger
sites where we can promote both brands,
increasing overall production, demand and
sales rates, and driving higher returns on
capital employed.
14 | Strategic report | Our business and strategy
Strategic report | Our business and strategy
Vistry Partnerships – strategy
The Vistry Partnerships business holds
a strong and unique position within
the partnerships market, combining
contracting and development expertise
on a national scale, supported by two
leading housebuilding brands.
The strategy is to accelerate the revenue
growth from the business’ 10 operating
regions through increasing output
from the existing infrastructure and
expansion into new geographies.
The Group is targeting an increase in
units (including equivalent units) to 6,000
p.a. and revenues of at least £1 billion.
This growth is to be driven by an increase
in higher margin development revenues
to 50% of total partnerships revenues,
whilst maintaining relatively stable
contracting revenues.
The Group’s land supply and strategic
land capability will support the growth
of higher margin development revenues.
Bovis Homes’ Partnerships business,
launched in 2019, made very good
progress in this area during the year, with
eight of the Group’s larger developments
being put into partnership arrangements
with housing associations. Three of these
developments have now been transferred
to Vistry Partnerships.
Development revenues typically
generate an operating margin of
between 14% to 18% as compared to
a low single digit operating margin for
contracting revenues. With this change
in mix, Vistry Partnerships is targeting a
significant step-up in profitability to an
operating margin of at least 10%.
“Our clear focus for 2020 is the successful
integration of the businesses to ensure
we maximise the significant benefits to be
realised from the combination”
All of our land for Vistry Partnerships
for 2020 is secured and 87% for 2021.
We are very active in the land market
and continue to see good opportunities.
In housebuilding we have acquired 1,489
plots across 5 sites in the year to date
and looking ahead we expect to acquire
land in line with our target of maintaining
a 3.5 to 4.0 years land bank. On average
we are targeting slightly smaller units
to maximise demand and output which
we expect to result in a reduced average
selling price in the land bank in the
medium term.
For Vistry Partnerships, we expect to
increase our land supply in-line with
our strategy of increasing our land-led
development revenues.
With our dual branded housing business
and growth strategy for partnership
development revenues, the Group has
an increased appetite for larger sites and
higher margin strategic opportunities.
Operational priorities - integration
Our clear focus for 2020 is the successful
integration of the businesses to ensure
we maximise the significant benefits to
be realised from the combination.
The integration process is well under
way and much progress has been made
to date.
Our housebuilding business has been
reorganised with the regional operating
areas defined and Managing Directors
for each business unit confirmed.
The Phoenix Collection and Linden
Collection housing ranges are being
reviewed and refined, and the centralising
of, and negotiations on procurement are
progressing well. On operating systems,
the health and safety systems are
aligned, and the COINS construction
software is to be harmonised across
housebuildingin the first half of this
year and implemented within Vistry
Partnerships in the coming year.
Land
The Group has a high-quality owned
land bank with strong fundamentals
and excellent forward visibility.
On housebuilding all of our land for
2020 has detailed planning consent
and 91% of our land for 2021 is secured.
Vistry Group PLC | vistrygroup.co.uk | 15
Chief Executive’s report | Greg Fitzgerald
Balance sheet
We have a robust balance sheet following
completion of the acquisition with
£600m of committed banking facilities,
and £100m of private placement notes
transferred from Galliford Try. We will
continue to acquire land utilising land
creditors where good deferred terms
are available.
We expect the business to deleverage
over the next two years with gearing
including land creditors targeted to
decrease below 30% by December 2020
and continue to decline in 2021.
We expect to maintain a housebuild land
bank of between 3.5 and 4.0 years and
to increase Partnerships’ landbank in-line
with our growth strategy, including
investment in strategic land. We will
optimise our work in progress, notably
utilising our dual branding capability to
drive capital efficiency on larger sites. Part
exchange will continue to be utilised on a
controlled basis with a focus on holding
no stock properties beyond three months.
Dividends
The Group’s dividend policy has been, and
will continue to be, to maintain a robust
and efficient balance sheet and to deliver
sustainable dividends to shareholders.
In September 2017, the Group announced
its intention to return surplus capital
resulting from its balance sheet
optimisation initiatives totalling £180m
to shareholders in the three years to
2020, with the first £60m paid as a
special dividend to shareholders in
November 2018.
The expected special dividend for 2019
was returned to shareholders by way of
a £60m bonus issue to shareholders on
2 January 2020. Reflecting the Group’s
new strategy following the acquisition,
there will be no further special dividend
payments in relation to the £180m capital
return initiative.
Instead of paying the Bovis Homes 2019
final dividend, a second interim cash
dividend of 41 pence per share will be
paid on 29 May 2020 to shareholders
on the register as at 27 December 2019.
Including the first interim dividend of
20.5 pence per share, this brings the total
ordinary dividend for 2019 to 61.5
(2018: 57.0) pence per share.
The Group expects to maximise
sustainable dividends to shareholders
with an ordinary dividend cover of 2
times initially, moving towards a dividend
cover of 1.75 times following a period of
integration and deleveraging. The Group
will also consider the general economic
circumstances, with regards to the
cyclicality of the industry.
Current trading and outlook
We are pleased to report a strong start to
the year with increased levels of consumer
demand seen across all our operating
regions in the first seven weeks.
For housebuilding in the first seven
weeks, the underling average sales
rate per site per week is up 15%, and we
have seen some positive momentum
on underlying pricing.
In 2020, we are firmly focused on
successfully integrating the housebuilding
businesses, delivering the significant
benefits from the combination as quickly
as possible, and best positioning the
business to deliver controlled volume
growth in the medium term. As such we
are not forecasting any volume increase
for this business area in 2020. We have
a strong forward sales position with 48%
of consensus housebuilding revenues for
FY20 secured.
Vistry Partnerships will continue to
pursue its growth plans for 2020,
being less impacted by the
integration process. Its strategy
of significantly increasing higher
margin development revenues, will
be reflected in a step-up of land
acquisition and strategic land
opportunities for the
Partnerships business.
This year, Vistry Partnerships has
entered into a £95m development
with housing association, Citizen
Housing Group, for the delivery of
360 new homes at the former hospital
site, Lea Castle, Kidderminster.
The homes for sale will be from both
the Bovis Homes and Linden Homes
housing ranges.
In London, Vistry Partnerships has
contracted with Red Door Ventures
Limited, a newly formed subsidiary of
Newham Council to deliver homes for rent
in Plaistow. The £63m scheme will provide
182 residential units and associated
commercial units and will extend the
Group’s track record in delivering
homes for the build to rent and private
rented sectors.
Vistry Partnerships has a strong forward
sold position with mixed tenure forward
sales totalling £244m (FY19: £159m)
of which £162m (FY19: £81m) is for
private units. On contracting, the
order book stands at £890m
(FY19: £960m), with 88% of the FY20
order book secured. In addition, over
£1.5bn (FY19: £1.4bn) is at preferred bidder
status or land acquisition stage.
Greg Fitzgerald
Chief Executive
16 | Strategic report | Our business and strategy
Strategic report | Our business and strategy
The Aspen | 4 bedroom home
Whiteley Meadows, Whiteley
Transformational
Acquisition creating a
top UK housebuilder and
leader in partnership housing
Vistry Group PLC | vistrygroup.co.uk | 17
Our business model
Driving value across the cycle...
We have core expertise and competitive advantage across
all the areas we operate, with our business model set up
to deliver a strong performance across the cycle
Successful
conversion of
strategic
land
Acquisition
of prime location
consented
land
1
vice T
Focused
on the entire
customer
journey
First
class sales
advisors
r
e
s
r
e
m
o
t
s
u
c
d
n
a
s
e
l
a
S
r g e t e d l and acquisition
a
Deliverable,
high quality
land supply
Southern
England,
greenfield
focus
D
e
s
i
g
n
a
n
d
l
p
a
n
n
i
n
g
In-house
planning
expertise
Well
designed,
contemporary
housing
ranges
Our DNA
building and selling
quality new
homes
Traditional
methods of
construction
High
build
standards
Working with
local communities
to meet their
needs
2
Creating
places where
people aspire
to live
Delivering
excellent customer
service
4
Meeting
our customers’
needs
Build
3
Safely
delivering to
programme
Strong
relationships
with suppliers and
subcontractors
18 | Strategic report | Our business and strategy
Strategic report | Our business and strategy
...From our portfolio of brands
Our DNA
building and selling
quality new
homes
Vistry Group PLC | vistrygroup.co.uk | 19
Vistry Group is one of
the UK’s top five
housebuilders
20 | Strategic report | Our business and strategy
Strategic report | Our business and strategy
The Maple | 5 bedroom home
Furrowfields Bishops Itchington
Vistry Group PLC | vistrygroup.co.uk | 21
Strategic priorities
Strategic priorities
Risks involved
Measuring success
People satisfaction
See page 24
Investment in the
development and training
of our people to ensure a
committed, motivated and
engaged workforce
• People capability and change
• Unplanned staff turnover
• Health, safety and environmental
• Employee engagement score
• Increased regulation
Customer satisfaction
See page 26
• Customer service
• HBF customer satisfaction
• Increased regulation
• NHBC reportable items
Delivering our customers
quality new homes and
a high level of customer
service that meets their
expectations throughout
their entire journey with
Bovis Homes
Healthy and safe working environment
See page 28
• Materials and subcontract labour
• RIDDOR
• Health, safety and environmental
• Accident frequency rate
• Increased regulation
Ensuring the health and
safety of our people and
minimising the accident
frequency rate whilst
delivering on time, is
unequivocally at the core
of our business
Enhanced shareholder returns
See page 30
Driving enhanced returns for
our shareholders through
increased profitability, return
on capital employed and
total shareholder returns
• Economic and sales environment
• Profitability
• Materials and subcontract labour
• ROCE
• Project delivery
• TSR
• People capability and change
• Increased regulation
22 | Strategic report | Our business and strategy
Strategic report | Our business and strategy
Strategic priorities
We have a clear set of strategic priorities
which underpin how we operate across
all aspects of our business and will support
driving towards our medium term targets
Vistry Group PLC | vistrygroup.co.uk | 23
Strategic priorities
People satisfaction
Investment in the development and training of our people
to ensure a committed, motivated and engaged workforce
Progress in 2019
In 2019, we continued to invest in
the development, training and
well-being of our workforce including
our subcontractors. The Bovis Homes
Training Centre remained a key focal
point through its offering of bespoke
learning & development solutions to
support our people and the needs of
the business.
In the year, we delivered more than
4,500 delegate training days, including
training support to key business
improvement projects. The attendance
rate rose to over 90% highlighting the
value and importance our people place
on their own development.
With the ever-increasing prevalence of
mental health issues in the home building
and wider construction industry, a key
focal point has been the rollout of mental
health first aid. Led and delivered by our
in-house Learning & Development team,
in partnership with Human Resources and
Safety, Health, and Environment (SHE), we
trained over 30 mental health first aiders
throughout the business to raise awareness
of the issues and provide support.
We continued the development of our
leadership teams with the rollout of
Foundation Leadership Training, the final
phase of our Building Leadership Excellence
programme, which has been delivered
to over 60 front line leaders across 240
delegate training days.
We are delighted that leadership frame
work has received external endorsement
with a nomination for the Construction
News Talent Awards for Excellence in
Learning & Development.
24 | Strategic report | Our business and strategy
Our trainee assistant site manager
programme ramped up its activity with
2 further cohorts joining in 2019, and
we took on a further 23 apprenticeships
following a record level of applications.
We recognise the challenges this period
of integration has placed on many of
our employees with a c.8% reduction in
headcount expected across the business
including central services.
We advanced work on the functional
development framework through working
with subject matter experts across all
regions to profile key skills, knowledge,
behaviours and learning and development
requirements for all job roles in sales,
customer care, build, and health & safety.
The sales programmes were refreshed
in line with the changing needs of the
business and a brand-new sales onboarding
programme was designed and rolled out to
drive ownership and accountability through
coaching and on the job learning; giving our
new sales people the knowledge, skills and
behaviours for the best possible start.
Key message
In 2020 we will continue
to invest in the learning &
development of our people
by updating our bespoke
offerings to focus on the
key knowledge, skills and
behaviours of the entire
Vistry Group including all SHE
development requirements.
Focus on the digital solutions reached new
milestones, with the design and rollout of a
mobile training booking service.
There will be a continued rollout of mental
health first aid training including awareness
courses for line managers.
Priorities for 2020
The successful integration of the business
following the Acquisition is our key
focus for 2020. We have made good
progress to date with in particular, the
operating structure for housebuilding
of 13 regions agreed.
2020 will also see investment in digital
learning solutions for the newly created
Vistry Group to include the construction
of bespoke eLearning modules, virtual
training delivery, and the continued
expansion and evolution of the
training booking systems and online
learning platforms.
KPIs
Unplanned
staff turnover
17%
(2018: 22%)
Peakon
engagement score
7.9
(2018: 7.7)
Strategic report | Our business and strategy
Investing
in our people
Putting the focus on training
and employee engagement
Vistry Group PLC | vistrygroup.co.uk | 25
Strategic priorities
Strategic priorities
Strategic priorities
Customer satisfaction
Delivering quality service and homes for our
customers remains a key strategic commitment
Progress in 2019
We have seen a continued uplift in
our HBF Customer Satisfaction score,
moving from a 2-star rating in 2017 to
the top 5-star performance for 2019.
There remains a firm focus on placing
the customer at the core of everything
we do and embedding a service centric
ethos across the business.
Customer
This year we delivered many of the new
capabilities our customers have been
asking for, facilitated by the successful
implementation of our customer
relationship management system
‘Keys’ across our Sales and Care teams.
Keys provides a single view of each
customer’s journey giving our teams
far greater insight and information,
and enabling them to provide a more
personalised and seamless service. It also
gives our customers self-help and self-
serve functionality, providing them more
choice of how and when they choose to
do things, making us easier to do
business with.
Importantly, this new capability also
provides on-going insight and feedback
from our customers that has enabled
us to:
• Improve visibility of customer insight
and feedback across the business
• Continue to improve our policies
and processes
• Enhance our analysis capabilities
and feedback to our Commercial and
Technical teams to ensure continuous
improvement in our products.
26 | Strategic report | Our business and strategy
Following feedback from our Home-
Buyers Panel, we launched our first
“Unwrapped Home” in 2019. The brief
was to take our customers through the
journey that their new Bovis Home will
go through during construction, and
to demonstrate the standard of the
build and quality processes followed.
The Unwrapped Home, a 3 bedroom
Spruce, is now open at Embrook Place in
Wokingham and provides a bespoke
and unique learning experience for
our customers. Visitors are able to clearly
see the different stages of construction
including wiring, plumbing, structure
and design and all the health and safety
aspects that are an integral part of the
process; providing our customers full
transparency of the homes.
Key message
We have seen a
continued uplift in
our HBF Customer
Satisfaction score,
moving to a
H H H H H
star performance
Listening to our customers
Our industry leading Home Buyers panel
continues to provide valuable feedback,
ensuring our customers have a voice
and are able to share their views about
important changes at Bovis Homes.
This has included the launch of our
new housing range, updates and
enhancements to our consumer website,
the type of training and development
our people would best benefit from, as
well as helping shape the future
customer journey.
Survey feedback is also shared throughout
the organisation on a daily basis enabling
people to act and continuously improve,
whilst get recognised for the great service
they are delivering.
People
We continue to invest in our people ,
working with the Institute of Customer
Service to maintain externally
benchmarked service training across
the business. This year all our Sales and
Care Teams have received training on our
new customer relationship management
platform, Keys.
During the year we have completed
a refresh of our Bovis Homes brand.
Following feedback from across the
business, an updated identity was
launched including a new uniform and
site and van livery.
Priorities for 2020
Customer service remains central to
everything we do and as the Vistry Group,
we are committed to continuing to deliver
a high quality service to our customers
across all our brands.
We will engage with customer panels
across the brands to help shape any
product or service improvements and
ensure what we develop meets our
customer needs. Performance will
continue to be benchmarked through
tracking the 8 week and 9 month HBF
survey responses, using insight and
feedback from them to identify
service improvements.
Strategic report | Our business and strategy
Jamie and Daniella:
Aspen Park, Hemel Hempstead
Delivering for
our customers
Listening and engaging to
improve quality and service
Vistry Group PLC | vistrygroup.co.uk | 27
Strategic priorities
SHE Safety, Health and Environmental
Healthy and safe
working environment
Ensuring the health and safety of our people and
minimising the accident frequency rate whilst delivering
on time, remains at the core of our business
Our approach
The Group is committed to delivering
a high standard of safety for all our
employees, subcontractors and other
on-site visitors.
With much progress made during 2019,
our focus is to continue to further
improve all aspects of our SHE systems
and ensure we have the teams and
processes in place to continue to deliver
an improving SHE track record.
Key message
Our key priority for 2020
is to merge the three existing
safety management systems
into one Vistry Group
Safety, Health and
Environmental (‘SHE’)
management system
SHE
Progress in 2019
During 2019 we fully refreshed our
health, safety and environmental
system through the delivery of standard
operating procedures. Promoted by a
new SHE Director, the standard operating
procedures set mandatory best practice
design, management and implementation
requirements that are regularly audited
by our dedicated in-house team of
SHE experts.
This internal inspection regime features
an overall SHE performance KPI which
has been set for all sites and provides a
“Gold – Green – Amber – Red – Black”
dashboard indicator that is updated by
the regions daily. This continues to be well
received by site teams and has increased
the level of engagement for both site
management teams and contractors, and
is consistent with our strategy to bring
about behavioural change.
The Bovis Homes safety awards recognise
excellent performance in health and
safety at our developments. This year
there were awards for the overall site
winner, two divisional site winners, two
regional winners and two that were highly
commended. In recognising performance,
more emphasis has been placed on
planning, attitude, team relationships as
well as performance.
Priorities for 2020
Our key priority for 2020 is to merge
the three existing safety management
systems into one Vistry Group SHE
management system and to ensure we
have strong environmental, health and
safety teams and processes in place across
all areas of the business.
In addition, we will be introducing our
new online reporting system for all
accidents and incidents. This database
known as ‘ActivSHEQ’ will hold the all
future inspection and investigation
reports as well as recording near misses.
Following on from this, we will digitalise
all SHE Forms, allowing our site teams to
complete electronic forms out on site.
We are also introducing our bespoke
off-site induction video for workers and
visitors accessible through a mobile app.
KPIs
RIDDOR
21
(2018: 21)
Total recordable injury
frequency rate (TRIFR)*
1.14
(2018: 1.14)
* As part of our bottom-up safety management
strategy and to better align to industry
standards leaders, we have adjusted the way
we report in 2018 by focusing on lagging
indicators such as RIDDORs and recordable
incidents. These indicators will tell us how we
have performed in the past to help build upon
our existing foundations.
28 | Strategic report | Our business and strategy
Strategic report | Our business and strategy
Keeping
our sites safe
Committed to protecting the
public and our people
Vistry Group PLC | vistrygroup.co.uk | 29
Strategic priorities
Enhanced
shareholder returns
Driving enhanced returns for our shareholders through
increased profitability, return on capital and total
shareholder returns
Our approach
The Group is focused on maximising the
clear and significant benefits it expects
to realise from the combination of
Bovis Homes, Linden Homes and Vistry
Partnerships and on strengthening
Vistry Group’s position as a top five
UK housebuilder.
The remuneration policy including the
management incentive schemes are
aligned to the execution of our strategy,
with performance measures including
an improvement in profitability and
customer satisfaction. For 2020, synergy
delivery is introduced to maximise
acquisition benefits for shareholders.
Progress in 2019
The Group continued to make progress
operationally in 2019 delivering further
improvement in the business and
financial performance.
As a result, the Group had another year
of record profit with operating margin
improving by 60 basis points to 17.0% and
profit before tax before exceptional items
increasing by 12% to £188.2m. The Group
returned value to shareholders by way of
a bonus share issue totalling £60m.
It is from this position of strength, both
operationally and financially, that the
Group undertook the acquisition of
Linden Homes and Vistry Partnerships
in January 2020.
Priorities for 2020
The Group is focused on successfully
integrating the Vistry Group in 2020 and
in particular, the housebuilding businesses
of Bovis Homes and Linden Homes.
This will ensure it is best positioned
to deliver the clear and significant
benefits from this compelling combination
to our shareholders, including pre-tax
cost savings of at least £35m p.a. by 2021.
Vistry Partnerships operates in a
high growth market and is targeting
accelerated revenue growth and margin
expansion, delivering increasing returns.
Deleveraging the Group over the next
two years is a key priority to best deliver
enhanced returns to our shareholders.
Key message
The Group is focused on
maximising the clear and
significant benefits from
the Acquisition
KPIs
Profit before tax
(pre exceptional)
£188.2m
(2018: £168.1m)
30 | Strategic report | Our business and strategy
Return on capital
employed
(pre exceptional)
22.3%
(2018: 19.3%)
For calculation of ROCE, see table on page 160
Total shareholder
return
71.2%
(2018: 14.4%)
Strategic report | Our business and strategy
Linden Homes:
Berengrave Gardens, Rainham
Focus on
better returns
Driving improvements
for our shareholders
Vistry Group PLC | vistrygroup.co.uk | 31
Risk management
The Board is required to assess the
prospects of the Group, taking account
of its current position and principal
risks, and to explain how this has been
done, over what period and why that
period is considered appropriate.
The assessment context
The Board has considered the longer term
viability of the Group, reviewing this over
a 5 year period based on the strategy
as outlined on pages 22 to 30 to the
current performance of the Group and its
principal risks. The average life cycle of our
developments falls within a 5 year time
period and this aligns with the timeframe
focused on for the annual strategic review
exercise conducted within the business
and reviewed by the Board.
The Group’s strategy was communicated
in detail at the beginning of 2019 and
then refreshed and recommunicated in
November 2019 as part of the acquisition.
The Board have highlighted the
following elements of the strategy as key
considerations in reaching this view, all of
which have an impact on the Group’s key
investment decisions:
• Focused on high quality housing
developments through two
accompanying brands
• Housebuilding targets edge of town and
large village “chimney pot” locations
• Traditional two storey family homes
are the core product offering for our
housebuilding brands, increasingly
through standardised design
• Continued to reduce the average size of
our homes over time and ensure they
remain affordable
• Partnership programmes include
contracting, land-led solutions and
mixed tenure housing delivery to
better weather changes in UK
economic environment
• The Group’s strategy is to drive
cash into the business leading to a
reduction in gearing
32 | Strategic report | Our business and strategy
Assessment process & assumptions
Viability statement
Based on the results of this analysis,
the Board have a reasonable expectation
that the Company will be able to
continue in operation and meet its
liabilities as they fall due over the 5 year
period reviewed.
Going concern
The Directors also considered it
appropriate to prepare the financial
statements on the going concern
basis, as explained in the basis of
preparation paragraph in note 1.3 to
the accounts. In forming this view, the
Group has analysed its forecast covenant
compliance over the period linked
to its banking arrangement, arriving
at an assessment of the headroom
evident between the forecast covenant
headroom and the outcomes necessary
to achieve covenant compliance.
Following refinancing in January 2020,
the Group currently has a revolving
credit facility of £450m, plus £150m of
term borrowings, expiring between 2023
and 2025. The Group regards its current
banking arrangements as adequate for its
needs in term of flexibility and liquidity.
As at 31 December 2019, the Group had
nil drawings under facilities and had net
cash of £362.0m.
A Risk Governance Committee operates
with representation from all parts of
our business to identify and monitor the
threats identified from within the Group.
This is coupled with a robust assessment
carried out by the Board to formally
agree and assess the principal risks facing
the Group, including those that would
threaten the execution of its strategy,
future performance and liquidity.
Management and mitigation of these
principal risks, as set out on pages 34 to
37 have been taken into consideration
when considering the future viability of
the Group.
As part of its annual strategic review the
Board also considered the Group’s
5 year financial plan, the core
assumptions underpinning this plan
and how the current economic and
regulatory environment may impact
this plan. The early years of the financial
plan are prepared in detail with the basis
being the development of our existing
land bank. There is inherently more
uncertainty in the later years of the plan
as these incorporate a higher level of
assumed housing completions from land
owned currently without planning or
land not currently owned by the Group.
The Group’s financial plan has been
reviewed in the context of its operational
performance during 2019 and stress
tested against scenarios to assess the
future viability of the Group.
The potentially highest impact risks,
from a Group viability point of view,
are seen as those which arise from
either a downturn in the economic
environment, for example following the
Brexit transitional period or fundamental
changes in government policy, leading to
decreased affordability, reduced demand
for housing and falling house prices.
Further information on the risk and
internal control processes is outlined on
pages 84 to 85.
Strategic report | Our business and strategy
Principal risks
and uncertainties
More details on the Group’s
approach to financial risk management
are laid out in note 4.5
Vistry Group PLC | vistrygroup.co.uk | 33
Principal risks and uncertainties
Description
Potential impact
Link to strategic
priorities
Annual
change
What’s changed over the last year?
How we are mitigating the risks?
t
n
e
m
n
o
r
i
v
n
e
l
s
e
a
s
d
n
a
c
i
m
o
n
o
c
E
r
u
o
b
a
l
t
c
a
r
t
n
o
c
b
u
s
d
n
a
s
l
a
i
r
e
t
a
M
k
s
i
r
t
e
k
r
a
M
k
s
i
r
l
a
n
o
i
t
a
r
e
p
O
y
r
e
v
i
l
e
d
t
c
e
o
r
P
j
1
Deterioration of the health
of the UK economy, brought
about by uncertainty, loss
of consumer confidence,
higher interest rates and
increasing unemployment,
leading to decreased
affordability, reducing
demand for housing and
falling house prices.
Adverse affects on
consumer confidence
and demand for new
homes, with consequential
impact on revenues,
profits and potentially
asset carrying values.
Potential for increased
restrictions on mortgages
granted could reduce
demand for new homes.
The Group’s ability to build
is constrained and may
impact profitability if
costs rise.
Inability to source raw
materials or unplanned
delays in our supply chain.
Delays or issues
resulting from failed
Vistry Group activity.
Unable to deliver sufficient
shareholder returns from
current developments or
a failure to achieve our
anticipated completions.
Cost overruns that have
a material impact over
financial performance.
2
Increasing production
across the industry may
lead to shortages of
both materials and
subcontract labour.
Pressures on supply
chain brought about
by integration activity
that could impact the
supply of materials or
subcontractor services.
3
Inability to convert land
assets to support required
housing development.
A failure to achieve our
operational targets due
to new programme
complexity within our
Vistry Partnership business,
an inability to execute our
homebuilding programme,
or a failure to control our
life of site costs.
• UK general election
• After a period of
• Diversification of our business
• Close monitoring of lead
resulting in a majority
uncertainty during 2019,
through the acquisition of
indicators in the housing market,
government providing
the UK has entered a
Vistry Partnerships with a
notably visitors to sales outlets,
some stability.
transitional period on
broader portfolio that
sales rates and price achieved.
the 31st January 2020 as
includes partnership and
part of our exit from the
regeneration activity.
European Union.
In addition to private housing,
programmes now include
contracting, land-led
solutions and mixed tenure
housing delivery to better
weather changes in UK
economic environment.
• Maintaining a rigorous risk based
approach to land acquisition
and portfolio of partnership and
regeneration with senior board
scrutiny where required.
• A focus on cash generation
and post-acquisition synergy
saving to further strengthen our
financial resilience.
• Standardised housing
• Recent events in China
• Maintain clear visibility of
• Centralised processes to
range designed and
(coronavirus) may have
future production requirements
monitor life of site costs
implemented for each
an impact on our ability
and its impact on suppliers
across all our active sites,
homebuilding brand -
to source materials and/
and subcontractors.
providing early warning and
Bovis Homes and
Linden Homes.
or any pandemic that
may impact availability
of UK workforce.
• Maintain close relationships
trend analysis.
with key suppliers and
• A quarterly supplier survey
subcontractors to gain visibility
process established to better
of future supply against need.
understand Vistry Group
• Dedicated steering group
to assess financial synergies
and operational performance
of new Vistry group supplier
agreements.
strengths and areas for
improvement in managing our
supply-chain relationships.
• Expansion of our ERP
• Vistry Partnerships adds
• Monthly build and cost
system that has delivered
significant complexity as
forecasting processes with
new system capability to
our programmes now
regular group oversight of
improve build forecasting
include contracting,
regional performances.
and planning processes.
land-led solutions and
mixed tenure housing
delivery which could
have a significant impact
on our cost, revenue and
delivery performance.
• Close monitoring of build
performance and delivery
against plan through regular
onsite visits from the
leadership community.
34 | Strategic report | Our business and strategy
Principal risks and uncertainties
Strategic report | Our business and strategy
Description
Potential impact
Link to strategic
priorities
Annual
change
What’s changed over the last year?
How we are mitigating the risks?
Increase
Decrease
No change
Customer satisfaction
Enhanced shareholder returns
People satisfaction
Healthy & safe working environment
t
n
e
m
n
o
r
i
v
n
e
s
e
l
a
s
d
n
a
c
i
m
o
n
o
c
E
r
u
o
b
a
l
t
c
a
r
t
n
o
c
b
u
s
d
n
a
s
l
a
i
r
e
t
a
M
y
r
e
v
i
l
e
d
t
c
e
j
o
r
P
1
2
3
Deterioration of the health
of the UK economy, brought
homes, with consequential
Adverse affects on
consumer confidence
and demand for new
impact on revenues,
profits and potentially
asset carrying values.
Potential for increased
restrictions on mortgages
granted could reduce
demand for new homes.
about by uncertainty, loss
of consumer confidence,
higher interest rates and
increasing unemployment,
leading to decreased
affordability, reducing
demand for housing and
falling house prices.
The Group’s ability to build
is constrained and may
impact profitability if
costs rise.
Inability to source raw
materials or unplanned
delays in our supply chain.
Delays or issues
resulting from failed
Vistry Group activity.
Unable to deliver sufficient
shareholder returns from
current developments or
a failure to achieve our
anticipated completions.
Cost overruns that have
a material impact over
financial performance.
Increasing production
across the industry may
lead to shortages of
both materials and
subcontract labour.
Pressures on supply
chain brought about
by integration activity
that could impact the
supply of materials or
subcontractor services.
Inability to convert land
assets to support required
housing development.
A failure to achieve our
operational targets due
to new programme
complexity within our
Vistry Partnership business,
an inability to execute our
homebuilding programme,
or a failure to control our
life of site costs.
• UK general election
resulting in a majority
government providing
some stability.
• After a period of
uncertainty during 2019,
the UK has entered a
transitional period on
the 31st January 2020 as
part of our exit from the
European Union.
• Standardised housing
range designed and
implemented for each
homebuilding brand -
Bovis Homes and
Linden Homes.
• Recent events in China
(coronavirus) may have
an impact on our ability
to source materials and/
or any pandemic that
may impact availability
of UK workforce.
• Diversification of our business
through the acquisition of
Vistry Partnerships with a
broader portfolio that
includes partnership and
regeneration activity.
In addition to private housing,
programmes now include
contracting, land-led
solutions and mixed tenure
housing delivery to better
weather changes in UK
economic environment.
• Close monitoring of lead
indicators in the housing market,
notably visitors to sales outlets,
sales rates and price achieved.
• Maintaining a rigorous risk based
approach to land acquisition
and portfolio of partnership and
regeneration with senior board
scrutiny where required.
• A focus on cash generation
and post-acquisition synergy
saving to further strengthen our
financial resilience.
• Maintain clear visibility of
future production requirements
and its impact on suppliers
and subcontractors.
• Maintain close relationships
with key suppliers and
subcontractors to gain visibility
of future supply against need.
• Dedicated steering group
to assess financial synergies
and operational performance
of new Vistry group supplier
agreements.
• Centralised processes to
monitor life of site costs
across all our active sites,
providing early warning and
trend analysis.
• A quarterly supplier survey
process established to better
understand Vistry Group
strengths and areas for
improvement in managing our
supply-chain relationships.
• Expansion of our ERP
system that has delivered
new system capability to
improve build forecasting
and planning processes.
• Vistry Partnerships adds
significant complexity as
our programmes now
include contracting,
land-led solutions and
mixed tenure housing
delivery which could
have a significant impact
on our cost, revenue and
delivery performance.
• Monthly build and cost
forecasting processes with
regular group oversight of
regional performances.
• Close monitoring of build
performance and delivery
against plan through regular
onsite visits from the
leadership community.
O
p
e
r
a
t
i
o
n
a
l
r
i
s
k
c
o
n
t
i
n
u
e
d
o
n
n
e
x
t
p
a
g
e
Vistry Group PLC | vistrygroup.co.uk | 35
e
c
i
v
r
e
s
r
e
m
o
t
s
u
C
d
n
a
e
g
n
a
h
c
,
l
e
p
o
e
P
y
t
i
u
n
i
t
n
o
c
s
s
e
n
i
s
u
b
d
n
a
y
t
e
f
a
s
,
h
t
l
a
e
H
l
a
t
n
e
m
n
o
r
i
v
n
e
i
g
n
d
n
u
f
d
n
a
i
y
t
i
d
u
q
L
i
l
n
o
i
t
a
u
g
e
R
d
e
s
a
e
r
c
n
I
k
s
i
r
l
a
n
o
i
t
a
r
e
p
O
k
s
i
r
l
a
i
c
n
a
n
F
i
Description
Potential impact
Link to strategic
priorities
Annual
change
What’s changed over the last year?
How we are mitigating the risks?
4
Product quality and
service standards
that do not meet our
customers’ expectations
or fall short of the
standards expected from
supervisory bodies.
5
An inability to attract,
develop or retain good
people alongside the
impact resulting from
the acquisition. Major IT
failure or cyber-attack
disabling critical systems.
The reputation of the Vistry
Group brands is diminished
with an adverse effect on sales
volumes and returns.
Excessive time and expense
rectifying and compensating
customer, impacting planned
business operations.
The loss of retained knowledge
or skill may inhibit the Group’s
ability to achieve both its
integration strategy and/or
financial performance targets.
The loss of IT capability or
significant data loss.
6
Unsafe practices in our
construction activities
causing injury or death
to our stakeholders and
damage to communities.
A loss of trust in the ability
of Bovis Homes to build
homes safely and in an
environmentally responsible
way, affecting the reputation
and financial health of
the business.
7
A failure to generate
enough liquidity to
manage short-
term and long-term
funding or investment
requirements.
Failure to service debt, comply
with borrowing covenants or
generate sufficient cash to meet
working capital requirements.
A failure to manage
liquidity requirements
impacts preparedness for
potential changes in
economic environment
and take advantage of
appropriate land buying
or investment opportunities
to help deliver improved
financial performance.
8
Increased costs, disruption and
reputational damage.
Inability to adhere to an
increasingly stringent
regulatory planning and
technical requirements
affecting the market.
Continued pressure
from the government to
ensure sufficient homes
are built, and built in a
sustainable way.
• Continued TV and print
• Implementation of a
• All homes built are subject
• Customer Home Buyer panel
media scrutiny of customer
new CRM tool that is
to NHBC building control
issues relating to home build
allowing us to revisit all
inspections.
quality across the sector.
our customer processes to
to gather insights which are
being used to improve our
customer offering and service.
simplify and improve the
customer experience.
• Quality inspections completed
by build staff, sales staff and
• CRM system that puts
regional directors.
• Bovis Homes trending as
a "5-star" builder due to
a much improved HBF
satisfaction score.
customers in control
when raising issues and
communicating with
customer care teams.
continued refinement of
internal communications
supported by a quarterly
employee survey to create
a strong framework of two-
way communication.
• The implementation of
• Significant investment in IT
• New staff policies and
• Engagement strategy with
a transitional service
capability and networking
processes to improve
agreement (TSA) through
delivered replacing legacy
employee experience with
Galliford Try group services
systems, improving
a particular focus on family
to provide some system
resilience and customer
friendly benefits.
and process capability until
and back-office processes.
appropriate transition to
Vistry Group.
• A working group overseeing
all project and programme
change, with heavy internal
promotion to ensure change is
managed effectively.
• Investment made in
additional health and
• Implementation of a
standard operating
safety advisors to increase
procedure to ensure
performance across
the business.
SHE is considered in all
aspects of site operation
and build processes.
• A consultative committee
• A requirement for regular
reviews performance and
regulatory requirements
for SHE matters.
• Monitoring health, safety
and environmental
performance against a
standard of excellence.
training for all staff and site
based personnel.
• Effective communication
processes in place to
proactively manage and
monitor issues.
• New banking and loan
• The new group has a more
• Regular reporting from within
• Regular reviews of our
agreements as part of the
formation of Vistry Group
diversified portfolio that
has a different working
with suitable covenants and
capital requirement than
headroom implemented.
just homebuilding.
all business units to ensure our
banking arrangements,
cash position is sustainable.
covenants and capital
structure, which were
reviewed in depth as part
of the acquisition.
• The government has now
• Partnership blend of
• Self-assessment process
• Investment in customer facing
approved a policy drawn
up by lenders, surveyors
and developers, designed
to streamline the safety
certification required.
The “Fire Safety Review” has
made recommendations on
building safety which will
impact all parts of the
Vistry Group.
programmes introduces a
significant increase in mixed
tenure social and afforable
housing increasing the
scruitiny in terms of social
value and requirements for
sustainability within the
communities we build.
• An increase in the
awareness of sustainability
including a new government
declaration on a UK carbon
neutral target.
to check that controls and
systems that help support
external standards are being
compliance to anticipated
adhered to across
the business.
standards should a regulator
be enacted.
• Participation in industry
• Recruitment and upskilling
forums and events discussing
of our company secretarial
potential regulatory changes
team to ensure ongoing
and impacts.
compliance to key external
laws and regulations.
36 | Strategic report | Our business and strategy
Description
Potential impact
Link to strategic
priorities
Annual
change
What’s changed over the last year?
How we are mitigating the risks?
Strategic report | Our business and strategy
e
c
i
v
r
e
s
r
e
m
o
t
s
u
C
d
n
a
e
g
n
a
h
c
,
e
l
p
o
e
P
y
t
i
u
n
i
t
n
o
c
s
s
e
n
i
s
u
b
d
n
a
y
t
e
f
a
s
,
h
t
l
a
e
H
l
a
t
n
e
m
n
o
r
i
v
n
e
g
n
i
d
n
u
f
d
n
a
y
t
i
d
i
u
q
i
L
n
o
i
t
a
l
u
g
e
R
d
e
s
a
e
r
c
n
I
4
5
6
7
8
Product quality and
service standards
that do not meet our
customers’ expectations
or fall short of the
The reputation of the Vistry
Group brands is diminished
with an adverse effect on sales
volumes and returns.
Excessive time and expense
rectifying and compensating
customer, impacting planned
standards expected from
business operations.
supervisory bodies.
The loss of retained knowledge
or skill may inhibit the Group’s
ability to achieve both its
integration strategy and/or
financial performance targets.
The loss of IT capability or
significant data loss.
An inability to attract,
develop or retain good
people alongside the
impact resulting from
the acquisition. Major IT
failure or cyber-attack
disabling critical systems.
Unsafe practices in our
construction activities
causing injury or death
to our stakeholders and
damage to communities.
A loss of trust in the ability
of Bovis Homes to build
homes safely and in an
environmentally responsible
way, affecting the reputation
and financial health of
the business.
Failure to service debt, comply
with borrowing covenants or
generate sufficient cash to meet
working capital requirements.
A failure to manage
liquidity requirements
impacts preparedness for
potential changes in
economic environment
and take advantage of
appropriate land buying
or investment opportunities
to help deliver improved
financial performance.
Increased costs, disruption and
reputational damage.
A failure to generate
enough liquidity to
manage short-
term and long-term
funding or investment
requirements.
Inability to adhere to an
increasingly stringent
regulatory planning and
technical requirements
affecting the market.
Continued pressure
from the government to
ensure sufficient homes
are built, and built in a
sustainable way.
• Continued TV and print
media scrutiny of customer
issues relating to home build
quality across the sector.
• Bovis Homes trending as
a "5-star" builder due to
a much improved HBF
satisfaction score.
• Implementation of a
new CRM tool that is
allowing us to revisit all
our customer processes to
simplify and improve the
customer experience.
• All homes built are subject
to NHBC building control
inspections.
• Quality inspections completed
by build staff, sales staff and
regional directors.
• The implementation of
a transitional service
agreement (TSA) through
Galliford Try group services
to provide some system
and process capability until
appropriate transition to
Vistry Group.
• Significant investment in IT
capability and networking
delivered replacing legacy
systems, improving
resilience and customer
and back-office processes.
• Investment made in
additional health and
safety advisors to increase
performance across
the business.
• Implementation of a
standard operating
procedure to ensure
SHE is considered in all
aspects of site operation
and build processes.
• New banking and loan
agreements as part of the
formation of Vistry Group
with suitable covenants and
headroom implemented.
• The new group has a more
diversified portfolio that
has a different working
capital requirement than
just homebuilding.
• New staff policies and
processes to improve
employee experience with
a particular focus on family
friendly benefits.
• A working group overseeing
all project and programme
change, with heavy internal
promotion to ensure change is
managed effectively.
• A consultative committee
reviews performance and
regulatory requirements
for SHE matters.
• Monitoring health, safety
and environmental
performance against a
standard of excellence.
• Regular reporting from within
all business units to ensure our
cash position is sustainable.
• Customer Home Buyer panel
to gather insights which are
being used to improve our
customer offering and service.
• CRM system that puts
customers in control
when raising issues and
communicating with
customer care teams.
• Engagement strategy with
continued refinement of
internal communications
supported by a quarterly
employee survey to create
a strong framework of two-
way communication.
• A requirement for regular
training for all staff and site
based personnel.
• Effective communication
processes in place to
proactively manage and
monitor issues.
• Regular reviews of our
banking arrangements,
covenants and capital
structure, which were
reviewed in depth as part
of the acquisition.
• The government has now
approved a policy drawn
up by lenders, surveyors
and developers, designed
to streamline the safety
certification required.
The “Fire Safety Review” has
made recommendations on
building safety which will
impact all parts of the
Vistry Group.
• Partnership blend of
• Self-assessment process
• Investment in customer facing
programmes introduces a
significant increase in mixed
tenure social and afforable
housing increasing the
scruitiny in terms of social
value and requirements for
sustainability within the
communities we build.
• An increase in the
awareness of sustainability
including a new government
declaration on a UK carbon
neutral target.
to check that controls and
external standards are being
adhered to across
the business.
systems that help support
compliance to anticipated
standards should a regulator
be enacted.
• Participation in industry
forums and events discussing
potential regulatory changes
and impacts.
• Recruitment and upskilling
of our company secretarial
team to ensure ongoing
compliance to key external
laws and regulations.
Vistry Group PLC | vistrygroup.co.uk | 37
Delivering quality
new homes
38 | Strategic report | Corporate social responsibility
Strategic report | Our financial performance
Millwood Meadows, Redditch
Vistry Group PLC | vistrygroup.co.uk | 39
Introduction
2019 Highlights:
Gold award
We focus our efforts in four key areas -
Compliance is monitored quarterly, with all
people, health and safety, the environment,
Group and regional leaders required to confirm
and the community, with a view to delivering
that they, and their teams, have abided by
long-term sustainable success. A new
the policies.
We are the first dedicated housebuilder to be
awarded the Ministry of Defence's Employer
Recognition Scheme Gold Award.
5-star housebuilder
sustainability strategy for Vistry Group is
also in development. This will set out a
new challenge in how we maximise the
social contribution and leverage the unique
opportunity that Vistry Partnerships
provides in delivering positive change in
The HBF has independently measured the
local communities. Our CSR priorities are
satisfaction of our customers and we’re
shaped around the issues that are both
proud to be one of the top performing,
important to our stakeholders, and important
5-star housebuilders.
Hedgehog highways
We’re the first housebuilder to commit to
building hedgehog highways on all
to our business, be it addressing a business
risk or opportunity, or strategy delivery.
We actively engage with all our key
stakeholder groups to shape our long-
term approach and share details of our
engagements in our Section 172(1) Statement
our Bovis Homes branded developments.
on page 42.
Mental Health First Aiders
For each of our CSR priorities we operate a
framework of Group policies and procedures,
all underpinned by a culture of Integrity,
We're training employees across the business
Caring and Quality. A summary of the CSR
in mental health first aid to raise awareness
policies are shown below in our Non-financial
of mental health in the work, reduce the
Information statement.
These policies are introduced to employees
in our induction process, are available on our
intranet, and are shared with our suppliers.
Any suspected policy non-conformities
can be raised in accordance with our
“Speak Up” Policy. This policy has been
substantially evolved this year and not only
details the whistleblowing process but reflects
the company’s commitment to openness and
proactively raising concerns.
The Group recognises the importance of
climate change and the collective responsibility
we all have to mitigate its negative effects.
We strive to continuously improve our CSR
approach and drive this at both a Group and
local level, empowering employees across the
business to drive change.
Our Sustainability Committee, established in
2019, centrally co-ordinates our efforts and
facilitates the sharing of best practice across
our regional business units.
The outcomes from our efforts are measured
by a series of key performance indicators
which are detailed over the coming pages.
stigma and provide practical support to
those affected.
We're committed to operating in a
sustainable manner, for the benefit
of our stakeholders and to support
the delivery of our strategy.
40 | Strategic report | Corporate social responsibility
Non-financial Information statement
In accordance with The Companies (Miscellaneous Reporting) Regulations 2018 a summary of the
Vistry Group non-financial policies are detailed below. Copies of these can be found on our website
here: vistrygroup.co.uk/responsibilities/csr-reports/2019. For details of our business model please
see page 18.
Reporting
requirement
Company
employees
Social matters
Group principle risk
Relevant policies
• People change and
business continuity
• Health, safety and
environmental
• Health, Safety and Welfare Policy
• Diversity and Inclusion Policy
• Ethical Code of Conduct Policy
• “Speak Up” Policy
We do not operate a Group policy because social
issues are assessed, managed and mitigated at a
local level. Regardless, any concerns can still be
raised via our “Speak Up” Policy.
Human rights
• Anti-Slavery and Human Trafficking Policy
Anti-corruption
and bribery
• Diversity and Inclusion Policy
• “Speak Up” Policy
• Anti-Bribery and Corruption Policy
• Anti-Money Laundering Policy
• Anti-Fraud Policy
• "Speak Up” Policy
Environment
• Health, safety and
environmental
• Environment Policy
• “Speak Up” Policy
Strategic report | Corporate social responsibility
Focusing on
our CSR priorities
Supporting sustainability,
our people and communities
Vistry Group PLC | vistrygroup.co.uk | 41
Bovis Homes Group PLC | 41
Stakeholder engagement
We're committed to operating fairly,
with integrity and with respect for
the opinions and perspectives
of our stakeholders. A summary of
our engagements is outlined below,
and this information forms our
Section 172(1) Statement.
Our key stakeholder groups are our
customers, employees, supply chain,
investors, local and national government
and the communities in which we operate.
Throughout the year we conduct a series
of planned engagements at a Group and
local level, as well as informal and ad
hoc meetings.
Engagements are conducted by employees
at many levels of the organisation.
The Board directly participates in some
of these engagements and has visibility
of some other engagements through the
Board reporting process. The views of
key stakeholders are used to shape the
Company’s long-term strategic approach
and its CSR priorities – people, health and
safety, environment and community.
Stakeholder Group
Key engagements
Outcomes
Investors
Institutions and people
who are shareholders of
our business
Director involvement:
• Annual General Meeting and other shareholder meetings
following the announcement of final and half-year results
• One-to-one meetings with investors
• Consultation on the Remuneration Policy
• Investor feedback results
Other engagements:
• Shareholder information is available on our website
• Responses to shareholder information requests
• Responses to voting agencies, including IVIS, ISS and PRIC
For more information see pages 40 to 63 and pages 70 to 85
Customers
The people who purchase
our homes
Director involvement:
• Engagements with housing associations
Director visibility
• HBF customer satisfaction survey (8 week and 9-month)
• Group Home Buyers’ panel
• Feedback from ad hoc engagements are made visible
to the CEO as necessary by the Customer Experience
Director who reports directly to the CEO
Other engagements:
• Direct engagements with sales and construction
teams on site
• Digital engagements via our CRM system
• Social media
For more information see pages 40 to 63 and pages 70 to 85
Director involvement:
• The Vistry Voice, a weekly podcast, usually by the CEO
• Regional roadshows
• People Forums
• Regionally located Board meetings
• Non-Executive Director business unit visits
• SAYE and SIP schemes
Director visibility (board reports)
• Quarterly engagement survey
Employees
Our directly employed staff
The Board has a deeper understanding
of shareholder views as a result of one
to one meetings with investors
Implementation of the new
Remuneration Policy is under
consideration, taking the views of
shareholders into account
The Board has greater understanding
of what our investors expect from our
engagement with voting agencies
Feedback received from investors
regarding the acquisition of Linden
Homes and Vistry Partnerships was
extremely helpful and was used to
shape various aspects of the transaction,
including structure, financing and
the Placing
The HBF has independently measured
the satisfaction of our customers
and we’re proud to be one of the top
performing, 5-star housebuilders
We introduced a new customer care
management system ‘Keys’ which
delivers many of the new capabilities
our customers have been asking for
Our first Unwrapped Home was
launched following feeedback from the
Home Buyers' panel
In 2019, the approximately 43%
of employees were participants
in a ShareSave plan, which represented
approximately a 10% increase from 2018.
The share plans encourage employee
engagement in Group success
We updated our whistleblowing policy
to our “Speak Up” policy following
employee feedback
42 | Strategic report | Corporate social responsibility
Strategic report | Corporate social responsibility
Stakeholder Group
Key engagements
Outcomes
Employees
Our directly employed staff
Supply chain
Our supply chain consists
of material suppliers and
subcontractors. Relationships with
material suppliers are coordinated
at a Group level and complemented
by local business units.
Relationships with subcontractors
are driven by the local business unit
Other engagements:
• Employee representatives
• Update news (quarterly newsletter)
• Intranet
• Health and well-being training
For more information see pages 40 to 63 and pages 70 to 85
Director involvement:
• The CEO and CFO maintain relationships with directors of
the Group’s key suppliers
Director visibility
• Supplier 360° feedback survey results are shared with the
Risk Governance Committee and Board
Other engagements:
• Regional MDs host local supply chain engagement events
• Group Commercial deal with procurement and hold
face-to-face account reviews with all key suppliers
on a regular basis
• Local business units frequently meet with
key subcontractors
• Supplier website hosting all technical specifications
• Project pipeline information is periodically emailed
• Supply Chain Sustainability School partners
• Performance questionnaire sent to group and local
subcontractors and suppliers.
For more information see pages 40 to 63 and pages 70 to 85
National and local
governments
Government departments that
shape the legislative environment
in which we operate and local
planning departments
Director visibility
• HBF Skills Panel
• Industry body memberships and events
(including HBF and NHBC)
• Meetings with Housing Association partners
Other engagements:
• Local planning meetings
Environment
and Community
The environment and communities
local to our offices and sites
• Environment Agency and local water authorities
For more information see pages 40 to 63 and pages 70 to 85
Director involvement:
• Group-level charitable donations
Director visibility
• Land purchase and planning application decisions
• Armed Forces Covenant initiatives and award
(see page 60)
• British Hedgehog Preservation Society Partnership
(see page 51)
• Feedback direct from Housing Associations through
a questionnaire
Other engagements:
• Public consultations
For more information see pages 40 to 63 and pages 70 to 85
We're training employees
across the business in mental
health first aid to raise
awareness of mental health in
the work, reduce the stigma
and provide practical support
to those affected
We held roadshows rolling out
SHE Standard Operating
Procedures (SOPs) following
engagement with supply chain
We provide access to CSR
training resources to our
supply chain through the Supply
Chain Sustainability School
Feedback from suppliers
and subcontractors is
provided through Risk
Governance Committee
The 360° supplier feedback has
resulted in the implementation
of fuel efficient telehandlers,
a reduction in idling time and
carbon emissions, and the
launch of our project pipeline
giving overall visibility to aspects
of our construction activity to
the supply chain
We have a better understanding
of what our housing association
partners expect from our
engagement with them
Awarded six Pride in the Job
awards and two Seals of
Excellence from NHBC
Gold award received in the
MOD’s Employer Recognition
Scheme for support for
Armed Services
Formation of Sustainability
Committee reporting to
the Board
Commitment to build hedgehog
highways on all ‘Bovis Homes’
branded developments
Feedback from housing
associations on the company
performance and communication
is provided through Risk
Governance Committee
Vistry Group PLC | vistrygroup.co.uk | 43
CSR strategic priorities
Pictured: xxx xxx xxx
Our CSR strategic priorities are shaped
around our four pillars of people,
health and safety, environment
and community.
Hampton Meadow, Stadhampton
44 | Strategic report | Corporate social responsibility
Strategic report | Corporate social responsibility
1
2
3
4
People
Health and safety
Environment
Community
Performance 2019
Improve our customer
satisfaction rating
Embed our core values
across the Group and
new joiners
Continue to develop our
apprenticeship programme
Employee:
engagement score
Employee:
wellbeing initiatives
Reduce annual injury
incidence rate
Improving leadership
behaviours
Refine our waste
reduction strategy
Reduce active waste per home
Reduce active waste sent
to landfill
Enhancing quality of
workforce engagement
Set target for active waste
per plot
Continue to develop our
strategic offering to assist
with affordable housing
Continue to build on our
relationships and support
our subcontractors
and suppliers
Harmonise Health & Safety
practices across the Group
Reduce our Greenhouse Gas
(GHG) emissions against our
chosen intensity measures
Ensure our charitable giving
maximises social impact
locally and nationally
Priorities for 2020
• Reduce our GHG emissions
• Continue to develop our
against our chosen
intensity measures
• To reduce the cost and
tonnes per sq ft built
• Measure and therefore
maximise skip volume to
ensure skip capacity is fully
utilised on site
strategic offering to assist
with affordable housing
• Continue to build on our
relationships and support our
subcontractors and suppliers
trough regular meetings and
training opportunities
• CSR volunteer days for
our people
• Align and enhance employee
experience across the entire
Vistry Group through a focus
on communication, support
and employee engagement
• Align and enhance rewards
and benefits offering,
leadership training and
employee wellbeing
initiatives, together with a
revised recruitment strategy
to attract talented individuals
• Continued investment in IT to
improve ways of working and
employee experience across
the entire company, sharing
the best practice from all
areas of Vistry Group
• Investment in training to
support our change
programmes including
investment in new
processes and systems
across Vistry Group
• Continue our focus on
mental health training
and awareness
Strengthening our environmental,
health and safety teams,
committee structure and safety
management system;
• Continuing to take a
sensible, proportionate
approach to managing the
hazards associated with our
work activities
• Roll-out the off-site
induction video for workers
and visitors accessible
through a mobile app
• Introduce the online
reporting system providing
real time feedback.
The system will be is
accessible via the intranet
and SHE Advisors can
complete reports as soon
as an event ends providing
immediate feedback
• Develop one Vistry
Group health and safety
management system
See page 46
See page 52
See page 54
See page 58
Key:
Priority not met
Priority partially met / within range
Priority met
Vistry Group PLC | vistrygroup.co.uk | 45
Our corporate social responsibility (CSR) priorities
1
People
KPIs
Staff turnover (unplanned)
Training days
Apprentices*
2019
2018
17% 22%
4,548
4,505
23
37
Customer satisfaction rating**
5-star
4-star
* Our 2018 apprentice numbers represented our initial intake as a result of the launch of our new apprentice programme
** Based on an industry recognised independent survey conducted by the HBF
Our people are critical to the
success of our business and
the delivery of our strategy.
We recognise that not being able to
attract and retain good people is a
principal risk to our business, so we
work hard to understand our employee
views and ensure that we provide an
environment they can thrive in.
Our approach to people is guided by
a robust framework of Group policies
and procedures and a network of
HR professionals.
As at 31 December 2019, the Group
directly employed 1,360 people
(2018: 1,295). This year the total
employee turnover rate decreased
to 24% (2018: 28%) due in part to
a reduction in the number of
redundancies made during the year.
Furthermore, unplanned staff turnover
reduced significantly to 17% (2018: 22%)
which is supported by a improved
overall employee satisfaction score,
which rose to 7.9 out of 10 (2018: 7.7)
in November 2019.
v ice
We embed these into the business
through our induction and
appraisal processes and through
leadership promotion. They are
regularly referenced in the CEO’s
messages and those of other ELT
members and regional directors.
Our values and the minimum ethical
standards we expect are set out in our
Code of Conduct Policy. As with our
other policies, non-conformities can
be raised in accordance with our
“Speak Up” Policy.
Communication and engagement
We recognise the importance of
keeping employees informed of
operational, financial and strategic
business matters and do this in a
number of ways, including:
v ice
• Vistry Voice
A weekly podcast from the Chief
Executive or other ELT member
provides regular light-hearted
updates on a range of topics including
business priorities, performance and
an opportunity to provide individual
and collective recognition across
the business.
Culture and values
Our company culture is shaped by our
three company values of Integrity,
Caring and Quality.
Update news
• Update News
The quarterly staff newsletter.
46 | Strategic report | Corporate social responsibility
• Regional roadshows
These biannual events see the CEO
and CFO travel around the regional
offices in the weeks following the full-
year and half-year results to deliver a
bespoke presentation to both site
and office staff, supported by that
business units Managing Director.
During these roadshows there
are opportunities for employees to
ask questions.
• Employee representatives
Each regional business meets regularly
with employee representatives to
discuss matters that may impact staff.
?
• Intranet
Two-way communication is
encouraged across all employee
engagement platforms and specific
exercises to understand employee
viewpoints are conducted.
We run a People Forum periodically
throughout the year. The two sessions
in 2019 were hosted by one of our Non-
Executive Directors and attended by
employee representatives from each of
our regional businesses. Feedback from
these forums is directly fed back to the
board by the Non-Executive Director.
In addition, a confidential employee
engagement survey is sent to all
employees every quarter covering a
number of topics that are assessed
regularly by the senior leadership team.
Strategic report | Corporate social responsibility
Alison Shipway | Sales Advisor
Putting the
focus on people
Supporting our staff to
deliver quality for customers
Vistry Group PLC | vistrygroup.co.uk | 47
Our corporate social responsibility (CSR) priorities
Vistry Group:
Reading training centre
Training and development
We have continued our investment in
training during the year to ensure our
employees are equipped to undertake
the functions for which they are
employed, and to provide the
opportunity for career development
equally and without discrimination.
All new starters attend the centralised
company induction on their first day,
with personal emphasis on our values
from the Chief Executive. They receive
a welcome personally from a member
of the ELT, followed by subject matter
experts providing key information on
subjects such as our values, HR, SHE,
learning and development and IT.
This is then complemented by regional
and functional inductions at the
employee’s normal place of work from
day two.
Any further training needs are identified
during the employee’s probation period
and thereafter formally during the
annual appraisal process, as well
as when business or role changes
require it. Training is offered on a range
of topics, including health, safety and
environmental matters (in accordance
with the Group’s SHE core training
matrix), IT, General Data Protection
Regulation, sales and customer care
(supported by the Institute of Customer
Service) and managerial skills.
48 | Strategic report | Corporate social responsibility
Structured development programmes are
also offered. These include trade, office
and sales apprenticeships (our 23 places
received a record 900 applications
this year), a trainee assistant site
manager programme (2 cohorts in 2019)
and a leadership training programme for
directors and middle management.
Professional qualifications are supported
through our Group educational
sponsorship policy which will meet
course expenses, including allowing
day release, where appropriate.
We also partner with organisations
such as the Royal Institute of Chartered
Surveyors (RICS) to facilitate professional
qualification for our surveying teams.
A total of 4,548 training days were
delivered during the year via our
Group Learning & Development team
(2018: 4,505), equivalent to 3.3 days
per employee (2018: 3.5).
Respect for employee rights
The Group operates solely in the UK
and complies with all relevant legislation
and regulations. As a result, human
rights issues are not deemed as a
significant risk to the business and the
Group does not operate a stand-alone
human rights policy.
The Group does however operate policies
covering our most significant human-
rights related issues, a Diversity and
Inclusion Policy and an Anti-Slavery and
Human Trafficking Policy.
In addition, the Group believes that it
has a key role to play in ensuring that
employees have an appropriate work
life balance. We aim for no employees to
work excessive hours, seek to minimise
weekend and late night working
and allow the purchase and sale of
holiday days. We also encourage
flexible working and offer enhanced
maternity, paternity, adoption and
shared parental leave.
Equality, diversity and inclusion
The Group passionately believes in
equality and diversity for all and does
not discriminate between employees,
or potential employees, on the grounds
of gender, sexual orientation, age,
colour, creed, ethnic origin or
religious belief. To that end, we have a
Diversity and Inclusion policy which is
rigorously enforced and promoted.
It is also Group policy to give full and fair
consideration to the employment needs
of disabled persons (and persons who
become disabled whilst employed by
the Group) where requirements may be
adequately covered by these persons and
to comply with any current legislation
with regard to disabled persons.
The Group’s policies are supported by
the Group’s Dignity at Work policy
which prohibits bullying, harassment
or victimisation.
We have undertaken a number of
measures to promote an inclusive
environment, including raising the profile
of our diverse leaders and reflecting
diversity in our communication materials.
We’re also proud to be signatories of
the Government’s Social Mobility Pledge
which facilitates employment of people
from disadvantaged backgrounds.
Our latest employee survey affirmed our
inclusive culture with 77% agreeing that
colleagues welcome opinions different
from their own.
A breakdown of our employee profile by
gender and age as at 31 December 2019 is
shown below.
Analysis by role and gender
Role
Female
Male
Total
Non-executive directors
Executive directors
Senior managers
Managers
Site based staff
Support staff
Apprentices
Total
Analysis by age
Age
<21 years
21 – 30 years
31 – 40 years
41 – 50 years
51 – 60 years
>60 years
Total
2
0
6
89
143
232
7
4
2
20
171
428
200
56
6
2
26
260
571
432
63
479
881
1,360
No. of
employees
55
231
332
344
307
91
%
4.0
17.0
24.4
25.3
22.6
6.7
1,360
100%
In common with the construction
industry as a whole, the majority of our
workforce is male (2019: 64.8%). While a
lower proportion of senior management
and directors are female, the Group
encourages and supports diversity,
including gender.
The Group's gender pay gap report
detailing performance and priorities is
available on our website.
Strategic report | Corporate social responsibility
Modern Slavery
Anti-corruption and anti-bribery
We recognise that modern slavery can
occur in the construction industry and
it is a risk to our business. We operate
an Anti-Slavery and Human Trafficking
Policy which applies to all staff and is
incorporated into our agreements
with subcontractors and suppliers.
It outlines our zero-tolerance approach
to slavery and human trafficking and
supports the Group’s efforts to combat
modern slavery.
The Modern Slavery Act working group
oversees the Group’s approach to
eliminating modern slavery from the
business and comprises a collaborative
cross-functional team which meets
on an at least quarterly basis. We are
also a member of the Supply Chain
Sustainability School Modern Slavery
Engagement Programme which aims to
increase awareness and provide guidance
and training to our supply chain.
Any modern slavery related concerns
can be raised in accordance with our
“Speak Up” Policy. There were no reports
of modern slavery in the Group made
in 2019.
up
Don’t let one bad apple
spoil it for everyone...
The Group is committed to high
ethical, legal and moral standards but
recognises that corrupt behaviours are
a potential risk. To mitigate this risk
the Group operates an Anti-Bribery
and Corruption Policy, Anti-Money
Laundering Policy and Anti-Fraud Policy.
These policies are supported by a network
of procedures and checks.
Our controls focus on our relationships
with our customers and supply chain.
We work hard to make sure we know
all our customers and all customer
interactions are logged in our new
CRM system. We conduct mystery
shopper activities and do not accept
any cash payments. Cross-regional cost
checks and land purchase processes allow
for monitoring of potentially suspicious
supply chain activity and all employees
are subject to the Group’s corporate
hospitality policy. All subcontractors
are made aware of our policies and are
encouraged to adopt their own policies.
Our internal checks are complemented by
our external lawyers who are made aware
of all of our policies and take them into
consideration when reviewing contracts.
The effectiveness of
these policies is
scrutinised and reviewed
by the Audit Committee.
As with our other policies,
any suspected non-conformities
can be raised via our
“Speak Up” Policy.
If you (as an individual working here)
believe someone is putting the
operation of this site at risk by
theft, dishonesty, unethical or
unsafe behaviour then:
• Speak to the Site Manager or
your Trade Supervisor or
• Speak to one of the trained
call handlers from intouch
- an independent company
who can be contacted in
confidence 24/7
Report your concerns via the intouch secure website at
intouchfeedback.co.uk/vistrygroup
Business continuity
Diversity and inclusion
ELT
Anti-money laundering
Policy
Anti-bribery and corruption
Anti-fraud
Company policy statement
0800 097 0026
Summary of Company policies
Executive Leadership Team
Access code: 26847#
All of our Vistry Group (the “Group”) policy statements are available, in full, on our Group intranet and the Vistry
2020
intouch is an independent company providing a
Group website. Below is a brief summary of each one. If you feel any policy is being breached, please contact your line
confidential service 24/7
manager or the Speak up helpline.
What you need to know
All gifts and hospitality given/received must be fully logged and recorded in accordance with
our procedures.
We have procedures in place that reduce the likelihood of fraud and are committed to the
prevention, detection and reporting of any fraud. Robust action will be taken against any
individual or group perpetrating an actual or attempted fraud against the Group.
We have procedures in place designed to prevent money laundering from taking place and are
committed to the prevention, detection and reporting of any such events. Employees should be
Anti-slavery and human trafficking We have a zero tolerance approach to modern slavery - any suspicions should be reported via
vigilant and report any suspicion of money laundering.
the confidential Speak up helpline or to the Police.
Each regional business and Central Service functions are required to maintain a business
continuity plan, in order to minimise the impact of serious disruption to our operations.
We believe that a diverse and inclusive culture is essential to the long-term success of
Vistry Group enabling us to respond to our diverse customer and wider stakeholder needs.
This is reflected in our diversity and inclusion policy, which applies to the Board and Group as a
whole. Our aim is to build and sustain an inclusive culture and diverse workforce at
Vistry Group. This policy reflects our approach to achieving a similarly diverse and inclusive
Board of Directors. We believe that diversity encourage initiatives that promote broader
inclusive diversity both at a Board level and across Vistry Group, in line with our core values.
We seek to minimise our impact on the environment as far as practicable, and aim to influence
our suppliers and contractors to do likewise. Each region shall appoint a director responsible
for environmental matters. Environmental incidents should be reported in accordance with
All employees are expected to share our commitment to high ethical and moral standards.
The creation of healthy and safe workplaces that minimise the likelihood of injury or ill
health is central to our mission. The Chief Executive has executive accountability for health
and safety matters. Each business unit head is the director responsible for health and
safety matters. All incidents must be reported in accordance with reporting procedures.
There shall be no compromises with regard to health and safety in our offices or developments,
with appropriate monitoring arrangements in place.
We are committed to ensuring high standards of business conduct and encouraging a culture
of integrity and honesty within the Group. All employees are expected to carry out their duties
in an ethical manner and report any concerns. Employees (and other stakeholders) can do
this in confidence using the confidential Speak up hotline, if they feel they cannot raise their
concerns with their line manager (details below).
Group procedures.
Environment
Ethical code of conduct
Health, safety and welfare
Speak up policy
up
Speak up helpline
intouchfeedback.co.uk/vistrygroup
T: 0800 097 0026 access code 26847#
GD54062 / 12.2019
Vistry Group PLC | vistrygroup.co.uk | 49
Our corporate social responsibility (CSR) priorities
Health and safety:
Vistry Group backs industry’s
mental health campaign
We were the first housebuilder to sign up to back the charity
Mates in Mind that supports construction employees, and
we’re fully behind this new industry-wide initiative.
50 | Strategic report | Our business and strategy
50 | Strategic report | Corporate social responsibility
TitleAaudantium, totam re “Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae vitae dicta sunt explicabo. Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora incidunt ut labore et dolore magnam aliquam quaerat voluptatem. Ut enim ad minima veniam, quis nostrum exercitationem ullam corporis suscipit laboriosam, nisi ut aliquid ex ea commodi consequatur? Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem eum fugiat quo voluptas nulla pariatur?”Aaudantium, totam re“Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae vitae dicta sunt explicabo. Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora incidunt ut labore et dolore magnam aliquam quaerat voluptatem. Ut enim ad minima veniam, quis nostrum exercitationem ullam corporis suscipit laboriosam, nisi ut aliquid ex ea commodi consequatur? Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem eum fugiat quo voluptas nulla pariatur?”Aaudantium, totam re “Sed ut perspiciatis unde omnis iste natus error sit voluptatem accusantium doloremque laudantium, totam rem aperiam, eaque ipsa quae ab illo inventore veritatis et quasi architecto beatae vitae dicta sunt explicabo. Nemo enim ipsam voluptatem quia voluptas sit aspernatur aut odit aut fugit, sed quia consequuntur magni dolores eos qui ratione voluptatem sequi nesciunt. Neque porro quisquam est, qui dolorem ipsum quia dolor sit amet, consectetur, adipisci velit, sed quia non numquam eius modi tempora incidunt ut labore et dolore magnam aliquam quaerat voluptatem. Ut enim ad minima veniam, quis nostrum exercitationem ullam corporis suscipit laboriosam, nisi ut aliquid ex ea commodi consequatur? Quis autem vel eum iure reprehenderit qui in ea voluptate velit esse quam nihil molestiae consequatur, vel illum qui dolorem eum fugiat quo voluptas nulla pariatur?”
Strategic report | Corporate social responsibility
Health and safety:
Mental health is a priority
for the Vistry Group
The Group is proud to have signed up to the Building
Mental Health Charter, an industry initiative being
driven by the Home Builders Federation and the
Lighthouse Construction Industry Charity.
The charter gives best practice
guidance to companies on how to
provide mental health support for
workers in the housebuilding industry.
The Group trains staff as Mental Health
First Aiders in every location and office in
which they operate. We recognise that
the symptoms of mental ill-health can be
much harder to identify than physical
ailments and this training will help
equip our staff with the skills to spot
the signs early.
The Mental Health First Aiders will be
points of contact for employees or
subcontractors to raise concerns to, and
they will also proactively reach out to
colleagues they feel may need support.
Bob Wolstenholme
Safety, Health & Environment Director
Environment:
First housebuilder
to install hedgehog
highways on all
developments
The Group has joined forces
with the British Hedgehog
Preservation Society (BHPS) to
launch a trailblazing campaign
to protect hedgehogs and other
endangered creatures.
The population of hedgehogs is sadly in
decline as they struggle to find enough
food, mates and shelter. In response
to this important issue, the Group has
committed to installing hedgehog
highways in all existing “Bovis Homes”
branded developments, as well as all
future sites.
Mental Health First Aid
Training delivered to Home Builders Federation staff by Sam Davey (Core Training and
Planning Manager) and Rob Middleton (Training Development Officer)
These ground-level holes in fencing and
other barriers facilitate the movement
of hedgehogs and other small mammals
between gardens.
As part of our ongoing partnership with
the BHPS we have also donated £5,000,
will build hedgehog homes in open green
spaces and will work with the BHPS to
provide our customers with literature on
helping hedgehogs.
Vistry Group PLC | vistrygroup.co.uk | 51
Strategic report | Business overview
Our corporate social responsibility (CSR) priorities
2
Health and safety
KPIs
RIDDORs
Total Recordable Injuries
2019 2018
21
21
182
220
Lost Time Injury Frequency Rate (LTIFR)
0.13
0.11
Total Recordable Injury Frequency Rate (TRIFR)
1.14
1.14
Promoted by a new Health, Safety
and Environment Director, the SOPs
set mandatory best practice design,
management and implementation
requirements that are regularly audited
by our dedicated in-house team of
SHE experts.This internal inspection regime
features an overall H&S performance
KPI which has been set for all sites and
provides a “Gold – Green – Amber
– Red – Black” dashboard indicator
that is updated by the regions daily.
This continues to be well received by
site teams and has increased the level of
engagement with both site management
teams and contractors and is consistent
with our strategy to bring about
behavioural change.
A key facet of the new management
system is stakeholder engagement.
We involve contractors early in the
project to deliver improved quality and
safety of works. This approach has
already resulted in a 30% reduction in
service strikes.
Whilst the LTIFR has increased slightly
(0.13 in 2019 compared to 0.11 in 2018),
this is well within our tolerance levels and
the marginal increase is due in part to a
reduction in overall working hours, rather
than an increase in injuries.
Furthermore, we actively promote
worker engagement at site level
through daily activity briefings (“DABs”).
These provide an opportunity for site
management to communicate with
subcontractors in respect of tasks
scheduled to occur that day and
particular risks that may arise as a result.
They also provide a forum for
subcontractors to provide feedback, for
example in respect of near-misses and
agree improvements implemented.
We think it’s important to recognise and
encourage excellence in safety and run
an annual safety award scheme, the Best
Sites Award. This year there were awards
for the overall site winner, two divisional
site winners, two regional winners and
two that were highly commended.
Winners were selected based on their
approach to safety planning, attitude, team
relationships as well as performance.
Health and wellbeing
Sadly, incidents of suicide in the
construction industry are high.
We recognise the importance of this issue
and are determined to be an industry
leader in tackling mental health.
We were the first housebuilder to
become a supporter of Mates in Mind, a
construction industry initiative which aims
to increase awareness of mental health and
to reduce the stigma attached to it.
Building on this, this year we have
committed to ensuring there are qualified
Mental Health First Aiders (MHFA) available
in all areas of our business. The role of
the MHFAs will be to raise awareness of
mental health in the workplace, reduce the
stigma surrounding mental health issues
and provide practical support to anyone
personally effected.
We also strive to facilitate wellbeing with a
range of regionally co-ordinated activities,
including regular teambuilding exercises,
away days and yoga sessions.
The safety of our people, and
those who work with us, is our
top priority.
We mitigate the risk of incidents with a
robust Health, Safety and Welfare Policy,
associated procedures, a team of health
and safety professionals and a culture
of behavioural safety. Going beyond just
safety, we recognise the impact of mental
ill-health and are taking a number of steps
to address this important issue.
Safety
Achieving high standards of health and
safety is an integral part of business
performance. Its importance is evident
throughout all levels of the organisation.
Health and safety is one of the first topics
to be covered in executive meetings, and
it is highlighted early in our new starter
induction, with clear linkage to our values
and ethos.
Our approach is to comply with all
statutory provisions at a minimum and
strive for continual improvement by
setting appropriate health and safety
objectives and targets. We’re very sad to
report that this year we did incur a fatality
on one of our construction sites. We are
investigating this fully and continue to
drive improvements in all aspects of safety
to prevent this occurring again.
During 2019 we fully refreshed our
health, safety and environmental
system through the delivering of
standard operating procedures (SOPs).
52 | Strategic report | Corporate social responsibility
Strategic report | Corporate social responsibility
Bottom up safety
management
Top down approach
Ensures
greater
collaboration
Create
strong safety
culture
More
compelled
to comply
Information used
to justify decisions
Collaborative
decision making
Employee
consultation
Experienced
based
quntification
Real world
experience
Bottom up approach
Jack Allen | Site Manager
Committed to
health and safety
Comprehensive health and safety
training for all employees
Vistry Group PLC | vistrygroup.co.uk | 53
Our corporate social responsibility (CSR) priorities
3
Environment
KPIs
Recycling
Waste per plot
GHG emissions
2019
2018
96%
94%
6.77
5.94
1.55
1.59
The Group recognises its
responsibilities to protect and
enhance the environment and
to minimise, so far as it is safe,
practicable and economically
sound, any adverse environmental
impact of its activities.
The Group’s commitment to the
environment is set out in the
company’s Environment Policy, which is
underpinned by associated procedures.
Our key environmental risks are waste,
climate change, biodiversity, flooding and
sustainable timber. We strive to minimise
our impacts in these areas and to have a
positive impact where we can.
We continue to research and develop
more efficient build processes and
modern methods of construction which
should reduce the amount of waste
generated from our activities.
Climate change
We continue to recognise the importance
of climate change and strive to minimise
the long-term impact of our homes, as
well as our operational footprint.
For our homes we take a fabric first
approach, using design and careful
material selection to reduce the need
for heating. In some cases this will be
complemented with the provision of
renewable energy sources.
From an operational perspective our
focus this year has been on revising
our company car policy to limit
CO2 emissions. We have also renewed
our forklift truck fleet and specified
machines that are no more than two
years old, to ensure improved efficiency.
Our overall GHG emissions for the
year are 6,245 tonnes, a small increase
from last year due to an increase in the
number of homes built.
GHG emissions have been reported
from all sources required under the
Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013.
These sources fall within the Group’s
operational control.
Waste
Tonnes
The 2019 reporting period showed an
increase in overall waste per plot, driven
by less waste being removed by ground
workers. Reducing this will be a focus
for 2020. One solution to this issue that
we have introduced this year is the use
of green waste soil improvers. In certain
circumstances these can be added to
existing topsoil to make it suitable for
use, thus reducing the need to landfill
and replace the pre-existing soil.
Overall our level of recycling increased
to 96%. To drive further improvements
we continue to enforce waste
segregation on all sites and have
increased transparency of waste
performance metrics with monthly
waste reports.
Total waste diverted from landfill
Comprising: Timber
Plasterboard
Hazardous
Light Mixed Compactable Waste
Other
Total waste to landfill
Comprising: Timber
Plasterboard
Hazardous
Light Mixed Compactable Waste
Other
Total waste
Number of plots
54 | Strategic report | Corporate social responsibility
2019
2018
25,133
23,972
2,965
3,094
2,920
3,291
6
19
17,937
16,399
1,306
1,169
1,057
1,469
0
0
1
0
0
0.2
1,028
1,430
28
39
26,191
25,441
3,867
3,759
Strategic report | Corporate social responsibility
Protect and enhance
the environment
Aiming to take a sustainable approach
Vistry Group PLC | vistrygroup.co.uk | 55
Our corporate social responsibility (CSR) priorities
The Group does not have responsibility
for any emission sources that are not
included in the consolidated financial
statements and are outside the boundary
of operational control.
During the year, measures were
operated to collect emissions data from
our construction sites. Where this data
was incomplete at the year end, we have
extrapolated total emissions by using
Greenhouse gas (GHG) emissions data for the period 1 January 2019 to 31 December 2019
(with prior year comparatives)
Emissions from:
2019
2018
2017 Unit
Combustion of fuel at our facilities and construction
sites as well as fleet vehicle use (Scope 1 emissions)
5,275
4,902
5,683
Purchased electricity (Scope 2 emissions)
970
1,336
1,522
Total GHG emissions (Scope 1 and Scope 2)
6,245
6,238
7,160
Company’s chosen intensity measurements:
(i) Total GHG emissions per legally completed unit(1)
1.61
1.65
1.96
(ii) Total GHG emissions per 1,000 sq ft legally completed
1.55
1.59
1.81
*
*
*
**
†
* Tonnes of CO2e. ** Tonnes of CO2e per legally completed unit. † Tonnes of CO2e per 1,000 sq ft legally completed.
(i) an averaging approach to extend
data to a full year for sites with part-
year data, and (ii) applied an average
calculated from all sites to sites returning
inadequate data. The calculations allow
for sites which opened and closed during
the year.
GHG emissions have been calculated
using emission factors from UK
Government’s GHG Conversion Factors
for Company Reporting 2019. Scope 1
emissions arise from the consumption
of gas at our facilities, diesel on
construction sites and UK business
mileage in fleet cars.
Emissions from air conditioning in
offices have been excluded as not
being material. Scope 2 emissions
represent purchased electricity.
Waste management - a joined up approach
“All waste and recycling services
for the Group are managed by its
appointed partner, Reconomy – the
UK’s leading provider of outsourced
waste management services. Since
first joining forces in 2009, the two
companies have formed a close
working relationship, with an ongoing
commitment to minimising waste
volumes, increasing recycling rates and
reducing waste sent to landfill.
During the start of 2019 the waste
policy was reaffirmed by both the
Group and Reconomy to support the
new housing range and focus trades on
the importance of waste segregation.
Reconomy also welcomed the
Regional buying team to their
Head office to demonstrate the
new ‘Sitebuddy’ app, which enables
site teams to efficiently order skip
exchanges and to take part in the
National meeting.
Regular review meetings with Build
Directors, together with the production
of a monthly management dashboard
to monitor cost and waste have
enabled the swift identification of any
corrective actions, thereby ensuring the
delivery of waste management KPIs.
Regular reporting and communication
has also led to the creation of a
regional league table for waste
performance, which has fuelled
internal competition and driven
further improvements.”
Tony Filson,
Corporate Account Manager, Reconomy
56 | Strategic report | Corporate social responsibility
Strategic report | Corporate social responsibility
Two notable Group-wide biodiversity
initiatives this year have been the
introduction of hedgehog highways
on all sites (see page 51) and making
improvements to our handling of topsoil.
For the latter we worked closely with a
specialist soils consultancy to produce
clearer guidance to our sites on the
handling of soils at different stages of
the project.
This has resulted in improved
establishment of planted and seeded
landscape schemes and reduced issues
with plot gardens.
Flooding
All sites are reviewed at acquisition stage
to determine the likely ground conditions
and the type of surface water measures
required to limit surface water discharge
and any potential for localised flooding.
This involves active consultation with
the Environment Agency and relevant
water authorities to ensure that there
is, as a minimum, no impact from our
development on local flood conditions.
Our approach is not to acquire sites
on flood plains and to incorporate
Sustainable Drainage Systems where
appropriate for the development.
Going forward we are working to
enhance stakeholder awareness of the
ecological benefits that our development
designs and material choices can create.
Sustainable timber supplies
We specify Forestry Stewardship Council
(FSC) or PEFC certified timber is used for
all our developments.
Biodiversity
We see biodiversity as an increasingly
important issue and strive to not only
mitigate our impacts in this area but
also to positively encourage biodiversity
where we can.
To do this we first conduct extensive
pre-construction ecology assessments.
These assessments evaluate the
suitability of habitats for protected
species and log proposals to mitigate
the impact of our developments
more generally.
Mitigations may include the
retention and protection of trees,
hedgerows and existing landscape
features, new landscaping which
provides enhanced habitats for
local wildlife and the provision
of amenities for the community
(e.g. open spaces for community
food production). The ecological
enhancements provided during
2019 include:
• Hedgehog Highways
• Bird and bat boxes
• Bat garage
• Reptile hibernacula
• Insect hotels
• Orchard planting with associated
rough grassland
• Wildflower areas
• Native planting of trees,
hedgerows and scrub areas
Vistry Group PLC | vistrygroup.co.uk | 57
Our corporate social responsibility (CSR) priorities
4
Community
KPIs
Affordable housing completions
2019
2018
1,189
1,192
Planning obligations spend
£37.0m £25.7m
This year we have been working with
a number of providers to develop a
bespoke specification for the homes we
deliver to RPs in response to the growing
demands they are under.
Of our 3,867 homes (2018: 3,759)
completed in 2019, 31% were sold to
RPs (2018: 1,192 and 32%).
Armed Forces Covenant
The Group is proud to be a supporter of
the Armed Forces Covenant and to be
the first housebuilder to have achieved
gold status in the MOD’s Employer
Recognition Scheme.
We are committed to ensuring that
our nation’s Forces personnel
(past and present), and their families,
are treated with respect and fairness
and have implemented a number of
initiatives to support them. A copy of
our commitments can be found on
our website.
Driving the local economy
The majority of our site-based population
are employed by local subcontractors.
The use of local and regional suppliers
means that our developments provide
benefits for the wider community,
through job creation and opportunities
for other local businesses to support
the development.
We take our social responsibilities
very seriously. We create spaces
where communities will thrive,
provide affordable housing,
support Force's personnel and
contribute to the economy and
charitable causes.
Creating thriving communities
We collaboratively design our
developments to foster a sense
of community.
All of our developments are subject to
extensive public consultation prior to
commencing on site. We incorporate this
feedback into the design process.
Our approach to development design
focusses on the principles of Green
Infrastructure (GI) - networks of multi-
functional green space which includes
parks, open spaces, playing fields,
woodlands, street trees, allotments,
private gardens, sustainable drainage
systems and soils. This holistic
approach supports peoples’ mental and
physical health, encourages active travel,
improves drainage and improves
carbon storage. This year we have
been working closely with landscape
and ecology consultants to deliver
improvements to our GI design
and delivery.
Where possible we seek to incorporate
leisure and amenity areas, together with
integrating developments into local
public transport infrastructure. In some
cases local resident travel vouchers may
be provided to encourage use of
public transport.
Where play spaces are included, we
work with specialist play space designers
to ensure they are inclusive, fun and
encourage healthy lifestyles.
Our larger developments will often
include provision of a local school or
other building of benefit to the local area.
As a minimum we commit to provide
resources and improvements to the
local area in agreement with the
local authority.
All of our sites have defibrillators installed
and staff are trained how to use them.
These can be called upon by local
communities and we have also taken the
step to ensure that these defibrillators
remain within the local area once our
developments have been completed.
Affordable housing
We recognise that we have a
fundamental role to play in tackling
the country’s housing supply challenge.
We work collaboratively with local
authorities and registered providers
(RPs) to provide affordable housing
across a range of different tenure types.
The Government’s Help to Buy Scheme
and our own Trinity Discount Scheme
for Armed Forces personnel are offered
on all our developments.
58 | Strategic report | Corporate social responsibility
Strategic report | Corporate social responsibility
Creating vibrant
new communities
Supporting our customers on their
new home adventure
Vistry Group PLC | vistrygroup.co.uk | 59
Our corporate social responsibility (CSR) priorities
We collaborate with our supply chain on
the development of skills for the industry,
and our apprenticeship programme
incorporates supply chain secondments
to learn key construction skills. We offer
work experience placements to those
attending school and college.
We upskill our supply chain by providing
training on topics such as health and
safety and site supervisor safety.
As members of the Supply Chain
Sustainability School we also leverage
their resources to educate our supply
chain on sustainability-related matters.
Our suppliers and subcontractors
are involved at an early stage in site
development to ensure adequate
resource planning is in place and
health and safety remains a number
one priority. We continue to work with
our supply chain to ensure timely delivery
of our homes in an environmentally and
socially aware way. We actively seek and
respond to feedback from our suppliers
through quarterly 360 surveys.
Charitable giving
Bovis Homes regularly supports
charitable fundraising events and local
sponsorship opportunities, as well as
facilitating staff-led fundraising activities.
Charitable donations and sponsorship
(one-off and ongoing) are managed by
each regional business to ensure that
local causes and charities important to
staff are given priority.
Causes supported include schools and
school fetes, local sports clubs, hospitals
and hospices, roundtables, elderly care,
local community initiatives and other
local and national charities.
A payroll giving initiative is offered to
employees to enable them to contribute
to their chosen charities directly from
their salary.
Community:
The Group is proud to have achieved the
highest award from the Ministry of Defence
for supporting Armed Forces personnel
The Group is the first dedicated
housebuilder in the industry to
receive the recognition.
• Introducing a trainee assistant site
manager programme, specifically
targeted at ex-armed forces personnel
The Group received the Government’s
Defence Employer Recognition Scheme
Gold Award for a raft of initiatives put in
place to support Forces personnel.
These include:
• Being a signatory to the Armed Forces
Covenant; a promise to ensure that
those who serve or who have served
in the Forces, and their families, are
treated fairly
• Offering a discount scheme to help
those connected to the Military onto
the housing ladder
• Offering mentoring and work placements
to those with military background
• Sponsoring the 2019 Armed Forces
Day National Event in Salisbury, which
marks the service of men and women
in the Armed Forces and includes three
days of celebrations including a
military parade
• Regularly attending Career Transition
Partnership recruiting events for
members of the Armed Forces
• Supporting staff members who choose
to be members of the Reserve Forces
The Group currently employs around 100
people with ex-military backgrounds,
including site managers, technical staff
and trainers.
Former Welsh Guard Josh Beesley, who
is trainee assistant site manager at the
Group’s Filton location, was medically
discharged from the Army before
we offered him a second career.
The 26-year-old said: “For many young
people leaving the Armed Forces, it can
feel quite daunting trying to find
Civilian work. The Group was there to
give me an opportunity and train me and
I’m not surprised the Company has won
the Gold award.”
Strategic report approval
The strategic report outlined on pages 2 to 67, incorporates the financial highlights, the Chairman’s statement, the strategic review,
the Chief Executive’s report, the financial review, the principle risks and uncertainties review and corporate social responsibility review.
By Order of the Board
Earl Sibley, Chief Financial Officer
27 February 2020
60 | Strategic report | Corporate social responsibility
Strategic report | Corporate social responsibility
From left, Roger Morton, Josh Beesley,
Chris Pugh, Darren Partridge at Bovis
Homes' Faringdon Fields in Oxfordshire
Community:
Bovis Homes first to gain
MOD Gold award for
backing military personnel
Vistry Group PLC | vistrygroup.co.uk | 61
The Group delivered
controlled growth
during 2019
62 | Strategic report | Our financial performance
Strategic report | Our financial performance
Orchard Fields, Maidstone
Vistry Group PLC | vistrygroup.co.uk | 63
Financial review | Earl Sibley
2019
£m
2,625
1,184
2018
£m
2,567
1,192
3,809
3,759
58
-
3,867
3,759
2019
2018
897.0
170.4
866.1
160.7
1,067.4
1,026.8
42.4
14.1
-
20.4
1,124.0
1,047.2
6.8
14.2
1,130.8
1,061.4
The gross margin was positively
impacted by the increasing embedded
gross margin in our land bank and our
operational improvements including the
initial impacts from our margin initiatives.
During 2019, our construction costs
decreased by 2% per square foot,
reflecting the inflationary impacts being
offset by reductions in our cost base as
we delivered production in a controlled
manner, changes in specification and the
under-utilisation of contingency in line
with our margin initiative.
Operating profit increased to £192.6m
before exceptionals (2018: £174.2m)
at an operating profit margin of
17.0% (2018: 16.4%). Administrative
expenses increased in 2019 to £60.8m
(2018: £56.7m) reflecting the Group’s
efficient operating structure, offset by
higher employee costs and the ongoing
investment in new processes, systems
and training.
Volume
Private legal completions
Affordable legal completions
Total legal completions
JV legal completions
Total legal completions including JVs
Revenue
Private legal completions
Affordable legal completions
Revenue from legal completions
Partnership land transactions revenue
Other revenue
Total development revenue
Land sales revenue
Total revenue
In February 2019 we announced the
launch of our new Partnerships Housing
Division and following the Acquisition,
we now have a leading partnerships
business, working alongside housing
associations to increase output
and deliver best returns from our
development land.
Land sales revenue of £6.8m in 2019
primarily relates to the disposal of the
final out-of-operating area site in the
period at Penwortham near Preston,
realising £6.4m of cash and contributing
£0.1m in profit.
Total adjusted gross profit(2) was
£253.4m (adjusted gross margin: 22.4%),
compared with £230.9m (gross margin:
21.8%) in 2018. Housing adjusted gross
margin was 22.4% in 2019, ahead of the
21.9% achieved in 2018. The adjusted
gross margin was impacted by market
influences during the year with sales
price inflation being flat in the first six
months and showed a 1-2% decrease
in the second half. The Group saw
construction cost inflation of c3-4% in
the first six month of 2019, flattening
out in the second half with the market
uncertainty from Brexit and the
general election.
Trading performance
In line with our strategy, the
Group delivered controlled
volume growth during 2019
resulting in a 3% increase in
legal completions(1) to 3,867
(2018: 3,759).
This included 1,184 affordable homes
representing 31% of total completions
(2018: 32%). Total revenue was
£1,130.8m, an increase of 7% on the
previous year (2018: £1,061.4m).
Housing revenue was £1,067.4m,
4% ahead of the prior year
(2018: £1,026.9m). The average
sales price for our private homes
increased 1% to £341,700
(2018: £337,400) with our overall
average sales price increasing
2% to £280,200 (2018: £273,200).
Other revenue was £14.1m (2018: £20.4)
primarily driven by the release of
deferred revenue from disposals
within our PRS joint ventures.
The disposals from our PRS joint
ventures are largely complete as at
the end of 2019.
Partnership land transactions revenue
of £42.4m was generated from six
land sales in the period with housing
associations, where the Group will
develop the sites in partnership with the
housing associations, with the expected
site wide development margin for the
Group, at a level similar to our standard
housing business.
(1) Inclusive of joint venture completions
(2) Gross profit plus other operating income
64 | Strategic report | Our financial performance
Exceptional costs of £13.5m relate to
the Acquisition; this transaction
completed on 3 January 2020. The costs
include certain advisory costs as well as
some cost relating to the refinancing of
the Group.
The Group delivered a record profit
before tax before exceptionals for
the year ended 31 December 2019 of
£188.2m, comprising operating profit
of £192.6m, net financing charges of
£6.1m and £1.8m of share in JV profit.
After exceptional costs profit before tax
was £174.8m, this compares to £168.1m
of profit before tax in 2018, which
comprised £174.2m of operating profit
and £6.1m of net financing costs.
Financing and Taxation
Net financing charges before exceptionals
during 2019 were £6.1m (2018: £6.1m)
reflecting the marginally lower net debt
in the period, a consistent level of
commitment fees, and issue costs
amortised, as well as the impact of
implementing IFRS16 in the period,
(0.6m) disclosed in note 5.5 to the
financial statements.
The Group has recognised a tax charge
of £36.4m at an effective tax rate of
20.8% (2018: tax charge of £31.5m at
an effective rate of 18.7%); this rate is
higher than the current rate of 19.0%
primarily as a result of non-deductable
exceptional costs incurred in the year and
an adjustment made in respect of the
prior year. The Group has a current tax
liability of £20.9m on its balance sheet as
at 31 December 2019 (2018: £18.1m).
Dividends
The first interim dividend of 20.5 pence
per share (2018: 19.0 pence) was paid on
22 November 2019. A second interim
dividend of 41.0 pence per share
(2018 final dividend: 38.0 pence) has
been declared and will be paid on 29 May
2020 to holders of ordinary shares on
the register at the close of business on
27 December 2019, bringing total
dividends for the year to 61.5 pence per
share (2018: 57 pence).
Strategic report | Our financial performance
Building on
strong foundations
2019
£m
126.8
138.4
2018
£m
144.9
136.6
(112.4)
(158.8)
149.8
(58.2)
115.2
(58.5)
60.9
362.0
-
12.4
(1.9)
(20.3)
13.9
126.8
Investments increased by £56.1m
since the start of the year, primarily
driven by the creation of the joint
venture with Riverside Regeneration
Limited in respect of the development
of Stanton Cross, Wellingborough,
in April. In addition, the Group entered
into a joint venture in December with
Metropolitan Living Limited in respect
of a new strategic development at
Cambourne West, Cambridgeshire.
Retirement benefit assets increased by
£3.1m primarily as a result of higher
than expected returns on the scheme’s
assets and contributions to the fund in
the period. This has resulted in a pension
surplus of £4.5m at 31 December 2019
(2018: £1.4m).
Cash flow
Net cash at 1 January
Profit in the year
Dividends and taxes paid
Issue of shares
Movement in trade and other receivables
Movement in inventories
Movement of investment in joint ventures
Other
Net cash at 31 December
Instead of a cash special dividend, a
bonus issue of shares was made to
shareholders on the register at the
close of business on 2 January 2020; for
every one share held at the bonus issue
record time, 0.03819 bonus shares
were issued (2018 special dividend:
45.0 pence). The dividend reinvestment
plan, introduced in 2012, gives
shareholders the opportunity to
reinvest their dividend.
Basic EPS pre exceptional of 111.5p
(2018: 101.6p) has increased 10% year
on year as a result of record profit
having incorporated the Placing.
Basic EPS post exceptional of 101.5p
(2018: 101.6p) has remained consitent
year on year.
Net assets and cash flow
As at 31 December 2019 net assets of
£1,272.0m were £210.9m higher than at
the start of the year, driven by an increase
in the cash balance through operating
cashflow which has subsequently been
utilised to fund the Acquisition. Net assets
per share as at 31 December 2019 were
857 pence (2018: 787 pence).
Vistry Group PLC | vistrygroup.co.uk | 65
Financial review | Earl Sibley
Inventories decreased during the year
by £112.6m to £1,207.7m. The value of
residential land, the key component of
inventories, decreased by £142.4m.
This reflects completions during the period
as well as the impact of Partnership land
transactions and the sale of our Stanton
Cross development at Wellingborough
into a joint venture. Other movements
in inventories included an increase in
work in progress of £31.0m driven by the
infrastructure investment on a number
of our new developments including
Northstowe, Peterborough and Essington.
Whilst our usage of part exchange as
a sales tool increased in the year, our
part exchange properties balance has
decreased by £1.6m, as we continue to
make use of this sales tool, in a controlled
and disciplined manner, with no properties
held for more than three months unsold
at the end of the period.
Trade and other receivables increased
by £41.3m, driven by increased balances
receivable from housing associations
at 31 December 2019. Trade and
other payables increased by £12.8m,
predominantly reflecting increased
accruals and trade creditors from
production offset by £34.1m net
settlement of land creditors.
Land creditors decreased to £260.7m
(2018: £293.3m) representing 36%
(2018: 34%) of our gross land investment
and includes significant balances in
respect of longer-term schemes at
North Whiteley and Alphington SW
Exeter purchased in 2019.
Following implementation of IFRS16 in
2019, right of use assets of £21.3m and
lease liabilities of £23.0m have been
recognised on the balance sheet; further
detail is discussed in notes 5.5 and 5.14 to
the financial statements.
Land bank
Consented plots added
Sites added
Sites owned at period end
Total plots in land bank at period end
including joint ventures
Average consented land plot ASP
Average consented land plot cost
As at 31 December 2019 the Group’s net
cash balance, which reflects cash and cash
equivalents less bank and other loans,
was £362.0m (2018: £126.8m). Net cash
is quoted excluding the lease liabilities
arising on adoption of IFRS16, the impact
of which is clearly disclosed in note 5.5
to the financial statements. The Group
started the year with net cash of
£126.8m and generated an operating
cash inflow before land expenditure
of £281.4m (2018: £291.2m) and
recognised a reduction of £36.4m
in loans. The loan reduction arose as a
result of the movement of funding from
Homes England into the newly
formed joint venture with Riverside at
Stanton Cross, Wellingborough.
Net cash payments for land investment
increased to £184.7m (2018: £145.4m),
reflecting the timing of land acquisitions
and reduction in land creditors. Cash
inflows from joint ventures were £74.7m
(2018: nil), generated on the sale of land
and inventory into the Stanton Cross,
Wellingborough joint venture.
Dividend and cash outflows decreased
to £112.4m (2018: £158.8m) driven by
decreased corporation tax payments and
the payment of a special dividend by way
of shares rather than cash; payments
relating to dividends were £78.6m
(2018: £129.7m). A further £152.2m
of cash was raised by the Placing in
November 2019.
66 | Strategic report | Our financial performance
2019
2018
4,531
4,164
18
116
19
117
17,328
17,328
£299,000
£305,000
£46,411
£54,900
At 31 December 2019, we had a
committed revolving credit facility of
£250m in place. Following refinancing
driven by the Acquisition. The Group
currently has in place £150m in 3 year
term borrowings, a £450m revolving
credit facility (£410m 5 year, £40m 3 year)
and £100m USPP 7 year term borrowings.
The private placement was taken on as
part of Acquisition.
The Group’s total land bank including
share of joint ventures as at 31 December
2019 represents 3.9 years of supply based
on 4,000 completions p.a. reflecting
our strategy to maintain an optimal
land bank at 3.5 to 4.0 times. The 3,867
plots that legally completed in the year
were replaced by a combination of site
acquisitions and conversions from our
strategic land pipeline. Based on our
appraisal at the time of acquisition, the
new additions, on average, are expected
to deliver a future gross margin over
26% and a ROCE in excess of 25%.
The average selling price of all units within
the consented land bank increased over
the year to £299,000, 2% lower than
the £305,000 at 31 December 2018.
The estimated embedded gross margin
in the consented land bank as at
31 December 2019, based on prevailing
sales prices and build costs is 24.8%
and reflects the initial impact of our
margin initiatives.
Strategic land continues to be an
important source of supply and during
the year 4,531 plots have been converted
from the strategic land pipeline into the
consented landbank.
Earl Sibley
Chief Financial Officer
Strategic report | Our financial performance
Both images:
Haygate Fields, Wellington
Vistry Group PLC | vistrygroup.co.uk | 67
1 Ian Tyler (59)
Non-executive Chairman
Committee membership: Nomination Committee
Date appointed: 29 November 2013
Experience: Ian is Chairman of Cairn Energy PLC., AWE
Management Ltd and Amey PLC. Ian was Chief Executive
of Balfour Beatty plc from 2005 to March 2013, having
joined the company in 1996 as Finance Director and
becoming Chief Operating Officer in 2002. He is a
Chartered Accountant and prior to 1996 was Financial
Comptroller of Hanson and Finance Director of ARC Ltd,
one of its principal subsidiaries, and held financial roles
at Storehouse plc. He was a non-executive director of
Mediclinic International Plc until February 2017 and Cable
& Wireless Communications Plc until September 2015,
where he was also chairman of its audit committee, and a
non-executive director of VT Group plc until 2010.
What he brings to the Board: Board leadership and
debate, construction health and safety matters, familiarity
with dealing with international shareholders, business
growth and value creation.
External directorships: Listed: BAE Systems plc,
Cairn Energy PLC. Non-listed: Amey PLC, a subsidiary
of Ferrovial S.A., AWE Management Ltd (a joint venture
company between Lockheed Martin, Jacobs
Engineering and Serco)
2 Ralph Findlay (59)
Independent Non-executive Director and Senior
Independent Director
Committee membership: Chairman of the Audit
Committee and member of the Nomination and
Remuneration Committees
Date appointed: 07 April 2015
Experience: Ralph is a Chartered Accountant and is Chief
Executive Officer of Marston’s PLC, a position he has held
since 2001, having been Finance Director from 1996 to
2001 and Group Financial Controller from 1994 to 1996.
He previously held roles with Geest plc as Group Chief
Accountant, Bass plc as Treasury Manager and qualified
and worked with Price Waterhouse as a specialist in
financial services.
What he brings to the Board: Commercial,
financial and general management experience in a
consumer facing industry. Land acquisition and business
growth experience.
External directorships: Listed: Chief Executive of
Marston’s PLC.
3 Chris Browne OBE (59)
Independent, Non-executive Director
Committee membership: Nomination, Remuneration
and Audit Committees
Date appointed: 01 September 2014
Experience: Chris was Chief Operating Officer of easyJet
plc until June 2019 and also served as a non-executive
director from January to September 2016. She was
Chief Operating Officer, Aviation, of TUI Travel plc
until September 2015 and was managing director of
Thomson Airways from 2007 to May 2014 and managing
director First Choice Airways from 2002 to 2007. She
has a Doctorate of Science (Honorary) for Leadership
in Management and was awarded an OBE in 2013 for
services to aviation.
What she brings to the Board: Commercial and general
management experience in a consumer facing and highly
regulated industry, plus leadership and operational skills.
External directorships: None
Directors and officers
1 Ian Tyler
2 Ralph Findlay
3 Chris Browne
4 Nigel Keen
5 Katherine Innes Ker
6 Mike Stansfield
7
Greg Fitzgerald
ELT
8
Graham Prothero
ELT
9
Earl Sibley
ELT
10 Keith Carnegie
ELT
11
Martin Palmer ELT
12
Stephen Teagle
ELT
Board skillset
(Number of directors)
Board skillset
(Number of directors)
Construction and
property
Construction and
property
8
9
8
9
5
5
5
5
5
5
3
3
13 Darrell White
1
2
Retail
Retail
Financial
Financial
Strategy and
business development
Strategy and
business development
People and culture
People and culture
Health and safety
and regulation
Health and safety
and regulation
Public sector
Public sector
2
Environment and
1
sustainability
14 Andrew Hammond
Environment and
sustainability
Vistry Group PLC
Executive Leadership Team
Company secretary
Vistry Partnerships Limited
Tenure
(Number of directors)
Tenure
(Number of directors)
Diversity
(Number of directors)
Diversity
(Number of directors)
Board skillset
(Number of directors)
4
2
4
3
2
3
2
2
9
8
7
7
3
5
5
5
0-2 years
0-2 years
2-4 years
2-4 years
Male
Female
Male
Female
4+ years
4+ years
2
1
Construction and
property
Retail
Financial
Strategy and
business development
People and culture
Health and safety
and regulation
Public sector
Environment and
sustainability
68 | Our governance | Directors and Officers
Tenure
(Number of directors)
Diversity
(Number of directors)
2
3
4
4+ years
2
7
0-2 years
2-4 years
Male
Female
4 Nigel Keen (58)
Independent Non-executive Director
Committee membership: Chairman of the
Remuneration Committee, member of the Nomination
and Audit Committees
Date appointed: 15 November 2016
What he brings to the Board: House building
and residential construction industry, strategy and
business development.
External directorships: Non-listed: Non-executive
chairman of Braidwater Limited, non-executive
director of Moulded Foams Limited, and Partner of MJS
Development Consultancy LLP.
Experience: Nigel was Property and Development
Director of the John Lewis Partnership until January
2018, where he was responsible for the property
strategy and portfolio across both John Lewis and
Waitrose, including stores, supermarkets, distribution
centres and manufacturing sites. He joined the John
Lewis Partnership in 1999, having previously held
roles with Tesco plc from 1989 to 1999, including
as Construction Director, and with John Evers &
Partners from 1985 to 1989, having trained as a
Quantity Surveyor.
What he brings to the Board: Property,
construction and customer experience in a consumer
facing industry. Property strategy, land acquisition
and development.
External directorships: Listed: Non-executive
director of PPHE Hotel Group Limited. Non-listed:
Non-executive director of RG Carter Construction,
Trustee of Sported Foundation and Trustee of
Maudsley mental health charity.
5 Katherine Innes Ker (59)
Independent Non-executive Director
Committee membership: Nomination, Remuneration
and Audit Committees
Date appointed: 09 October 2018
Experience: Katherine Innes Ker is a non-executive
director at Go-Ahead Group PLC, Chair of the
Mortgage Advice Bureau (Holdings) plc, and Senior
Independent Director and Chair of the Remuneration
Committee of building products company Forterra plc.
Katherine was a non-executive director of Taylor
Wimpey plc from 2001 to 2011 and Chair of the
Remuneration Committee from 2004 to 2011 and non-
executive director of Bryant Group plc prior to the
acquisition by Taylor Woodrow. She was non-
executive director at St Modwen Properties PLC from
2010-2013, and other appointments include Gigaclear
Limited until 2018 and Colt Telecom Group SA until
2015. Katherine has a degree in Chemistry and a PhD
in Molecular Biophysics from Oxford University.
What she brings to the Board: Strong Board and
broad commercial experience, corporate finance,
mortgage lending, house building and residential
construction industry.
External directorships: Listed: Go-Ahead Group PLC,
Chair of the Mortgage Advice Bureau (Holdings) plc,
Forterra PLC. Non-listed: Independent Chair of the
Remuneration Committee of Balliol College, Oxford and
member of the Management Board of the Bonavero
Institute of Human Rights, Oxford University
6 Mike Stansfield (63)
Independent Non-executive Director
Committee membership: Nomination, Remuneration
and Audit Committees
Date appointed: 28 November 2017
Experience: Mike Stansfield is non-executive
Chairman of Braidwater Limited and a non-executive
director of Moulded Foams Limited, both private
equity backed companies. During his executive career
he was Chief Executive of David Wilson Homes from
1997 until 2005, having been appointed a director of
Wilson Bowden plc in 1994 and holding positions with
David Wilson Homes, including Divisional Chairman
and Managing Director. He was also Chairman of
WBD City Homes Limited from 2003 to 2005, a board
member of the Housing Forum from 2002 to 2011, and
a non-executive director of NHBC Building Services
from 2005 to 2014.
7
Greg Fitzgerald (55)
Chief Executive
Committee membership: None
Date appointed: 18 April 2017
Experience: Greg was Chief Executive of Galliford
Try Plc from 2005 to 2015, having previously been
Managing Director of its house building division
from 2003. Prior to this he was a founder and
later Managing Director of Midas Homes, which
was acquired by Galliford Try Plc in 1997. As Chief
Executive, he transformed Galliford Try Plc from
a building contractor into a well-respected house
building and construction business, which included
the acquisition of Linden Homes in 2007. Greg was
Executive Chairman of Galliford Try Plc during 2015
before becoming non-executive Chairman from
January to November 2016. He was a non-executive
Director of the National House Building Council from
2010 until July 2016.
What he brings to the Board: Leadership and
strategic focus in house building and construction
industry, business growth and value creation.
External directorships: Non-listed: Non-executive
Chairman of Ardent Hire Solutions Limited and Baker
Estates Limited.
8
Graham Prothero (58)
Chief Operating Officer
Committee membership: None
Date appointed: 3 January 2020
Experience: Graham was appointed as COO of Vistry
Group PLC on 3 January. Graham was Chief Executive
of Galliford Try Plc from March 2019, having previously
served as Finance Director since 2013.
From 2008 to 2013, he was Finance Director of
Development Securities plc (now U&I Group plc).
He is a Fellow of the Institute of Chartered
Accountants in England and Wales and was previously
a partner at Ernst & Young LLP.
What he brings to the Board: Leadership, strategic
focus, financial and accounting expertise.
External directorships: Listed: Non-Executive
Director and Chair of the Audit Committee of
Marshalls plc. Non-listed: Trustee and Vice Chair of
the Jigsaw Trust (a charitable trust).
9
Earl Sibley (47)
BA (Hons) ACA, Group Chief Financial Officer
Committee membership: None
Date appointed: 16 April 2015
Experience: Earl is a chartered accountant and
re-joined Bovis Homes as Group Finance Director
in April 2015 having worked as Group Financial
Controller from 2006 to 2008. Earl served as Interim
Chief Executive from January to April 2017. He held
a number of senior finance and operational positions
with Barratt Developments plc from 2008 to 2015,
including Regional Finance Director and previously
worked for Ernst & Young.
What he brings to the Board: Leadership, strategic
focus, financial and accounting expertise.
External directorships: None.
Our governance
10
Keith Carnegie (50)
Executive Director
Experience: Keith is a qualified solicitor
(non-practising) and joined Bovis Homes in 1999
as a Regional Legal Director, having been a
partner in private practice. He has held a number
of senior roles within the Group, including Regional
Managing Director, Division Chairman and Chief
Operating Officer.
11
Martin Palmer (61)
FCIS, Group Company Secretary
Committee membership: Secretary to the Board and
Board committees
Date appointed: 01 December 2001
Experience: Martin is a Fellow of the Institute of
Chartered Secretaries and Administrators. He has
seventeen years of experience with Bovis Homes and
was previously Group Company Secretary of London
Forfaiting Company PLC from 1997 to 2001.
What he brings to the Board: Governance,
regulation and compliance.
External directorships: None
12
Stephen Teagle (60)
Chief Executive of Vistry Partnerships Limited
Experience: Stephen was appointed as Chief Executive
of Vistry Partnerships Limited on completion of the
acquisition of Linden Homes and Vistry Partnerships.
Stephen joined Galliford Try in 2006 and was
appointed Chief Executive of its Partnerships business
in 2016. He is a chartered surveyor and has more
than 25 years’ experience in the regeneration and
affordable housing sectors, with time spent both
commissioning schemes as well as working in the
private sector, giving him a unique perspective on joint
ventures, regeneration and mixed-tenure delivery.
Stephen is also Chair of the Housing Forum, a cross-
sector membership network of 150 organisations and
businesses that collaborates to promote improved
supply and better quality homes.
13 Darrell White (48)
Divisional Chairman – North Division
Experience: Darrell joined Bovis Homes in 1995 as
a surveyor. He has held a number of roles and was
promoted to Division Chairman in 2019 having been
Divisional Managing Director, Regional Managing
Director for the Northern region and Operations
Director for Central region.
14 Andrew Hammond (49)
Divisional Chairman – South Division
Experience: Andrew was appointed as Divisional
Chairman on completion of the acquisition of the
Linden Homes and Vistry Partnerships businesses.
Andrew joined Galliford Try in 2015 as Divisional
Managing Director and was promoted to its Executive
Board in 2016 as Divisional Chairman and latterly
Chief Executive of Linden in 2019. He was previously
with Persimmon where he held a number of roles
including, Commercial Director, Managing Director and
ultimately Regional Chairman from 2007.
Vistry Group PLC | vistrygroup.co.uk | 69
Full year report 2017 | Performance | 69
Corporate governance report
2019 continued the significant progress in the Group’s
operational and financial performance and saw it well-
placed to make an approach for Galliford Try plc’s Linden
Homes and Partnerships & Regeneration businesses.
Ian Tyler | Chairman
In 2019 the Group leveraged the
foundations laid in 2017 and the progress
of 2018. Medium term targets set in 2017
to be achieved by 2020 have provided
a clear direction and, with many already
attained, we are delivering improving
returns to our shareholders. As we move
forward as a larger Group, our management
teams are energised to achieve progress
in a new era, with the initial focus on
the integration and the delivery of
synergies for the benefit of shareholders.
The housebuilding business will maximise
output through controlled volume growth
in the medium term, whilst maintaining
high quality delivery. The Partnerships
business will accelerate revenue growth,
increasing output from it’s existing
structure and expanding into geographies.
Strong leadership has continued to
reap rewards, with our Chief Executive
providing a driven “hands on” operational
focus and regularly visiting offices and
as many development sites as he can
to assess performance, talk about the
challenges faced, and reinforce our culture
and values, an activity which will be
supported by the Chief Operating Officer
going forward. The Executive Leadership
Team (“ELT”) has ensured that this focus
has cascaded through the governance
structure, supported by divisional staff in
monitoring business units as they strive to
meet expectations and deliver in the right
way. I am pleased to say that our business
units now have renewed confidence and
discipline and I am proud of the progress
they have made over the past three years.
I also completed a series of visits to
business units and their sites during 2019,
talking to Divisional staff, business unit
MDs, their teams, and our hard working
site staff and subcontractors.
The programme of office and site visits for
the non-executive directors continued,
helping them to better understand the
Group’s operations, test culture, observe
behaviours first-hand, and assess progress
in embedding the Group’s values of
Integrity, Quality and Caring.
Change projects designed to deliver
significant operational improvements
moved further forward in 2019, continuing
our focus on investing in our people and
in systems to allow them to work more
effectively and the Group to function
cost efficiently. The full benefit of these
investments is now coming through and
it is highly positive that the Group is an
organisation that quality people now
actively want to join.
Looking ahead, 2020 is set to be an exciting
year for the enlarged Group, with many
challenges ahead. The integration is in full
swing, an optimal organisation and asset
management structure is being put in
place, and operational and procurement
synergies are being actively pursued.
Housebuilding operations are being aligned
and will operate under the dual brands of
Bovis Homes and Linden Homes and we
are delighted to have Vistry Partnerships
as part of the Group, bringing a new
dimension to the Group business capability
and market presence.
The Board has ultimate responsibility for
the success of the Company and my task
focuses on ensuring that it provides strong
strategic leadership, monitors the delivery
of strategic priorities and objectives and
rises to challenges along the way,
whilst keeping an eye on emerging and
principal risks. In doing so, the Board
must ensure that it upholds the highest
standards of integrity and promotes
effective relationships, communication,
openness and accountability in the
boardroom, throughout the business and
externally with stakeholders.
The Board was heavily involved
in all aspects of the acquisition
process, which was successfully
concluded early in 2020,
transforming the Group into a
top five housebuilder, in terms
of size, improving the Group’s
competitive capability across the
housing market, and opening
up significant opportunity for
the future to deliver improved
returns for shareholders.
I am delighted with this progress.
As we move through all the change and
opportunity ahead, we will continue to
invest in our people and systems to deliver
sustainable success and will maintain
our focus on customer service and the
consistent delivery of quality homes to
satisfied customers.
Our people, subcontractors and suppliers
continued to demonstrate their exceptional
talents and wide-ranging abilities in
delivering the outstanding progress made
by the Group in 2019. I would like to
thank them all for their contribution
and commitment. The Group’s operational
performance has improved significantly
and is demonstrated for our customers by
the Group achieving a 4-star rating for the
2017/18 HBF year and trending at a 5-star
rating for the 2018/19 HBF year.
Our financial performance has been strong
and, coupled with the achievement of key
objectives more quickly than expected,
provided a position of strength from which
we were able to pursue and conclude the
recent acquisition.
The Board is pleased with what has
been achieved and looks forward to the
challenge ahead in delivering for all our
stakeholders as a top five housebuilder.
70 | Our governance
Our governance
Bowbrook Meadows, Shrewsbury
We value dialogue with all our shareholders,
institutional and retail, and have maintained
ongoing engagement with our major
shareholders during 2019. The Board is
very cognizant of the vote on the new
Remuneration Policy at the General
Meeting held on 2 December 2019.
The Remuneration Committee engaged
with shareholders, institutions and proxy
advisors ahead of the vote and has
continued to engage since, responding
to the concerns of those shareholders who
voted against the new Policy and setting
out developing thoughts, proposals and
intentions in implementing the new Policy
in 2020.
Looking forward, our 2020 AGM will be
held on 20 May 2020 and you will find the
Notice at the end of this Annual Report.
This report has been approved by the Board
and I can confirm that your Company was
compliant with the provisions of the UK
Corporate Governance Code during 2019.
Ian Tyler
Chairman
Further information on pages
74 to 85
Visit our website for details
vistrygroup.co.uk
/investors/corporate-governance
Vistry Group PLC | vistrygroup.co.uk | 71
The Board believes that the right
culture and values play a pivotal role in
delivering long term sustainable success.
This requires a continuous focus. The right
standards and behaviours enable the Board
to function effectively in supporting and
overseeing senior management as they
reinforce the Group’s culture and values.
As an enlarged Group, we are redesigning
our induction process, which all staff will
experience, to support this process, and
staff presentations and training sessions will
also contain repeat messaging, including
the publicising of our whistleblowing
reporting line “Speak up”, designed to
promote transparency and accountability.
The Board completed an internal formal
evaluation of its 2019 performance at
the beginning of 2020. The last external
independent evaluation was in respect
of 2017. The process adopted has allowed
the Board to assess performance in
2019 and the progress with the action
plan arising from the 2018 internal
evaluation, whilst looking forward to the
challenges and opportunities ahead in
2020 as an enlarged Group and areas
for further development. The Board is
performing effectively and the action plan
for 2020 has been designed to build on
the progress already made in many
areas, recognising the increased demands
the Board will face at the helm of a
larger enterprise. The development
of structured succession planning will
continue, engagement with shareholders is
ongoing in respect of remuneration and will
be further developed more generally, and
the focus on the monitoring of culture will
be maintained as the integration progresses
and the enlarged Group moves to its
desired organisational shape.
The main activities of the Board during
2019 are provided in detail in the report
and, in addition to regular activities and the
acquisition process, included two visits to
the regions, an in-depth review of strategy
at the annual strategy day, a review of
succession planning, and receiving reviews
and presentations on a range of topics from
senior management and the NHBC.
Our corporate governance practices
remain aligned with the version of the UK
Corporate Governance Code applicable
to our 2019 financial year. The Board
monitored progress with the action plan
put in place to deliver compliance with the
Code at each meeting during the year.
The Group’s new diversity and inclusion
policy saw its first full year in 2019 with a
number of implementation measures taking
place across the business to promote and
support a diverse and inclusive culture,
supported by our values, both in the
boardroom and across the Group.
I would like to thank my colleagues on
the Board for their collective support and
strong individual contributions during a
highly successful year in 2019. The Board
has functioned well and held a number of
additional meetings, many at short notice.
Notably, the non-executive directors made
a significant contribution and utilised their
collective skills and experience during the
acquisition process in challenging and
testing views, assumptions and modelling
put forward by the executive directors and
advisors, leading to a successful conclusion
and the strong position the enlarged Group
stands in today.
Corporate governance report
Priory Fields, Wells
72 | Our governance
Our governance
Corporate
governance
report
Introduction
This report sets out the Company’s
compliance with the UK Corporate
Governance Code “the Code” issued by the
Financial Reporting Council (publicly available
at frc.org.uk) and also describes how the
governance framework, explained in our
corporate governance policy guidelines,
available on the Company’s website
(vistrygroup.co.uk/investors/corporate-
governance), is applied.
The Board is pleased to report that the
Company has, throughout 2019, complied
with and applied the provisions of the 2018
UK Corporate Governance Code.
Vistry Group PLC | vistrygroup.co.uk | 73
Corporate governance report
Our purpose, culture and values
As a housebuilder, Vistry Group exists
to develop sustainable new homes and
communities across all sectors of the UK
housing market.
The Group’s values are defined as Integrity,
Quality and Caring. We distilled our values
in consultation with employees and other
stakeholders, ensuring a natural fit with
what Vistry Group is all about. With the
acquisition of Linden Homes and Vistry
Partnerships we are promoting our
culture and values to ensure that natural
fit is established right across the Group,
working from a position of strength that
comes from the clear cultural similarities
already existing between the businesses.
Linden Homes and Vistry Partnerships
have, for some time, operated under the
ethos “Doing the right thing”, very close
to our ethos “Do the right thing”.
We are building on these similarities
to strengthen our culture and
presentations, meetings and visits
from the CEO, the ELT and the wider
leadership team, together with our new
induction programme, which all staff will
experience, are being used to reinforce
our purpose, culture and values.
Our induction explains the importance
of culture, how our values feed into the
right behaviours, and our expectations
of staff as they go about their daily
working lives. Our leadership teams
know the importance of modelling our
values in all contact with staff, suppliers
and other stakeholders. Our internal
messaging to staff is tailored to reflect
them and all staff presentations and
events carry reminders of who we are
and how we go about what we do.
We listen to staff feedback, provide
support to underpin the right behaviours,
which includes an open and accessible
management style and people functions
that provide the right advice when needed.
All of this is supported by “Speak up”, our
independent whistleblowing reporting
line, which allows concerns to be raised
in confidence.
We regard our culture as a key
contributor to long-term sustainable
business success.
74 | Our governance
It links to our purpose and underpins
our strategy, prioritising people in
our operations, both in the delivery
of satisfaction for our people and our
customers and in the provision of
quality service. The same is true in
ensuring a healthy and safe working
environment for all our staff, with the
aim that everyone safely reaches the
end of their working day. Our culture
supports the range of our activities in
meeting our purpose and it is through
our focus on long-term sustainable
success that we will deliver enhanced
returns for our shareholders.
The Board maintains a clear focus on
culture and uses discussion inside and
outside Board meetings to hear the
views of senior management on how
well our values are embedded and the
further work needed to maintain and
improve this position. Coupled with
visits to business units and sites, which
allow the directors to talk to staff at all
levels and hear their views, the Board
has the opportunity to get a real sense
of how our culture is working and the
underlying behaviours and attitudes
being portrayed.
These visits also provide opportunity for
the non-executives to engage in a way
that models and reinforces our values
and behaviours, supporting the message
from the wider leadership team.
Together with KPIs and other data,
this engagement allows the Board to
periodically assess whether purpose,
culture, values and strategy are aligned
and reflect the expectations of the Board,
leaving it to influence where necessary.
A culture review was carried out by an
external party and Internal Audit in 2018
and it is intended that a further review
take place once the integration process
is complete.
The Board reviewed workforce related
policies and practices during the year and
how they are implemented throughout
the Group, considering a comprehensive
document prepared by the HR function
with support from advisors, and
concluded that they are fit for purpose
and consistent with the Group’s culture
and values and could be expected to
support long term sustainable success.
Our leadership structure
The Board is responsible to the Company’s
shareholders for the long-term success
of the Group and its values, strategy,
business model and governance.
It sets and reaffirms the Group’s culture,
provides leadership and direction,
and determines the strategy and
strategic objectives. The implementation
of strategy by the executives is
monitored and business plans, budgets
and forecasts are reviewed and
challenged, together with outcomes,
with independent judgement being
applied by the non-executive directors.
The monitoring of overall performance
and progress with operations against
business plans, using KPIs and coupled
with development site and business unit
office visits, allows the Board to test
the individual and collective capabilities
of the Group and its ability to deliver
quality homes, on time and on budget,
to satisfied customers. These activities
are carried out within an approved risk
appetite and with regular monitoring of
internal controls and risk management.
The Board has a schedule of matters
reserved for its decision, which is
reviewed and approved on an
annual basis. A copy is available on the
Company’s website (vistrygroup.co.uk/
investors/corporate-governance).
This schedule dovetails with delegation
of authority documents which operate
across the Group’s activities and down
through the governance structure.
These delegations have recently been
reviewed to ensure that they are
consistent in purpose and design,
provide appropriate controls, and are
understood by those responsible for
their effective operation.
Below the Board, the ELT is responsible
for the day to day operations of the
Group, comprising the CEO, COO, CFO,
Executive Director, CEO of Partnerships
and Group Company Secretary. The CEO,
COO and CFO report to the Board as
executive directors and the Executive
Director and CEO of Partnerships
regularly attend Board meetings to
report on operations within their remit.
Title Our governance
Following the acquisition, housebuilding
operations are managed in two Divisions,
North and South, which are responsible
for the collective management of the
business units within their operating
areas. Divisional staff provide leadership,
operational direction and finance support.
The Divisions report through the
Divisional Chairmen to the COO.
The Group currently has 23 business
units, with housebuilding having 13 and
Partnerships comprising 10.
Each business unit operates within an
allocated geography and is run by a board
comprising directors responsible for
specific disciplines. Standardised operating
procedures and systems are being rolled
out across the Group as part of the
integration and their implementation
and application will be monitored to
provide a consistent and effective
method of operating, reducing risk and
supporting the delivery of longer term
business objectives.
The business unit MDs report into the
Divisional Chairmen. Group functions
provide support to the Board, the
executive directors, the ELT, the Divisions
and the business units. In total, the
leadership team comprises approximately
50 members of staff.
The leadership and governance
structure for 2020 has expanded
significantly as a result of the
acquisition and is shown below.
Vistry Group PLC Board
Responsible for leadership, strategy,
values and governance
ELT
Executive Leadership Team
Audit Committee
• Oversees financial
Remuneration
Committee
statements and reporting
• Sets and reviews
• Monitors internal controls
remuneration policy
and risk management
• Determines remuneration
Vistry Homes Limited Board
Responsible for the operations of the Group
• Monitors reporting and
effectiveness of external
and internal auditors
and incentives of the
executive directors and
the Chairman
• Sets performance criteria
for incentive plans
Nomination Committee
• Reviews balance and
composition of the Board
• Maintains focus on
succession planning
• Leads recruitment process
for the Board
• Recommends appointment
of directors
• Sets diversity policy
North Division board
Responsible for the operational
management of the North Division
South Division board
Responsible for the operational
management of the South Division
7 Eastern
8 Kent
9 South East
10 Thames Valley
11 Southern
12 Western
13 South West
Yorkshire
1
2 Mercia
3 East Midlands
4 West Midlands
5 Cotswolds
6
Northern Home Counties
Partnerships board
Responsible for the operational
management of Partnerships
1 North East
2 Yorkshire
3 North West
4 East Midlands
5 West Midlands
6 East England
7 London
8 Drew Smith
9 West
10 South West
1
2
4
5
3
9
10
8
6,7
Vistry Group PLC | vistrygroup.co.uk | 75
12137983625101411
Corporate governance report
The Board
There were no changes in the
membership of the Board during 2019,
which comprised the non-executive
Chairman, five independent non-
executive and two executive directors.
Graham Prothero was appointed to the
Board as an executive director and as
COO on 3 January 2020, increasing the
number to three executive directors.
Biographical details for the directors
are provided on pages 68 to 69.
Their dates of appointment, length
of service to the end of 2019 and
attendance at Board meetings are
shown below. The Board held eight
main board meetings and all members
attended the AGM and a strategy day in
accordance with the calendar scheduled
for the year. In addition, the Board held
nine meetings in connection with the
acquisition as it progressed through
its various stages during the year.
Chris Browne and Katherine Innes Ker
were unable to attend one scheduled
meeting each, both as a result of prior
commitments. Nigel Keen was unable to
attend one additional meeting as a result
of a pre-existing commitment.
The Board maintains a broad range of
expertise and experience and a strong
blend of skills, which has allowed it to
perform effectively during a period of
significant momentum for the business,
which included progressing the
acquisition, with all that entails.
The non-executive Chairman brings
a strong track record of commercial
experience in construction and
infrastructure related industries, which
benefit the Group in the delivery of its
strategy and oversight of its business
plans and performance and were
invaluable during the acquisition process.
Ralph Findlay, Senior Independent
Director, has strong commercial, financial
and general management expertise from
a consumer facing industry and Chris
Browne brings a strong commercial and
operational background, again from a
consumer facing industry.
76 | Our governance
Date of
appointment
Tenure in
current role
Attendance
at scheduled
meetings
Attendance
at additional
meetings
Current role
Name
Ian Tyler
29/11/13
Chairman
6.1 years
Chris Browne
01/09/14
Non-executive
5.3 years
Ralph Findlay
07/04/15
Non-executive
4.75 years
Nigel Keen
15/11/16
Non-executive
3.1 years
Mike Stansfield
28/11/17
Non-executive
2.1 years
Katherine Innes Ker
09/10/18
Non-executive
1.25 years
Greg Fitzgerald
18/04/17
Chief Executive 2.75 years
Earl Sibley
16/04/15 Chief Financial Officer
4.75 years
8/8
7/8
8/8
8/8
8/8
7/8
8/8
8/8
9/9
9/9
9/9
8/9
9/9
9/9
9/9
9/9
Nigel Keen has an in-depth construction
and property background and experience
of running property strategy and
portfolios, once again from a consumer
facing industry, while Mike Stansfield
brings a strong housebuilding industry
background, spanning three decades.
Katherine Innes Ker is an experienced
non-executive director across a range
of sectors and has extensive experience
of the City, in addition to housebuilding
experience. All the non-executive
directors contributed strongly during
the acquisition process, bringing their
previous experience to bear in debate
and challenging the executive directors
and advisors in specific areas and on
modelling assumptions.
The five non-executive directors have
been determined by the Board to be
independent in character and judgement
with no relationships or circumstances
likely to affect, or that could appear to
affect, their judgement.
All the directors will be offering themselves
for re-election at the forthcoming AGM,
in accordance with the Code. The Board
strongly supports all the individual
director’s re-elections, taking account
of the balance of skills and expertise and
the performance of the Board as a whole.
The directors’ biographies on pages 68
to 69 and the notes to the AGM Notice
on pages 164 to 170 together provide
details explaining why their individual
contributions are and continue to be
important for the Group’s long-term
sustainable success.
In accordance with the Companies Act
2006 and as permitted by the Company’s
Articles of Association, the Board has
authorised actual and potential conflicts
of interest and conflicts are reviewed
annually. The Board is satisfied that
powers to authorise actual and potential
conflicts are operating effectively.
A diversity and inclusion policy was put in
place in December 2018 to promote and
support a diverse and inclusive culture,
supported by our values, both in the
boardroom and across the Group.
The Board seeks a mix of talented people
with a range of experience, skills, vision
and independence, recognising the
importance of a blend of abilities, views
and social and ethnic backgrounds to
enable it, as the objective of the policy, to
function effectively.
The Board has two female non-executive
directors and six female members of senior
management report into the level below
the Board. A high emphasis continues to
be placed on ensuring the development
of diversity in senior management roles
across the Group by strengthening
the talent pipeline, something that the
acquisition has supported, and through
internal promotion and recruitment.
There are no particular considerations,
applicable to the Board or senior
management, concerning aspects such
as age, gender, or educational and
professional backgrounds, beyond
the requirement for qualified professional
staff to hold certain positions.
Diversity and inclusion training is
refreshed and the policy is implemented
by circulation throughout the Group
and publication on the Group’s website
and incorporates the Group’s long-
standing equal opportunities policy.
Further information on implementation
of the policy in 2019 is contained in the
Nomination Committee report on
page 112. Gender metrics are contained
in the corporate social responsibility
report on page 49.
All the directors have service agreements
or contracts and the details are set out
in the current remuneration policy,
available at vistrygroup.co.uk./investors/
corporate-governance.
Our governance
Board meetings
and main activities
There were eight scheduled Board
meetings in 2019 and an additional
nine meetings in connection with
the acquisition.
The Board maintains and reviews
a scheduled agenda plan, which
ensures that all key issues and
matters reserved to the Board are
discussed at the appropriate time
in the year, and any requirement
for additional meetings is identified
by the Chairman, in conjunction
with the CEO, COO, CFO and
Company Secretary.
The Chairman reviews meeting
agendas with the CEO and
Company Secretary, who maintains
a rolling schedule of matters
arising, which tracks progress
with actions and is reviewed at
each meeting.
The Board receives a
comprehensive electronic meeting
pack a week in advance of each
meeting, plus other information
required to enable it to discharge
its duties. Meetings are conducted
in an atmosphere of open and free
flowing discussion and debate,
with a questioning approach
which enables the non-executive
directors to challenge and test
the strategy, progress made with
implementation and delivery,
and proposals put forward by the
executive directors. Members of the
ELT attended a number of meetings
during 2019 and this widens debate
and increases the range of views
and input available to the non-
executive directors.
Visit our website for details
vistrygroup.co.uk
/investors/corporate-governance
The main activities at Board meetings in 2019 were as follows:
• the Chief Executive provided reports
and updates spanning the Group’s
activities, including progress with
implementation of the strategy,
customer satisfaction, health and
safety, HR matters, investor feedback,
trading performance, land acquisitions/
sales, affordable housing, part-
exchange, and progress with key
projects, including joint ventures.
• the Chief Financial Officer presented the
2019 Budget for approval and provided
a regular finance report. The finance
report includes, at various times,
rolling forecasts, Group KPIs, budgets,
results, projections, leading market
indicators, analyst consensus data, an
analysis of share price valuation and
movements, as well as progress reports
from disciplines reporting to the Chief
Financial Officer and project updates.
• the Budget for 2020 was the
subject of debate, challenge and
detailed consideration and included
consideration of a combined Budget for
the enlarged Group.
• the Divisional Chairmen presented on
the performance of their Divisions and
explained the progress made across the
range of their operations and activities,
taking questions on the challenges
experienced and those lying ahead.
• the Board received regular reports
covering health and safety and
discussed performance against KPIs,
areas for improvement and monitored
actions taken, including service strikes
and the effectiveness of training
and engagement with site teams
and subcontractors.
• the Board monitored customer
satisfaction performance and rolling
HBF survey results.
• the Board received feedback from
the non-executive director
responsible for leading workforce
engagement, following two People
Forum meetings held during the
year, and discussed employee views
regarding the acquisition.
• the Board continued to review
progress with margin initiatives and
approved specification and design
changes following customer feedback
on the Group’s Phoenix housing
range establishing a cycle of
continuous improvement.
• post investment appraisals were
reviewed.
• the Board received progress updates
on the Group’s fledgling Partnerships
Housing operation.
• a presentation was provided by the
NHBC, which provided feedback and
external assurance on the Group’s
performance across a range of KPIs and
included a question and answer session.
• the 2018 full-year results and the
2019 interim results were reviewed
and approved, including release to the
London Stock Exchange.
• actions arising from the 2018 Board
performance evaluation were
progressed and monitored and the
approach to the internal formal
evaluation for 2019 was approved and
the evaluation process commenced.
• an engagement strategy was
developed to give momentum to the
acquisition and the various stages were
followed through as the transaction
progressed, requiring a significant
time commitment during the year and
reaching a successful conclusion early
in 2020.
• the Board continued to keep the
requirements of the new UK Corporate
Governance Code under review and
monitored an action plan to ensure
they were met.
• the Board continued to assess the
possible impact of Brexit on the
Group’s activities.
The Board also reviewed emerging and
principal risks and their mitigation,
regulatory announcements, major
shareholdings, litigation, the process for
the longer-term viability statement, and
plans for the 2019 strategy day.
Vistry Group PLC | vistrygroup.co.uk | 77
Corporate governance report
Site visit: Cotswolds
The Board’s site visit to the Group’s Moreton-in Marsh development
In July 2019, the Board visited Western region’s
The Avenue development in Moreton-in-Marsh.
The Avenue Phase 2 includes house types from our
Phoenix range.
The Avenue was opened in May 2017 and is located on the
edge of the traditional Cotswold market town of Moreton-
in-Marsh. The development is close to a former RAF station
where some of the bygone runway areas are now known
as ‘avenues’. Moreton-in-Marsh town centre is just under a
mile away where the picturesque High Street boasts a variety
of local shops and services. There is a convenience store
and bank as well as supermarket, primary school, health
facilities and trains direct to London in under two hours.
The development features 2, 3, 4 and 5 bedroom
homes including a range of discounted housing offered
in partnership with Cotswold District Council.
During the site tour the Board had opportunity to review
progress of the build programme with the site team, and
to discuss specific features of the development such as the
footpath to the village, and site-specific training, welfare
support and health and safety performance.
The site visit included a viewing of the sales office and show
homes and the regional management team and site and sales
staff discussed the local market, production, sales rates and
customer satisfaction with the Board. The site visit concluded
with an overview of the site’s overall performance and
objectives for 2019 and 2020.
Two of eight scheduled meetings were
held in London and six were held in the
regions, providing the opportunity to
interact with business unit management
teams, tour their offices and active sites
and meet staff at all levels. Two business
unit management teams provided
presentations to the Board in informative
open discussion and question and
answer sessions. These followed site
visits to view construction activities
and site set-up, show homes and
sales offices. All sessions concluded with
an evening meeting with management
and members of the ELT, allowing
more informal discussion to take place,
including individual interaction with
the non-executive directors.
The Board continues to consider
stakeholders in its deliberations and
takes the views and feedback from
shareholders, employees, subcontractors,
78 | Our governance
suppliers, and customers into account
in its decision making, considering their
interests and the impact of certain
decisions upon them.
This was particularly the case as the
acquisition progressed through its
various stages during the year.
Further information on stakeholder
engagement can be found in the section
172(1) statement on pages 42 to 43.
Prior to and following the vote on
the new Remuneration Policy at the
2019 General Meeting, the Board
engaged with major shareholders and
that consultation is ongoing, with the
objective of understanding their concerns
and taking their views into account in
the implementation of the new Policy in
2020, ahead of the vote on the directors’
remuneration report at the 2020 AGM.
The Board selected a non-executive
director, Nigel Keen, for workforce
engagement from the beginning of 2019,
as the most suitable approach for the
Group, which method operates alongside
other feedback channels. Two People
Forum meetings were held during the
year and Nigel Keen attended to hear the
views of employees and, subsequently,
feedback was provided to the Board.
The feedback was informative and helpful
to the Board and included employee
views on the acquisition. Apart from
maintaining awareness of workforce
views, there were no particular decisions
or actions that needed to be taken in
response during 2019. The views of
employees were also received via the
executive team, from employee liaison
groups and in reports from the HR
function, which were taken into account
in decisions taken by the Board affecting
operations and employment conditions.
Title Our governance
Engagement with suppliers is considered
by the Board in discussions on build
activity, supply relationship management,
and procurement and the views of the
Group Commercial Director are taken into
account in decision making.
A 360° supply chain survey, which has
been in place for over a year, is providing
useful feedback and engagement, and
has led to positive initiatives, such as
the implementation of fuel efficient
telehandlers, a reduction in idling time
and carbon emissions, and the launch of
our project pipeline giving visibility over
all aspects of our construction activity to
the supply chain. Independent feedback
also comes from the NHBC on the
Group’s performance. Subcontractors
attend adjudication and project meetings
at business unit offices and they also have
ongoing involvement in health and safety
and other matters which affect the well-
being of the employees on site.
Subcontractors are also regularly engaged
on our product and development of our
specification and construction details,
which has enabled us to enhance our
quality and specification. Our suppliers
also attend regular meetings and provide
input to the product, specification,
and effective ways of working.
KPIs remain under consideration to
monitor relationships and service
charters, portal websites, supplier visits
and supply chain events are continually
being developed to maintain this key
area of engagement.
people and succession planning, long term
capital structure, a risk assessment update
and the risk appetite. Operational and
financial plan targets were also discussed.
Feedback from customers is monitored
on a continual basis, both in terms of
customer satisfaction and the HBF survey.
The Group implemented a CRM system
during the year and this is providing
digital engagement with customers and
is already receiving positive feedback.
The system provides a tailored personal
service, maintains a record of individual
customer contacts, and provides build
stage updates, together with elements
of self service. Customer feedback is also
provided via our site teams, updates
on individual cases, and the Group’s
Homebuyers Panel. This includes views
on the Group’s product range and service
provision, which are passed to the teams
responsible to consider improvements.
The annual strategy day held in July
2019 provided the Board with the
opportunity for an in-depth review of
the strategy for the Group and progress
with implementation. Discussion included
consideration of organic growth versus
acquisition options and the pro and cons
of both.
An operational strategy update was
provided covering the range of the
Group’s activities, followed by sessions on
The programme of informal non-executive
visits to the business units continued
during 2019, allowing them to increase
their knowledge of the Group’s activities
and hear a range of views directly from
staff at all levels on the Group progress.
Importantly, the visits allow the non-
executives to establish a relationship
with local management, test the culture,
reassure themselves that our values and
the right behaviours are embedded, and
hear any concerns from staff. A total of 24
non-executive director visits took place
across our sites and offices.
Once again, the Chairman led the way in
2019 in terms of increased engagement
with our business unit teams and
completed 13 visits to our offices, holding
discussions with the regional MDs and
the wider management teams, before
visiting sites. The Chairman visited 21 sites
during 2019.
During the year, the Chairman held
two meetings with the non-executive
directors, without the executive directors
present, and the Senior Independent
Director held a meeting with the non-
executives, without the Chairman present.
The Grenadier | 5 bedroom home
The Silk Mill, East Hanney
Vistry Group PLC | vistrygroup.co.uk | 79
Corporate governance report
Board perforance evaluation
2019 action plan
The Board carried out an internal formal
evaluation of its 2018 performance at the
beginning of 2019 using a questionnaire, followed
by open discussion between the Chairman and
each director. A draft paper prepared by the
Chairman was then considered by the Board and
an action plan was put in place, which was set
out in the 2018 Annual Report. Progress was
reviewed regularly during 2019 and all actions
were completed, it being acknowledged that
further steps would be required in 2020 as an
enlarged Group.
The Board carried out an internal formal
evaluation of its 2019 performance at the
beginning of 2020 using a questionnaire designed
to capture feedback on implementation of the
2019 action plan, assess the performance of
the Board during the year, and to look forward
to areas for development and action in 2020,
recognising the challenges, risks and opportunities
ahead as an enlarged Group.
Investment review
Succession planning
Past investment decisions to
receive review and appraisal
periodically, focusing on those
made since January 2017.
Further progress to be made with
structured succession planning,
particularly for the executive
directors, but also for the wider
executive team, including
monitoring development plans.
Understanding culture
Engagement
Monitoring of culture and
Chairman and non-executive
director visits to the regions
and sites to be more accurately
recorded and regular debriefs to
be held drawing conclusions.
Further develop engagement with
major shareholders and particularly
with proxy voting agencies.
The Maple | 5 bedroom home
Furrowfields Bishops Itchington
80 | Our governance
Our governance
2020 action plan
Succession planning
Investment review
Succession planning for the leadership of the enlarged
Group to be developed, with increased focus on executive
director succession, Board composition and the skill sets
required. Succession planning for the role of Chairman also
to be considered.
Progress with the periodic review of investment decisions
to be maintained, focusing on investments made since
January 2017.
Stakeholders engagement
Technology as a determinant of future strategy
Relationships and visibility with shareholders and proxy
advisors to be developed from a corporate governance
perspective, particularly in respect of remuneration.
Board to give focus to emerging areas, such as the
development of a digital offering as an integral part of
determining future strategy.
Competitor performance
Integration and delivery of synergies
Board to regularly review external data on the performance
of competitors to supplement actions already taken to
provide increased visibility and assurance regarding the
market/industry.
Board to monitor the integration process and progress with
the delivery of synergies at each meeting.
Led by the Chairman, the Board then
had an open discussion session on the
feedback received and the key themes
that had emerged. A draft paper
was subsequently prepared for
Board consideration.
The Board performed effectively during
2019, delivering on its scheduled
commitments and holding a number of
additional meetings, many at short
notice, to progress the acquisition.
Discussion was open and transparent
at all times, challenging and testing the
views, assumptions and modelling put
forward by the executive and advisors.
Steps to be taken in 2020 at the helm
of an enlarged Group were agreed,
including monitoring the integration
process, monitoring the delivery of
synergies, and familiarising the Board
with the Partnerships business and its
risk management and internal controls.
The relationship between the executive
and the Board continues to be open
and positive and the access of the non-
executive directors to the business
through the executive is excellent.
The performance evaluation of the
Chairman was led by the Senior
Independent Director, with input from
all other members of the Board. It was
considered that the Chairman and the
Board had operated effectively and
successfully addressed the challenges in
the period. The Chairman’s contribution
during the various stages of the
acquisition was a significant feature
enhancing the Board’s effectiveness
during 2019 and it was noted that he had
increased the level of communication
with Board members between
Board meetings, welcoming debate
and challenge.
The Chairman engages the Board
well, runs meetings efficiently, and
facilitates and engages contribution
from all the directors.
Board meetings are well-planned and
have appropriate agendas, based on a
good understanding of the Company’s
business model and strategy and
continue to be held in a conducive
environment with a strong focus on the
important issues. The Chairman has a
positive and constructive relationship
with the CEO.
During 2019, the Chairman spent time
visiting business units and sites and
engaging with the Company’s
executives and relevant external advisers.
He also spent considerable time on the
acquisition in leading Board discussions,
engaging with the executive directors,
and in sessions with the various advisors.
Following the internal formal
evaluation for 2018, he ensured that
an action plan was put in place and
was followed through in 2019, with
discussion on progress taking place at
every scheduled meeting.
As Chairman of the Nomination
Committee, the Chairman maintained
the clear focus on succession planning,
with the position evolving as the year
progressed and the acquisition moved
forward, particularly in respect of senior
executive succession in the context of the
Group’s strategy and the challenges and
opportunities ahead.
Vistry Group PLC | vistrygroup.co.uk | 81
Corporate governance report
Board committees
The Board is supported by standing
Audit, Nomination and Remuneration
Committees.
Membership, roles and activities are
set out in separate reports. The Audit
Committee report is on pages 108 to 111,
the Nomination Committee report is on
pages 112 and 113, and the Remuneration
Committee report is on pages 88 to 106.
Each Committee reports to and has terms
of reference approved by the Board and
the minutes of Committee meetings are
circulated to the Board.
The Audit Committee is chaired by Ralph
Findlay, the Remuneration Committee
is chaired by Nigel Keen, and the
Nomination Committee is chaired by
Ian Tyler.
The internal formal Board evaluation
included performance evaluations of the
Committees and all were identified as
having areas where performance could
be improved. Further detail is given in the
individual Committee reports.
Governance as a business enabler
The Board aims to meet governance best
practice taking account of the business
model, organisation structure, processes
and internal controls that are right for
the Group. The Group’s approach to
governance best practice is set out
below and designed to enable and
support the sustainable long-term
success of the business.
The Group currently complies with and
applies the provisions of the 2018 UK
Corporate Governance Code and has
continued to review its principles and
provisions during 2019 to ensure that
the actions determined in 2018 meet
the revised requirements. They included
measures to enable greater engagement
with the workforce, strengthening the
role of the Nomination Committee,
and widening the role of the
Remuneration Committee.
Matters reserved for the Board include
the overall leadership of the Group,
setting the Group’s values and standards,
approval of strategy and budgets,
oversight of operations and performance,
structure and capital, financial reporting,
internal controls, corporate governance,
delegation of authority, and approval of
major expenditure and transactions.
The Board has approved a written
division of responsibilities between the
non-executive Chairman and the
Chief Executive and the role of the
Senior Independent Director has been
similarly defined.
The Chairman
is primarily responsible for:
• the effective working of the Board,
• taking a leading role in determining
the Board’s composition and
structure, and
• ensuring that effective
communications are maintained
with shareholders.
The Chief Executive
is responsible for:
• the operational management
of the Group,
• developing strategic operating
plans and presenting them to the
Board, and
• the implementation of strategy
agreed by the Board.
The Senior Independent Director supports
the Chairman in ensuring that the Board
is effective and constructive relations are
maintained, in addition to leading the
annual performance evaluation of the
Chairman and providing an additional
point of contact for shareholders.
The control framework is subject to
Board review. The Group has a defined
set of delegated authorities, procedures
and controls across the range of its
activities, which have been documented
and are available to all staff via the
Group’s intranet, including the authorities
and decision making delegated by the
Board to management in respect of the
operational control of the Group.
They are regularly and formally assessed
both by internal and external audit, in
addition to being subject to a quarterly
self-assessment process established
in 2017. These delegated authorities were
reviewed early in 2020 to ensure that
appropriate controls are in place for the
enlarged Group.
The Group’s leadership structure provides
the framework for governance control,
reporting and risk management and is set
out on page 68.
The advice and services of the Group
Company Secretary are available to the
directors. All directors have access to the
Company’s professional advisers and can
seek independent professional advice at
the Company’s expense. There was no
advice sought during the year.
Training is made available to directors
at induction and as required to develop
and maintain knowledge. The Chairman
is responsible for ensuring that directors
continually update and refresh their
knowledge and skills appropriate to their
role on the Board and Board Committees.
Directors are also required to maintain
their awareness of the culture and
operations of the Group. During 2019,
the directors received refresher training
on directors’ duties and responsibilities
in connection with the acquisition and
they also received regular updates on
regulatory developments.
The Company has an insurance policy
in place which insures directors against
certain liabilities, including legal costs.
Information on share capital
is provided on pages
115 to 116
82 | Our governance
Title Our governance
The Winchester | 5 bedroom home
Crown Hill Gardens, Radford Semele
Shareholder engagement
The Company has a regular
comprehensive investor relations
programme, which allows our major
shareholders to engage with the Chief
Executive and Chief Financial Officer at
various points in the year.
In addition to one-to-one meetings
through the year, the Company holds
a series of presentations and meetings
following the announcement of
the final and half-yearly results.
These presentations are made publicly
available so that all shareholders can
access them on the Group’s website
at vistrygroup.co.uk/investors/
corporate-governance.
An increased level of shareholders
engagement was seen in connection with
the acquisition as it progressed, with
the Chairman seeking views on various
aspects and attending meetings, together
with the CEO and CFO. The feedback
received was extremely helpful and was
used to shape various aspects of the
transaction, including structure, financing
and the placing.
Engagement then took place with
shareholders and proxy advisors prior
to the General Meeting held on
2 December 2019 to approve the
transaction, particularly around
remuneration and adoption of the
new remuneration policy. It was
recognised that the time for consultation
was short, which resulted from the
timescales driven by the transaction.
Following the vote on the Remuneration
Policy at the General Meeting,
engagement has continued with the
objective of understanding shareholders’
concerns and taking their views into
account in the implementation of the
new Policy in 2020, ahead of the vote on
the directors’ remuneration report at
the 2020 AGM.
The Board reviews feedback from
investor relations meetings, visits and
presentations, including commentary
on the matters discussed. The overall
feedback received during 2019 was
extremely helpful to the Board in terms of
the strategic direction of the Group.
The Board also values other channels
to obtain shareholders’ views.
The Chairman is responsible for ensuring
that all directors are aware of any issues
or concerns raised by major shareholders.
In addition, the Senior Independent
Director is accessible to shareholders.
All shareholders are invited to attend
the Company’s AGM, which this year will
be held on 20 May 2020. The full Board,
including all Committee Chairmen, attend
and value this meeting as a means of
communicating with private investors,
encouraging their participation.
All shareholders have the opportunity
to exercise their right to vote and
can appoint proxies if they are unable
to attend. To increase ease of voting
an electronic voting facility is provided.
Shareholders attending the AGM have the
opportunity to ask questions relevant to
the business of the meeting and hear the
views of other shareholders before casting
their vote. After the meeting the results of
voting on all resolutions are published on
the Group’s website.
Vistry Group PLC | vistrygroup.co.uk | 83
Corporate governance report
Winchester Village, Winchester
Risk management and
internal control
The Board has responsibility for
maintaining and monitoring sound
risk management and internal
control systems.
The Board’s role includes responsibility
for the risk appetite and the identification,
management and mitigation of risk,
including emerging risk. Risk is a regular
discussion item, which allows the
directors to review the risk appetite
and principal and emerging risks and
assess the quality of risk identification,
risk management processes, and
risk mitigation.
Risk is a theme that runs naturally
through Board discussions on a range
of topics and adopting this approach
ensures that risk identification and
consideration of emerging risk feature
regularly in the Board’s deliberations.
In setting its approach to risk, the
Board aims to ensure that the
Company is neither prevented from
taking opportunities nor exposed to
unreasonable risk.
84 | Our governance
Monitoring and review forms part of
the work undertaken by the Audit
Committee and is based principally on
the review and interrogation of reports
from the Internal Audit function and
from management. It covers all material
controls, including financial, operational
and compliance controls and compliance
with risk management processes.
In addition, an established Risk
Governance Committee operates with
representation from the business units
to support the monitoring of existing
risk and the effectiveness of controls and
mitigation, alongside the identification of
emerging risk across the Group. This role
will continue in the enlarged Group.
In reviewing the effectiveness of the
Company’s system of internal control and
risk management systems during 2019,
the Board (i) considered the risk appetite
and (ii) reviewed changes in the nature,
likelihood and impact of emerging and
principal risks, their mitigation, the
controls placed against them and the
Company’s ability to respond to changes
and (iii) received reports from the
Audit Committee on the operation and
effectiveness of the risk management
and internal controls systems and
their integration with strategy and the
business model.
The Board also reviewed the minutes
of Audit Committee meetings and
the minutes of Risk Governance
Committee meetings.
Recommendations for improvements to
internal controls were made during the
year and corrective action was taken,
but they did not represent significant
control failings or weaknesses. A self-
assessment process supports our internal
control framework, where all directors
across the company report business unit
performance in control adherence.
The Board has complied with Provision
28 of the Code by completing a
robust assessment of the emerging
and principal risks facing the Company.
It has established a continuous process
for identifying emerging risk and
evaluating and managing the principal
risks, in accordance with the FRC’s
“Guidance on Risk Management, Internal
Control and Related Financial and
Business Reporting”. This process has
been in place for the period under review
and up to the date of approval of the
Annual Report and Accounts and includes
compliance with provision 29.
It is designed to manage rather than
eliminate risk and can only provide
reasonable and not absolute assurance
against material misstatement or loss.
Title Our governance
The Company maintains tight control
in this area through a centralised
treasury function, business unit payment
functions, three-way matching of
payments, authorisation documentation,
and the segregation of authorisation
accountability.
The Company maintains a regular weekly
and monthly financial reporting cycle
and an alternate monthly cost valuation
process, allowing management to assess
financial progress against objectives.
Reporting is supported by a formal
budget and monthly rolling forecasting
which ensures that there is a recent
financial forecast in place at all times
against which to assess performance.
Together with this financial reporting,
Division and business unit management
teams report key business issues
promptly and as part of a standard
monthly regional operational
reporting pack.
Finally, there is a process of accounts
preparation, which ensures that there
is an audit trail between the output
from the Company’s financial reporting
systems and the preparation of the
financial statements.
Control framework
The Company maintains a comprehensive
control environment, which is regularly
reviewed by the Board.
The principal elements of the control
environment include regular board
meetings, the Division and business
unit structure, defined operating
controls and delegated authorisation
limits, the Internal Audit function,
the Risk Governance Committee,
and a comprehensive financial
reporting system.
There are a number of elements of the
Company’s internal control and risk
management systems that are specifically
related to the Company’s financial
reporting process:
• there is a well understood
management structure which allows
for clear accountability and an
appropriately granular level of
financial control.
• the structure is underpinned by
documented delegated authority levels
for business transactions.
• the process is supported by process
documents and systems for both
internal management reporting and
external reporting which stipulates,
amongst other things, reporting
timetables and the contents of key
management reports.
• best practice processes and
procedures are mapped for all
core and support activities.
• a quarterly self-assessment for all
director level employees operates
to confirm adherence to mandatory
controls and non-conformities are
reported to the ELT for discussion
and remediation.
• Internal Audit plays a key role in
monitoring the control environment
and in identifying and supporting the
mitigation of threats to the business.
The Company operates software systems
that record financial transactions and
whose effectiveness is reviewed by the
Internal Audit function on a regular basis.
Findings arising from these exercises
are reported to the Audit Committee
and action is taken, as appropriate.
Control over cash expenditure is a
key component of the financial
control framework.
Shorelands, Bude
Vistry Group PLC | vistrygroup.co.uk | 85
Delivering quality
new homes
86 | Our governance
Our governance
Winchester Village, Winchester
Vistry Group PLC | vistrygroup.co.uk | 87
Directors’ remuneration report
On behalf of the Board, I am pleased to present the
Directors’ Remuneration Report for the financial year ended
31 December 2019. It provides details on how directors
were paid in 2019 and the link between remuneration and
the Company’s performance. The Report is subject to an
advisory shareholder vote at the 2020 AGM.
Nigel Keen | Chairman of the Remuneration Committee
The discussions and correspondence
were fairly wide ranging, but the feedback
can be summarised in the five sections
that follow:
1. Quantum, how much pay is appropriate?
The Committee was clear that the level
of remuneration for directors should
be competitive but not excessive.
The task for the Committee was to
determine what level and structure
of remuneration would provide the
Company with the ability to attract,
retain and motivate leadership to deliver
value and minimise risk in the enlarged
Group. In order to assess this, the
Committee considered the relationship
between variable pay and fixed pay and
levels of remuneration in areas from
which we might recruit. These levels
were tested against two sets of pay
information both of which have obvious
relevance to the enlarged group.
The two markets examined were
as follows:
1. UK listed companies with market
capitalisation somewhat above, and
somewhat below, the size of the
Vistry Group; and
2. The 9 UK listed housebuilding
companies of a similar size to
Vistry Group.
This analysis showed that the expected
remuneration for directors under the
new Policy was slightly lower than the
market average for UK listed companies
of a similar market capitalisation to
the enlarged Group. Against the listed
housebuilder comparator group the
expected level of Vistry Group pay in
total was around median for the CEO
role, and below median for the CFO role.
The Committee therefore concluded
that the revised policy, which was
approved in December, was appropriate
and should be applied from completion
of the acquisition.
2. Ensuring increased pay relates only
to post acquisition actual delivery of
shareholder value
The Committee is clear in its view that
any additional remuneration following
a corporate transaction should only
be available to Vistry Group executives
once there is demonstrable shareholder
value delivered to our shareholders.
It is for this reason that the change in
pay opportunity is framed as incentive
pay not fixed pay. Payments under the
annual and long-term schemes will only
arise if the anticipated benefits of the
acquisition are delivered in the short
and longer term respectively. This is
described further below.
It should be noted that the base salary
of the CEO has not been increased
beyond inflation in 2020 and that the
salary of the newly appointed COO
who joined from Galliford Try as
part of the acquisition, has been set
significantly below his former salary.
Furthermore, the change in the CFO’s
base salary of 18% was independent of
the acquisition and reflected the fact
that his salary was materially below
market, even for a business of
Vistry Group’s pre acquisition scale
and complexity.
Although some shareholders suggested
that the pay opportunity itself ought to
be phased in over some years following
a corporate transaction, the Committee
believes that the intention that no extra
pay should be available without extra
shareholder value being delivered will be
achieved in full within the design of the
executive incentives as described above.
3. Pension reduction glidepath
Regarding executive director pension
allowances, the acquisition Circular
explains that they shall be equalised to
the wider workforce on, or before,
31 December 2022.
A new Remuneration Policy was put
to shareholders and approved at the
General Meeting in December 2019.
The Remuneration Policy table is
set out on pages 104 to 106.
The Remuneration Policy can be
found on the Company’s website in
its entirety.
Remuneration in context
The acquisition of Linden Homes
and the Vistry Partnerships business
has resulted in a much enlarged
business, with both material additional
commercial and operating complexity
and significant opportunity to deliver
value to shareholders. In recommending
the acquisition to shareholders, the
Remuneration Committee considered
carefully the appropriateness of the
Company’s existing remuneration policy
in respect to its ability to retain and
incentivise the enlarged leadership
team in driving integration and delivering
the full benefits from the substantially
larger group and, in due course, to
attract and recruit new leadership of
appropriate calibre. It concluded that,
whilst the existing policy was appropriate
for the business prior to acquisition,
significant change, particularly in respect
of variable pay, was appropriate to ensure
shareholders’ interests were protected and
their value maximised.
The new Policy, on which shareholders
subsequently voted, was set out within
the acquisition documents and, as a
result, we were unable to consult with
shareholders prior to its publication as
we would normally have expected to do.
Nonetheless, we did seek shareholders
views in the short period available and
the Policy was approved by 65.5% of
shareholders at the General Meeting held
in December and we are grateful for the
support received. During the then ongoing
dialogue, some shareholders raised
questions and concerns.
88 | Our governance
We are now able to confirm that we will
introduce a stepped arrangement to
reduce executive director pensions over
the next three years to reach workforce
levels by January 2023.
the stretching financial and operational
targets detailed later in the Report.
Further explanation of the annual bonus
performance assessment can be found on
pages 93 to 94.
4. Annual Bonus deferral into shares
In light of the increase in variable
pay, it was suggested that it might be
appropriate to defer an element of all
annual bonus paid, rather than simply to
defer any amount over and above 100%
of salary. The Committee believes there
is merit in this suggestion and intends to
operate the Policy so that one third of all
annual bonus paid is deferred into shares
for a period of two years.
5. Level of Directors
Shareholding Guidelines
Regarding the level of executive
director shareholding guidance, the
Committee intends to review the level
of shareholding guidance in light of the
increased opportunity to potentially
receive shares under the new Policy.
2019 performance and remuneration
During 2019, the Group continued to make
considerable strides towards its strategy
and operational priorities, putting the
customer at the centre of everything we do.
Operational progress was made across all
business areas and is reflected in the quality
of our product, our customer satisfaction
scores, and in our financial performance,
which saw the delivery of another year of
record profits. Our production processes
now consistently deliver high quality new
homes to satisfied customers and are
driving operating efficiencies. It was from
this position of strength that we were
able to conclude the major acquisition
of the Linden Homes and Partnerships &
Regeneration businesses from Galliford Try.
The Group delivered a profit before tax
for the year ended 31 December 2019 of
£188.2m, which compares to profit before
tax of £168.1m in 2018. Basic earnings per
share (EPS) increased by 9.7% to 111.5p
(pre exceptional items) and was 101.5p
(post exceptional items) versus 101.6p
in 2018. Return on Capital Employed
(ROCE) finished at 22.3%, up from 19.3%
in 2018. (ROCE has been calculated as
pre exceptional operating profit divided
by the average of opening and closing
shareholders’ funds, plus net debt). At the
same time, the Group delivered a strong
forward sales position to support growth
in 2020.
The performance in 2019 resulted in 100%
of maximum bonus being awarded to the
Chief Executive, Greg Fitzgerald, and the
Chief Financial Officer, Earl Sibley, against
Based on EPS, TSR and ROCE performance
over the period 2017 to 2019, LTIP
awards made in 2017 will vest at 81.6%
of maximum. Further details of the
conditions applicable to these awards and
the performance achieved are set out on
pages 94 to 95.
2020 remuneration
In terms of remuneration for 2020, Greg
Fitzgerald’s salary was increased from
£679,575 to £696,565 (2.5%), below the
general increase for the wider employee
population of 2.75%. Earl Sibley’s salary
was increased from £334,750 to £395,000
(18.0%) taking into account his additional
responsibilities and considering both his
role in the enlarged Group and the below
market level of his previous salary. Graham
Prothero was appointed as Chief Operating
Officer with effect from 3 January 2020 on
a salary of £500,000, which is significantly
less than his previous salary at Galliford Try.
Following the regular annual review,
the Committee determined that the
annual bonus measures for 2020 should
maintain the focus on financial metrics,
whilst continuing to prioritise high
levels of customer satisfaction and also
incentivising the delivery of synergies and
the successful integration of the Group.
The detailed targets will be disclosed in full
retrospectively, in accordance with
our normal practice. The 2020 annual
incentive scheme will reflect the following
core elements:
1. EBIT (55%). The potential short term
performance of the enlarged Group was
set out in the public documents related
to the acquisition and the associated
equity placing. Attaining this will be a
significant achievement and it will form
the basis of target performance, with
maximum set at materially above
this level.
2. Synergies (20%). A material element of
transaction value will come from cost
synergies which the Board believes can
be generated and it is critical that these
are delivered both quickly and effectively.
The achievement of maximum bonus
for this element will require significant
outperformance in terms of both in-year
delivery and year-end run rate.
3. Capital Employed (25%). Balance
sheet efficiency is a key driver of value
for the Group. Target capital employed
Our governance
performance will be based on expected
levels of gearing set out in the acquisition
documents with maximum set at levels
of significant out performance. Once the
post acquisition balance sheet is settled,
to the extent that this balance sheet
differs from that used to set these capital
employed targets, those targets will be
conformed accordingly.
4. Customer Service (pre-requisite). The
Board believes that a key risk in the
delivery of value from the acquisition is
the maintenance of customer service
through the integration process and it is
vital that customer satisfaction
is maintained.
From 2020 the Committee has determined
that one third of any bonus award will be
paid in shares, deferred for two years.
The Committee believes that the acquisition
provides significant opportunity for value
creation in terms of earnings growth and
cash returns to shareholders and that
success in delivery will be appropriately
measured by the three LTIP vesting criteria
of TSR, ROCE and EPS.
EPS threshold and maximum will be set
at 395p per share and 446p per share
respectively. ROCE threshold will be set at
20.8% and maximum at 22.6%. If needed
these targets will be conformed to the post
transaction balance sheet. Ultimately, the
success of the strategy will be measured
through our relative TSR, with threshold set
at peer group median and maximum set at
peer group upper quantile.
With the ongoing process of integration,
it is sensible for Vistry Group to retain
flexibility to amend the performance
conditions under both incentive plans
should there be a material change to the
Group’s financial statements. Of course, if
this were likely, we would consult widely
with our shareholders.
Conclusion
I hope you find that this report clearly
explains the remuneration approach we
have taken and how we will implement the
new Policy in future. I look forward to your
support at the 2020 AGM in respect of this
report and will be available on the day to
take any questions you may have.
Nigel Keen
Chair of the Remuneration Committee
Vistry Group PLC | vistrygroup.co.uk | 89
Remuneration report
Introduction
This annual remuneration report explains how the remuneration policy has been implemented in the year ended 31 December 2019 and
how it will be implemented for 2020. Details of remuneration in 2019 are set out first, followed by the approach for 2020.
At a glance summary
Component and where to find
Greg Fitzgerald – CEO
Earl Sibley - CFO
Graham Prothero* – COO
Single figure totals for 2019 (page 92)
£2,804k
£1,303k
Annual bonus payments for 2019 (pages 93 to 94)
100% of maximum
100% of maximum
LTIP awards vesting in respect of 2019 (page 95)
81.6%
81.6%
LTIP awards granted in 2019 (page 94)
150% of basic salary
125% of basic salary
n/a
n/a
n/a
n/a
Salaries for 2020 (page 99)
£696,565 (+2.5%)
£395,000 (+18.0%)
£500,000
Shareholding as % of salary (page 96)
Guideline in 2019: 100% of salary (CEO 200%)
581%
24%
0%
Changes to the Remuneration Policy for 2020
New policy approved by shareholders at the General Meeting held on
2 December 2019
Annual bonus for 2020 (pages 100 and 101)
Bonus opportunity increased to 150% of basic salary in the new
Remuneration Policy.
Profit before tax: 55% weighting
Period end capital employed: 25% weighting
Delivery of synergies: 20% weighting
Customer satisfaction: Acts as threshold to bonus
The balance of financial and non-financial metrics is maintained, keeping
the focus on financial metrics, with the introduction of a synergy measure,
removal of the operating margin measure, and the reduction in the
weighting to profit before tax from 60% to 55% of the bonus.
Period end capital employed replaces average capital employed and is
subject to an underpin to ensure the right behaviours are maintained.
The customer satisfaction measure continues to act as a threshold, below
which a stepped reduction in total bonus earned on the financial metrics
applies, potentially down to zero.
LTIP awards for 2020 (page 101)
200% of basic salary
200% of basic salary
200% of basic salary
TSR: 33.3% weighting
ROCE: 33.3% weighting
EPS: 33.3% weighting
TSR, EPS and ROCE remain equally weighted, each applying to one third
of awards.
*Graham Prothero, was appointed as Chief Operating Officer with effect from 3 January 2020.
90 | Our governance
Our governance
The link between remuneration and strategy
As set out in the Strategic Report, the enlarged Group has a clear set of strategic priorities designed to move the business forward,
once the process of integration is complete, and allow it to compete more effectively across the housing and regeneration markets as
a top five housebuilder and enhance shareholder value. These priorities include people satisfaction, customer satisfaction, a healthy
and safe working environment, and enhanced shareholder returns through increased profitability, ROCE and total shareholder return.
Our medium-term targets have provided the Group with a clear direction and many have already been achieved. At present, we are
focused on the integration and delivery of synergies to the benefit of shareholders. Looking forward, the housebuilding business has
national scale with an expanded geographic reach and the strategy is to maximise output through controlled volume growth in the
medium term, whilst maintaining high quality delivery. We will also maximise the opportunities inherent in being a dual branded
housebuilder, ensuring the we provide our customers with the product choice to best meet their needs. The Partnerships business
holds a strong and unique position within the partnerships market and the strategy here is to accelerate revenue growth through
increased output from the existing operating structure, coupled with expansion into new geographies. The enlarged Group’s land
supply and strategic land capability will support the growth of development, land-led revenues.
In designing the new Remuneration Policy for the enlarged Group, which was approved by shareholders in December 2019, the link
between remuneration and the strategic priorities, the integration process, and the Group’s targets were carefully considered by
the Committee. This included consideration of the importance of driving behaviours that underpin the culture of the business and
support the sustainable success of the enlarged Group. Targets used in the Group’s incentive schemes are monitored and progress
measured by reference to many of the Group’s reported KPIs, which include pre-tax profit, operating margin, net cash, ROCE, earnings
per share, private and affordable completions, the HBF customer satisfaction score, plots added to the land bank, and involuntary
staff turnover.
Annual bonus arrangements link to the Group’s near-term strategic priorities and, for 2019, the Committee selected operating margin
and average capital employed measures to sit alongside the profit before tax and customer satisfaction performance measures.
Margin improvement remains critical to the improvement of ROCE and average capital employed drives a disciplined balance sheet
and supports the management of capital. For 2020, synergy delivery is introduced to maximise acquisition benefits for shareholders
and period end capital employed will be used as an interim measure to maintain a robust balance sheet with appropriate gearing, with
an underpin to counter short term actions and maintain long term performance.
The LTIP takes a longer-term perspective and 2019 awards saw a return to the financial and share price performance measures
of relative total shareholder return, earnings per share and ROCE, equally weighted, at one third of awards. Although customer
satisfaction has been removed as an LTIP performance measure, high levels of customer satisfaction will continue to be incentivised in
2020 via the near-term annual bonus arrangements, as explained above.
Key remuneration decisions during 2019
During 2019, the Committee determined the performance measures and set targets for the 2019 annual bonus (shown on
page 93), approved 2018 bonus payments and approved the vesting of the CEO’s 2017 Recruitment Award. It also determined the
performance measures and set targets for and approved LTIP awards made in 2019 and confirmed the total lapse of the 2016
LTIP awards. Malus and clawback provisions for incentive awards and a two year post vesting holding period for LTIP awards
continued to be applied in 2019.
During the second half of 2019, the Committee took considerable care developing and reviewing the design of a new Remuneration
Policy appropriate to the enlarged Group following the Acquisition. Factors taken into account included appropriate competitive
market positioning as a top five housebuilder and ensuring the ability to retain and attract the talent required to successfully deliver
the strategy of an enlarged Group. The Committee engaged with shareholders, institutions and proxy advisors ahead of the vote on
the new Remuneration Policy at the General Meeting held on 2 December 2019 and has continued to engage since, responding to the
concerns of those shareholders who voted against the new Policy and setting out the Committee’s developing thoughts, proposals
and intentions in implementing the new Policy in 2020.
Linked to the new Remuneration Policy, the Committee reviewed the new LTIP Rules, which were approved by shareholders at the
General Meeting held on 2 December 2019 and agreed a post-employment shareholding guideline.
Towards the end of the year, the Committee considered the structure for the 2020 annual bonus and completed the 2020
remuneration review, which included consideration of the link between executive remuneration and pay and employment conditions
throughout the Group (including oversight of the general proposals for staff for 2020). The Chairman’s fee was also reviewed.
Vistry Group PLC | vistrygroup.co.uk | 91
Remuneration report
Implementation of remuneration policy for the year ended 31 December 2019 Single figure of executive
directors’ remuneration (audited)
Base salary
Benefits (1)
Pension (3)
Other – pension salary supplement (4)
Sub-total (fixed pay)
Annual bonus
Long Term Incentives (2)
Sub-total (variable pay)
Total remuneration
Notes:
Greg Fitzgerald
(appointed CEO 18 April 2017)
Earl Sibley
(appointed GFD (now CFO) 16 April 2015)
2019
£000
680
1
-
136
817
680
(6) 1,307
1,987
2,804
2018
£000
666
1
-
133
800
593
(5) 787
1,380
2,180
2019
£000
335
7
20
30
392
335
(6) 576
911
1,303
2018
£000
325
19
25
24
393
289
-
289
682
(1)
(2)
(3)
(4)
(5)
Taxable benefits include medical insurance and a loan account balancing payment relating to membership of the Bovis Homes Regulated Car Scheme, plus
income tax and national insurance due on this payment.
The 2016 LTIP measured over the three-year period to 31 December 2017 lapsed in full. The 2017 LTIP measured over the three-year period to 31 December
2019 will vest to the extent of 81.6% on 8 September 2020. The share price on grant of this award was £11.61 and at the end of the three-year performance
period was £13.08. 12.7% of the value of the award vesting is attributable to share price growth during the performance period.
The single figure for Earl Sibley has been calculated as the employer’s cash contribution, 60% of which is taken as a pension salary supplement. Greg Fitzgerald
was not a member of a pension scheme during the year.
Greg Fitzgerald receives a non-bonusable and non-pensionable pension salary supplement. Earl Sibley receives a non-bonusable and non-pensionable pension
salary supplement representing the balance his pension allowance not contributed to a pension scheme.
The recruitment award for Greg Fitzgerald was approved by shareholders at the General Meeting held on 2 May 2017. The performance condition, which
required the Company’s total shareholder return over the period from 4 April 2017 to 31 December 2018 to be at least equal to the median of the TSR
comparator group applicable to awards granted under the LTIP in 2017, was met and the award vested in full. The award will be paid entirely in shares, to be
released in April 2020. The value is calculated using the share price on the vesting date (1,025.0 pence on 21 February 2019).
(6)
This is an estimated value based on the average shareprice over the last quarter of 2019 of £11.82125 for the 2017 LTIP awards which vest on
8 September 2020.
Greg Fitzgerald is non-executive Chairman of Baker Estates Limited, for which his personal service company received a fee of £62,000
during the year, and non-executive Chairman of Ardent Hire Solutions Limited, for which his personal service company receives fees of
£115,000 per annum. Earl Sibley does not currently hold any external directorships.
The following table shows the remuneration for the non-executive directors who served during the 2019 financial year:
Non-executive directors
Ian Tyler
Alastair Lyons (retired 23/05/18)
Chris Browne
Ralph Findlay
Katherine Innes Ker (appointed 9/10/18)
Nigel Keen
Mike Stansfield
Total
92 | Our governance
Salary / fees £000
2019
185
-
53
73
53
63
53
2018
170
31
49
64
11
54
49
480
428
Our governance
Annual bonus payment in respect of 2019
The maximum opportunity for the Chief Executive and Chief Financial Officer for the year ended 31 December 2019 was 100% of salary.
Provisions that enable the recovery of sums paid (clawback) continue to apply, as set out in the policy table.
A breakdown of the performance against the measurement criteria is shown below.
Following the regular annual review and the success of the emphasis on operational delivery and customer satisfaction in 2018, the
Committee determined that the annual bonus scheme for 2019 should be adjusted to focus on financial metrics supporting the Group’s
medium-term targets, whilst continuing to prioritise high levels of customer satisfaction. The Committee increased the weighting for
financial metrics to 100% from 60%, replaced the legal completion profile measure with average capital employed, and redesigned the
customer satisfaction measure to act as a threshold, below which total bonus earned is reduced. Threshold was set at 80% customer
satisfaction in the Home Builders Federation (“HBF”) survey and at this level bonus earned on the financial metrics is triggered
without reduction. A customer satisfaction score of 79% leads to a reduction of 25% of bonus earned and scores of 77%, 74% and
70% lead to further 25% reductions, until no bonus is earned at a score of 70%. The average capital employed measure is designed
to deliver operating efficiencies and a more controlled profile of completions across the year from an appropriate level of work in
progress across sites. Lastly, the weighting for the profit before tax performance measure was increased.
All targets were set in February 2019.
Measure
Financial measures (100%)
Weighting
(as a % of maximum)
Threshold
On target
Stretch and
maximum
Outcome and
award achieved
(% of maximum)
Profit before tax
60%
0% of
maximum
£168.0m
50% of
100% of
£188.2m
maximum
maximum
(100%)
£180.0m
£186.0m
Operating margin
20%
0% of
50% of
100% of
maximum
maximum
maximum
15.0%
16.4%
17.0%
17.0%
(100%)
Average capital employed
20%
Threshold 0%: 5% below Budget
3% above
On target: In line with Budget
Maximum100%: 2% above Budget
Budget
(100%)
Non-financial measures (0%)
Customer satisfaction (HBF survey score)
(completions between 1 October 2018 and 30
September 2019 to reach at least 70% before any
measure can pay out)
Total bonus (% salary)
Acts as threshold
n/a
n/a
n/a
Threshold met
(HBF survey
score: 5-star)
100%
Pre-tax-profit for 2019 was £188.2 million, exceeding the target set for stretch performance, and a pay-out of 100% against the 60%
allocated to this measure was achieved. Operating margin finished at 17.0%, reaching the maximum target of 17.0% and a full pay-out of the
20% of allocated to this measure was delivered. The average capital employed measure was also met in full, with a result 3% above Budget,
resulting in 100% of the 20% allocated to this measure being achieved. There was no discretion exercised in arriving at the 2019 bonus
outcome for the executive directors, representing a total pay-out of 100% of the bonus opportunity. The Committee determined that this
outcome had a clear link to the significant progress made by the Group in 2019 and was a fair reflection of the performance delivered by the
executive directors.
Vistry Group PLC | vistrygroup.co.uk | 93
Remuneration report
Executive director
Greg Fitzgerald
Earl Sibley
Maximum bonus
% of salary
Target bonus
% of salary
Actual bonus
% of salary
Total 2019
bonus £000
100
100
50
50
100%
100%
680
335
Vistry Group Long Term Incentive Plan
Long term incentive awards are made in the form of performance shares or nil-cost options under the Vistry Group Long Term Incentive
Plan. New plan rules were approved by shareholders at the General Meeting held on 2 December 2019 and the 2020 awards will be
granted under this Plan. All prior year awards were granted under the rules approved at the 2010 Annual General Meeting. Each award
is made subject to the achievement of performance criteria as explained below and will ordinarily vest after three years. A two-year
holding period following vesting was introduced for 2017 awards onwards, which extends to five years the time between awards being
granted and when they can be exercised. Provisions that enable the withholding of payment or the recovery of sums paid (malus and
clawback) were further strengthened with the adoption of the new Plan rules.
Discretions available to the Committee contained in the new LTIP rules are set out in the policy table on page 105 and also in the exit
payments policy in the full Remuneration Policy, available on our website: vistrygroup.co.uk/investors/corporate-governance.
Awards granted during 2019 (audited)
For the 2019 awards, the Committee decided to return to financial and share price performance measures, using relative total
shareholder return, earnings per share and ROCE, equally weighted at one third of awards. Although the customer satisfaction
performance measure was removed, high levels of customer satisfaction continue to be incentivised via the near-term annual
bonus arrangements.
An award of 90,529 shares was made to Greg Fitzgerald at 150% of basic salary on 4 March 2019, calculated based on a share price
of £11.26 on 1 March 2019. The award is subject to a three-year performance period ending on 31 December 2021 and exercisable in
2024, following a two-year holding period, as follows:
Executive director
Greg Fitzgerald
Type of award
Performance share award
Number
of shares
awarded
90,529
Face value
of award
£000
1,019
% of face value
that would vest
at threshold
25.0*
An award of 37,161 shares was made to Earl Sibley at 125% of basic salary on 4 March 2019, calculated based on a share price of £11.26
on 1 March 2019. The award is subject to a three-year performance period ending on 31 December 2021 and exercisable in 2024,
following a two-year holding period, as follows:
Executive director
Earl Sibley
Type of award
Performance share award
Number
of shares
awarded
37,161
Face value
of award
£000
418
% of face value
that would vest
at threshold
25.0*
* Threshold vesting for the proportion of the awards measured against each of the EPS, TSR and ROCE performance conditions was set at 8.3% of the maximum for
each measure or 25.0% of the shares in the total award.
The performance measures for all 2019 awards are TSR (33.3%), EPS (33.3%) and ROCE (33.3%). Achieving threshold performance for the
financial and share price performance measures would result in 25.0% of the total award vesting.
The performance targets are:
• TSR – threshold performance equal to the annualised median of the index and maximum performance equal to the annualised
median of the index, plus 7.5%.
• EPS – threshold performance at cumulative EPS of 320 pence and maximum performance at cumulative EPS of 353 pence.
• ROCE – threshold performance at 22.0% and maximum performance at 25.0%, both as measured in the third year of the
performance period (2021).
Visit our website for details
vistrygroup.co.uk
/investors/corporate-governance
94 | Our governance
Our governance
The 2019 constituents of the TSR index, which may be subject to change, are as listed below:
TSR comparator group
Barratt Developments plc
Bellway plc
The Berkeley Group plc
Countryside Properties PLC
Crest Nicholson Holdings plc
Persimmon plc
Redrow plc
Taylor Wimpey plc
Awards vesting in respect of 2019
The LTIP awards made in 2017 were measured over the three-year period to 31 December 2019 and will vest to the extent of 81.6% on
8 September 2020. One third of the award was measured against Customer Satisfaction, with the remainder measured using EPS
performance (22.2%), TSR performance against an index of the UK’s leading housebuilders (22.2%), and ROCE performance (22.2%).
The Customer Satisfaction measure had no threshold and threshold vesting for the financial and share price performance measures was
set at 6.67% against each metric.
The Customer Satisfaction performance measure (using the HBF customer satisfaction rating for the period October 2018 to September
2019) required the achievement of at least 4-star status (80% to 89.9%). The Group achieved 5-star status for the period and 100% of this
element of the award will vest.
The threshold EPS target was 238p and the maximum target was 280p measured on a cumulative three-year basis. Absolute cumulative EPS
over the three-year performance period was 281.0p and 100% of the EPS element will vest.
The threshold TSR target was performance equal to the annualised median of the index and the maximum target was performance equal to
the annualised median of the index, plus 10%. Actual TSR was 26.9%, which was above the median of the index of 26.5% with the result that
32.5% of the TSR element will vest.
The threshold ROCE target was 18.4% and the maximum target was 23.4% measured in the third year of the performance period (2019).
Actual ROCE in 2019 was 22.3% and 84.6% of the ROCE element will vest.
Historical LTIP awards
The table below summarises the historical long-term incentive awards made to the executive directors.
Award size (% salary)
Performance criteria
Year of grant
Performance period
(CEO)
(CFO)
Customer
satisfaction
TSR
EPS
ROCE
Percentage of
award vesting
2016
2017
2017
2018
2019
01/01/2016 – 31/12/2018
125%
33.3%
33.3%
33.3%
0%
01/01/2017 – 31/12/2019
*200%
125%
33.3%
22.2%
22.2%
22.2%
81.6%
04/04/2017 – 31/12/2018
**100%
100%
100%
01/01/2018 – 31/12/2020
†200%
125%
25%
25%
25%
25%
Ongoing
01/01/2019 – 31/12/2021
150%
125%
33.3%
33.3%
33.3%
Ongoing
* As explained in the 2017 Directors’ Remuneration Report, this level of award was granted on an exceptional basis.
** G P Fitzgerald’s Recruitment Award which vested with effect from 31 December 2018, as explained in the 2018 Directors’ Remuneration Report.
† As explained in the 2018 Directors’ Remuneration Report, this level of award was granted on an exceptional basis.
Pensions
Earl Sibley is a member of the Bovis Homes Group Personal Pension Plan (“GPP”). The Company contributes up to 15% of his base salary
to the GPP. During 2018, Earl Sibley took 60% of this contribution as a pension salary supplement.
Greg Fitzgerald was not a member of a pension scheme during the year and receives a pension salary supplement of 20% of his
base salary.
There are no special early retirement or early termination provisions for executive directors, except as noted in the exit payments
policy in the Remuneration Policy, available on our website at vistrygroup.co.uk/investors/corporate-governance.
Any new appointments include eligibility for membership of the GPP.
Vistry Group PLC | vistrygroup.co.uk | 95
Remuneration report
Payments for loss of office and to past directors
There were no payments for loss of office made during the year. There were also no payments to past directors.
Directors’ shareholdings and share interests (audited) Directors’ beneficial share interests
The directors’ interests in the share capital of the Company are shown below. All interests are beneficial.
31 Dec 2019
Shares under
the LTIP
(shares subject
to performance
conditions)
Ordinary shares
SAYE options
(options subject
to continuous
employment)
Ordinary shares
31 Dec 2018
Shares under
the LTIP
(shares subject
to performance
conditions)
SAYE options
(options subject
to continuous
employment)
428,480
9,935
479,110
124,014
-
389,563
388,581
4,213
9,771
148,400
-
4,213
2,616
-
1,026
2,687
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,388
25,350
1,026
2,687
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Executive directors
Greg Fitzgerald
Earl Sibley
Non-executive directors
Ian Tyler
Alastair Lyons (retired 23/05/18)
Chris Browne
Ralph Findlay
Nigel Keen
Mike Stansfield
Katherine Innes Ker
There were no changes in the holdings of ordinary shares of any of the directors between 31 December 2019 and 27 February 2020
other than the normal monthly investment in partnership shares through the Bovis Homes Group Share Incentive Plan.
The directors’ interests in share options and awards under the Long Term Incentive Plan are detailed on page 92. There were no
changes in the holdings of share options and awards under the Long Term Incentive Plan between 31 December 2019 and
27 February 2020.
Shareholding guidelines
Guidelines have been approved for executive directors in respect of ownership of Vistry Group shares. During 2019, the Board
expected executive directors to retain 100% of the net value derived from the exercise of Long Term Incentive Plan awards as shares,
after settling all costs and income tax due, until such time as executive directors hold shares with an historical cost equal to basic
annual salary. The CEO was required to hold shares with an historical cost equal to twice basic annual salary. This shareholding
guideline has been increased to 200% of basic annual salary and now applies to all executive directors. Shares no longer subject to
performance conditions but subject to deferral or a holding period count towards the guideline (on a net of tax basis).
Executive director
Greg Fitzgerald
Earl Sibley
Shareholding
at 31 Dec 2019
Historical
acquisition
cost
Salary at
1 Jan 2020
%
shareholding
achieved
Shareholding
guideline
428,480
£4,044,738
£696,565
9,935
£95,021
£395,000
581%
24%
200%
100%
Greg Fitzgerald continued to meet the shareholding guidelines during 2019 and, having acquired further shares in the Placing in
November 2019, now holds shares with a historical cost equal to almost six times basic annual salary. Earl Sibley continued to increase
the number of shares held during 2019.
96 | Our governance
Directors’ interests in Long Term Incentive Plan shares
Executive director
Award date
Vesting date
Interest
as at
31 Dec
2018
Interest
as at
31 Dec
2019
Value of
shares at
date of award
(£000)
Vesting and
exercised
in year
Lapsed
in year
Greg Fitzgerald 02/05/17
31/12/17
*76,786
76,786
02/05/17
31/12/18
*76,786
76,786
08/09/17
08/09/20
111,972
111,972
05/03/18
05/03/21
123,037
123,037
04/03/19
04/03/22
-
90,529
Earl Sibley
24/02/16
24/02/19
39,040
-
08/09/17
08/09/20
49,342
49,342
05/03/18
05/03/21
60,018
37,511
04/03/19
04/03/22
-
37,161
650
650
1,300
1,332
1,019
344
375
650
418
-
-
-
-
-
-
-
-
-
Expiry date
18/04/20
18/04/20
08/09/27
05/03/28
04/03/29
-
-
-
-
-
39,040
24/02/26
-
08/09/27
22,507
05/03/28
-
04/03/29
Our governance
Market
value at
vesting
(£000)
Gain on
exercise
(£000)
Shares
retained
on
exercise
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* 2017 Bonus award and Recruitment Award granted to Greg Fitzgerald following approval at a General Meeting held on 2 May 2017.
** As explained in the 2017 Directors’ Remuneration Report, the award was calculated based on the closing middle market share price on 21 February 2017,
which was £7.60 per share.
Directors’ interests in share options
Executive director
Date of grant
Scheme
Interest as at
31 Dec 2018
Granted
in year
Lapsed
in year
Exercised
in year
Interest as at
31 Dec 2019
Exercise price
per share
Option exercise
period
Earl Sibley
24/03/2016
SAYE
4,213
-
-
-
4,213
712.00 06/21 – 12/21
The Save As You Earn (SAYE) options were granted at a 20% discount to the prevailing market price on the date of grant. There was
no payment required to secure the grant of any share options. There was no change in the terms and conditions of any outstanding
options granted under the SAYE Scheme during the financial year. Share options held in the SAYE Scheme, which are not subject to
performance conditions, may under normal circumstances be exercised during the six months after maturity of the savings contract.
Total Shareholder Return performance graph (1)
e
c
n
a
m
r
o
f
r
e
P
R
S
T
£900
£800
£700
£600
£500
£400
£300
£200
£100
0
816
449
309
672
327
277
520
262
240
520
258
220
357
217
198
436
235
218
FTSE 350 Home Construction Companies
Bespoke home construction index (2)
Vistry Group PLC
FTSE 250 index
FTSE 250 index
Vistry Group PLC
(1) This graph illustrates ten-year TSR performance and
therefore does not represent the period under which
the Long Term Incentive Plan is measured
(2) Median TSR growth of the constituents of the
bespoke index. Index consists of FTSE 350 home
construction companies as at 31 December 2009
(Barratt Developments, Bellway, The Berkeley Group,
Persimmon, Redrow, Taylor Wimpey)
289
191
189
174
144
135
127
95
89
115
109
102
Dec 2009
Dec 2010
Dec 2011
Dec 2012
Dec 2013
Dec 2014
Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019
Source - DataStream
As required by the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended), the above
graph shows the Total Shareholder Return of an ordinary share held in Vistry Group PLC (Bovis Homes Group PLC as was) over the last
ten financial years, compared to the FTSE 250 index and the median of the FTSE 350 home construction companies (as listed at
31 December 2009) over the same period. As a constituent of the FTSE 250 operating in the home construction sector, the Committee
considers both these indices to be relevant benchmarks for comparison purposes.
Vistry Group PLC | vistrygroup.co.uk | 97
Remuneration report
The middle market price of the Company’s shares at 31 December 2019 was £13.08 (2018: £8.618). During the year ended 31 December
2019 the share price recorded a middle market low of £8.13 and a high of £13.48. As at the date of this report the share price stood
at £12.96.
Total CEO remuneration
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Single figure total £000
1,016
836
1,315
1,440
1,596
1,505
1,029
1,376
2,180
2,804
Annual bonus against maximum %
100
82.4
84.2
97.8
88.7
59.8
10
100
89
100%
Long Term Incentive Plan vesting
against maximum
31
0
50
50
66.7
66.7
35.9
n/a
n/a
81.6%
Recruitment award vesting against maximum
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
100
n/a
Note: Columns for 2010 to 2016 relate to David Ritchie and those for 2017 to 2019 relate to Greg Fitzgerald
Change in remuneration of CEO
The table below sets out the percentage change in the remuneration awarded to Greg Fitzgerald between 2018 and 2019 compared to
the average percentage change for employees as a whole.
Executive director
Greg Fitzgerald
Earl Sibley
Employees as a whole
* Excludes sales and build functions which have tailored incentive schemes.
CEO pay ratio
Base salary
Benefits
Annual bonus
2.0%
0%
3.0%
(63.2%)
4.86%
0%
14.7%
15.9%
*(1%)
Our CEO pay ratio has been calculated using “option B”, which uses gender pay data to identify the three employees that represent the
lower quartile, the median, and the upper quartile. This option has been selected as it provides a clear methodology, including fewer
adjustments, to impute Full-time Equivalent earnings and is more likely to produce robust data year on year. The Committee has
reviewed the results of the calculations and is satisfied that they are representative of the respective quartiles and that there would be
little difference if calculated on any other basis.
Year
2019
Method
CEO Single Figure £000
All UK Employees
Lower Quartile
Median
Upper Quartile
Option B
£2,804
Ratio
Total pay
Salary
78:1
£36,091
£29,863
56:1
£49,792
£46,500
43:1
£64,500
£58,000
98 | Our governance
Our governance
Relative importance of spend on pay
The graph below details Group wide expenditure on pay for all employees (including variable pay, social security, pensions and share
based payments) as reported in the audited financial statements for the last two financial years, compared with profit before tax and
dividends paid to shareholders.
Notes:
• Total spend on pay in 2018 was £81.0 million and in 2019
was £93.0 million, representing an increase of 14.8%.
• Profit before tax in 2018 was £168.1 million and in 2019
was £188.2 million, (pre exceptional items), representing
an increase of 11.9%.
• Cash dividends paid to shareholders totalled £129.7 million
in 2018 and £78.6 million in 2019, representing an decrease
of 65%. The 2019 special dividend was paid by way of bonus
issue of shares in January 2020, with a total value of £66.0m.
Implementation of remuneration policy for the year ending 31 December 2020
A new remuneration policy was approved at the General Meeting held on 2 December 2019, effective from 3 January 2020. The key
changes in the way that the remuneration policy will be implemented in 2020 versus 2019 are as follows:
• No base salary increase for the CEO beyond that applied to the wider workforce
• Repositioning of salary for the CFO to the level appropriate to the role and increased responsibilities in the enlarged Group
• Annual bonus incentive maximum to be set at 150% of basic annual salary and deferral in shares to be introduced
• LTIP award maximum to be set at 200% of basic annual salary
• Shareholding guideline increased to 200% of salary for all executive directors
• Post employment shareholding guideline introduced as the lower of 1x the shareholding guideline and actual salary on cessation
• Pension will be set in line with the wider workforce from 1 January 2023, with a series of stepped reductions applying from
1 January 2021, 2022 and 2023
Executive directors’ base salaries and benefits
The salaries of the executive directors with effect from 1 January 2020 were as follows:
Executive directors
Greg Fitzgerald
Graham Prothero (appointed 03/01/20)
Earl Sibley
Position
2020 base salary
£696,565
£500,000
CEO
COO
CFO
£395,000
18.0%
% increase
from 2019
2.5%
n/a
When determining the base salary increases, the Committee took account of increases awarded to the workforce, in addition to the
individual performance of executive directors and the impact of the increase on their total compensation. In the case of the CFO, his
increased responsibilities and role in the enlarged Group were judged by the Committee to warrant a repositioning.
The salary of Greg Fitzgerald, the Chief Executive, was increased by 2.5%, below the award of 2.75% to the wider employee population.
The salary of Earl Sibley, the Chief Financial Officer, was increased by 18.0% to ensure that it is competitively positioned against the
market when considering his role in the enlarged Group and the extent of his increased responsibilities.
An allowance of just over 2.75% of salary was provided for general staff increases. Benefits will continue on the same basis as for 2019.
Vistry Group PLC | vistrygroup.co.uk | 99
050100150200201820190500100015002000Jonathan HillMinimumIn line with expectationsMaximumMinimumIn line with expectationsMaximum0500100015002000David RitchieChief ExecutiveGroup Finance Director£000s168.1129.7£000sSalary and benefitsPensionsBonusLTIP1,7571,03759551%24%96357833318%7%47%23%20%10%30%29%37%4%28%26%40%6%87%13%82%18%81.0Total spendon payProfit beforetaxDividendspaid188.278.693.0£m20182019Total spend on pay£80.2m£m£70.2m20182019Profit before tax£114.0m£168.1m20182019Dividends paid£60.4m£129.7m £m£m
Remuneration report
Approach to annual bonus
The Committee paid close attention to the feedback received from shareholders prior to and after the vote on the new Remuneration
Policy at the General Meeting held on 2 December 2019. Feedback regarding quantum and incentive multiples was considered
carefully. The Committee reflected on the enlarged Group’s positioning in the sector and the importance of being able to recruit and
retain the talent required to ensure a successful and sustainable business, delivering increasing value for shareholders. It remains
of the view that it is appropriate for the Group to increase incentive multiples for incentive scheme to a competitive level and has,
accordingly, increased the bonus multiple for 2020 from 100% to 150% of basic annual salary. The Committee has considered bonus
deferral and agreed that the last third of any bonus award will be paid in shares, deferred for two years.
Following the regular annual review of bonus structure and the ongoing success of the emphasis on operational delivery and customer
satisfaction in 2019, the Committee determined that the annual bonus scheme for 2020 should maintain the focus on financial
metrics, whilst continuing to prioritise high levels of customer satisfaction, and also incentivising the delivery of synergies and the
successful integration of the Group. In introducing a measure for the delivery of synergies with a weighting of 20%, the Committee
has reduced the weighting for the profit before tax performance measure to 55%, and removed the operating margin measure, whilst
maintaining the weighting for financial metrics at 100%.
Average capital employed has been replaced with period end capital employed for 2020, which is subject to an underpin designed to
ensure that appropriate actions and behaviours are employed in meeting this measure, with the weighting increased to 25%.
The period end capital employed measure is designed to deliver operating efficiencies and maintain a strong and robust balance sheet.
As before, the customer satisfaction measure continues to act as a threshold, below which total bonus earned is reduced.
Threshold is set at 80% customer satisfaction in the Home Builders Federation (“HBF”) survey and at this level bonus earned on the
financial metrics is triggered without reduction. A customer satisfaction score of 79% leads to a reduction of 25% of bonus earned and
scores of 77%, 74% and 70% lead to further 25% reductions, until no bonus is earned at a score of 70%. Should the Group’s customer
satisfaction score fall below 80%, the Committee has agreed that it will review the circumstances surrouding the fall in performance
and may apply downward discretion to the level of bonus earned over and above the automatic threshold reduction.
Measure
Profit before tax
Average capital employed (2019) / period end capital employed (2020)
Synergy delivery
Financial measures
2019 Weighting
(as a % of maximum)
2020 Weighting
(as a % of maximum)
60%
20%
n/a
100%
55%
25%
20%
100%
Customer satisfaction (HBF survey score)
Acts as threshold
Acts as threshold
Non-financial measures
0%
0%
Provisions that enable the withholding of payment or the recovery of sums paid (malus and clawback) apply to the annual bonus
in circumstances of (i) a material misstatement of results; (ii) an error in assessing a performance condition or in the information on
which the award was granted; (iii) serious misconduct; (iv) a material failure of risk management; (v) circumstances of corporate failure
(vi) serious reputational damage; or (vii) any other circumstances that the Committee considers to be similar in nature or effect.
Malus can apply prior to the bonus payment date and clawback can apply for a two-year period thereafter.
100 | Our governance
Our governance
The Committee has decided not to disclose the detail of performance targets in advance as they are considered commercially sensitive,
being closely indicative of the Group’s strategy, but will disclose them retrospectively in the 2020 annual remuneration report.
The 2020 performance measures and weightings are described below.
Measure
Rationale / link to strategy
% weighting
Financial measures (100%)
Profit before tax
Period end capital employed
Incentivise the achievement of profit targets, with the objective
of sustainably increasing shareholder value.
Incentivise management of the level of capital employed within
the business, aligning with shareholder interests in progressively
and sustainably increasing returns, subject to an underpin
designed to ensure that appropriate actions and behaviours
are employed.
Synergy delivery
Incentive management to deliver the level of synergies
anticipated to the benefit of shareholders.
55%
25%
20%
Non-financial measure
Customer satisfaction
Maintaining our focus on quality of service is seen as key to
reputation and future success, both in terms of customer demand
and achieved selling prices. Measured by the HBF survey score
for legal completions between 1 October 2019 and 30 September
2020. Should a customer satisfaction score of 80% not be
achieved, total bonus earned from the financial measures starts
to reduce.
Acts as threshold
Total opportunity
100%
Approach for Long Term Incentive Plan awards
The key features of the long term incentive arrangements (as outlined on page 94) are expected to remain the same as those for
2019, with the exception of (i) the increase in the maximum award multiple from 150% to 200% and (ii) the TSR measure moving
from being calculated on a relative straight line method to a relative ranking approach. Further explanation of the rationale for the
increase in incentive multiples is provided under “Approach to annual bonus” on page 100. Relative ranking for TSR is considered by
the Committee to more fairly reflect out-performance against a small comparator group and is consistent with the approach adopted
by the majority of listed companies.
Provisions that enable the withholding of payment or the recovery of sums paid (malus and clawback) can apply to LTIP awards in
certain circumstances, consistent with those that apply to the bonus, disclosed on the previous page. Malus can apply prior to the
award vesting date and clawback can apply for a two-year period thereafter. A two-year holding period following vesting extends to
five years the time between awards being granted and when they can be exercised.
Performance measures and targets for 2020 LTIP awards
The performance measures for all 2020 awards will be TSR (33.3%), EPS (33.3%) and ROCE (33.3%) and threshold vesting will be set at
25% for each financial measure.
The performance targets are:
• TSR – threshold performance equal to the median of the comparator group and maximum performance equal to the upper quartile
of the comparator group.
• EPS – threshold performance at cumulative EPS of 395 pence and maximum performance at cumulative EPS of 446 pence.
• ROCE(1) – threshold performance at 20.8% and maximum performance at 22.6%, both as measured in the third year of the
performance period (2022).
(1) Balance sheet efficiency is a key driver of value for the Group. Target capital employed performance will be based on expected levels of gearing set out in the
acquisition documents with maximum set at levels of significant out performance. Once the post acquisition balance sheet is settled, to the extent that this
balance sheet differs from that used to set these capital employed targets, those targets will be conformed accordingly.
Vistry Group PLC | vistrygroup.co.uk | 101
Remuneration report
Pensions
Pension arrangements (as outlined on page 95) will continue on the same basis as in 2019, subject to the introduction of a stepped
reduction arrangement from 2020 onwards, designed to equalise executive director pensions with the rate applicable to the wider
workforce on or before 1 January 2023.
Post employment shareholding guidelines
Guidelines have been approved for executive directors in respect of post-employment ownership of shares in Vistry Group PLC.
The Board expects executive directors to retain the lower of one times the shareholding guideline (200% of salary) and the actual
shareholding at cessation for two years post cessation. The shares to be held only include vested shares from incentive schemes and
exclude shares purchased by executive directors.
Non-executive directors’ remuneration
The fees for the non-executive director positions for 2020 are set out below:
Role
Chairman fee
Senior Independent Director fee
Non-executive director base fee
Additional fees:
Audit Committee chair
Remuneration Committee chair
2019
2020
£185,000
£190,100
£10,000
£10,000
£53,000
£54,460
£10,000
£10,000
£10,000
£10,000
The fees for the Chairman and the other non-executive directors were increased to their current levels with effect from 1 January 2020,
following a review which took into account competitive positioning, responsibilities, time commitment for the roles and the size and
complexity of the Company. The Chairman’s fee was last reviewed with effect from 1 January 2019. The non-executive director base fee
was also last reviewed with effect from 1 January 2019.
Remuneration of senior management and other below board employees
In addition to responsibility for executive directors, the Committee is also involved in consideration of the remuneration arrangements
for the Executive Leadership Team below the Board, in conjunction with the Chief Executive. Alignment is delivered by ensuring
that senior management and executive directors participate in the same bonus and incentive schemes as far as possible, with similar
performance measures and targets. The Committee has visibility of the remuneration of management teams below the Executive
Leadership Team and has oversight of payment and employment conditions throughout the Group and takes these into account when
setting executive pay.
The Committee is mindful of the new UK Corporate Governance Code provision regarding the alignment of pension provisions with the
broader workforce. This will form part of the review of the remuneration policy that will be conducted during 2019.
The Remuneration Committee
Committee membership and meetings
All members of the Committee are independent non-executive directors who have no personal financial interest, other than as
shareholders, in the matters to be decided. Biographical details are provided on pages 68 to 69.
Name
Nigel Keen (appointed Chairman 23/05/18)
Chris Browne
Ralph Findlay
Mike Stansfield
Katherine Innes Ker
Date of
appointment
Role
Attendance
at meetings
15/11/2016
Chairman
01/09/2014
Chairman
07/04/2015
Member
28/11/2017
Member
9/10/2018
Member
9/9
8/9
9/9
9/9
9/9
The Committee met nine times in 2019. Chris Browne missed one meeting as a result of a prior commitment. In addition to the key activities
and decisions mentioned in the introduction to this report, the Committee approved the directors’ remuneration report for inclusion in the
2018 Annual Report, approved the 2019 offer of the SAYE scheme, and reviewed remuneration related workforce policies and practices.
It received a 2019 AGM season review and market update and implemented actions required in widening the role of the Committee under
the 2018 UK Corporate Governance Code.
102 | Our governance
Our governance
An evaluation of the Committee’s performance during 2019 was performed and it was found to be functioning effectively and fulfilling
its remit. The year had been challenging, largely as a result of the acquisition, with the design and review of the new Remuneration Policy
having to be accelerated, leaving a shorter period for consultation with shareholders than the Committee would have liked. The importance
of ongoing quality engagement with shareholders on the implementation of the new Policy was recognised, including in the run up to the
vote on the Remuneration Report at the 2020 AGM. The importance of setting clear metrics for incentives schemes that meet the needs of
the Group and satisfy the various requirements of shareholders was also recognised.
The Committee starts its meetings without executive management present when it wishes to do so. During 2019, the Committee
asked Ian Tyler (Chairman), Greg Fitzgerald (Chief Executive), and Earl Sibley (Chief Financial Officer) to attend meetings and
assist its discussions. This excluded matters connected to their own remuneration, service agreements or terms and conditions
of employment. The Committee takes care to recognise and manage conflicts of interest when receiving views from executive
directors or senior management and no director or senior executive is involved in any decisions regarding their own remuneration.
The Group Company Secretary acts as secretary to the Committee.
Advisers to the Committee
Willis Towers Watson were appointed advisors to the Committee on 12 December 2018, following a selection and interview process.
Previously, Deloitte LLP had been advisers to the Committee since August 2009. Willis Towers Watson provide independent advice on all
aspects of executive remuneration and attend Remuneration Committee meetings when invited by the Chairman of the Committee.
The Committee reviews the advice, challenges conclusions and assesses responses from its advisors to ensure objectivity and independence.
Willis Towers Watson also provide actuarial consultancy and administration services to the Trustee of the Bovis Homes Pension Scheme.
They also provide consultancy services to the Company in respect of pensions. Willis Towers Watson is a founder member of the
Remuneration Consultants Group and have signed the voluntary Code of Conduct for remuneration consultants. The fees paid to Willis
Towers Watson for services provided in 2019 were £172,917 (2018: £20,740). The level of fees in 2019 reflects the input required in designing
the new Remuneration Policy and to the public documents for the acquisition, together with support in shareholder engagement.
Shareholder voting at the 2019 AGM
At the Annual General Meeting held on 22 May 2019, shareholder proxy voting on the directors’ remuneration report for the year ended
31 December 2018 was as follows:
Resolution
For
%
Against
%
Total votes
Withheld (1)
Directors’ remuneration report 2018
102,576,274
98.53
1,534,557
1.47
104,110,831
38,044
Shareholder voting at the 2019 GM
At the General Meeting held on 2 December 2019, shareholder proxy voting on the directors’ remuneration policy was as follows:
Resolution
For
%
Against
%
Total votes
Withheld (1)
Directors’ remuneration policy
73,854,103
65.46
38,973,302
34.54
112,827,405
17,584
(1) A vote withheld is not a vote in law and is not counted in the calculation of votes for and against.
The Company is committed to ongoing shareholder dialogue and seeks to understand any concerns investors may have. Should there
be a significant level of votes against resolutions relating to directors’ remuneration, the Company seeks to understand the reasons
for this and will set out any actions taken in response. Steps were taken prior to the vote on the new Remuneration Policy at the
2019 General Meeting to explain the rationale for changes the Committee felt necessary in light of the acquisition and the Company
subsequently engaged with major shareholders. The Committee understands that the main concerns raised were in relation to
quantum and the rate at which the pay opportunity is to be deployed. Our engagement with shareholders continues, as we consult
on the approach to implementation of the new Policy, prior to submitting the 2019 directors’ remuneration report to shareholders for
approval at the 2020 AGM.
By order of the Board
Nigel Keen
Chairman of the Remuneration Committee
27 February 2020
Note: This Directors’ Remuneration Report has been prepared in accordance with the requirements of Schedule 8 to the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 (as amended). The report also meets the relevant requirements of the Listing Rules of the Financial Conduct
Authority, and describes how the Board has complied with the principles and provisions of the UK Corporate Governance Code relating to remuneration matters.
Remuneration tables subject to audit in accordance with the relevant statutory requirements are contained in the annual remuneration report.
Vistry Group PLC | vistrygroup.co.uk | 103
Remuneration Policy
The table below sets out key elements of the Remuneration Policy approved by shareholders at the General Meeting on 2 December 2019.
The full remuneration policy is available at vistrygroup.co.uk/investors/corporate-governance.
Components of the remuneration framework for executive directors
The policy table below summarises the main components of the remuneration framework, a large proportion of which is
performance related.
Operation
Opportunity
Performance metrics
Fixed pay
Purpose and link
to strategy
Base salary
To attract and retain
high performing talent
required to deliver
the business strategy,
providing core reward
for the role.
Ordinarily reviewed annually.
The review typically considers
competitive positioning, the individual’s
role, experience and performance,
business performance and salary
increases throughout the Group.
Market benchmarking exercises are
undertaken periodically and judgement
is used in their application.
Not applicable.
Whilst we do not consider it appropriate
to set a maximum base salary level,
any increases will take into account the
individual’s skills, experience, performance,
the external environment and the pay of
employees throughout the Group.
Whilst generally the intention is to
maintain a link with general employee pay
and conditions, in circumstances such as
significant changes in responsibility or size
and scope of role or progression in a role,
higher increases may be awarded.
Thus, where a new director is appointed
at a salary below market competitive
levels to reflect initial experience, it may be
increased over time subject to satisfactory
performance and market conditions.
This will be fully disclosed in advance
on appointment.
We do not consider it appropriate to set
a maximum benefits value as this may
change periodically.
Not applicable.
Not applicable.
A pension allowance of up to 20 per
cent of base salary may be paid for
current incumbents. For new incumbents,
the contribution rate is set at 7 per cent
of base salary, to be maintained in line
with changes in the rate applicable to
the workforce.
This may be taken as a contribution to the
Group Personal Pension Plan, as a cash
supplement, or a combination of the two.
Salary increases awarded after the first
year of the Policy are not pensionable
for directors who receive pension
contributions at a rate above that
applicable to the workforce.
From January 2023 or earlier, all directors
pension contributions shall be maintained
in line with the rate set for the workforce.
Benefits
To provide market
competitive benefits
consistent with role.
Benefits typically include medical
insurance, life assurance, membership
of the Bovis Homes Regulated Car
Scheme for Employees or cash car
allowance, annual leave, occupational
sick pay, health screening, personal
accident insurance, and participation
in all employee share schemes
(SAYE and SIP).
In line with business requirements,
other expenses may be paid, such as
relocation expenses, together with
related tax liabilities.
Pension
To attract and retain
talent by enabling long
term pension saving.
Executives joining the Group since
January 2002 can choose to
participate in a defined contribution
arrangement, or may receive a
cash equivalent. A salary supplement
may also be paid as part of a pension
allowance arrangement.
104 | Our governance
Variable pay
Purpose and link
to strategy
Annual bonus
To incentivise and
reward the delivery
of near-term business
targets and objectives.
Long Term
Incentive Plan
(“LTIP”)
To incentivise, reward
and retain executives
over the longer term
and align the interests
of management and
shareholders.
Operation
Opportunity
Performance metrics
Our governance
The annual bonus
scheme offers a
maximum opportunity
of up to 150% of base
salary. Achievement of
stretching performance
targets is required to
earn the maximum.
Performance measures are selected to
focus executives on strategic priorities,
providing alignment with shareholder
interests and are reviewed annually.
Weightings and targets are reviewed
and set at the start of each financial year.
Financial metrics will comprise at least
50 per cent of the bonus and are likely
to include one or more of:
• a profit based measure
• a cash based measure
• a capital return measure
Non-financial metrics, key to business
performance, will be used for any balance.
These may include measures relating to
build quality and customer service.
Overall, quantifiable metrics will comprise
at least 70 per cent of the bonus.
Below threshold performance delivers no
bonus and target performance achieves a
bonus of 75 per cent of base salary.
The annual bonus scheme is a
discretionary scheme and is reviewed
prior to the start of each financial year
to ensure that it appropriately supports
the business strategy.
Performance measures and stretching
targets are set by the Committee.
Bonuses are normally paid in cash and
any amounts awarded over 100 per cent
of base salary can be deferred in cash or
shares for two years.
It is the intention for the default
treatment for deferred awards to be in
shares. In any year in which no dividend
is proposed discretion may be exercised
to pay part, or all, of the bonus in
ordinary shares, consistent with the
deferral profile above. Actual bonus
amounts are determined by assessing
performance against the agreed targets
after the year end. The results are then
reviewed to ensure that any bonus
paid accurately reflects the underlying
performance of the business.
Clawback provisions apply (for a period
of two years from the bonus payment
date). Circumstances include: a material
misstatement, serious misconduct, a
material failure of risk management,
restatement of prior year results,
corporate failure, or serious reputational
damage to any Group company.
Typically, annual awards are made
under the LTIP. Awards can be
granted in the form of nil-cost options,
forfeitable shares or conditional
share awards.
The maximum annual
award, under normal
circumstances is 200 per
cent of base salary
for executive Directors.
The performance measures applied to
LTIP awards are reviewed annually
to ensure they remain relevant to
strategic priorities and aligned to
shareholder interests.
Performance is measured over a
performance period of not less
than three years. LTIP awards do
not normally vest until the third
anniversary of the date of the grant.
Vested awards are then subject
to a two-year holding period.
For nil-cost options this will be a
prohibition on exercise until the end of
the holding period.
Awards may be granted with the
benefit of dividend equivalents, so that
vested shares are increased by the
number of shares equal to dividends
paid from the date of grant to the date
of exercise.
Malus provisions can be applied to
awards prior to the vesting date and
clawback provisions can be applied
for two years thereafter in certain
circumstances, including a material
misstatement, serious misconduct, a
material failure of risk management
or serious reputational damage to any
Group company. Malus can also be
applied for any other reason which the
Committee considers appropriate.
Weightings and targets are reviewed
and set prior to each award.
Performance measures will include long
term performance targets, of which
financial and / or share price-based
metrics will comprise at least two thirds
of the award. Quantifiable non-financial
metrics, key to business performance,
will be used for any balance.
Any material changes to the
performance measures from year
to year would be subject to prior
consultation with the Company’s
major shareholders.
Below threshold performance realises
0 per cent of the total award, threshold
performance realises 25 per cent and
maximum performance realises 100
per cent. The Committee may adjust
downwards the number of shares
realised if it considers such adjustment
is justified based on: (a) the performance
of the Company, any business area or
team; (b) the conduct, capability or
performance of the participant; or
(c) the occurrence of unforeseen
events or of events outside of the
participant’s control.
Vistry Group PLC | vistrygroup.co.uk | 105
Remuneration Policy
Variable pay
Purpose and link
to strategy
Shareholding
guideline
To encourage
executives to build
up a meaningful
shareholding over time
and align the interests
of management and
shareholders.
Operation
Opportunity
Performance metrics
The guideline for executive directors is
200% of base salary.
Not applicable.
Executive directors benefitting from the
exercise or release of LTIP awards are
expected to retain 100% of the net value
derived as shares, after settling all costs
and income tax due, until such time as
the guideline is met.
The post-employment shareholding
guideline is the lower of 1x the
shareholding guideline (200 per cent
of salary) and the actual shareholding
at cessation. Shares to be held for two
years post-cessation. Shares to be
held only includes vested shares from
incentive plans and excludes shares
purchased by executives.
Notes to the policy table
The Committee may make minor amendments to the Policy set out above (for regulatory, exchange control, tax or administrative purposes, or to take account of a
change in legislation) without obtaining shareholder approval, for that amendment.
The executive Directors may request, and the Company may grant salary and bonus sacrifice arrangements. The LTIP rules permit the substitution or variance
of performance conditions to produce a fairer measure of performance as a result of an unforeseen event or transaction. They include discretions for upwards
adjustment to the number of shares to be realised in the event of a takeover, and scheme of arrangement or voluntary winding up. Non-significant changes to the
performance metrics may be made by use of discretion under the performance conditions. Awards are normally satisfied in shares, although there is flexibility to
settle in cash.
The Committee reserves the right to make remuneration payments and payments for loss of office (including exercising any discretions available to it in connection
with such payments) that are not in line with the Policy table set out above where the terms of the payment were set out:
(i) before 16 May 2014 (the date the Company’s first remuneration policy came into effect);
(ii) under the Company’s previous shareholder-approved remuneration policies, provided that the terms of payment were consistent with the relevant
remuneration policy in force at the time they were set out; or
(iii) at a time when the relevant individual was not a director of the Company and, in the opinion of the Committee, the payment was not in consideration for the
individual becoming a director of the Company.
For these purposes, “payments” includes the Committee determining and paying short-term and long-term incentive awards of variable remuneration.
106 | Our governance
Our governance
The Winchester | 5 bedroom home
Townsend Place, Shrivenham
Delivering
quality homes
Building high quality homes that are
designed to meet our customers’ needs
Vistry Group PLC | vistrygroup.co.uk | 107
Vistry Group PLC | 107
Audit committee report
The Audit Committee continues to play a fundamental role
in protecting shareholders’ interests and I am pleased to
introduce the Committee’s report for 2019. During the year
the Committee reviewed the Group’s financial reporting,
internal control systems and risk management and maintained
oversight of external and Internal Audit.
Ralph Findlay | Committee Chairman
Committee membership
and meetings
During 2019, the Committee comprised
five independent non-executive directors
and had no changes in membership.
The non-executive directors have,
between them, the recent and relevant
experience required by the UK Corporate
Governance Code. As a whole they
have competence relevant to the
sector in which the Company operates.
Biographical details and information on
skillsets are provided on pages 68
and 69.
Committee membership is determined
by the Board following recommendation
from the Nomination Committee and
is kept under review as part of the
Committee’s performance evaluation.
The Company Chairman, Chief Executive
and Chief Financial Officer were present
at all meetings in 2019 by invitation.
PricewaterhouseCoopers LLP, the
external auditors, and the Head of
Internal Audit & Risk attended all
meetings and the Head of Financial
Reporting attended two meetings.
The Committee met three times in
2019 and detailed papers and
information were received sufficiently in
advance of meetings to allow full
and proper consideration of the matters
for discussion. The Committee also
met with the external auditors and the
Head of Internal Audit & Risk, without
executive management present, at the
end of two meetings. Ralph Findlay,
Committee Chair, also met privately
with the audit engagement partner of
the external auditors during the year.
The Group Company Secretary acts as
secretary to the Committee. An overview
of the main activities during 2019 is
provided on the next page.
Visit our website for details
vistrygroup.co.uk
/investors/corporate-governance
Name
Date of
appointment
Role
Attendance
at meetings
Ralph Findlay (appointed Chairman 15/05/15)
07/04/2015 Chairman
Chris Browne
01/09/2014
Member
Katherine Innes Ker
09/10/2018 Member
Nigel Keen
Mike Stansfield
15/11/2016 Member
28/11/2017 Member
3/3
3/3
3/3
3/3
3/3
Overview
In line with its remit, the Committee
reviewed the integrity of the Group’s
financial statements and kept
operating, financial and accounting
practices under review during 2019.
Aware of the importance of such
matters, it also carefully reviewed
significant areas of judgement and the
viability statement.
The Committee monitored the system for
internal control, financial reporting and
risk management, with the effectiveness
of this system being reviewed in the
context of the Group’s strategic
priorities and operational performance.
Reporting was received from the external
auditor, Internal Audit and management
and was openly debated in free-
flowing discussions, which served to
test conclusions, audit outcomes
and judgements. The Committee
considers that the effectiveness of the
Group’s Internal Audit function has
improved significantly and focus has now
moved to developing its ability to act as
a driver of performance and consistency
in compliance across the Group.
The Risk Governance Committee
refreshed its membership during the
year and its role in reviewing risk
management and emerging and principal
risks is now embedded. It will continue
to contribute to the monitoring of
emerging and principal risks and the
understanding and mitigation of evolving
risk facing the enlarged business.
108 | Our governance
Responsibilities and terms
of reference
The key responsibilities of the
Committee are:
• Monitoring the integrity of the
financial statements, the accompanying
reports to shareholders and corporate
governance statements, including
reviewing and testing the findings of
the external auditor.
• Reviewing and monitoring the
effectiveness of systems for internal
control, financial reporting and
risk management.
• Overseeing and reviewing the
effectiveness of the Group’s Internal
Audit function.
• Making recommendations to the
Board in relation to the appointment
and removal of the external auditor
and approving their remuneration and
terms of engagement.
• Reviewing and monitoring the external
audit process and the independence
and objectivity of the auditor, as well
as the nature and scope of the external
audit and its effectiveness.
• The pre-approval of all audit related
and non-audit services proposed to
be undertaken, taking into account
relevant ethical guidance.
The Committee’s terms of reference
are available on the Company’s website
(vistrygroup.co.uk/investors/
corporate-governance).
Main activities during the year
The Committee followed a programme
structured around the annual reporting
cycle and received reports from
Internal Audit, the external auditor
and management. The key activities
undertaken were:
• Discussed the key accounting
considerations and judgements
reflected in the Group’s results for the
year ended 31 December 2018 with the
external auditor.
• Reviewed the 2018 annual report and
accounts, so as to recommend to the
Board that, taken as a whole, it was
fair, balanced and understandable.
Our governance
• Assessed the results and effectiveness
• Reviewed the Company’s
of the 2018 final audit.
• Reviewed and discussed the key
accounting considerations and
judgements reflected in the Group’s
results for the six months ended 30
June 2019 with the external auditor.
• Evaluated and agreed the external
auditor’s audit strategy memorandum
in advance of the 2019 year-end audit.
• Received reports from Internal Audit
(further detail below).
• Reviewed and assessed the Group’s risk
appetite and monitored the effective
mitigation of principle risks.
• Reviewed continued progress with
the review of risk management and
the work completed by the Risk
Governance Committee, including
having sight of minutes.
• Reviewed the effectiveness of the
system of internal control and
risk management systems and
continued to monitor progress with
the implementation of key new
software systems to ensure the
expected improvements in the control
environment were delivered.
• Completed an assessment of
anti-bribery, fraud risk and anti-
fraud measures.
• Reviewed management’s going
concern assessment at each reporting
period end, considering detailed
financial forecasts, future cash flow
projections and the resources
available to the Group, including
the current banking facility and
forecast covenant compliance.
• Reviewed management’s viability
assessment for the year end reporting
period covering strategic planning,
principle risks, detailed financial
forecasts, resources available to
the Group, scenario testing,
qualifications and assumptions
and the period chosen.
• Reviewed the potential impact of the
enlarged Group on risk management
and the control environment.
whistleblowing policy, arrangements
for reporting concerns, and general
nature of the cases reported.
• Reviewed the Committee’s terms
of reference.
The Audit Committee was provided with
summarised findings and action plans
from all internal audits throughout
the year. These included process reviews
which covered the entirety of the Group,
alongside regional reviews that tested
the end-to-end control framework in
detail within a particular region.
The audit cycle ensures each region
is subjected to detailed review a
minimum once every three years,
although the frequency is often
increased based on perceived risk and
operational performance.
The Committee continued to monitor
the programme assurance review,
a continuous activity designed to ensure
that key projects forming part of a
wider change programme are effectively
co-ordinated and deliver maximum
benefit, with governance support coming
from Internal Audit. Clear progress
was made during 2019, leading to
a significant improvement in the
control environment.
Whistleblowing was also discussed,
which saw a continuation in 2019 of the
increased level of reported cases and
investigations seen in 2018. Promotion of
the whistleblowing policy was maintained
throughout the Group during 2019.
The Group operates a confidential
reporting service run by an external
provider and investigations are
completed by independent resource
within the Group.
Twenty one cases were raised during
2019 from across the business, broadly
in line with 2018, demonstrating that
the concerted efforts to maintain
awareness of whistleblowing, with
positive tone from the top, were effective.
The Committee and executive
management remain committed to
ensuring that the whistleblowing facility
is well publicised throughout the
enlarged Group during 2020 and will
continue to monitor reporting and
investigations to ensure that appropriate
action is taken, with cases being
closed out on a timely basis.
Vistry Group PLC | vistrygroup.co.uk | 109
Audit committee report
At its meeting in February 2020,
the Committee discussed with the
external auditor the key accounting
considerations and judgements reflected
in the Group’s results for the year ended
31 December 2019 and reviewed the
2019 Annual Report and Accounts, to be
able to recommend to the Board that,
taken as a whole, it was fair, balanced
and understandable and provided the
information necessary for shareholders
to assess the Company’s performance,
business model and strategy.
The approach taken was to analyse key
areas of progress and challenge during
the year, followed by review of the 2019
Annual Report and Accounts to ensure
that all key areas had been reported
upon in a balanced and fair way.
Significant areas
The key accounting judgements
considered by the Committee and
discussed with the external auditors, in
relation to the 2019 accounts, were:
• Inventory provisioning - the level of
inventory provisioning impacts the
carrying value of the most significant
balance on the balance sheet.
The Company carries a provision to
write down the value of the land
held within inventories to the lower
of cost and net realisable value, less
costs to sell, where this is less than
the historical cost and reviews this
provision annually. The assessment
of the level of provision required
necessitates the exercise of judgement
by management. At this year end the
provision remaining was £3.4m and
had been audited and reported on by
the external auditors. The utilisation in
the period, and adjustments proposed
were discussed and justified by
management and the land write down
provision remaining at the period
end was reviewed.
110 | Our governance
Following discussion, the Committee
was satisfied that the judgements
exercised were appropriate and that
the provision was appropriately
stated at the year end. Details of
the movements in the provision are
provided in note 3.1 to the accounts on
pages 136 to 137.
• Margin forecasting and recognition
- the gross margin from revenue
generated on each individual site within
the year is based on the latest forecast
or the gross margin expected to be
generated over the life of that site.
The remaining life gross margin is
calculated using forecasts for selling
prices and all land, build, infrastructure
and overhead costs associated with
that site. The assessment of house
prices and cost to complete is based
on the specific details of each site and
incorporates certain assumptions and
judgements by management. The level
of profit recognised in the income
statement is monitored throughout the
year via the Group’s usual budgeting,
forecasting and management
accounts reporting. The control
processes surrounding the review of
life of site revenue and costs have been
enhanced by the implementation of a
new ERP system.
External auditor
PricewaterhouseCoopers LLP (PwC)
were appointed as external auditor at
the 2015 AGM, following the completion
of a competitive audit tender process
supervised by the Committee. In doing
so, the Committee complied with
the provisions of the Competition &
Markets Authority Order, including the
appointment of the auditor to audit
and non-audit services. The lead audit
engagement partner will rotate, having
completed five years in the role, and the
audit for the 2020 financial year will be
led by a new partner.
Our 2020 AGM Notice contains a
resolution for the re-appointment
of PwC as auditors to the Company.
In making this recommendation, the
Committee took into account, amongst
other matters, the independence
and objectivity of PwC, the ongoing
effectiveness of the external audit
process and cost.
There are no contractual restrictions on
the choice of external auditor. The AGM
Notice also contains a resolution to give
the directors authority to determine the
auditor’s remuneration, which provides a
practical flexibility to the Committee.
During the year, the Committee reviewed
the independence and objectivity of the
external auditor, which was confirmed
in an independence letter containing
information on procedures providing
safeguards established by the external
auditor. Regulation, professional
requirements and ethical standards
were taken into account, together with
consideration of all relationships between
the Company and PwC and their staff.
Relations with the external auditors
are managed through a series of
meetings and regular discussions and
the Committee ensures a high quality
audit by challenging the key areas of the
external auditor’s work.
At its meeting in February 2020, the
Committee reviewed the effectiveness of
the external audit process as part of its
consideration of the 2019 final audit.
This involved assessing delivery and
content against the audit plan for
the 2019 year end audit, including
determination of audit risks and
significant areas of judgement,
consideration of the performance and
communication of the audit team, and
the quality of reporting, observations,
recommendations and insight.
It also included the review of progress
with areas of particular focus agreed
for the 2019 audit and comprehensive
papers received from the external
auditor, discussing and challenging
their conclusions and audit judgements
and assessing responses from the
external auditor. Continuity was being
maintained within the audit team,
business knowledge was improving year
on year, and communication was
generally constructive and timely.
Debate took place on the application
and harmonisation of certain
accounting policies in connection with
the acquisition, with outstanding
matters to be resolved.
Following review of the effectiveness
of the external audit process by the
audit team and management, actions
are to be agreed for the year ahead.
Lastly, feedback was taken on the
effectiveness and conduct of the audit
from those involved.
The Committee keeps under review its
policy which requires the Committee to
approve all audit related and non-audit
services proposed to be undertaken by
the external auditors, with the exception
of compliance work undertaken in the
ordinary course of business, which is
treated as pre-approved. When a request
for approval is made, the Committee has
due regard to the nature of the audit
related or non-audit service, whether the
external auditor is a suitable supplier, and
whether there is likely to be any threat
to independence and objectivity in the
conduct of the audit. The related fee
level, both separately and relative to the
audit fee is also considered.
At its meeting in September 2019, the
Committee considered the need for
non-audit services to be provided in
connection with the proposed acquisition
of Linden Homes and Vistry Partnerships,
including the verification of potential
synergies and in connection with the
financial performance of the Group, pro
forma balance sheet, and working
capital statement. The Committee
noted that such services were ordinarily
undertaken by the external auditor,
together with the regulatory context of
much of the work, before pre-approving.
The team from PwC providing non-
audit services in relation to the
acquisition were independent of
the external audit team. The fees
associated with these non-audit services
were significantly higher than the
remuneration for audit services provided
in 2019. However, subsequent to the
non-audit work being completed, related
to the independence and quality control
procedures of PwC, the Committee
reviewed the threats and safeguards
associated with the services provided at
its December 2019 meeting and received
confirmation that the independence of
the external auditor was not impaired.
For an analysis of fees paid to PwC for
audit and non-audit services see note 2.1
on page 135.
Internal Audit
Internal Audit was strengthened
further during 2019 with an additional
member joining the team to maintain
progress towards a significantly
improved internal capability, led by
the Head of Internal Audit & Risk.
The Committee has again reviewed
the progress being made to enhance
the effectiveness of the work of
Internal Audit and the role and profile
of the Risk Governance Committee in
identifying and mitigating threats to
the business.
The co-sourced approach to Internal
Audit was reduced during 2019,
allowing the strengthened team
to undertake more review activity.
Overall, the Committee is pleased
with the ongoing progress and has
approved rolling plans for scrutiny
of the effectiveness of the control
environment and risk management
of the enlarged Group, together with
emerging risk, during the first half of
2020, whilst the integration process
is taking place. This will be followed
by a return to more traditional
Internal Audit activity in the second
half, including opportunities for
Internal Audit to act as a driver
of performance and compliance
throughout the business.
Performance evaluation
An evaluation of the performance of
the Committee was undertaken as part
of the internal formal performance
evaluation of the Board, and completed
at the beginning of 2020. The evaluation
considered the membership of the
Committee; the focus and quality
of discussion; oversight of financial
reporting, accounting judgments
and estimates, disclosures, and
announcements; the performance of the
external auditor, including independence
and quality control; and the role and
performance of internal audit.
Our governance
The Committee was considered to have
performed well, and in accordance
with its Terms of Reference. Looking
forward, the integration of the Bovis
Homes, Linden Homes and the
Partnerships businesses will impact risk
management and internal audit policies
and procedures. These issues will require
close attention in 2020. The Committee
will also arrange to be updated on
developments in governance and
accounting regulations in 2020.
The Committee considers PwC to have
been effective and to have carried out
a high quality audit in the fifth year
since appointment, having continued
to develop a good understanding of the
Group’s business and to build effective
working relationships. PwC provided
non-audit services in connection with
the acquisition of the Linden Homes
and the Partnerships businesses and
the Committee is satisfied that they
continued to demonstrate independence
as auditor to the Group. The lead audit
engagement partner will rotate in 2020,
having completed five years in the role.
Internal Audit continues to make a
significant contribution to the Group’s
control environment, identifying risk
and control weaknesses, producing
clear and well-articulated reports for
Committee review and supporting an
ongoing improvement in processes
and controls. It was noted that the
Head of Internal Audit has an important
role in contributing to the integration
process and the harmonisation of risk
management and internal controls
across the enlarged Group, and
measures were discussed to ensure
that independence is maintained as the
integration progresses. The provision of
adequate resource for Internal Audit was
also considered, together with the skills
and knowledge needed in the enlarged
Group, noting that the internal audit
team is being strengthened, This will be
kept under review.
Ralph Findlay
Chairman of the Audit Committee
27 February 2020
Vistry Group PLC | vistrygroup.co.uk | 111
Nomination Committee report
The main focus of the Committee in 2019 was on executive
director succession planning and Board composition, with
the approach evolving as the acquisition of the Linden
Homes and Vistry Partnerships businesses moved closer
to being a reality.
Ian Tyler | Committee Chairman
Overview
The Committee commenced 2019 with a
review of executive director succession
planning and the strength and depth of
the talent available to the Group, both
internally and via potential recruitment.
It continued to review the composition
of the Board more generally and the
knowledge, skills and experience
available to the Board amongst the non-
executive directors.
Towards the end of the year, as progress
with the acquisition of the Linden Homes
and Vistry Partnerships businesses
moved forward the focus evolved to
potential Board composition following the
acquisition and the appointment of a Chief
Operating Officer to lead the operations of
the enlarged Group.
The Committee will continue to monitor
Board composition and develop succession
planning during 2020 in light of the
challenges and opportunities ahead and
delivery of the Group’s strategy as a top
five housebuilder.
Committee membership
and meetings
As a result, the Committee moved to
consideration of the Board composition
required by an enlarged group and the
need for a Chief Operating Officer to
be appointed. Toward the end of the
year, these deliberations concluded
in the recommendation to the Board
that, conditional on completion of
the acquisition, Graham Prothero be
appointed as Chief Operating Officer
and as an executive director of the
enlarged group.
In line with the 2018 version of the
UK Corporate Governance Code, a
diversity and inclusion policy was
reviewed and approved in late 2018.
112 | Our governance
Name
Ian Tyler
Chris Browne
Ralph Findlay
Nigel Keen
Mike Stansfield
Katherine Innes Ker
Date of
appointment
Role
Attendance
at meetings
29/11/2013
Chairman
01/09/2014
07/04/2015
15/11/2016
28/11/2017
09/10/2018
Member
Member
Member
Member
Member
7/7
6/7
7/7
7/7
7/7
6/7
During 2019, a number of actions
and events took place supporting
implementation of the policy, including
the appointment of HBF Brand
Ambassadors and signature by the Group
of the Social Mobility Pledge.
For all meetings, papers and supporting
documentation were circulated in
advance, allowing proper consideration
of matters for discussion. The Chief
Executive attended seven meetings and
the Chief Financial Officer attended two
meetings, both by invitation. The Group
Company Secretary acts as secretary to
the Committee.
Responsibilities and terms
of reference
The key responsibilities of the Committee:
• Reviewing the structure, size and
composition of the Board (including
skills, knowledge, experience and
diversity) and making recommendations
to the Board.
• Considering succession planning
for directors and senior executives,
taking account of the challenges and
opportunities facing the Company
and the skills and expertise needed in
the future.
• Monitoring the leadership needs of
the Company and leading the process
for Board appointments, ensuring
they are conducted on merit, against
objective criteria, including diversity
and inclusion, using the services of an
appropriate external search consultant.
• Making recommendations to the
Board, including on the re-appointment
of non-executive directors, the
re-election of directors at the AGM,
and membership of the Audit and
Remuneration Committees.
• The Committee also reviews the
results of the Board performance
evaluation relating to the composition
of the Board. External legal or other
independent professional advice can
be obtained at the Company’s expense
and this facility was not utilised during
the year. The Committee’s terms
of reference are available on the
Company’s website (vistrygroup.co.uk/
investors/corporate-governance).
Main activities during the year
The main activities during the early part
of 2019 focussed on executive director
succession planning, designed to ensure
that the skills and expertise required
to take opportunities and meet future
challenges as the Group progressed the
delivery of its strategy would be in place
at the appropriate time. The approach
included an assessment of the capability
and talent available to the Group and the
identification of individuals capable of
achieving the level of knowledge, skills
and expertise required, which was further
developed leading to consideration of a
Our governance
tailored development programme and the
need for external recruitment to backfill
existing capability.
As discussions took place on the
acquisition of the Linden Homes and Vistry
Partnerships businesses this approach
evolved, with the Committee moving
to consider the Board composition that
would be required by an enlarged Group.
Whilst it was concluded that the non-
executive capability was expected to
remain appropriate, the need to appoint
a Chief Operating Officer was identified as
an essential component of the leadership
capability required for the enlarged Group.
With shareholder approval for the
acquisition in place by early December
2019, the Committee’s deliberations
resulted in the recommendation to the
Board that, conditional on completion,
Graham Prothero be appointed as Chief
Operating Officer and as an executive
director of the enlarged Group.
This recommendation was based on
merit and objective criteria, including
Graham’s extensive industry experience,
knowledge of the businesses being
acquired, and the broader leadership needs
of an enlarged Group. Towards the end of
the year, the Committee also considered
the overall composition of the Board, the
length of service of its membership as a
whole, and the actions that would need to
be considered going forward to ensure it
was refreshed at the appropriate time.
The Nomination Committee reviewed and
approved a new diversity and inclusion
policy in December 2018, designed to
promote and support the development of
a diverse and inclusive culture, both in the
boardroom and across the Group.
The policy expresses how the Board seeks
a mix of talented people with a range of
experience, skills, vision and independence,
recognising the importance of a blend
of abilities, views and social and ethnic
backgrounds to enable it, as the objective
of the policy, to function effectively.
In implementing the policy, a high emphasis
is being placed on ensuring the development
of diversity in senior management roles
across the Group by strengthening the
talent pipeline and through internal
promotion and recruitment. The policy is
implemented by circulation throughout
the Group, regular communication, and
publication on the Group’s intranet
and website.
Actions and events in support of the
diversity and inclusion policy during
2019 included:
A summary of the Committee’s activities during 2019 follows:
• Keeping the structure, size and composition of the Board under review, including
in the context of an enlarged Group.
• Assessing the talent available to the Group and developing succession planning
for the executive directors, with specific consideration of future requirements,
challenges and opportunities.
• Considering the leadership requirements of an enlarged Group, leading to the
recommendation to the Board that a Chief Operating Officer be appointed,
conditional on completion of the proposed acquisition.
• Completing rigorous reviews leading to recommendations regarding the renewal
of directors’ service contracts for I P Tyler and N J Keen.
• Considering the overall composition and length of service of the Board and the
need to refresh its membership at the appropriate time.
• Recommending the directors to stand for re-election at the 2019 AGM in
accordance with the UK Corporate Governance Code.
• Approving the Nomination Committee report for the 2018 Annual Report.
• Reviewing the Committee’s terms of reference.
• Appointment of HBF Brand Ambassadors
to visit schools and support career fairs,
promoting and encouraging women to
join the industry
• Signature by the Group of the Social
Mobility Pledge
• Advertisement of a broad range of
vacancies on workingmums.co.uk and
ongoing encouragement of recruitment
agencies to include women on shortlists
for vacancies
• 26 Mental Health First Aiders being
trained across the Group, with more to
be trained during 2020
• Our Head of HR being shortlisted for
the CN Talent Awards as Diversity &
Inclusion Leader of the Year, linked to
our “100 Years 100 Women” event
in 2018
Non-executive directors’ service contracts,
excluding the Company Chairman, are
renewed on an annual basis following the
conclusion of a second three year term,
subject to satisfactory performance and
there being no need to re-balance the
Board, with the third year of the third term
extending until the subsequent AGM.
Having served for three years, a
recommendation was made to the Board
that the service contract for Nigel Keen be
renewed for a second three year term.
This decision followed rigorous review,
including the contribution, performance
and commitment of Nigel, his appointment
as Remuneration Committee Chair, and the
composition of the Board as a whole.
Having served for six years, a
recommendation was made to the
Board, with Ralph Findlay in the Chair,
that the service contract for Ian Tyler be
renewed for a third three year term.
This decision also followed rigorous review,
including the contribution, performance
and commitment of Ian, the quality of
leadership provided to the Board, and the
composition of the Board as a whole.
Performance evaluation
An evaluation of the performance of the
Committee was completed as part of the
internal formal performance evaluation
of the Board, completed at the beginning
of 2020. The Committee was performing
effectively, with an expanded scope, but
should give more detailed consideration
to succession planning and to Board
composition in 2020. This would include
the talents, skills sets and experience
required amongst the executive to deliver
the strategy of the enlarged Group and
the skills, knowledge and capabilities
available to the Board via the non-
executive, ensuring it had the right
composition. In addition, succession
planning would be given a longer term
dimension looking across a three year
horizon, which would naturally
encompass consideration of the roles
of Chairman and CEO.
Ian Tyler
Chairman of the Nomination Committee
27 February 2020
Vistry Group PLC | vistrygroup.co.uk | 113
Annual General Meeting
Notice of the 2020 Annual General
Meeting to be held on Wednesday,
20 May 2020 is set out on pages
164 to 170. Members wishing to vote
should return forms of proxy to the
Company’s Registrar not less than
48 hours, (excluding non-working
days), before the time for holding
the meeting.
The directors believe that all the
resolutions to be considered at the
Annual General Meeting are in the
best interests of the Company
and its shareholders as a whole.
The directors unanimously
recommend that all shareholders
vote in favour of the resolutions, as
the directors intend to do in respect
of their own shares in the Company.
Directors
Details of the directors and their
biographies are shown on pages
68 and 69.
Graham Prothero was appointed as an
executive director and the Company
COO on 3 January 2020.
In accordance with the UK Corporate
Governance Code, all the directors
will retire at the 2020 Annual General
Meeting and, being eligible, offer
themselves for re-appointment.
Details of directors’ pay, pension
rights, service contracts and directors’
interests in the ordinary shares of the
Company are included in the Directors’
Remuneration Report on pages
88 to 106.
Research and development
We continue to undertake research and
development to improve the processes,
materials and products used in the
construction of our developments and
to enhance the energy efficiency of our
range of homes.
Disclosure of information under
Listing Rule 9.8.4R
There is no further information to be
disclosed in accordance with Listing
Rule 9.8.4R.
Directors’ report
The directors have pleasure in
submitting their Annual Report
and Accounts for the year ended
31 December 2019.
Other disclosures made in the
Annual Report
The Company is required to disclose
certain information in its directors’
report which the directors have
chosen to disclose elsewhere in the
Annual Report and Accounts and is
incorporated by reference. Details of
where this information can be found
are set out below:
Subject
Likely future developments in the business
Important events since the year end
Going concern statement
Directors’ interests
Stakeholder engagement
Employee involvement / employment of disabled persons
Pages
12 to 16
162
32
96
42
46 to 49
56
70 to 85
88 to 106
Greenhouse gas emissions
Corporate governance report
Directors’ remuneration
A total ordinary dividend
61.5p
(2018: 57.0p)
has been declared
Directors’ names and
functions are listed on
pages 68 and 69
Notice of the 2020 Annual
General Meeting pages
164 to 170
114 | Our governance
Dividends
An interim dividend of 20.5p
(2018: 19.0p) per share was paid on
22 November 2019. The Board has
declared a second interim dividend of
41.0p (2018 final dividend: 38.0p) per
share in respect of the 2019 financial
year on 29 May 2020, in lieu of a final
dividend to shareholders on the
register at the close of business on
27 December 2019. On this basis,
the total dividend for 2019 will be
61.5p (2018: 57.0p), representing an
increase of 8% (excluding the 2018
special dividend).
Pursuant to the acquisition of the
Linden Homes and Vistry Partnerships
businesses, the Company returned value
to its shareholders by way of a bonus
issue through the issuance of 5,665,723.
Shareholders received 0.03819 bonus
issue shares for every 1 share held.
The dividend reinvestment plan gives
shareholders the opportunity to
reinvest dividends.
Section 172 statement
The directors have an obligation to act
in accordance with the duties set out in
section 172 of the Companies Act 2006,
which provide that they must act in the
way they consider, in good faith, would
be most likely to promote the success
of the Company for the benefit of its
shareholders as a whole and, in doing so,
have regard (amongst other matters) to:
• the likely consequences of any
decisions in the long term
• the interests of the Company’s
employees
• the need to foster the Company’s
business relationships with suppliers,
customers and others
• the impact of the Company’s
operations on the community
and environment
• the desirability of the Company
maintaining a reputation for high
standards of business conduct
• the need to act fairly as between
shareholders of the Company
The directors consider that they have
acted in accordance with their duties
under s.172 in the decisions taken during
the year ended 31 December 2019.
The s.172 Statement at pages 42 to 43
identifies the key steps we have taken to
engage with our stakeholders and the
outcomes of our engagement.
Directors’ indemnities
During the financial year and as at the
date of this report, indemnities were
in force under which the Company has
agreed to indemnify the directors, to
the extent permitted by law and the
Company’s Articles of Association, in
respect of all losses arising out of, or in
connection with, the execution of their
powers, duties and responsibilities, as
directors of the Company or any of
its subsidiaries.
The Company’s subsidiary, Vistry Homes
Limited, has granted a qualifying pension
scheme indemnity to the directors of the
Pension Trustee to the extent permitted
by law in respect of all losses arising out
of, or in connection with, the execution of
their powers, duties and responsibilities
as directors of the Pension Trustee.
Powers of the directors
Subject to the Company’s Articles
of Association, UK legislation and
any directions given by special
resolution, the business of the
Company is managed by the Board,
which may exercise all the powers
of the Company. The directors
have been authorised to allot and
issue ordinary shares and to make
market purchases of the Company’s
ordinary shares and these powers
may be exercised under authority of
resolutions of the Company passed
at its Annual General Meeting.
The rules in relation to the
appointment and replacement
of directors are set out in the
Company’s Articles of Association.
Articles of Association
Unless expressly specified to the contrary
in the Articles of Association, they may
only be amended by a special resolution
of the Company’s shareholders at a
general meeting. This year, the Board
is asking shareholders to approve the
adoption of new Articles of Association
which incorporate a number of
amendments to the existing Articles
of Association. An explanation of the
main changes between the existing and
the proposed Articles of Association are
summarised in the explanatory notes to
the Notice of the Annual General Meeting
at the back of this Annual Report
and Accounts.
Share capital
The Company has a premium listing
on the London Stock Exchange. As at
27 February 2020, its share capital
comprised 217,743,365 fully paid
Ordinary Shares of 50 pence each.
At the Company’s 2019 AGM, the
directors were authorised to:
• allot shares in the Company or grant
rights to subscribe for, or convert, any
security into shares up to an aggregate
nominal amount of £22,444,280;
• allot shares up to an aggregate
nominal amount of £44,888,560 for
the purpose of a rights issue; and
• make market purchases up to
13,480,048 shares in the Company
Our governance
(representing approximately 10% of
the Company’s issued share capital at
the time). Shareholders will be asked to
renew similar authorities at the
2020 AGM.
During the year the Company allotted
68,666 shares in connection with the
exercise of options under the Company’s
employee share plans. The Employee
Benefit Trust did not purchase any shares
during the year.
On 7 November 2019 the Company
successfully completed a placing of
13,472,591 ordinary shares at £11.30 to
raise approximately £152.2 million with
existing and new institutional investors.
Proceeds from this was used to part-fund
the acquisition. The net placing price
of approximately 1,104 pence per
placing share was received by the
Company after expenses directly
attributable to the placing represented
a discount of approximately 5.4% to
that intra-day price and a discount of
approximately 5.1% to the closing price
on 6 November 2019.
The placing shares represent
approximately 9.9 per cent of the
issued share capital of the Company
prior to the placing. There has been
no other non pre-emptive issuance for
cash in the last three years.
The Company has not held any shares in
treasury during the period under review.
All issued shares are fully paid and free
from any restrictions on their transfer,
except where required by law, such as
insider trading rules. The rights and
obligations attaching to the Company’s
ordinary shares are set out in the
Company’s Articles of Association,
copies of which can be obtained from
Companies House in the UK or by writing
to the Group Company Secretary.
Shareholders are entitled to attend,
speak and vote at general meetings of
the Company, to appoint one or more
proxies and, if they are corporations, to
appoint corporate representatives.
On a show of hands at a general meeting
of the Company every shareholder
present in person or by proxy and
entitled to vote has one vote and on a
poll every shareholder present in person
or by proxy and entitled to vote has one
vote for every ordinary share held.
Vistry Group PLC | vistrygroup.co.uk | 115
Directors’ report
Further details regarding voting,
including the deadlines for voting, at
the Annual General Meeting can be
found in the notes to the Notice of the
Annual General Meeting at the back
of this Annual Report and Accounts.
No shareholder is, unless the Board
decides otherwise, entitled to attend or
vote either personally or by proxy at a
general meeting or to exercise any other
shareholder rights if he or any person
with an interest in shares has been
sent a notice under section 793 of the
Companies Act 2006 and has failed to
supply the Company with the requisite
information within the prescribed period.
Shareholders may receive a dividend and
on a liquidation may share in the assets
of the Company. None of the ordinary
shares of the Company, including those
held by the Company’s share schemes,
carry any special rights with regard to
control of the Company. Employees
participating in the Group’s Share
Incentive Plan may direct the trustee to
exercise voting rights on their behalf at
any general meeting but are not required
to do so.
Substantial shareholdings
The instrument of transfer of a
certificated share may be in any usual
form or in any other form which the
Board may approve.
The Board may refuse to register any
instrument of transfer of a certificated
share which is not fully paid, provided
that the refusal does not prevent
dealings in shares in the Company
from taking place on an open and
proper basis. Certain employees and
officers of the Company must conform
to the Company’s share dealing rules;
these restrict the ability to deal in the
Company’s shares at certain times and
require permission to deal.
The Board may also refuse to register a
transfer of a certificated share unless the
instrument of transfer: (i) is lodged, duly
stamped (if stampable), at the registered
office of the Company or any other place
decided by the Board accompanied by
the certificate for the share to which it
relates and such other evidence as the
Board may reasonably require to show
the right of the transferor to make the
transfer; (ii) is in respect of only one class
of shares; and (iii) is in favour of not more
than four transferees.
Transfers of uncertificated shares must
be carried out using the relevant system
and the Board can refuse to register
a transfer of an uncertificated share
in accordance with the regulations
governing the operation of the relevant
system and with UK legislation.
There are no other limitations on
the holding of ordinary shares in the
Company and the Company is not aware
of any agreements between holders of
securities that may result in restrictions
on the transfer of securities or on
voting rights.
Financial risk management
Details of financial risk management and
exposure to credit / liquidity risks are
included in note 4.5 to the accounts.
Political donations
No political donations were made during
the year ended 31 December 2019
(2018: nil). The Group has a policy of not
making donations to political parties or
incurring political expenditure.
As at 31 December 2019, the following interests of 3% or more in the Company’s issued share capital had been notified to the Company:
Ordinary shares of 50p each
BlackRock, Inc.
Dimensional Fund Advisors
Schroders plc
Prudential plc group of companies
Standard Life Aberdeen plc group of companies
Woodford Investment Management Ltd
Royal London Asset Management Limited
Norges Bank
% direct
holding
% indirect
holding
% financial
instruments
Total number of
shares held
-
-
-
-
-
4.74
4.14
3.05
9.37
5.00
4.96
4.73
4.87
-
-
-
0.41
13,197,548
-
-
6,723,676
6,680,423
0.20
6,644,963
-
-
-
6,562,807
6,389,100
5,567,004
0.17
4,335,572
% of voting
rights of
the issued
share capital
9.78
5.00
4.96
4.93
4.87
4.74
4.14
3.22
Between 1 January and 27 February 2020, the following interests of 3% or more in the Company’s issued share capital were notified
to the Company:
Ordinary shares of 50p each
Standard Life Aberdeen plc group of companies
Norges Bank
% direct
holding
% indirect
holding
% financial
instruments
Total number of
shares held
-
3.44
5.02
-
-
10,924,770
0.05
7,615,514
% of voting
rights of
the issued
share capital
5.02
3.49
116 | Our governance
Takeover directive
On a change of control, provisions
in the Group’s syndicated banking
facility agreements (described
in note 4.2 to the accounts)
would allow lenders to withdraw
the facility.
All of the Group’s share schemes
contain provisions relating to a
change of control. Under these
provisions, a change of control
would be a vesting event, allowing
exercise of outstanding options
and awards, subject to satisfaction
of performance conditions,
as required.
There are a number of commercial
contracts that could alter in the
event of a change of control.
None is considered to be material
in terms of their potential impact
on the Group in this event.
Auditors
Each person who is a director at the date
of approval of this report confirms that:
• so far as the director is aware,
there is no relevant audit information
of which the Company’s auditors are
unaware; and
• each director has taken all the steps
that he/she ought to have taken as a
director to make himself/herself aware
of any relevant audit information
and to establish that the Company’s
auditors are aware of that information.
This confirmation is given and should
be interpreted in accordance with
the provisions of Section 418 of the
Companies Act 2006.
Following an audit tender process
conducted at the end of 2014,
PricewaterhouseCoopers LLP were
appointed as auditor at the 2015 AGM.
In accordance with the provisions of
the Companies Act 2006, resolutions
concerning the re-appointment of
PricewaterhouseCoopers LLP and their
remuneration will be placed before the
2020 Annual General Meeting.
Statement of directors’
responsibilities
The directors are responsible for
preparing the Annual Report, the
Directors’ Remuneration Report and the
financial statements in accordance with
applicable law and regulations.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law the
directors have prepared the Group and
Parent company financial statements in
accordance with International Financial
Reporting Standards (IFRSs) as adopted
by the European Union. Under company
law the directors must not approve the
financial statements unless they are
satisfied that they give a true and fair
view of the state of affairs of the Group
and the Company and of the profit or loss
of the Group and the Company for
that period.
In preparing these financial statements,
the directors are required to:
• select suitable accounting policies
and then apply them consistently;
• make judgements and accounting
estimates that are reasonable
and prudent;
• state whether applicable IFRSs as
adopted by the European Union have
been followed, subject to any material
departures disclosed and explained in
the financial statements; and
• prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and Company will continue
in business.
The directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the Group
and Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the Company and
the Group and enable them to ensure
that the financial statements and the
Directors’ Remuneration Report comply
with the Companies Act 2006 and, as
regards the Group financial statements,
Article 4 of the IAS Regulation.
Our governance
They are also responsible for
safeguarding the assets of the
Company and the Group and hence
for taking reasonable steps for the
prevention and detection of fraud and
other irregularities.
The directors are responsible for the
maintenance and integrity of the
Company’s website. Legislation in
the United Kingdom governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
The directors consider that the
Annual Report and Accounts, taken
as a whole, is fair, balanced and
understandable and provides the
information necessary for shareholders
to assess a Company’s performance,
business model and strategy.
Each of the directors, whose names
and functions are listed on pages
68 and 69 of the Annual Report and
accounts confirm that, to the best of
their knowledge:
• the Group and Company financial
statements, which have been prepared
in accordance with IFRSs as adopted by
the EU, give a true and fair view of the
assets, liabilities, financial position and
profit of the Group; and
• the Strategic Report contained in the
annual report includes a fair review of
the development and performance of
the business and the position of the
Group, together with a description of
the principal risks and uncertainties
that it faces.
By Order of the Board
M T D Palmer
Group Company Secretary
27 February 2020
Vistry Group PLC
Registered number 306718
Vistry Group PLC | vistrygroup.co.uk | 117
Auditors’ report
Independent auditors’ report to the members of Vistry Group PLC
(formerly Bovis Homes Group PLC)
Report on the audit of the financial statements
Opinion
In our opinion, Vistry Group PLC’s Group financial statements and Company financial statements (the “financial statements”):
• give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2019 and of the Group’s profit
and the Group’s and the Company’s cash flows for the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European
Union and, as regards the Company’s financial statements, as applied in accordance with the provisions of the Companies Act
2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial
statements, Article 4 of the IAS Regulation.
We have audited the financial statements, included within the Annual report and accounts (the “Annual Report”), which comprise: the
Group and Company Balance sheets as at 31 December 2019; the Group income statement and the Group statement of comprehensive
income, the Group and Company Statements of cash flows, and the Group and Company statements of changes in equity for the year
then ended; and the Notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled
our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the Group or the Company.
Other than those disclosed in note 2.1 to the financial statements, we have provided no non-audit services to the Group or the
Company in the period from 1 January 2019 to 31 December 2019.
118 | Our governance
Our governance
Our audit approach - overview
Materiality
• Overall Group materiality: £9.4 million (2018: £8.4 million), based on 5% of profit before
tax and exceptional items.
• Overall Company materiality: £6.5 million (2018: £4.7 million), based on 1% of total assets.
Audit
scope
Key audit
matters
• The Group principally operates through one main trading entity which is structured into
seven regions, being Mercia, West Midlands, Western, South West, Northern Home
Counties, South East and Southern Counties. We undertook work across the seven regions
which together account for 100% of the Group revenue.
• At the parent entity level we audited the Company and tested the consolidation process.
• Margin forecasting and recognition (Group)
• Carrying value of inventory (Group)
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to the Health and Safety at Work etc Act 1974, and we considered the extent to which non-compliance might have a
material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation
of the financial statements such as the Companies Act 2006 and the Listing Rules of the Financial Conduct Authority. We evaluated
management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of
controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce
expenditure and the potential manipulation of forecast site margins. Audit procedures performed included:
• Discussions with management and internal audit and assessment of known or suspected instances of non-compliance with laws and
regulation (including health and safety) and fraud;
• Evaluation and testing of the operating effectiveness of management’s controls around cost forecasting and margin estimation;
• Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to
cost forecasting and margin estimation; and
• Identifying and testing journal entries, in particular testing a sample of journals including unusual or unexpected journal postings to
the income statement.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and
regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Vistry Group PLC | vistrygroup.co.uk | 119
Auditors’ report
Key audit matter
How our audit addressed the key audit matter
Margin forecasting and recognition (Group)
Refer to page 110 of the Audit committee report
(‘Significant areas’) and Note 1.5 of the financial statements
(‘Critical accounting judgements and key sources of
estimation uncertainty).
The Group’s margin forecasting and recognition system is based
on a number of key assumptions including:
At a regional level we tested management’s forecasting and
monitoring controls, including observation of a sample of the
site review meetings attended by representatives from the
Commercial and Finance teams and other departments to obtain
evidence regarding the accuracy and completeness of actual and
forecast costs.
• Build costs (allocated to each plot based on the Group’s site
wide margin model);
• Land costs and central site costs, including infrastructure
costs (allocated to each plot based on the Group’s site wide
margin model); and
• Sales price (based on an expected sales price for the type and
size of property).
Periodic surveyor and financial appraisals are performed to
determine the costs to date and work in progress, based upon
the stage of completion of each unit. The accounting records
are updated accordingly.
If the overall site is loss-making then management consider this as
part of the land write down provisioning process.
There is uncertainty within the above assumptions from potential
changes in the market conditions or unforeseen circumstances.
This could result in the forecast assumptions being inaccurate and
an incorrect margin being recognised.
We consider this to be the most significant financial reporting risk
for the Group principally due to the high level of management
judgement inherent in the accounting for the Group’s revenue
and cost of sales.
We compared the actual revenue and costs for completed
sites against the original viability forecast to identify any
significant differences. We then sought to understand the
nature of the event that had caused the difference to arise, for
example, a change in the plan or an error in forecasting.
This was performed to gain assurance about the accuracy of
management’s estimation methodology.
We attended surveyor valuation assessments at a sample of
sites which provided evidence over existence of inventory as
well as the basis for the valuation of costs incurred used in
margin forecasting.
We tested a sample of actual costs incurred and forecast costs to
third party support. We selected a sample of cost variations and
verified that these had been appropriately approved.
We read the minutes from a sample of surveyor meetings held
in early 2020 to check completeness of site costs at the balance
sheet date.
We tested that the system correctly recalculated site margins to
reflect the latest forecast position. We tested a sample of forecast
sales prices to the actual sales prices attained to support the
validity of estimated sales prices in the forecasts.
Based on the procedures performed, we did not identify any sites
where we considered the underlying assumptions in the forecast
to be inappropriate.
Carrying value of inventory (Group)
Refer to page 110 of the Audit committee report
(‘Significant Areas’) and Note 1.5 of the financial statements
(‘Critical accounting judgements and key sources of
estimation uncertainty’).
The procedures set out above for the ‘Margin forecasting and
recognition’ key audit matter are also relevant to auditing the
carrying value of inventory. In addition to those procedures, we
performed the following:
Inventory is comprised of land held for development, work
in progress (WIP), raw materials, completed plots and part
exchange properties.
Land held for development and raw materials are held at cost.
WIP is made up of the cost of the land being built on, direct
materials, direct labour costs and those overheads that have
been incurred in bringing the inventories to their present
location and condition. Completed plots are held at build cost
and part exchange properties are held at the market value
determined at the time of legal completion.
Inventories are stated at the lower of cost and net realisable
value (“NRV”), NRV being the estimated net selling price less
costs to sell and estimated total costs of completion based on
management’s forecast.
As the most significant balance on the Group Balance sheet there
is an increased risk of material misstatement in the cost
of inventory. In addition, due to the cyclical nature of the housing
industry or issues experienced during the build programme,
there is a risk that the NRV of the inventory is lower than cost
and therefore inventory is held at the incorrect value.
We examined margins for all major sites to identify those with
low or eroding margins, for example due to specific issues or
under performance. We discussed the identified sites with
management, including considering the level of provisions held
against these sites and, if material, corroborated the explanations
to support the carrying value of inventory.
We evaluated the quantum and ageing of part exchange
properties and challenged the recoverability of these assets.
We checked that appropriate site acquisition approvals had
been obtained for significant sites, which include consideration of
site profitability.
Based on the procedures performed we did not identify any sites
where we determined that additional impairments were required
in the year, above those already made by management.
We determined that there were no key audit matters applicable to the Company to communicate in our report.
120 | Our governance
Our governance
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in
which they operate.
Vistry Group PLC is a British housebuilder listed on the London Stock Exchange. The Group is wholly UK based, operating in England
and Wales. The Group is dependent on macroeconomic factors as well as the conditions of the UK residential property market.
The Group may be particularly adversely affected by any factor that reduces sales prices or transaction volumes or presents constraints
in the supply chain in the UK residential property market. This was particularly relevant for our work in the areas of margin forecasting
and recognition and the carrying value of inventory explained in the key audit matters above.
We determined that there are two components in the Group and tested the consolidation process:
• One main trading entity which is structured into seven regions, being Mercia, West Midlands, Western, South West, Northern Home
Counties, South East and Southern Counties. We undertook work across the seven regions which together account for 100% of the
Group revenue; and
• The parent entity which we audited at the Company level.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements,
both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£9.4 million (2018: £8.4 million).
£6.5 million (2018: £4.7 million).
How we determined it
5% of profit before tax and exceptional items.
1% of total assets.
Rationale for benchmark applied We believe that profit before tax, adjusted
for the impact of exceptional items, is the
primary measure used by the shareholders in
assessing the performance of the Group.
We believe that total assets provides the
most appropriate benchmark given the
nature of the business being a holding
company and stakeholder focus on assets.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.47 million
(Group audit) (2018: £0.40 million) and £0.32 million (Company audit) (2018: £0.23 million) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add
or draw attention to in respect of the directors’ statement in the
financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting in
preparing the financial statements and the directors’ identification
of any material uncertainties to the Group’s and the Company’s
ability to continue as a going concern over a period of at least twelve
months from the date of approval of the financial statements.
We have nothing material to add or to draw attention to.
However, because not all future events or conditions
can be predicted, this statement is not a guarantee as
to the Group’s and Company’s ability to continue as a
going concern. For example, the terms of the United
Kingdom’s withdrawal from the European Union are not
clear, and it is difficult to evaluate all of the potential
implications on the Group’s trade, customers, suppliers
and the wider economy.
We are required to report if the directors’ statement relating to
Going Concern in accordance with Listing Rule 9.8.6R(3) is materially
inconsistent with our knowledge obtained in the audit.
We have nothing to report.
Vistry Group PLC | vistrygroup.co.uk | 121
Auditors’ report
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’
report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the
other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report,
any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic report, Directors’ report and Corporate Governance Statement, we also considered whether the
disclosures required by the UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06),
ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as
described below (required by ISAs (UK) unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and
Directors’ report for the year ended 31 December 2019 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic report and Directors’ report. (CA06)
Corporate Governance Statement
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance
Statement (in the Corporate governance report on page 73) about internal controls and risk management systems in relation
to financial reporting processes and about share capital structures in compliance with rules 7.2.5 and 7.2.6 of the Disclosure
Guidance and Transparency Rules sourcebook of the FCA (“DTR”) is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the
audit, we did not identify any material misstatements in this information. (CA06)
In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance
Statement (in Corporate governance report on page 73) with respect to the company’s corporate governance code and
practices and about its administrative, management and supervisory bodies and their committees complies with rules
7.2.2, 7.2.3 and 7.2.7 of the DTR. (CA06)
We have nothing to report arising from our responsibility to report if a corporate governance statement has not been prepared
by the Company. (CA06)
122 | Our governance
Our governance
The directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or
liquidity of the Group
We have nothing material to add or draw attention to regarding:
• The directors’ confirmation on page 32 of the Annual Report that they have carried out a robust assessment of the principal
risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
• The directors’ explanation on page 32 of the Annual Report as to how they have assessed the prospects of the Group, over
what period they have done so and why they consider that period to be appropriate, and their statement as to whether
they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall
due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications
or assumptions.
We have nothing to report having performed a review of the directors’ statement that they have carried out a robust
assessment of the principal risks facing the Group and statement in relation to the longer-term viability of the Group.
Our review was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’
process supporting their statements; checking that the statements are in alignment with the relevant provisions of the UK
Corporate Governance Code (the “Code”); and considering whether the statements are consistent with the knowledge and
understanding of the Group and Company and their environment obtained in the course of the audit. (Listing Rules).
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the directors, on page 117, that they consider the Annual Report taken as a whole to be fair, balanced
and understandable, and provides the information necessary for the members to assess the Group’s and Company’s position
and performance, business model and strategy is materially inconsistent with our knowledge of the Group and Company
obtained in the course of performing our audit.
• The section of the Annual Report on page 109 describing the work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee.
• The directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a
relevant provision of the Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the directors’ Remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006. (CA06)
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of directors’ responsibilities, the directors are responsible for the preparation of the financial
statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are
also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Vistry Group PLC | vistrygroup.co.uk | 123
Auditors’ report
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility
for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly
agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
• the Company financial statements and the part of the directors’ Remuneration report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit Committee, we were appointed by the members on 15 May 2015 to audit the financial
statements for the year ended 31 December 2015 and subsequent financial periods. The period of total uninterrupted engagement is
5 years, covering the years ended 31 December 2015 to 31 December 2019.
Christopher Burns (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
27 February 2020
124 | Our governance
Financial statements | contents
Winchester Village, Winchester
Financial
statements
Financial statements
and notes
127 Group income statement
127 Group statement of
comprehensive income
128 Balance sheets -
Group and Company
129 Statement of changes in equity -
Group and Company
130 Statements of cash flows -
Group and Company
131 Notes to the financial statements
Supplementary
information
163 Five year record
164 2020 AGM Notice
168 Explanatory notes to the
AGM Notice
171 Shareholder information
172 Principal offices
Vistry Group PLC | vistrygroup.co.uk | 125
Financial statements
and notes
Northfields, Somerton
126 | Financial statements
Group income statement
For the year ended 31 December
Revenue
Cost of sales
Gross profit
Adjusted gross profit
Other operating income
Gross profit
Administrative expenses
Other operating income
Operating profit
Financial income
Financial expenses
Net financing costs
Share of profit of joint ventures
Profit before tax
Income tax expense
Profit for the year attributable to ordinary shareholders
Earnings per share (pence)
Basic
Diluted
Note
2.0
5.12
5.12
2.1
5.12
4.3
4.3
4.3
5.7
5.1
2.3
2.3
Group statement of comprehensive income
For the year ended 31 December
Profit for the year
Other comprehensive (expense) / income
Items that will not be reclassified to the income statement
Remeasurements on defined benefit pension scheme
Deferred tax on remeasurements on defined benefit pension scheme
Total other comprehensive expense
2019
£000
Pre Exceptional
2019
£000
Exceptional
2019
£000
Post Exceptional
2018
£000
1,130,768
(888,012)
242,756
253,431
(10,675)
242,756
-
-
-
-
-
-
1,130,768
1,061,396
(888,012)
(830,505)
242,756
253,431
(10,675)
230,891
230,891
-
242,756
230,891
(60,864)
(12,846)
(73,710)
(56,723)
10,675
192,567
813
(6,939)
(6,126)
1,788
-
(12,846)
-
(630)
(630)
-
10,675
179,721
813
(7,569)
(6,756)
1,788
-
174,168
481
(6,585)
(6,104)
5
188,229
(13,476)
174,753
168,069
(36,243)
151,986
(131)
(36,374)
(31,499)
(13,607)
138,379
136,570
101.5p
101.4p
101.6p
101.5p
Note
2019
£000
2018
£000
138,379
136,570
5.9
5.1
(2,116)
464
(1,652)
(5,781)
1,083
(4,698)
Total comprehensive income for the year attributable to ordinary shareholders
136,727
131,872
Vistry Group PLC | vistrygroup.co.uk | 127
Balance sheets
As at 31 December
Assets
Intangible fixed assets
Property, plant and equipment
Right-of-use assets
Investments
Restricted cash
Deferred tax assets
Trade and other receivables
Retirement benefit asset
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Issued capital
Share premium
Retained earnings
Note
5.6
5.4
5.5
5.7
4.1
5.2
5.9
3.1
3.2
4.1
4.4
4.4
Group
2019
£000
4,336
1,845
21,347
85,129
1,748
184
1,090
4,506
120,185
2018
£000
1,079
2,181
-
28,992
1,381
-
611
1,381
35,625
Company
2019
£000
-
-
-
2018
£000
-
-
-
14,153
11,262
-
-
-
-
-
-
-
14,153
11,262
1,207,667
1,320,229
-
-
105,374
361,962
64,505
163,217
1,675,003
1,547,951
1,795,188
1,583,576
74,169
359,857
837,940
67,398
216,907
776,762
Total equity attributable to equity holders of the parent
1,271,966
1,061,067
Liabilities
Bank and other loans
Lease liabilities
Deferred tax liability
Trade and other payables
Total non-current liabilities
Trade and other payables
Lease liabilities
Provisions
Current tax liabilities
Total current liabilities
Total liabilities
4.2
5.5
5.2
3.3
3.3
5.5
5.8
5.2
-
36,401
16,686
-
122,940
139,626
-
730
183,769
220,900
352,359
278,706
6,309
3,989
20,939
383,596
523,222
-
4,843
18,060
301,609
522,509
642,380
452,889
344
642,724
656,877
74,169
359,857
220,115
654,141
-
-
-
781
781
-
-
-
1,955
1,955
2,736
344
453,233
464,495
67,398
216,907
177,537
461,842
-
-
-
781
781
-
-
-
1,872
1,872
2,653
Total equity and liabilities
1,795,188
1,583,576
656,877
464,495
The Company made a profit for the year of £118,332,000 (2018: £117,983,000). These financial statements on pages 127 to 163 were approved by
the Board of directors on 27 February 2020 and were signed on its behalf: Earl Sibley, Director.
128 | Financial statements
Group statement of changes in equity
For the year ended 31 December 2019
Balance at 1 January 2018
Total comprehensive income
Issue of share capital
Own shares disposed
Deferred tax on other employee benefits
Share based payments
Dividends paid to shareholders
Own
shares
held
£000
Other
retained
earnings
£000
Total
retained
earnings
£000
Issued
capital
£000
Share
premium
£000
Total
£000
(3,642)
776,897
773,255
67,330
215,991
1,056,576
-
-
22
-
-
-
131,872
131,872
-
(22)
(113)
1,413
-
-
(113)
1,413
(129,665)
(129,665)
-
68
-
-
-
-
-
131,872
916
-
-
-
-
984
-
(113)
1,413
(129,665)
Note
4.4
5.2
5.3
2.2
Total transactions with owners recognised directly in equity
22
(128,387)
(128,365)
68
916
(127,381)
Balance at 31 December 2018
(3,620)
780,382
776,762
67,398
216,907
1,061,067
Balance at 1 January 2019
IFRS16 opening adjustment
Total comprehensive income
Issue of share capital
Deferred tax on other employee benefits
Share based payments
Dividends paid to shareholders
Total transactions with owners recognised directly in equity
(3,620)
780,382
776,762
67,398
216,907
1,061,067
-
-
-
-
-
-
-
65
65
136,727
136,727
-
-
-
-
65
136,727
-
140
-
140
2,891
2,891
(78,645)
(78,645)
6,771
142,950
149,721
-
-
-
-
-
-
140
2,891
(78,645)
(75,549)
(75,549)
6,771
142,950
74,172
4.4
5.2
5.3
2.2
Balance at 31 December 2019
(3,620)
841,560
837,940
74,169
359,857
1,271,966
Company statement of changes in equity
For the year ended 31 December 2019
Balance at 1 January 2018
Total comprehensive income
Issue of share capital
Share based payments
Dividends paid to shareholders
Balance at 31 December 2018
Balance at 1 January 2019
Total comprehensive income
Issue of share capital
Share based payments
Dividends paid to shareholders
Balance at 31 December 2019
Attributable to equity holders of the parent
Total
retained
earnings
£000
Issued
capital
£000
Share
premium
£000
Total
£000
187,806
67,330
215,991
471,127
117,983
-
1,413
(129,665)
-
68
-
-
-
117,983
916
-
-
984
1,413
(129,665)
177,537
67,398
216,907
461,842
177,537
67,398
216,907
461,842
118,332
-
-
118,332
-
6,771
142,950
149,721
2,891
(78,645)
-
-
-
-
2,891
(78,645)
220,115
74,169
359,857
654,141
Vistry Group PLC | vistrygroup.co.uk | 129
Statements of cash flows
For the year ended 31 December
Cash flows from operating activities
Profit for the year
Depreciation and amortisation
Financial income
Financial expense
Loss/(profit) on sale of property, plant and equipment
Equity-settled share-based payment expense
Income tax expense
Share of results of joint ventures
Profit released on sale of assets from joint ventures
Group
Company
Note
2019
£000
2018
£000
2019
£000
2018
£000
5.4, 5.5, 5.6
4.3
4.3
5.1
5.7
138,379
136,570
118,332
117,982
6,253
(813)
6,939
3
2,891
36,374
(1,788)
(972)
905
(481)
6,585
(450)
1,413
-
-
(10,287)
(9,855)
-
-
-
-
-
-
31,499
1,955
1,872
(5)
(1,197)
-
-
-
-
(Increase)/decrease in trade and other receivables
(58,234)
12,402
(191,363)
8,827
Decrease/(increase) in inventories
Increase/(decrease) in trade and other payables
Decrease in provisions and retirement benefit assets
Cash generated from operations
Interest paid
Income taxes paid
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Acquisition of intangible fixed assets
Acquisition of property, plant and equipment
Proceeds from sale of property, plant and equipment
Movement of investment in joint ventures
Dividends received from joint ventures
Reduction in restricted cash
115,170
(1,891)
16,716
(15,692)
(8,629)
(7,042)
-
-
-
-
-
-
252,289
162,616
(81,363)
118,826
(2,093)
(2,773)
(33,804)
(29,165)
-
-
-
-
216,392
130,678
(81,363)
118,826
131
278
10,287
9,855
5.6
5.4
5.7
5.7
(3,706)
(565)
-
(1,213)
(1,876)
1,977
(58,511)
(20,300)
5,135
(368)
1,067
33
-
-
-
-
-
-
-
-
-
-
-
-
Net cash (outflow)/generated from investing activities
(57,884)
(20,034)
10,287
9,855
Cash flows from financing activities
Dividends paid
Principle elements of lease payments
Net proceeds from the issue of share capital
(Repayment)/drawdown of bank and other loans
Net cash used in financing activities
2.2
(78,645)
(129,665)
(78,645)
(129,665)
5,562
149,721
-
-
984
149,721
(36,401)
11,192
-
-
984
-
4.4
4.2
40,237
(117,489)
71,076
(128,681)
Net increase/(decrease) in cash and cash equivalents
198,745
(6,845)
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
4.1
4.1
163,217
170,062
361,962
163,217
-
344
344
-
344
344
130 | Financial statements
Notes to the financial statements
The notes have been grouped into sections under five key categories:
1. Basis of preparation
2. Result for the year
3. Land bank and other operating assets and liabilities
4. Financing
5. Other disclosures
The key accounting policies have been incorporated throughout the notes to the financial statements adjacent to the disclosure to which
they relate. All accounting policies are included within an outlined box.
1.0 Basis of preparation
1.1 General information
Vistry Group PLC (the “Company”), formerly named ‘Bovis Homes Group PLC’ is a company domiciled in the United Kingdom, England.
The consolidated financial statements of the Company for the year ended 31 December 2019 comprise the Company and its subsidiaries
(together referred to as the “Group”) and the Group’s interest in Joint ventures. The financial statements were authorised for issue by the
directors on 27 February 2020.
1.2 Basis of accounting
The consolidated financial statements of the Company and the Group have been prepared in accordance with the International Financial
Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union and Companies
Act 2006 applicable to companies reporting under IFRS.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 to not present the Company income statement
and statement of comprehensive income.
The Group has applied the following standards for the first time for its annual reporting year commencing 1 January 2019:
• Amendments to IAS28 ‘Investments in Associates and joint ventures’
• IFRIC23 Uncertainty over income tax treatments
• IFRS16 ‘Leases’
The impact of these changes on the Group’s financial statements is described in Note 1.7.
All other accounting policies have been applied consistently to the Company and the Group.
The financial statements are prepared on the historical cost basis.
1.3 Going concern
The Directors are satisfied that the Group has sufficient resources to continue in operation for the 12 months from date of approval of these
financial statements. The Directors reviewed detailed financial and covenant compliance forecasts covering the period to December 2020,
including the Linden Homes and Vistry Partnerships businesses, and summary financial forecasts for the periods ending 31 December 2020 and
31 December 2021.
Having started the year with net cash of £126.8 million, the Group generated a strong operating cash flow during 2019 and raised £149.7m of
cash as a result of share issues, increasing the net cash position to £362.0 million after significant investment into joint ventures.
As at 31 December 2019, the Group held cash and cash equivalents of £362.0 million and had borrowings of nil.
In January 2020, the Group entered into borrowing facility agreements totalling £600.0 million, including a £150.0m term loan and £450.0 million
revolving credit facility to meet the liquidity needs of the enlarged business following the Acquisition.
For these reasons, the Directors consider it appropriate to prepare the financial statements of the Group and the Company on a going
concern basis.
Vistry Group PLC | vistrygroup.co.uk | 131
Notes to the financial statements continued
1.4 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December. Subsidiaries are entities controlled by the Group. The Group controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity.
In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date
on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control ceases.
Associates are any entities in which the Group has significant influence, but not control, over the financial and operating policies.
The consolidated financial statements include the Group’s share of the comprehensive income and expense of associates on an equity
accounted basis, from the date that significant influence commences until the date that significant influence ceases.
A joint arrangement is an arrangement over which the Group and one or more third parties have joint control. These joint arrangements are
in turn classified as:
• Joint ventures whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its
liabilities; and
• Joint operations whereby the Group has rights to the assets and obligations for the liabilities relating to the arrangement.
The consolidated financial statements include the Group’s share of the comprehensive income and expense of its joint ventures on an
equity accounted basis and its share of income and expenses of its joint operation within the corresponding lines of the income statement,
from the date that joint control commenced.
1.5 Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with adopted IFRSs requires management to make estimates and assumptions that affect
the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the
basis of carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both
current and future periods.
No individual judgements have been made that have a significant impact on the financial statements, other than those involving estimates, which
are outlined below.
Key sources of estimation uncertainty for the Group
Land held for development and housing work in progress
The Group holds inventories which are stated at the lower of cost and net realisable value. To assess the net realisable value of land held for
development and housing work in progress, the Group completes a financial appraisal of the likely revenue which will be generated when these
inventories are combined as residential properties for sale and sold. Where the financial appraisal demonstrates that the revenue will exceed
the costs of the inventories and other associated costs of constructing the residential properties, the inventories are stated at cost. Where the
assessed revenue is lower, the extent to which there is a shortfall is written off through the income statement leaving the inventories stated at a
realisable value.
To the extent that the revenues which can be generated change, or the final cost to complete for the site varies from estimates, the net
realisable value of the inventories may be different. A review taking into account estimated achievable net revenues, actual inventory and costs to
complete as at 31 December 2019 has been carried out, and appropriate adjustments have been made to the carrying value of the provision.
These estimates were made by local management having regard to actual sales prices, together with competitor and marketplace evidence, and
were further reviewed by Group management. Should there be a future significant decline in UK house pricing, then further write- downs of land
and work in progress may be necessary. Further detail on the carrying value of inventories is laid out in note 3.1.
Margin recognition
The gross margin from revenue generated on each of the Group’s individual sites within the year is recognised based on the latest forecast for the
gross margin expected to be generated over the remaining life of that site. The remaining life gross margin is calculated using forecasts for selling
prices and all land, build, infrastructure and overhead costs associated with that site. There is inherent uncertainty and sensitivity to external
forces (predominantly house prices and labour costs) in these forecasts, which are reviewed regularly throughout the year by management and
are addressed on pages 32 to 37.
Defined benefit pension scheme
The Group has a defined benefit pension scheme, closed to future accrual in 2018, which is subject to estimation uncertainty. Note 5.9 outlines
the way in which this Scheme is recognised in the Group’s Financial Statements, the associated risks and sensitivity analysis showing the impact of
a change in key variables on the defined benefit obligation.
The Company has no sources of estimation uncertainty.
132 | Financial statements
Notes to the financial statements continued
1.6 Segment reporting
The Chief Operating Decision Maker, which is the Board, notes that the Group’s main operation is that of a housebuilder and it operates
entirely within the United Kingdom. For the year ended 31 December 2019, there are no separate segments, either business or geographic,
to disclose, having taken into account the aggregation criteria provisions of IFRS8 Operating segments.
Since the Acquisition, the Board have identified two separate segments having taken into consideration IFRS8 criteria – Housebuilding
and Partnerships. At 30 June 2020, segmental reporting will be presented for these business segments to reflect the Group’s new
management and internal reporting structure.
1.7 Impact of standards and interpretations effective for the first time
The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards,
with a date of initial application of 1 January 2019:
• Amendment to IAS28 ‘Investments in Associates and joint ventures’, which has not had a significant impact on reported results or position.
• IFRIC23 Uncertainty over income tax treatments, which has not had a significant impact on reported results or position.
• IFRS16 ‘Leases’ replaces IAS17 ‘Leases’, requiring all assets held by the Group under lease agreements of greater than 12 months in duration to
be recognised as assets within the Balance Sheet, unless they are considered to be of low value (less than £3,000 in total payments). Similarly,
the present value of future payments to be made under those lease agreements must be recognised as a liability. The Group has reviewed its
leasing arrangements and the impact on reported results are disclosed in note 5.5.
1.8 Impact of standards and interpretations in issue but not yet effective
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2020,
which are not expected to have a material impact on reported results and have not been early adopted in preparing these financial statements:
• Amendment to IAS 1 ‘Presentation of financial statements’, effective 1 January 2020.
• Amendment to IAS 8 ‘Accounting policies, changes in accounting estimates and errors’, effective 1 January 2020.
• Amendment to IFRS3, ‘Definition of a business’, effective 1 January 2020.
2.0 Result for the year
Revenue
Revenue is recognised in the income statement when control of each home has passed to the purchaser, which is when legal title is
transferred. Revenue in respect of the sale of residential properties is recognised at the fair value of the consideration received or receivable,
net of value added tax and discounts, on legal completion. In certain instances, property may be accepted in part consideration for a sale of a
residential property.
The fair value is established by independent surveyors, reduced for costs to sell. Net sale proceeds generated from the subsequent sale of
part exchange properties are recorded as an adjustment to cost of sales. The original sale is recorded in the normal way, with the fair value
of the exchanged property replacing cash receipts. Cash incentives are considered to be a discount from the purchase price offered to the
acquirer and are therefore accounted for as a reduction to revenue.
The Group applies its policy on contract accounting when recognising revenue and profit on contracts. Revenue and costs are recognised by
reference to the stage of completion of contract activity at the balance sheet date. This is normally measured by surveys of work performed
to date. When it is probable that the total costs on a construction contract will exceed total contract revenue, the expected loss is recognised
as an expense in the Income Statement immediately. The application of this policy requires judgements to be made in respect of the total
expected costs to complete for each site. The Group has in place established internal control processes to ensure that the evaluation of costs
and revenues is based upon appropriate estimates.
Revenue is recognised on land sales and commercial property sales from the point of unconditional exchange of contracts as long as there
are no significant obligations remaining. Where the Group still has significant obligations to perform under the terms of the contract,
revenue is recognised when the obligations are performed.
When the Group makes sales to joint ventures in which it owns an interest, it will only recognise revenue and profit in the period of the initial
transaction to the extent of third parties’ interests in the joint venture. The unrecognised element of revenue and profit will be deferred and
released to the income statement when the joint venture has sold the assets to which the original transaction with the Group related.
Vistry Group PLC | vistrygroup.co.uk | 133
Notes to the financial statements continued
Revenue by type
Private housing
Affordable housing
Partnership land transactions
Land sales
Release of deferred revenue from joint ventures
Other
Total
Timing of revenue recognition
At a point in time
Over time
Total
2019
£000
897,017
170,379
42,432
6,811
7,766
6,363
2018
£000
866,156
160,693
-
14,163
10,143
10,241
1,130,768
1,061,396
930,986
199,782
895,671
165,725
1,130,768
1,061,396
The Group’s total revenue recognised in relation to contract liabilities is shown in the table above as affordable housing revenue.
Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities relating to its existing contracts with customers:
Contract assets included in inventory
Amounts recoverable on contracts
Payments on account
2019
£000
23,533
42,829
(7,731)
2018
£000
47,546
24,160
(11,296)
Contract assets included in inventory relate to work in progress which has not yet been recognised in the Income Statement, in line with the
Group’s policy for recognition for long term contracts. Amounts recoverable on contracts represent amounts where the revenue recognised on
a long term contract exceeds the value of stage payments that have been made on that contract and payments on account represents positions
where stage payments exceed revenue recognised on contracts. Based on historical trends, management expects in excess of 90% of the payment
on account total to be recognised as revenue in the next reporting period.
For contracts in progress at the balance sheet date, contract costs incurred plus recognised profit minus recognised losses to date amounted to
£428,011,000 (2018: £490,022,000).
2.1 Operating profit
Operating profit before financing costs and exceptionals is stated after charging/(crediting):
Depreciation of tangible fixed assets (see note 5.4)
Amortisation of intangible fixed assets (see note 5.6)
Depreciation of right-of-use assets (see note 5.5)
Hire of plant and machinery
Personnel expenses (see note 5.3)
Rental income (included in revenue)
Government grants recognised within cost of sales (see note 4.2)
Loss/(profit) on disposal of property, plant and equipment
Other operating income includes:
Joint arrangement management fees income
Profit on disposal of investment
134 | Financial statements
2019
£000
898
449
4,906
7,597
93,014
(101)
(118)
3
2019
£000
2,064
8,611
2018
£000
771
134
-
8,597
80,986
(736)
(21)
(450)
2018
£000
-
-
Notes to the financial statements continued
Exceptional expenses
Exceptional items are those which, in the opinion of the Board, are material by size and non-recurring in nature and therefore require
separate disclosure within the Income Statement in order to assist the users of the financial statements in understanding the underlying
business performance of the Group.
Administrative expenses resulting from the Acquisition
Interest costs resulting from the Acquisition
Exceptional expenses
2019
£000
12,846
630
13,476
2018
£000
-
-
-
During the year ended 31 December 2019, the Group entered into a sale and purchase agreement for the Acquisition. The administrative fees
incurred in relation to this transaction include legal, financing and accounting advisory services, transaction insurance costs and other expenses.
The exceptional interest costs incurred relate to the accelerated amortisation of capitalised facility arrangement fees on the 2015 revolving credit
facility; this results from the early termination of this facility in January 2020 triggered by the refinancing for the Acquisition.
Auditors’ remuneration
Fees payable to the Company’s auditors for the audit of the Company’s annual financial statements
The audit of the Company’s subsidiaries, pursuant to legislation
Interim review work
Non-audit fees (included within exceptional administrative expenses)
Fees charged to operating profit before financing costs
2.2 Dividends
The following dividends were paid by the Group:
Prior year final dividend per share of 38.0p (2018:32.5p)
Special dividend per share of nil (2018: 45.0p)
Current year interim dividend per share of 20.5p (2018:19.0p)
2019
£000
35
215
30
865
1,145
2019
£000
51,078
-
27,567
78,645
2018
£000
30
174
30
-
234
2018
£000
43,645
60,483
25,537
129,665
The 2019 Special dividend was paid by way of bonus shares in January 2020 with a total value of £66.0m.
A second interim dividend of 41.0 pence per share (2018 final dividend: 38.0 pence) has been declared and will be paid on 29 May 2020 in respect
of 2019.
41.0p per qualifying ordinary share (2018: 38.0p)
2.3 Earnings per share
Profit attributable to ordinary shareholders
Profit for the year attributable to equity holders of the parent (pre exceptional)
Profit for the year attributable to equity holders of the parent (post exceptional)
Weighted average number of ordinary shares
Weighted average number of ordinary shares at 31 December
2019
£000
2018
£000
60,668
51,223
2019
£000
151,986
138,379
2018
£000
-
136,570
2019
2018
136,291,860
134,355,573
Vistry Group PLC | vistrygroup.co.uk | 135
Notes to the financial statements continued
Diluted earnings per share
The calculation of diluted earnings per share for the year ended 31 December 2019 was based on the profit for the year attributable to ordinary
shareholders after exceptionals of £138,379,000 (2018: £136,570,000) and a weighted average number of diluted ordinary shares outstanding
during the year ended 31 December 2019 of 136,432,481 (2018: 134,557,450).
The average number of shares is increased by reference to the average number of potential ordinary shares held under option during the year.
This reflects the number of ordinary shares which would be purchased using the aggregate difference in value between the market value of
shares and the share option exercise price and fair value of future employee services. The market value of shares has been calculated using
the average ordinary share price during the year. Only share options which are expected to meet their cumulative performance criteria have been
included in the dilution calculation.
Weighted average number of ordinary shares (diluted)
Basic weighted average number of ordinary shares at 31 December
Effect of share options in issue which have a dilutive effect
Diluted weighted average number of ordinary shares at 31 December
Pre and post exceptional earnings per share
Basic earnings per share pre exceptional
Diluted earnings per share pre exceptional
Basic earnings per share post exceptional
Diluted earnings per share post exceptional
2019
2018
136,291,860
134,355,573
140,621
201,877
136,432,481
134,557,450
2019
111.5p
111.4p
101.5p
101.4p
2018
101.6p
101.5p
101.6p
101.5p
3.0 Land bank and other operating assets and liabilities
This section shows the assets used to generate the Group’s trading performance and the liabilities incurred as a result. Liabilities relating to the
Group’s financing activities are addressed in section 4. Deferred tax assets and liabilities are shown in section 5.2.
3.1 Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour
costs and those overheads, not including any general administrative overheads, that have been incurred in bringing the inventories to their
present location and condition. Net realisable value represents the estimated net selling price less estimated total costs of completion of the
finished units.
Land held for development, including land in the course of development until legal completion of the sale of the asset, is initially recorded
at cost along with any expected overage. Where, through deferred purchase credit terms, cost differs from the nominal amount which will
actually be paid in settling the deferred purchase terms liability, an adjustment is made to the cost of the land, the difference being charged
as a finance cost.
Options purchased in respect of land are capitalised initially at cost and written down on a straight-line basis over the life of the option.
Should planning permission be granted and the option be exercised, the option is not amortised during that year and its carrying value is
included within the cost of land purchased.
Investments in land without the benefit of planning consent, either through purchase of freehold land or non refundable deposits paid on
land purchase contracts subject to residential planning consent, are capitalised initially at cost. Regular reviews are completed for impairment
in the value of these investments, and provision made to reflect any irrecoverable element. The impairment reviews consider the existing use
value of the land and assesses the likelihood of achieving residential planning consent and the value thereof.
Ground rents are held at an estimate of cost based on a multiple of ground rent income, with a corresponding credit created against cost of
sales, in the year in which the ground rent first becomes payable by the leasehold purchaser.
Part exchange properties are held at the lower of cost and net realisable value, and include a carrying value provision to cover the costs of
management and resale. Any profit or loss on the disposal of part exchange properties is recognised within cost of sales in the Group
Income Statement.
136 | Financial statements
Notes to the financial statements continued
Group
Raw materials and consumables
Work in progress
Part exchange properties
Land held for development (net of provision)
Inventories
2019
£000
4,690
2018
£000
5,424
470,760
439,753
15,917
16,345
716,300
858,707
1,207,667
1,320,229
Inventories to the value of £886.4 million were recognised as expenses in the year (2018: £832.7 million). Part exchange properties of
£80.5 million (2018: £64.6 million) were disposed of during the year for proceeds of £79.9 million (2018: £64.8 million).
Movement on inventory provision
Balance at 1 January
- Utilised on specific sites sold in the year
- Unutilised on specific sites sold in the year and so released to the income statement
New provisions recognised on sites still held
New provisions recognised on sites identified for disposal outside of core operating area
Balance at 31 December
£4.5 million (2018: £6.4 million) of inventories were valued at net realisable value rather than at historic cost.
3.2 Trade and other receivables
2019
£000
3,439
(2,041)
-
(2,041)
282
550
2,230
2018
£000
5,543
(2,471)
(66)
(2,537)
33
400
3,439
Trade receivables, amounts recoverable on contracts and other debtors do not carry any interest and are stated at their nominal value as
reduced by appropriate allowances for estimated irrecoverable amounts. The Group applies the IFRS9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets. To measure the expected
credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the age of the
outstanding amounts. The contract assets relate to unbilled work in progress on contracts described in note 2.0 and have a historically low
level of default, similar to the Group’s low default levels on trade receivables.
Other debtors include amounts receivable from the Government in relation to the Help To Buy scheme.
Trade receivables
Amounts recoverable on contracts
Amounts due from subsidiary undertakings
Other debtors
Prepayments and accrued income
Current assets
Group
Company
2019
£000
2018
£000
2019
£000
2018
£000
30,563
12,666
42,829
24,160
-
-
-
-
-
-
639,712
452,889
9,307
8,781
22,675
18,898
-
-
-
-
105,374
64,505
639,712
452,889
Trade receivables and amounts recoverable on contracts are shown net of their associated expected credit loss allowances, which are £678,000
(2018: £1,440,000) and £1,318,000 (2018: £1,436,000) respectively. The Group’s standard invoice payment terms are 30 days.
The carrying value of amounts due from subsidiary undertakings represents the Company’s maximum credit risk. Interest is charged on these
amounts at a rate of 2.3% per annum. The directors consider these amounts to be fully receivable at year end.
Receivables which are past due but not impaired are not material in either period.
The Directors consider that the carrying amount of trade receivables approximates to their fair value.
Vistry Group PLC | vistrygroup.co.uk | 137
Notes to the financial statements continued
3.3 Trade and other payables
Trade payables
Trade payables on normal terms are not interest bearing and are stated at their nominal value.
Trade payables on extended terms, particularly in respect of land, are recorded at their fair value at the date of acquisition of the asset to
which they relate. The discount to nominal value which will be paid in settling the deferred purchase terms liability is recognised over the
period of the credit term and charged to finance costs using the effective interest rate method.
Government grants
Government grants are recognised in the income statement so as to match with the related costs that they are intended to compensate.
Government grants are included within deferred income.
Non-current liabilities
Trade payables
Other creditors
Current liabilities
Trade payables
Payments on account
Taxation and social security
Other creditors
Accruals
Deferred income
Group
Company
2019
£000
2018
£000
2019
£000
2018
£000
122,819
183,530
121
239
122,940
183,769
-
781
781
259,533
221,192
7,731
11,296
1,750
1,771
1,941
2,020
72,924
38,288
8,480
4,139
352,359
278,706
-
-
-
-
-
-
-
-
781
781
-
-
-
-
-
-
-
Total trade and other payables
475,299
462,475
781
781
The Group’s non-current liabilities largely relate to land purchased on extended payment terms. An ageing of land creditor repayments is provided
in note 4.6.
4.0 Financing
This section outlines how the Group manages its capital and related financing activities.
4.1 Cash and cash equivalents
Cash and cash equivalents comprises cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part
of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Bank balances
Call deposits
Cash and cash equivalents in the balance sheet and cash flows
Group
Company
2019
£000
11,743
2018
£000
547
350,219
162,670
361,962
163,217
2019
£000
344
-
344
2018
£000
344
-
344
Restricted cash primarily relates to amounts that the Group paid into indemnity funds as part of the NewBuy housing scheme which have not yet
been released.
138 | Financial statements
Notes to the financial statements continued
4.2 Bank and other loans
Bank borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of direct issue costs, and subsequently at amortised cost.
Finance charges are accounted for on an accrual basis to the income statement using the effective interest method and are added to the
carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Government grants
The benefit on loans with an interest rate below market is calculated as the difference between interest at a market rate and the below
market interest. The benefit is treated as a Government grant.
Interest rate profile of bank and other loans
At 31 December
Revolving credit facility (terminated 3 Jan 2020)
HCA Loan
Post balance sheet
Rate
LIBOR +120-225 bps
EC Base Rate +220bps
Facility
maturity
2022
2027
Carrying
value 2019
£000
Carrying
value 2018
£000
-
-
-
36,401
Rate
Facility
maturity
Carrying
value 2019
£000
Carrying
value 2018
£000
Revolving credit facility (commencing 3 Jan 2020, amended 24 Jan 2020)
LIBOR +165-255bps
Revolving credit facility (commencing 3 Jan 2020, amended 24 Jan 2020)
LIBOR +165-255bps
Term Loan (commencing 3 Jan 2020, amended 24 Jan 2020)
LIBOR +165-255bps
USPP Loan
Details of facilities
403 bps
2025
2023
2023
2027
-
-
-
-
-
-
-
-
At 31 December 2019, the Group had a £250.0 million committed revolving credit facility, which was due to expire in December 2022.
This facility syndicate comprised six banks and the facility included a covenant package, featuring three covenants covering the Group’s
gearing ratio, consolidated tangible net worth and interest cover. These covenants were tested semi-annually.
During 2019, the loan facility agreement with the Homes and Communities Agency in relation to the development at Stanton Cross,
Wellingborough was transferred into Stanton Cross Developments LLP, a joint venture investment of the Group.
Subsequent to the year end, the £250.0 million committed revolving credit facility was terminated and the Group entered into the following
borrowing facilities:
- a £410.0 million committed revolving credit facility which expires in January 2025, with an option to extend to January 2026 or January 2027
- a £40.0 million committed revolving credit facility which expires in January 2023
- a £150.0 million term loan which expires in January 2023
- a £100.0 million US Private Placement borrowing, novated from Galliford Try plc as part of the Acquisition.
The combined £450.0 million revolving credit facility syndicate comprises eight banks. The revolving credit facilities, USPP Loan and Term
Loan all include a covenant package, as per the previous agreement, which is also tested semi-annually. The overall financing cost of the new
arrangements are marginally more expensive than the previous facility.
4.3 Net financing costs
Finance costs are included in the measurement of borrowings at their amortised cost to the extent that they are not settled in the period in
which they arise.
The Group is required to capitalise borrowing costs directly attributable to the acquisition, construction and production of a qualifying asset,
as part of the costs of that asset. Inventories which are produced in large quantities on a repetitive basis over a short period of time are not
qualifying assets. The Group does not generally produce qualifying assets.
Vistry Group PLC | vistrygroup.co.uk | 139
Notes to the financial statements continued
Net financing costs recognised in the Income Statement
Interest income
Net pension finance credit
Finance income
Imputed interest on deferred terms land payables
Interest on lease liabilities
Interest expense
Finance expenses
Net financing costs
4.4 Capital and reserves
Equity instruments
Note
5.9
5.5
2019
£000
(707)
(106)
(813)
3,453
558
2,929
6,939
6,126
2018
£000
(372)
(109)
(481)
3,614
-
2,971
6,585
6,104
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Own shares held by ESOP trust
Transactions of the Group-sponsored ESOP trust are included in the Group financial statements. In particular, the trust’s purchases of shares
in the Company are debited directly to equity through an own shares held reserve.
Share capital
Ordinary shares
In issue at 1 January
Issued for cash
Costs of issuing equity
2019
Number of shares
2019
Issued capital
£000
2019
Share premium
£000
2018
Number of shares
2018
Issued capital
£000
2018
Share premium
£000
134,796,633
67,398
216,907
134,660,750
67,330
215,991
13,541,624
6,771
146,003
135,883
-
-
(3,053)
-
68
-
916
-
In issue at 31 December – fully paid
148,338,257
74,169
359,857
134,796,633
67,398
216,907
The holders of ordinary shares (nominal value 50p) are entitled to receive dividends as declared from time to time and are entitled to one vote per
share at meetings of the Company. The cost of issuing equity in the year relate to the Placing.
Reserve for own shares held
The cost of the Company’s shares held in the ESOP trust by the Group is recorded as a reserve in equity. During the year ended 31 December
2019, the Group did not purchase any shares (2018: nil shares purchase at a total cost of £nil). There were no shares awarded under the Group’s
long-term incentive plan that vested during 2019 (2018: 2,313) and therefore the balance of the own shares held reserve has not reduced in 2019
(2018: £22,000). At 31 December 2019, the Group held 385,437 of its own shares (2018: 385,437), with a value on reserve of £3,620,000
(2018: £3,620,000). The Group has suspended all rights on shares held by the Group in the Company.
140 | Financial statements
Notes to the financial statements continued
4.5 Financial risk management
Group
The Group seeks to manage its capital in such a manner that the Group safeguards its ability to continue as a going concern and to fund its future
development. In continuing as a going concern, it seeks to provide returns for shareholders over the housing market cycle as well as enabling
repayment of its liabilities as a trading business.
The Group’s capital comprises its shareholders’ equity, added together with its net borrowings, or less its net cash, stated before issue costs. A five
year record of its capital employed is displayed on page 163.
Whilst the blended cost of capital is a factor in the Group’s decision making in assessing the right blend of shareholders’ equity and debt financing,
the Group has typically preferred to operate within a framework that features relatively low gearing or cash in hand. This is because the Group
recognises that housebuilding can be cyclical, and higher levels of gearing can create profound liquidity risks. The Group would seek to manage
its capital base through control over expenditure, maintenance of adequate banking facilities, control over dividend payments and in the longer
term through adjustments to its capital structure.
An important part of capital management for the Group is its financial instruments, which comprise cash, bank and other loans and overdrafts.
The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group also utilises financial assets and liabilities
such as trade payables or receivables that arise directly from operations.
The use of these carries risk: interest rate risk, credit risk and liquidity risk. Given that the Group trades exclusively in the UK, there is no material
currency risk.
Company
The Company only trades with other Group entities and is only exposed to credit risk on those intercompany balances.
a. Interest rate risk
Exposure to interest rate risk arises in the normal course of the Group’s business and interest rate swaps are used where appropriate to hedge
exposure to fluctuations in interest rates. The Group has no exposure to currency risk as all its financial assets and liabilities are denominated
in sterling. Throughout the year, the Group’s policy has been that no trading in financial instruments shall be undertaken.
Effective interest rates and repricing analysis
The interest rate profile of the Group’s interest bearing financial instrument is set out in note 4.2.
Sensitivity analysis
In managing interest rates, the Group aims to reduce the impact of short-term fluctuations in the Group’s earnings, given that Group
borrowings are variable in terms of interest rate. Over the longer-term, however, permanent changes in interest rates would have an impact
on consolidated earnings.
For the year ended 31 December 2019, a general increase of one percentage point in interest rates applying for the full year would not have a
material impact on the financial statements.
b. Credit risk
The Group’s exposure to credit risk is limited by the fact that the Group generally receives cash at the point of legal completion of its sales of
private houses. There are certain categories of revenue where this is not the case: for instance, housing association revenues or land sales.
The largest single amount outstanding at the year end was £20.2 million (2018: £5.2 million), which is payable by the end of October 2022.
The Group retains these outstanding balances as trade and other receivables. The carrying value of trade and other receivables equates to the
Group’s exposure to credit risk. This is set out in note 3.2.
The Group’s trade and other receivables are secured against the following:
Consented land
Second charge against property
Unsecured
2019
£000
-
1,090
105,374
106,464
2018
£000
400
611
64,105
65,116
In managing risk the Group assesses the credit risk of its counterparties before entering into a transaction. This assessment is based upon
management knowledge and experience. In the event that land is disposed of the Group seeks to mitigate any credit risk by retaining a charge
over the asset disposed of, so that in the event of default, the Group is able to seek to recover its outstanding asset.
Vistry Group PLC | vistrygroup.co.uk | 141
Notes to the financial statements continued
Company
The Company’s exposure to credit risk is limited as a result of all outstanding balances relating to companies within the Group.
c. Liquidity risk
The Group’s banking arrangements outlined in note 4.2 are considered to be adequate in terms of flexibility and liquidity for the enlarged Group’s
medium term cash flow needs, thus mitigating its liquidity risk. The Group’s approach to assessment of liquidity risk is outlined in the going
concern sub-section in the risk management section on page 32.
d. Housing market price risk
The performance of the UK housing market affects the valuation of certain of the Group’s non-financial assets and liabilities and the critical
judgements applied by management in these financial statements, including the valuation of land and work in progress.
The Group’s financial assets and liabilities are summarised below:
Linked to UK
housing market
£000
Not linked to UK
housing market
£000
Total
£000
-
1,748
1,748
1,090
105,374
106,464
-
-
-
361,962
361,962
-
-
(475,299)
(475,299)
1,090
(6,215)
(5,125)
Linked to UK
housing market
£000
Not linked to UK
housing market
£000
Total
£000
1,381
65,116
163,217
1,381
64,505
163,217
(36,401)
(36,401)
(462,475)
(462,475)
611
(269,773)
(269,162)
-
611
-
-
-
31 December 2019
Non-derivative financial assets
Restricted cash
Trade and other receivables
Cash and cash equivalents
Non-derivative financial liabilities
Bank and other loans
Trade and other payables
31 December 2018
Non-derivative financial assets
Restricted cash
Trade and other receivables
Cash and cash equivalents
Non-derivative financial liabilities
Bank and other loans
Trade and other payables
142 | Financial statements
Notes to the financial statements continued
4.6 Financial instruments
Fair values
There is no material difference between the carrying value of financial instruments shown in the balance sheet and their fair value.
Estimation of fair values
The following summarises the major methods and assumptions used in estimating the fair values of financial instruments:
Land purchased on extended payment terms
When land is purchased on extended payment terms, the Group initially records it at its fair value with a land creditor recorded for any
outstanding monies based on this fair value assessment. Fair value is determined as the outstanding element of the price paid for the land
discounted to present day. The difference between the nominal value and the initial fair value is amortised over the period of the extended
credit term and charged to finance costs using the ‘effective interest’ rate method, increasing the value of the land creditor such that at the
date of maturity the land creditor equals the payment required.
Land creditor
(estimated ageing)
2019
2018
Bank and other loans
Balance at
31 Dec
£000
Total contracted
cash payment
£000
Due within
1 year
£000
Between
1-2 years
£000
Between
2-3 years
£000
258,758
262,489
137,758
78,308
39,943
293,297
298,186
112,744
105,745
62,725
Between
3-4 years
£000
6,348
16,912
Between
4-5 years
£000
Due beyond
5 years
£000
14
15
118
45
Fair value is calculated based on discounted expected future principal and interest flows. See note 4.3 for further details.
Trade and other receivables / payables
Other than land creditors, the nominal value of trade receivables and payables is deemed to reflect the fair value. This is due to the fact that
transactions which give rise to these trade receivables and payables arise in the normal course of trade with industry standard payment terms.
5.0 Other disclosures
This section includes all disclosures which are required by IFRS or the Companies Act which have not been included elsewhere in the
financial statements.
5.1 Income tax expense
Income tax comprises the sum of the tax currently payable or receivable and deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Recognised in the income statement
Current tax
Current year
Adjustments for prior years
Deferred tax
Origination and reversal of temporary differences
Adjustments for prior year
Total income tax in income statement
Note
2019
£000
2018
£000
35,424
1,260
36,684
(331)
21
31,316
(919)
30,397
1,258
(156)
36,374
31,499
5.2
5.2
Vistry Group PLC | vistrygroup.co.uk | 143
Notes to the financial statements continued
Reconciliation of effective tax rate
Profit before tax
Income tax using the domestic corporation tax rate
Non-deductible expenses and disposal of ineligible assets
Other non-taxable income/non-deductable expense
Other
Change in tax rate
Adjustments to the tax charge in respect to the prior year
Total tax expense
2019
%
2019
£000
2018
%
2018
£000
174,753
33,203
2,441
(724)
173
-
1,281
19.0
1.4
(0.4)
0.1
-
0.7
20.8
36,374
168,069
31,933
-
675
20
(54)
(1,075)
31,499
19.0
-
0.4
-
-
(0.7)
18.7
The Group’s effective tax rate of 20.8% is higher than the current rate of 19% as a result of adjustments made in respect of the prior year which
have arisen as a result of a true up from the draft tax computations to the final tax computations that were filed with HM Revenue & Customs
for the year ended 31 December 2018 and the exceptional costs being non-deductible for tax purposes. The Group does not have any open
corporation tax enquiries with the tax authorities.
Recognised directly in Group statement of changes in equity or in the Group statement of comprehensive income
Relating to actuarial movements on pension scheme (Group statement of comprehensive income)
Relating to share-based payments (Group statement of changes in equity)
Deferred tax recognised directly in Group statement of changes in equity or the Group
statement of comprehensive income
5.2 Tax assets and liabilities
Note
5.2
5.2
2019
£000
464
140
604
2018
£000
1,083
(113)
970
The tax currently payable or receivable is based on taxable profit or loss for the year and any adjustment to tax payable or receivable in
respect of previous years. Taxable profit or loss differs from net profit or loss as reported in the income statement because it excludes items
of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.
The Group’s liability or asset for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance
sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance
sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are
recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can
be utilised. Such assets and liabilities are not recognised if the temporary difference arises from non-tax deductible goodwill, from the
initial recognition of assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit, and from differences
relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates
that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income
statement, except when it relates to items charged or credited directly to reserves, in which case the deferred tax is also dealt with
in reserves.
144 | Financial statements
Notes to the financial statements continued
Current tax assets and liabilities
The current liability of £20,939,000 (2018: £18,060,000 ) represents the remaining balance of income taxes payable in respect of current and
prior years.
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
Group
Property, plant and equipment
Non-current trade payables
Available for sale financial assets
Employee benefits - pensions
Employee benefits - share-based payments
Provisions
Inventories
Profit on sale of assets to joint ventures
Tax assets/(liabilities)
Movement in temporary differences during the year
Group
Property, plant and equipment
Trade payables
Available for sale financial assets
Employee benefits - pensions
Employee benefits - share-based payments
Provisions
Inventories
Profit on sale of assets to joint ventures
Movement in temporary differences
Assets
Liabilities
Net
2019
£000
2018
£000
-
-
-
-
1,495
149
-
4
1,648
-
-
-
-
297
149
-
168
614
2019
£000
(41)
(17)
(446)
(766)
-
-
2018
£000
(126)
(21)
(536)
(214)
-
-
(194)
(447)
-
-
(1,464)
(1,344)
2019
£000
(41)
(17)
(446)
(766)
1,495
149
(194)
4
184
2018
£000
(126)
(21)
(536)
(214)
297
149
(447)
168
(730)
Balance
1 Jan 2019
£000
Recognised
in income
£000
Recognised
in equity
£000
Balance
31 Dec 2019
£000
(126)
(21)
(536)
(214)
297
149
(447)
168
(730)
85
4
90
(1,016)
1,058
-
253
(164)
310
-
-
-
464
140
-
-
-
604
(41)
(17)
(446)
(766)
1,495
149
(194)
4
184
Vistry Group PLC | vistrygroup.co.uk | 145
Notes to the financial statements continued
Group
Property, plant and equipment
Trade payables
Available for sale financial assets
Employee benefits - pensions
Employee benefits - share-based payments
Provisions
Inventories
Profit on sale of assets to joint ventures
Movement in temporary differences
Factors affecting future tax charge
Balance
1 Jan 2018
£000
Recognised
in income
£000
Recognised
in equity
£000
Balance
31 Dec 2018
£000
(113)
(24)
(625)
(359)
737
330
(888)
372
(570)
(13)
3
89
(938)
(299)
(181)
441
(204)
-
-
-
1,083
(141)
-
-
-
(1,102)
942
(126)
(21)
(536)
(214)
297
149
(447)
168
(730)
The UK corporation tax rate is 19% (effective from 1 April 2017) and reduction to 17% (effective 1 April 2020) was substantively enacted on
6 September 2016. The deferred tax asset at 31 December 2019 has been calculated based on the current enacted rate of 17%.
Employee benefits
The Group recognises the deficit or surplus on its defined benefits pension scheme under the requirements of IAS19 (Revised): ‘Employee benefits’.
This has generated a surplus of £4.5 million (2018: surplus of £1.4 million). As at 31 December 2019, a deferred tax liability of £766,000
(2018 tax liability: £214,000) was recognised.
5.3 Directors and employees
The weekly average number of employees of the Group, all of whom were engaged in the United Kingdom on the Group’s principal activity,
together with personnel expenses, are set out below.
2019
1,340
2018
1,251
2019
£000
77,888
9,056
2,602
577
2,891
2018
£000
68,874
8,056
1,787
856
1,413
93,014
80,986
Average staff numbers - Group
Average staff numbers
The Company had no employees during 2019 (2018: nil).
A breakdown of staff numbers split by type of role is included on page 49.
Personnel expenses - Group
Wages and salaries
Compulsory social security contributions
Contributions to defined contribution plans
Expenses related to defined benefit plans
Equity-settled share-based payments
Personnel expenses
The Company had no personnel expenses during 2019 (2018: nil).
146 | Financial statements
Notes to the financial statements continued
Share-based payments
The Group has applied the requirements of IFRS2: “Share-based payments”.
The Group issues equity-settled share-based payments to certain employees in the form of share options over shares in the Parent Company.
Equity-settled share-based payments are measured at fair value at the date of grant calculated using an independent option valuation
model, taking into account the terms and conditions upon which the options were granted. The fair value is expensed on a straight line basis
over the vesting period, based on the Group’s estimate of shares that will eventually vest, with a corresponding credit to equity except when
the share- based payment is cancelled where the charge will be accelerated.
Movements in the number of share options outstanding and their related weighted average exercise prices
Long Term Incentive Plan
At 1 January
Granted
Lapsed
Exercised
At 31 December
Executive and other share options
At 1 January
Granted
Lapsed
Exercised
At 31 December
Save As You Earn
At 1 January
Granted
Lapsed
Exercised
At 31 December
2019
2018
Average
exercise price
in £ per share
option
-
-
-
-
-
Share
options
£000
1,144
317
(26)
-
1,435
Average
exercise price
in £ per share
option
-
-
-
-
-
2019
2018
Average
exercise price
in £ per share
option
Share
options
£000
Average
exercise price
in £ per share
option
7.56
-
-
5.02
8.37
33
-
-
(8)
25
9.19
-
11.29
7.26
7.54
2019
2018
Average
exercise price
in £ per share
option
Share
options
£000
Average
exercise price
in £ per share
option
7.15
9.30
7.58
7.15
7.73
464
143
(60)
(61)
486
6.56
9.06
6.71
7.22
7.15
Share
options
£000
1,377
184
(415)
(2)
1,144
Share
options
£000
153
-
(71)
(49)
33
Share
options
£000
496
138
(84)
(86)
464
Out of the 1,946,000 outstanding options (2018: 1,641,000), 314,000 options (2018: 117,000 ) were exercisable. Options exercised in 2019 resulted
in 69,000 shares (2018: 137,000 ) being issued at a weighted average share price of £6.90 each (2018: £7.13 each).
Vistry Group PLC | vistrygroup.co.uk | 147
Notes to the financial statements continued
Expiry date and exercise price of share options outstanding at the end of the year
Long Term Incentive Plan
Expiry date
15/03/2021
28/02/2022
26/02/2023
20/08/2023
25/02/2024
15/08/2026
02/05/2027
08/09/2027
05/03/2028
04/03/2029
Expiry date
22/08/2019
21/08/2020
20/08/2021
Expiry date
01/12/2019
01/12/2020
24/09/2020
24/09/2019
24/09/2021
24/09/2020
24/09/2022
23/09/2021
23/09/2023
01/12/2022
01/12/2024
Exercise price in
£ per share
option
2019
Share options
£000
2018
Share options
£000
-
-
-
-
-
-
-
-
-
-
-
14
16
23
8
19
209
154
368
321
303
1,435
14
16
23
8
19
-
154
580
330
-
1,144
Exercise price in
£ per share
option
2019
Share options
£000
2018
Share options
£000
5.02
7.73
8.53
-
-
5
20
25
8
5
20
33
Exercise price in
£ per share
option
2019
Share options
£000
2018
Share options
£000
7.97
7.66
7.66
7.12
7.12
6.12
6.12
9.06
9.06
9.30
9.30
-
-
-
11
-
15
181
34
93
20
114
18
3
1
13
56
15
200
47
109
20
-
-
486
464
Grant vest
2011-14
2012-15
2013-16
2013-16
2014-17
2016-19
2017-18
2017-20
2018-21
2019-22
Executive and other share options
Grant vest
2012-15
2013-16
2014-17
Save As You Earn
Grant vest
2014-19
2016-18
2015-20
2016-19
2016-21
2017-20
2017-22
2018-21
2018-23
2019-22
2019-24
148 | Financial statements
Notes to the financial statements continued
The weighted average fair value of the options granted during the period determined using the Binomial model was £6.87 per option
(2018: £7.14). The significant inputs into the model were a weighted average share price of £11.42 (2018: £11.32) at the grant date, the exercise
price shown in the table on the previous page, volatility of 37.25% (2018: 37.25%), an expected option life of 5 years (2018: 5 years) and an annual
risk-free rate of 0.81% (2018: 1.00%). The volatility is measured at the standard deviation of continuously compounded share returns, based on
statistical analysis of daily share prices over the last 3 years.
Share based payments expense in the income statement
Long Term Incentive Plan
Executive and other share options
Save As You Earn share options
Total expense recognised as personnel expenses
2019
£000
2,489
6
395
2,890
2018
£000
948
116
349
1,413
Information relating to directors’ remuneration, compensation for loss of office, long term incentive plan, share options and pension
entitlements appears in the directors’ remuneration report on pages 88 to 106. The directors are considered to be the only key management
personnel. A summary of key management remuneration is as follows:
Wages and salaries
Compulsory social security contributions
Contributions to defined contribution plans
Key management remuneration
Details of the equity settled share based schemes are set out below.
Long Term Incentive Plan
2019
£000
2,083
286
19
2,388
2019
£000
1,409
194
24
1,627
A long term incentive plan for executive directors and senior executives was approved by shareholders at a General Meeting in December
2019. One grant of awards under this plan was made in 2019. Details of the vesting conditions of these awards are laid out in the directors’
remuneration report which can be found on pages 88 to 106.
Project 200 Incentive plan
The Project 200 incentive plan was implemented for members of the executive management team during 2017, and is designed to support
the Group’s programme of balance sheet optimisation and reduction in capital reduction in order to facilitate the potential return of capital to
shareholders through special dividends.
Save As You Earn share options
The Vistry Group PLC Save As You Earn Option Scheme was established in 2007 and renewed in 2017. Share options held in the Save As You Earn
Option Scheme are not subject to performance conditions and may under normal circumstances be exercised during the six months after maturity
of the agreement. Save As You Earn share options are generally exercisable at an exercise price which includes a 20% discount to the market price
of the shares at the date of grant.
5.4 Property, plant and equipment
Plant, property and equipment is recorded at prime cost less accumulated depreciation. The sub-categories of PPE are depreciated
as follows:
• Freehold buildings on a 2% straight line basis;
• Plant, machinery and vehicles on a 33.3% reducing balance basis; and
• Furniture and fittings on a 25% reducing basis, other than computer equipment which is depreciated on a straight line basis over 3 years.
Vistry Group PLC | vistrygroup.co.uk | 149
Notes to the financial statements continued
Cost
Year ended 31 December 2019
Opening balance
Additions
Disposals
Closing
Accumulated depreciation
Opening
Charge for the year
Disposals
Closing
Cost
Year ended 31 December 2018
Opening balance
Additions
Disposals
Reclassifications
Closing
Accumulated depreciation
Opening
Charge for the year
Disposals
Reclassifications
Closing
Net book value at 31 December
2019
2018
-
-
-
-
-
-
-
-
Freehold
buildings
£000
Furniture,
fittings and
equipment
£000
Plant,
machinery
and vehicles
£000
Total
£000
2,552
1,103
3,655
492
(16)
73
-
565
(16)
3,028
1,176
4,204
1,149
665
(13)
1,801
325
233
-
558
1,474
898
(13)
2,359
Total
£000
5,937
1,876
Freehold
buildings
£000
2,033
-
Furniture,
fittings and
equipment
£000
Plant,
machinery
and vehicles
£000
3,625
992
279
884
(1,781)
(2,098)
(279)
(4,158)
(252)
33
-
2,552
219
1,103
-
3,655
393
-
(320)
(73)
-
-
-
2,677
486
264
285
3,334
771
(2,047)
(264)
(2,631)
33
1,149
1,227
1,403
40
325
618
778
-
1,474
1,845
2,181
The total of future minimum lease payments under short term and low value non-cancellable operating lease rentals are payable as follows:
Within one year
Between one and five years
Total
150 | Financial statements
Plant,
machinery
and vehicles
£000
722
1,435
2,157
Property
£000
329
28
357
Total
£000
1,051
1,463
2,514
Notes to the financial statements continued
5.5 Leases
The Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS
17 Leases. For adjustments recognised on adoption of IFRS16 on 1 January 2019, please refer to note 5.14.
The amounts recognised in the Group Balance Sheet were:
Right-of-use assets cost
Year ended 31 December 2019
Office
properties
£000
Show home
properties
£000
Site cabins
£000
Office
equipment
£000
Motor
vehicles
£000
Total
£000
Opening balance (on implementation of IFRS16)
13,574
1,796
5,632
Additions
Closing
Accumulated amortisation
Opening balance
Charge for the year
Closing
Net book value at 31 December
2019
Lease liabilities
Current
Non-current
Total lease liabilities
The amounts recognised in the Group Income Statement were:
Depreciation of right-of-use assets
Interest expense
Expense relating to short-term leases
Expense relating to leases of low-value assets
The total cash outflow for leases in 2019 was £8,827,000.
13,574
3,965
5,632
13,574
3,965
5,632
-
1,597
1,597
-
1,051
1,051
-
1,408
1,408
205
500
500
-
62
62
1,794
23,001
2,533
26,204
2,533
26,204
-
739
739
-
4,857
4,857
11,977
2,914
4,224
438
1,794
21,347
31 Dec 2019
£000
1 Jan 2019
£000
6,309
16,686
5,108
19,128
22,995
24,236
31 Dec 2019
£000
4,906
558
2,358
14
Extension and termination options are included in a number of leases across the Group. These are used to maximise operational flexibility in terms
of managing the assets used in the Group’s operations. The majority of extension and termination options held are exercisable only by the Group
and not by the respective lessor.
Vistry Group PLC | vistrygroup.co.uk | 151
Notes to the financial statements continued
5.6 Intangible Fixed Assets
Intangible fixed assets are recorded at prime cost less accumulated amortisation. IT software is amortised on a straight line basis over a
period of 3 – 5 years.
Assets under
construction
£000
IT Software
£000
-
344
344
-
-
-
1,213
3,362
4,575
134
449
583
Total
£000
1,213
3,706
4,919
134
449
583
344
3,992
4,336
Assets under
construction
£000
IT Software
£000
Total
£000
-
1,213
1,213
-
134
134
-
1,213
1,213
-
134
134
1,079
1,079
-
-
-
-
-
-
-
Cost
Year ended 31 December 2019
Opening balance
Additions
Closing
Accumulated amortisation
Opening
Charge for the year
Closing
Net book value at 31 December
2019
Cost
Year ended 31 December 2018
Opening balance
Additions
Closing
Accumulated amortisation
Opening
Charge for the year
Closing
Net book value at 31 December
2018
152 | Financial statements
Notes to the financial statements continued
5.7 Investments
Fixed asset investments
Investments in subsidiaries are carried at cost less impairment. The Parent Company accounts for the share based payments granted to
subsidiary employees as an increase in the cost of its investment in subsidiaries and the value of this investment is supported by net assets.
Joint ventures are those arrangements in which the Group has rights to the net assets of the arrangements and treated on an equity
accounted basis in the Group’s balance sheet.
Subsidiary undertakings
Interest in subsidiary undertakings’ shares at cost (100% ownership of ordinary shares)
-
-
14,153
11,262
Group
Company
2019
£000
2018
£000
2019
£000
2018
£000
Investments accounted for using the equity method
Interest in joint ventures – equity
- loan
Other investments
Total investments
61,155
5,116
23,952
23,854
-
-
-
-
85,107
28,970
14,153
11,262
22
22
-
-
85,129
28,992
14,153
11,262
In April 2019, Vistry Homes Limited (formerly Bovis Homes Limited) entered into a joint venture at Wellingborough, near Northampton, with
Riverside Regeneration Limited. As part of the initial transaction, land owned by the Group was sold into the joint venture, Stanton Cross
Developments LLP. The Group’s 50% share of the acquisition price was financed by equity, resulting in an increase in the Group’s equity interests
in joint ventures. Vistry Homes Limited (formerly Bovis Homes Limited) also entered into a joint venture with Metropolitan Living Limited in 2019,
purchasing land at Cambourne West financed by a combination of debt and equity.
The Group’s joint venture entered into in December 2018 with Clarion Housing Group continues to develop the site at Sherford, near Plymouth,
and completed its first house sales during the year ended 31 December 2019.
The carrying value of the Groups interests in join ventures accounted for using the equity method are set out in the table below:
Bovis Peer LLP
Stanton Cross Developments LLP
Bovis Latimer (Sherford) LLP
Bovis Homes Cambourne West LLP
IIH Oak Investors LLP
Total investments
% age of
ownership interest
Carrying value
2019
%
50
50
50
50
26
2018
%
50
2019
£000
69
100
56,069
50
-
26
31
4,677
309
61,155
2018
£000
4,715
-
-
-
401
5,116
Vistry Group PLC | vistrygroup.co.uk | 153
Notes to the financial statements continued
The subsidiary and associated undertakings and joint ventures in which the Group has interests are incorporated in Great Britain. In each case
their principal activity is related to housebuilding and estate development. As at 31 December 2019 the Group had thirty four subsidiaries, which
are listed below (with the company names as at 27 February 2020).
Registered office
Country of incorporation
Ownership interest in ordinary shares
2019 %
2018 %
Bovis Homes (Quest) Company Limited
Vistry Homes Limited
Bovis Country Homes Limited
Bovis Homes (Broadbridge Heath) Limited
Bovis Homes Limited
Bovis Homes BVC Limited
Bovis Homes Cornwall Limited
Bovis Homes Developments Limited
Vistry Limited
Bovis Homes Eastern Limited
Bovis Homes Freeholds Limited
Bovis Homes Insulation Limited
Bovis Homes Midlands And Northern Limited
Bovis Homes North Whiteley LLP
Bovis Homes Pension Scheme Trustee Limited
Bovis Homes Projects Limited
Bovis Homes South East Limited
Bovis Homes Southern Limited
Bovis Homes Wessex Limited
Elite Homes Group Limited
Elite Homes (North West) Limited
Gigg Lane Limited
Elite Homes (Yorkshire) Limited
H.Newbury & Son (Builders) Limited
Kilbride Tavistock Limited
Nether Hall Park Open Space Management Company Limited
Orchard Homes (Pitt Manor) Limited
Oxford Land Limited
Page Johnson Properties Limited
R.T.Warren (Builders, St.Albans) Limited
Unitpage Limited
Vistry Latimer Collingtree LLP
Bovis Homes Scotland Limited
Knights Mount Management Company Limited
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
9
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
67
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
67
100
100
100
100
100
100
At 31 December 2019 the Group had an interest in the following joint ventures which have been equity accounted to 31 December and are registered
and operate in England and Wales. As noted on the previous page, Stanton Cross Developments LLP and Bovis Homes Cambourne West LLP are new joint
ventures entered into during the year ended 31 December 2019. The principal activity of both joint ventures is housebuilding and estate development.
Bovis Peer LLP
Stanton Cross Developments LLP
Bovis Latimer (Sherford) LLP
Bovis Homes Cambourne West LLP
Bishops Park Limited
Rissington Management Company Limited
IIH Oak Investors LLP
Significant holdings in undertakings other than subsidiary undertakings
Berkshire Land Limited
Bishop's Stortford North Consortium Limited
C.C.B.(Stevenage) Limited
Haydon Development Company Limited
Oxfordshire Land Limited
154 | Financial statements
Registered office
Country of incorporation
Ownership interest in ordinary shares
2019 %
2018 %
1
1
1
1
1
3
4
1
5
6
7
8
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
50
50
50
50
50
50
26
33
25
33
39
25
50
100
50
-
50
50
26
33
25
33
39
25
Notes to the financial statements continued
Registered office
1. 11 Tower View, Kings Hill, West Malling, Kent, ME19 4UY
2. C/o Gilliespie MacAndrew LLP, 5 Atholl Crescent, Edinburgh, Scotland, EH3 8EJ, United Kingdom
3. Cowley Business Park, Cowley, Uxbridge, Middlesex, UB8 2AL
4. New Zealand House 15th Floor, 80 Haymarket, London, United Kingdom, SW1Y 4TE
5. St Bride’s House, 10 Salisbury Square, London, EC4Y 8EH
6. Croudace House, Tupwood Lane, Caterham, Surrey, CR3 6XQ
7. 6 Drakes Meadow, Penny Lane, Swindon, Wiltshire, SN3 3LL
8. Persimmon House, Fulford, York, YO19 4FE
9. Gateway House, 10 Coopers Way, Southend On Sea, Essex, SS2 5TE
The movement on the investment in the material joint venture (Stanton Cross Developments LLP) during the year is as follows:
At the start of the year
Equity invested during the year
Share of results
Unrealised profit on transactions with joint venture
At the end of the year
Summarised financial information relating to the material joint venture is as follows:
Non-current assets
Current assets
- Cash and cash equivalents
Current liabilities
- Current financial liabilities
Non-current liabilities
- Non-current financial liabilities
Net assets of joint venture
Group share of net assets recognised in the Group balance sheet at 31 December
Revenue
Costs
Operating profit
Income tax expense
Profit for the year
Group share of profit for the year recognised in the Group income statement
Group share of Bovis Latimer (Sherford) LLP profit for the year recognised in the Group income statement
Share of profit of joint ventures
2019
£000
-
57,986
1,757
(3,674)
56,069
2019
£000
-
140,357
4,107
(2,195)
-
(37,572)
(37,572)
100,590
50,295
15,845
(12,331)
3,514
-
3,514
1,757
31
1,788
2018
£000
-
-
-
-
-
2018
£000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The material joint venture has no significant contingent liabilities or commitments to which the Group is exposed and the Group has no significant
contingent liabilities in relation to its interest in the material joint venture.
Transactions with Bovis Peer LLP and IIH Oak Investors LLP
Bovis Homes Limited is contracted to provide property and letting management services to Bovis Peer LLP. Fees charged in the period, inclusive
of VAT, were £25,000 (2018: £109,000). None of these fees are outstanding at 31 December 2019 (31 December 2018: nil).
Bovis Homes Limited is part of a Joint Venture, IIH Oak Investors LLP, to invest in private rental homes. IIH Oak Investor LLP repaid its loan to
Bovis Homes Limited in November 2019 leaving a nil balance at 31 December 2019 (31 December 2018: £1,598,319) with £77,000 of interest
charges have been made on the balance during the year (31 December 2018: £118,000).
Vistry Group PLC | vistrygroup.co.uk | 155
Notes to the financial statements continued
Vistry Homes Limited (formerly Bovis Homes Limited) is part of a Joint Venture, Bovis Latimer (Sherford) LLP, to build houses in Sherford. As at
31 December 2019 loans of £20,174,000 (31 December 2018: £22,256,000) were in place with an interest rate of 5%. Interest charges made in
respect of the loans were £559,000 (year ended 31 December 2018: £nil). Vistry Homes Limited (formerly Bovis Homes Limited) also provides
ongoing services to the LLP for construction, management, accounting, company secretariat, sales and marketing services; charges made in
respect of these services were £260,700 inclusive of VAT (year ended 31 December 2018: £nil).
In April 2019, Vistry Homes Limited (formerly Bovis Homes Limited) entered into a Joint Venture, Stanton Cross Developments LLP, with Riverside
Regeneration Limited, with the LLP purchasing the Group’s interest in its land and infrastructure at Wellingborough, near Northampton.
Vistry Homes Limited (formerly Bovis Homes Limited) provides ongoing services to the LLP for construction, sales and company secretariat
support; charges made in respect of these services were £2,194,000 inclusive of VAT (year ended 31 December 2018: £nil).
In December 2019, Vistry Homes Limited (formerly Bovis Homes Limited) entered into a Joint Venture, Bovis Homes Cambourne West LLP, with
Metropolitan Living Limited, with the purpose of acquiring land for development at Cambourne West. Vistry Homes Limited (formerly Bovis
Homes Limited) has a loan to Bovis Homes Cambourne West LLP in place at 31 December 2019 of £3,777,000 (31 December 2018: nil) at an
interest rate of 4.5%.
5.8 Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and
it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined
by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and,
where appropriate, the risks specific to the liability.
As at 1 January 2019
Additional provisions made
Amounts used
As at 31 December 2019
Restructuring
costs
(see note 2.1)
£000
Site-related
costs
£000
Other
£000
Total
£000
930
-
(930)
2,289
1,624
4,843
659
(583)
-
-
659
(1,513)
-
2,365
1,624
3,989
Of the total provisions detailed above, £400,000 are expected to be utilised within the next year (2018: £930,102).
5.9 Employee benefits
The Group accounts for pensions and similar benefits under IAS 19 (Revised): “Employee benefits”. In respect of defined benefit schemes, the
net obligation is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current
and prior periods, such benefits measured at discounted present value, less the fair value of the scheme assets. The discount rate used to
discount the benefits accrued is the yield at the balance sheet date on AA credit rated bonds that have maturity dates approximating to
the terms of the Group’s obligations. The calculation is performed by a qualified actuary using the Projected Unit Method. The operating
and financing costs of such plans are recognised separately in the income statement; service costs are spread systematically over the lives
of employees and financing costs and credits are recognised in the periods in which they arise. All actuarial gains and losses are recognised
immediately in the Group statement of comprehensive income.
Payments to defined contribution schemes are charged as an expense as they fall due.
Pension cost note
The Company operates a UK registered trust based pension scheme, Bovis Homes Pension Scheme, that provides defined benefits.
Pension benefits are linked to the members’ final pensionable salaries and service at their retirement (or date of leaving if earlier).
The Trustees are responsible for running the Scheme in accordance with the Scheme’s Trust Deed and Rules, which sets out their powers.
The Trustees of the Scheme are required to act in the best interests of the beneficiaries of the Scheme. There is a requirement that at least
one-third of the Trustees are nominated by the members of the Scheme. There are two categories of pension scheme members:
• Deferred members: former active members of the Scheme, not yet in receipt of pension
• Pensioner members: in receipt of pension
The defined benefit obligation is valued by projecting the best estimate of future benefit outgoings, (allowing for revaluation to retirement for
deferred members and annual pension increases for all members) and then discounting to the balance sheet date. The majority of benefits receive
increases linked to inflation (subject to a cap of no more than 5% pa). The valuation method used is known as the Projected Unit Method.
The approximate overall duration of the Scheme’s defined benefit obligation as at 31 December 2019 was 19 years.
156 | Financial statements
Notes to the financial statements continued
Risks
Through the Scheme, the Company is exposed to a number of risks:
• Asset volatility: the Scheme’s defined benefit obligation is calculated using a discount rate set with reference to corporate bond yields, however
the Scheme invests significantly in equities and other growth assets. These assets are expected to outperform corporate bonds in the long term,
but provide volatility and risk in the short term.
• Changes in bond yields: a decrease in corporate bond yields would increase the Scheme’s defined benefit obligation, however this would be
partially offset by an increase in the value of the Scheme’s LDI holdings.
• Inflation risk: a significant proportion of the Scheme’s defined benefit obligation is linked to inflation, therefore higher inflation will result in
a higher defined benefit obligation (subject to the appropriate caps in place). The majority of the Scheme’s assets are either unaffected by
inflation, or only loosely correlated with inflation, therefore an increase in inflation would also increase the deficit. However, the caps in place
limit the potential impact of higher inflation and the Scheme’s LDI holdings hedge inflation rate changes to some extent.
• Life expectancy: if Scheme members live longer than expected, the Scheme’s benefits will need to be paid for longer, increasing the Scheme’s
defined benefit obligation.
• Liquidity: the Scheme holds a significant direct property investment with low liquidity. However the majority of the Scheme’s assets are liquid.
The Trustees and Company manage risks in the Scheme through the following strategies:
• Diversification: investments are well diversified, such that the failure of any single investment would not have a material impact on the overall
level of assets.
• Investment strategy: the Trustees are required to review their investment strategy on a regular basis.
• LDI: the Scheme invests in LDI assets, whose long term investment returns are expected to partially hedge interest rates and inflation movements.
Retirement benefit obligations
The Group makes contributions to one defined benefit scheme that provides pension benefits for employees upon retirement.
Present value of funded obligations
Fair value of plan scheme assets
Recognised asset for defined benefit obligations
Movements in the net asset for defined benefit obligations recognised in the balance sheet
Net asset for defined benefit obligations at 1 January
Contributions received
Expense recognised in the income statement
Loss recognised in equity
Net asset for defined benefit obligations at 31 December
The cumulative loss recognised in equity to date is £20.9million (2018: £19.2 million).
Change in defined benefit obligation over the year
Defined benefit obligation at beginning of year
Net interest cost
Current service cost
Past service cost
Actual member contributions
Actual benefit payments by the scheme
Loss/(gain) on change of assumptions:
Actuarial loss: experience differing from that assumed
Actuarial loss: changes in demographic assumptions
Actuarial loss/(gain): changes in financial assumptions
Defined benefit obligation at end of year
2019
£000
2018
£000
127,765
115,215
(132,271)
(116,596)
(4,506)
(1,381)
2019
£000
(1,381)
(5,712)
471
2,116
(4,506)
2019
£000
115,215
3,032
-
-
-
2018
£000
(2,111)
(5,798)
747
5,781
(1,381)
2018
£000
124,244
2,867
205
115
19
(5,903)
(9,883)
875
376
14,170
127,765
-
3,101
(5,453)
115,215
Vistry Group PLC | vistrygroup.co.uk | 157
Notes to the financial statements continued
On 26 October 2018, the High Court ruled in the Lloyds Banking Group case that the trustees are under a duty to make sure that equal benefits
are paid, including where these benefits are in the form of GMP. As a result, all schemes with GMP rights will have to act to allow for equalisation
of benefits for the effect of unequal GMPs. The impact of this change on the Group’s obligations has been estimated and is shown as the past
service cost in the table on the previous page.
Change in scheme assets over the year
Fair value of scheme assets at beginning of year
Interest income
Actual benefit payments by the scheme
Actual Group contributions
Actual member contributions
Gain/(loss) on assets
Administration costs
2019
£000
2018
£000
116,596
126,355
3,138
(5,903)
5,712
-
13,305
(577)
2,976
(9,883)
5,798
19
(8,018)
(651)
Fair value of scheme assets at end of year
132,271
116,596
The major categories of scheme assets are as follows:
Return seeking
Equities
Bonds
Other
Property
Cash
Liability driven instruments
Total market value of assets
2019
£000
2018
£000
63,317
19,500
3,530
7,578
38,346
132,271
58,626
-
11,282
1,624
45,064
116,596
All pension scheme assets have a quoted market price in an active market, apart from property investments, which are directly held.
During 2016, scheme assets were invested in cash and liability driven instruments (“LDIs”), moving away from bonds and gilts, and in 2017 and
2018 further scheme assets were invested in LDIs in order to increase the level of liability hedging. The liabilities within a defined benefit pension
scheme are particularly sensitive to changes in the discount rate applied to future liabilities (which is determined by the long term yield on
investment grade corporate bonds or gilts) and the level of inflation (see sensitivity analysis table below). LDIs aim to reduce the exposure of a
pension scheme to these risks by holding assets which behave in the same way as the scheme’s liabilities when interest rates or inflation, or future
expectations of them, change.
During 2019, the majority of the scheme’s property portfolio was sold and investment was made into bonds to de-risk the scheme’s assets.
158 | Financial statements
Notes to the financial statements continued
Expense recognised in the income statement
Current service cost
Administration expenses
Net interest credit
Expense recognised in the income statement
Assumptions
Principal actuarial assumptions at the balance sheet date (expressed as weighted averages):
Group
Discount rate at 31 December
Future salary increases
Inflation - RPI
- CPI
Future pension increases
Sensitivity analysis
Assumption
Discount rate
RPI and CPI inflation
Assumed life expectancy
2019
£000
-
577
(106)
471
2019
%
1.9
n/a
3.0
2.0
n/a
2018
%
2.7
n/a
3.2
2.2
n/a
2018
£000
205
651
(109)
747
2017
%
2.4
2.5
3.2
2.2
2.5
Change in
assumption
Change in defined
benefit obligation
+0.5%pa / -0.5%pa
-£10.2m / +£11.6m
+0.5%pa / -0.5%pa
+£4.1m / -£5.7m
+1 year
+£4.5m
Limitations of the sensitivity analysis
These calculations provide an approximate guide to the sensitivity of results and may not be as accurate as a full valuation carried out on
these assumptions. Each assumption change is considered in isolation, which in practice is unlikely to occur, as changes in some of the
assumptions are correlated. The Scheme invests in LDI assets which aim to hedge changes in the value of the Scheme’s liabilities. Changes in the
discount rate and inflation would therefore be partially offset by a change in the value of the Scheme’s assets.
Present value of defined benefit obligations
127,765
115,215
124,244
125,594
102,160
Fair value of scheme assets
Surplus/(deficit) in the scheme
132,271
116,596
126,355
119,004
109,277
4,506
1,381
2,111
(6,590)
7,117
2019
£000
2018
£000
2017
£000
2016
£000
2015
£000
The most recent formal actuarial valuation was carried out as at 30 June 2016. The results have been updated to 31 December 2019 for
accounting purposes by a qualified independent actuary. As part of this valuation exercise, the mortality assumptions for the scheme are now
based on the SAPS 2 “all” tables and Core CMI_2018 projections with a long-term rate of improvement of 1.5% pa. These tables imply the
following remaining life expectancy at age 63.
Remaining years of life at 63
Men
Women
Current age at 43
Current age at 63
26.6
28.7
24.9
26.9
The Trustees are required to carry out an actuarial valuation every 3 years. The latest actuarial valuation of the Scheme was performed by the
Scheme Actuary for the Trustees as at 30 June 2016. This valuation revealed a funding shortfall of £36.1 million however allowing for changes in
market conditions and in particular the strong returns on the Scheme’s assets, the Scheme Actuary estimated that the Scheme’s shortfall had
decreased to around £25m as at 31 December 2017. In addition, the closure of the Scheme to future accrual was agreed with effect from
28 February 2018.
The 2019 actuarial valuation is being finalised at the date of this report.
Vistry Group PLC | vistrygroup.co.uk | 159
Notes to the financial statements continued
To eliminate the shortfall at 31 December 2017, the Trustee and the Company agreed that three contributions of £5.5m will be paid into the
Scheme by the Company. The first of these was made on 28 February 2018, with further payments following on 31 January 2019 and
31 January 2020.
Alongside the latest valuation and the recovery plan the Company has also agreed the principles of a longer-term plan to de-risk the pension
scheme assets and liabilities position.
5.10 Related party transactions
Transactions between fellow subsidiaries, which are related parties, have been eliminated on consolidation, as have transactions between the
Company and its subsidiaries during this year.
Transactions between the Group, Company and key management personnel in the year ended 31 December 2019 were limited to those relating to
remuneration, which are disclosed in the directors remuneration report (which can be found on pages 88 to 106 and in note 5.3).
Mr Greg Fitzgerald, appointed Group Chief Executive, is non-executive Chairman of Ardent Hire Solutions (“Ardent”). The Group hires forklift
trucks from Ardent.
Mr Graham Prothero, appointed Chief Operating Officer, is non-executive Director and Chair of the Audit Committee of Marshalls PLC. The Group
incurred costs with Marshalls PLC in relation to landscaping services.
Mr Ian Baker, is the Managing Director of Baker Estates Ltd where Mr Greg Fitzgerald is a majority shareholder. The Group received advisory
services from Ian Baker’s consultancy company IB (SW) in the period.
Ms Katherine Innes Ker, is a non-executive director of Forterra PLC and Vistry Group PLC. The Group incurred costs with Forterra PLC in relation
to the supply of bricks.
The total net value of transactions with related parties were as follows:
Expenses paid to Ardent
Expenses paid to IB (SW)
Expenses paid to Marshalls PLC
Expenses paid to Forterra PLC
2019
£000
2,736
20
19
545
2018
£000
2,059
-
-
108
The balance of expenses payable to Ardent at 31 December 2019 was £274,399 (2018: £155,000) and no income was receivable (2018: £nil), the
balance payable to IB (SW) at 31 December 2019 was £67,200 and no income was receivable (2018: £nil), the balance payable to Marshalls at
31 December 2019 was £nil and no income was receivable (2018: £nil), and the balance payable to Forterra at 31 December 2019 was £98,141 and
no income was receivable (2018: £nil). There have been no other related party transactions in the financial year which have materially affected
the financial performance or position of the Group, and which have not been disclosed.
Transactions between the Group, Company and joint ventures are in note 5.7.
5.11 Reconciliation of Return on Capital Employed performance measure
Operating profit before exceptional items
Opening total equity
Deduct: investment in joint ventures
Deduct: net cash
Opening capital employed
Closing net equity including joint ventures
Deduct: investment in joint ventures
Deduct: net cash
Closing capital employed
Average capital employed (note 1)
ROCE excluding joint ventures
Note 1 Average of opening and closing capital employed for the year.
160 | Financial statements
2019
£000
2018
£000
192,567
174,168
1,061,068
1,056,576
28,992
126,816
8,717
144,853
905,260
903,006
1,271,966
1,061,067
85,129
361,962
824,875
865,068
22.3%
28,992
126,816
905,259
904,133
19.3%
Notes to the financial statements continued
5.12 Reconciliation of adjusted gross profit
The Group uses an alternative performance measure which is not defined within IFRS. The Directors use this alternative performance measure,
along with IFRS measures, to assess the operational performance of the Group. The definition and reconciliation of the financial alternative
performance measure used to IFRS measures, is shown below:
Adjusted gross profit is defined as gross profit plus other operating income:
Gross Profit per Consolidated Income Statement
Other operating income
Adjusted gross profit
5.13 Business combinations
2019
£000
242,756
10,675
253,431
On 3 January 2020, the Group acquired the Linden and Partnerships and Regeneration businesses from Galliford Try plc for consideration of
c. £1,400m. This acquisition will position the Group as a top five national housebuilder by volume, expand the Group’s presence across the UK and
into Yorkshire and establish the Group as one of the leaders in the highly attractive, high-growth partnerships business.
Linden Homes is a top UK housebuilder, and Vistry Partnerships is a market leading partnerships business. The combination of these businesses
with the existing Vistry business will create the capacity to deliver more than 14,000 new units per year over the medium term, deliver an
enhanced customer proposition, enhance the Group’s geographical footprint, realise synergies and strengthen the senior management team.
The acquisition was of the entire share capital and control of the holding companies Goldfinch (Jersey) Limited and Galliford Try Partneships Ltd.
and all of their trading subsidiaries.
The c.£1,400.0m consideration for the Linden and Partnerships and Regeneration businesses includes cash of c.£400m, the novation of a
£100m term loan, and 63,739,385 consideration shares with a fair value of £13.42 per share at the date of acquisition, totalling £855.4m in
share consideration. The amount of cash consideration is deferred until April 2020, if any, is not finalised at the date of this report.
At the date of this report it is impracticable to disclose the provisional fair values of the total consideration paid and the acquired assets, liabilities,
contingent liabilities and goodwill.
The goodwill that will be recognised is expected to capture synergies that will be achieved as an enlarged business, as well as intangible assets
which do not qualify for separate recognition such as workforce. It is impracticable to conclude at the date of this report the total amount of
goodwill which is expected to be deductible for tax purposes.
As this acquisition took place on 3 January 2020, the statement of comprehensive income does not include any revenue, profit or loss relating to
the acquired Linden Homes and Vistry Partnerships businesses for the year ended 31 December 2019.
5.14 Change in accounting policy
This note explains the impact of the adoption of IFRS16 ‘Leases’ on the Group’s financial statements and discloses the new accounting policies that
have been applied from 1 January 2019.
The Group has adopted IFRS16 prospectively from 1 January 2019 and has not restated comparatives for the 2018 reporting period, as permitted
under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are
therefore recognised in the opening balance sheet on 1 January 2019.
a. Adjustments recognised on adoption of IFRS16
On adoption of IFRS16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under
the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s
incremental borrowing rate as of 1 January 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1
January 2019 was 2.5%
Operating lease commitments disclosed as at 31 December 2018
Discounted using the lessee’s incremental borrowing rate of at the date of initial application
(Less): short-term leases recognised on a straight-line basis as expense
(Less): low-value leases recognised on a straight-line basis as expense
Lease liability recognised as at 1 January 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
Total lease liabilities as at 1 January 2019
2019
£000
27,233
(1,714)
(1,281)
(2)
24,236
5,108
19,128
24,236
The associated right-of-use assets for the Group’s leases were measured on a prospective basis, applying the new rules from 1 January 2019.
Where relevant, right-of-use assets have been adjusted for onerous lease contracts at the date of initial application.
Vistry Group PLC | vistrygroup.co.uk | 161
Notes to the financial statements continued
The recognised right-of-use assets at cost relate to the following types of assets:
Office properties
Show home properties
Site cabins
Office equipment
Motor vehicles
Total right-of-use assets
31 Dec 2019
£000
1 Jan 2019
£000
13,574
3,965
5,632
500
2,533
26,204
13,574
1,796
5,632
205
1,794
23,001
The change in accounting policy affected the following items in the balance sheet on 1 January 2019:
• Right-of-use assets – increase by £23.0m
• Lease liabilities – increase by £24.2m
• Provisions – decrease by £0.6m
• Creditors – decrease by £0.1m
The net impact on retained earnings on 1 January 2019 was a decrease of £0.1m.
Practical expedients applied
In applying IFRS16 for the first time, the group has used the following practical expedients permitted by the standard:
• the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
• reliance on previous assessments on whether leases are onerous
• the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases
• the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application, and
• the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease
b. The Group’s leasing activities and how these are accounted for
The Group leases various offices, site cabins, office equipment, cars and show homes. Rental contracts are typically made for fixed periods of 1 to 4
years but may be for longer or include extension options. Lease terms are negotiated on an individual basis and contain a wide range of different
terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Until the 2019 financial year, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under
operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.
From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available
for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the
lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is
depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payments that are based on an index or a fixed annual rate increase
The lease payments are discounted using lessee’s incremental borrowing rate, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise site equipment and other items less than £3,000
in total lease costs.
5.15 Post balance sheet events
On 3 January 2020, the Group acquired the Linden and Partnerships and Regeneration businesses from Galliford Try plc, as detailed in note 5.13.
The Board believes the acquisition will result in the Group becoming firmly positioned as one of the UK’s top housebuilders (across both private and
affordable housing) and more importantly establish the Group as one of the leaders in the highly attractive, high growth partnerships business.
At the date of the Acquisition the Group also entered into new borrowing facilities which are detailed further in note 4.2. Graham Prothero was
also appointed as Director of Vistry Group PLC on 3 January 2020.
162 | Financial statements
Five year record - unaudited
Years ended 31 December
Revenue and profit
Revenue
2019
£m
Pre Exceptional
2019
£m
Post Exceptional
2018
£m
2017
£m
Pre Exceptional
2017
£m
Post Exceptional
2016
£m
2015
£m
1,130.8
1,130.8
1,061.4
1,028.2
1,028.2
1,054.8
946.5
Operating profit before financing costs
192.6
179.7
174.2
128.0
121.2
160.0
163.5
Net financing costs
Share of result of joint ventures
Profit before tax
Tax
Profit after tax
Balance sheet
Equity shareholders’ funds
Net cash
Capital employed
Returns
Operating margin (note 1)
Return on shareholders’ funds (note 2)
Return on capital employed (note 3)
(6.1)
1.8
(6.8)
1.8
(6.1)
0.0
(7.2)
0.0
(7.2)
0.0
(5.6)
0.3
(5.2)
1.8
188.2
174.8
168.1
120.8
114.0
154.7
160.1
(36.2)
(36.4)
(31.5)
(22.7)
(22.7)
(33.9)
(32.1)
151.9
138.4
136.6
98.1
91.3
120.8
128.0
1,272.0
1,272.0
1,061.1
1,056.6
1,056.6
1,015.9
957.8
(362.0)
(362.0)
(126.8)
(144.9)
(144.9)
(38.6)
(30.0)
910.0
910.0
934.3
911.7
911.7
977.3
927.8
17%
11%
22%
16%
11%
22%
16%
13%
19%
12%
9%
14%
12%
9%
14%
15%
13%
17%
17%
15%
18%
Homes (including units sold on third party owned land)
Number of unit completions
Average sales price (£’000)
3,867
280.2
3,867
3,759
280.2
273.2
3,645
272.4
3,645
3,977
3,934
272.4
254.9
231.6
Ordinary shares
Earnings per share (p)
Dividends per share
Paid (p)
Interim paid and final proposed (p) (note 4)
111.5
101.5
101.6
73.1
68.0
90.1
95.4
58.5
61.5
58.5
61.5
96.5
57.0
45.0
47.5
45.0
47.5
41.3
45.0
36.7
40.0
Note 1: Operating margin has been calculated as operating profit over turnover.
Note 2: Return on shareholders’ funds has been calculated as profit after interest and tax over opening shareholders’ funds.
Note 3: Return on capital employed has been calculated as operating profit over the average of opening and closing shareholders’ funds plus net debt or less net cash, excluding
investment in joint ventures.
Note 4: In 2019 a second interim dividend was declared, not a final dividend. 61.5p includes this second interim dividend.
Vistry Group PLC | vistrygroup.co.uk | 163
Notice of meeting
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.
If you are in any doubt as to any aspect of the proposals referred to in this document or as to the action you should take, you should seek
your own advice from a stockbroker, solicitor, accountant or other professional adviser authorised under the Financial Services and Markets
Act 2000 immediately.
If you have sold or otherwise transferred all of your shares, please pass this document together with the accompanying documents to the
purchaser or transferee, or to the person who arranged the sale or transfer so they can pass these documents to the person who now holds
the shares.
Notice of meeting
NOTICE IS HEREBY GIVEN that the 2020 Annual General Meeting of Vistry Group PLC (the “Company”) will be held at The Spa Hotel,
Mount Ephraim, Royal Tunbridge Wells, Kent TN4 8XJ on Wednesday, 20 May 2020 at 12.00 noon for the following purposes:
Ordinary resolutions
Reports and accounts
1.
To receive the audited accounts of the Company for the year ended 31 December 2019 and the reports of the directors and auditors.
Remuneration report
2. To approve the directors’ remuneration report in the form set out in the Company’s annual report and accounts for the year ended
31 December 2019 in accordance with section 439 of the Companies Act 2006.
Directors
3. To re-appoint Ian Paul Tyler as a director of the Company.
4. To re-appoint Margaret Christine Browne as a director of the Company.
5. To re-appoint Ralph Graham Findlay as a director of the Company.
6. To re-appoint Nigel Keen as a director of the Company.
7. To re-appoint Michael John Stansfield as a director of the Company.
8. To re-appoint Katherine Innes Ker as a director of the Company.
9. To re-appoint Gregory Paul Fitzgerald as a director of the Company.
10. To re-appoint Earl Sibley as a director of the Company.
11. To re-appoint Graham Prothero as a director of the Company.
Auditors
12. To re-appoint PricewaterhouseCoopers LLP as auditors of the Company.
13. To authorise the directors to determine the remuneration of the auditors.
Authority to allot shares
14. That the directors be generally and unconditionally authorised to allot shares in the Company and to grant rights to subscribe for or to
convert any security into shares in the Company pursuant to and in accordance with section 551 of the Companies Act 2006 (‘the 2006 Act’):
(a) up to an aggregate nominal amount of £36,254,373; and
(b) comprising equity securities (as defined in the 2006 Act) up to an aggregate nominal amount of £72,508,746 (including within such limit
any shares issued or rights granted under paragraph (a) (above) in connection with an offer by way of a rights issue to holders of ordinary
shares in proportion (as nearly as may be practicable) to their existing holdings and so that the directors may impose any limits
or restrictions and make any arrangements which they consider necessary or appropriate to deal with fractional entitlements, record
dates, legal, regulatory or practical problems in, or under the laws of, any territory or any other matter, such authorities to apply
(unless previously renewed, varied or revoked by the Company in a general meeting) until the conclusion of the Annual General Meeting
of the Company in 2021 or fifteen months from the date of this resolution, whichever is the earlier, but in each case so that the Company
may make offers and enter into agreements during the relevant period which would, or might, require shares to be allotted, or rights to
subscribe for or convert any security into shares to be granted, after the authority ends and the directors may allot shares and grant rights
under any such offer or agreement as if the authority had not ended.
164 | Supplementary information
Notice of meeting continued
Special resolutions
Articles of Association
15. That with effect from the conclusion of the meeting the draft articles of association produced to the meeting and, for the purposes of
identification, initialled by the Chairman be adopted as the articles of association of the Company in substitution for, and to the exclusion of,
the Company’s existing articles of association.
Notice of general meetings
16. That a general meeting other than an Annual General Meeting may be called on not less than 14 clear days’ notice.
Authority to disapply pre-emption rights
17. That if resolution 14 is passed, and in place of all existing powers, the directors be authorised pursuant to section 570 and 573 of the 2006 Act
to allot equity securities (as defined in the 2006 Act) wholly for cash under the authority given by that resolution as if section 561 of the 2006
Act did not apply to any such allotment or sale, such power:
(a) to expire (unless previously renewed, varied or revoked by the Company in a general meeting) at the conclusion of the Annual General
Meeting of the Company in 2021 or fifteen months from the date of this resolution, whichever is the earlier, but, in each case during this
period the directors may make an offer or agreement which would or might require equity securities to be allotted after the power ends
and the directors may allot equity securities under any such offer or agreement as if the power had not ended;
(b) to be limited to the allotment of equity securities in connection with an offer of equity securities (but in the case of the authority granted
under resolution 14(b) by way of a rights issue only) to ordinary shareholders in proportion (as nearly as may be practicable) to their existing
holdings and so that the directors may impose any limits or restrictions and make any arrangements which they consider necessary or
appropriate to deal with fractional entitlements, record dates, legal, regulatory or practical problems in, or under the laws of, any territory
or any other matter; and
(c) to be limited, in the case of the authority granted under resolution 14(a), to the allotment of equity securities for cash otherwise than
pursuant to paragraph (b) up to an aggregate nominal amount of £5,443,600.
This power applies in relation to a sale of shares which is an allotment of equity securities by virtue of section 560(3) of the 2006 Act as if in
the first paragraph of this resolution the words ‘under the authority given by that resolution’ were omitted.
Authority to purchase own shares
18. That the Company be and is hereby granted general and unconditional authority, for the purposes of section 701 of the 2006 Act, to
make market purchases (within the meaning of section 693(4) of the 2006 Act) of the ordinary shares of 50 pence each in its capital
PROVIDED THAT:
(i) this authority shall be limited so that the number of ordinary shares of 50 pence each which may be acquired pursuant to this authority
does not exceed an aggregate of 21,774,398 ordinary shares and shall expire at the conclusion of the next Annual General Meeting of the
Company in 2021 (except in relation to the purchase of ordinary shares the contract for which was concluded before such time and which is
executed wholly or partly after such time);
(ii) the maximum (exclusive of expenses) price which may be paid for each ordinary share shall be the higher of: (a) an amount equal to 105 per
cent of the average of the middle market quotations for an ordinary share of the Company as derived from the London Stock Exchange
Daily Official List for the five business days immediately preceding the day on which the Company agrees to buy the ordinary shares; and
(b) an amount equal to the higher of the price of the last independent trade of an ordinary share and the highest current independent bid
for an ordinary share as derived from the London Stock Exchange Trading System (SETS); and
(iii) the minimum price (exclusive of expenses) which may be paid for an ordinary share shall be 50 pence.
Vistry Group PLC
11 Tower View
Kings Hill
West Malling
Kent ME19 4UY
By Order of the Board
M T D Palmer
Group Company Secretary
20 March 2020
Vistry Group PLC | vistrygroup.co.uk | 165
Notice of meeting continued
Notes:
(i)
(ii)
Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001 and section 360B(2) of the 2006 Act, the Company gives notice
that only holders of ordinary shares entered on the register of members no later than 8.00pm on 18 May 2020 (or, in the event of any
adjournment, 8.00pm on the day which is two days before the adjourned meeting) will be entitled to attend and vote at the meeting and
a member may vote in respect of the number of ordinary shares registered in the member’s name at that time. Changes to entries on the
register after the relevant deadline shall be disregarded in determining the rights of any person to attend or vote at the meeting.
A proxy form is enclosed. A registered member of the Company may appoint one or more proxies in respect of some or all of their ordinary
shares to exercise that member’s rights to attend, speak and vote at the Annual General Meeting. A registered member appointing multiple
proxies must ensure that each proxy is appointed to exercise rights attaching to different shares and must specify on the proxy form the
number of shares in relation to which that proxy is appointed. A proxy form which may be used to make such appointment and give proxy
instructions accompanies this Notice. If you do not have a proxy form and believe that you should have one, or if you require additional
forms, please contact the Company’s Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY.
Members or their duly appointed proxies are requested to bring proof of identity with them to the meeting in order to confirm their identity
for security reasons. A shareholder attending the meeting has the right to ask questions relating to the business being dealt with at the
meeting in accordance with section 319A of the 2006 Act. In certain circumstances prescribed by the same section, the Company need not
answer a question.
(iii)
The proxy form must be executed by or on behalf of the member making the appointment. Any corporation which is a member can
appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that they do not
do so in relation to the same shares. A corporation may execute the form(s) of proxy either under its common seal or under the hand of
a duly authorised officer, attorney or other authorised person. A member may appoint more than one proxy to attend and vote on the
same occasion.
(iv) A proxy need not be a member of the Company.
(v)
Participants of the Vistry Group Share Incentive Plan may instruct the trustee to vote on their behalf on a poll.
(vi)
(vii)
The proxy form and the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or
authority must be received at the office of the Company’s Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road,
Bristol BS99 6ZY or received via the Computershare website, (investorcentre.co.uk/eproxy) (full details of the procedures are given in the
notes to the proxy form enclosed with the report and accounts and on the website) not less than 48 hours (excluding non-working days)
before the time for holding the meeting. Completion of the proxy form, other such instrument or any CREST proxy instruction (as described
in paragraph (vii) (below) will not preclude a member from attending the Annual General Meeting and voting in person instead of through
his proxy or proxies. Voting on all substantive resolutions will be by a poll. When announcing the results of the poll voting, the Company
will disclose the total number of votes in favour and against and the number of abstentions on the Company website (vistrygroup.co.uk)
and through a Regulatory Information Service. If a member returns both paper and electronic proxy instructions, those received last by the
Registrar before the latest time for receipt of proxies will take precedence. Members are advised to read the website terms and conditions of
use carefully.
To appoint one or more proxies or to give an instruction to a proxy (whether previously appointed or otherwise) via the CREST system,
CREST messages must be received by the issuer’s agent (ID number 3RA50) not later than 48 hours (excluding non-working days) before
the time appointed for holding the meeting (and any adjournment of the meeting) in accordance with the procedures described in the
CREST Manual. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp generated by the CREST
system) from which the issuer’s agent is able to retrieve the message. After this time any change of instructions to a proxy appointed
through CREST should be communicated to the proxy by other means. CREST personal members or other CREST sponsored members, and
those CREST members who have appointed voting service provider(s) should contact their CREST sponsor or voting service provider(s) for
assistance with appointing proxies via CREST. For further information on CREST procedures, limitations and system timings please refer to
the CREST manual. The Company may treat as invalid a proxy appointment sent by CREST in the circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities Regulations 2001.
(viii)
CREST members and, where applicable, their CREST sponsors, or voting service providers should note that Euroclear UK & Ireland Limited
does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply
in relation to the input of CREST proxy instructions and the appropriate CREST message must be properly, authenticated in accordance with
Euroclear’s specifications and must contain the information required for such instructions and described in the CREST Manual (available
via euroclear.com CREST). It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal
member, or sponsored member, or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider(s)
take(s) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time.
In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to
those sections of the CREST manual concerning practical limitations of the CREST system and timings.
166 | Supplementary information
Notice of meeting continued
(ix)
Any person to whom this Notice is sent who is a person nominated under section 146 of the 2006 Act to enjoy information rights
(a “Nominated Person”) may have a right, under an agreement between him and the member by whom he was nominated, to be appointed
(or to have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment
right or does not wish to exercise it, he may, under any such agreement, have a right to give instructions to the member as to the exercise
of voting rights. The statement of the rights of members in relation to the appointment of proxies in paragraph (ii) above does not apply to
Nominated Persons. The rights described in these paragraphs can only be exercised by members of the Company.
(x)
As at 20 March 2020 (being the last practicable date prior to the publication of this Notice) the Company’s issued share capital consists
of 217,743,983 ordinary shares, carrying one vote each on a poll. Therefore, the total voting rights in the Company as at 20 March 2020
are 217,743,983.
Audit concerns
(xi)
Under section 527 of the 2006 Act, members meeting the relevant threshold requirements set out in that section may require the Company
to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s accounts (including the auditor’s report
and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of
the Company ceasing to hold office since the last Annual General Meeting for the financial year beginning 1 January 2019 that the members
propose to raise at the Annual General Meeting. The Company may not require the members requesting any such website publication to
pay its expenses in complying with sections 527 or 528 of the 2006 Act. Where the Company is required to place a statement on a website
under section 527 or 528 (requirements as to website availability) of the 2006 Act, it must forward the statement to the Company’s auditor
not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General
Meeting includes any statement that the Company has been required under section 527 of the 2006 Act to publish on a website.
Shareholder requisition rights
(xii)
Under sections 338 and 338A of the Companies Act 2006, members meeting the threshold requirements in those sections have the right
to require the Company: (a) to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which
may properly be moved and is intended to be moved at the meeting; and/or (b) to include in the business to be dealt with at the meeting
any matter (other than a proposed resolution) which may be properly included in the business unless (i) (in the case of a resolution only) it
would, if passed, be ineffective whether by reason of inconsistency with any enactment or the Company’s constitution or otherwise, (ii) it is
defamatory of any person, or (iii) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify the
resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it,
must be received by the Company not later than 6 April 2020, being the date six clear weeks before the meeting, and (in the case of a matter
to be included on the business only) must be accompanied by a statement setting out the grounds for the request.
Questions
(xiii)
(xiv)
Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating
to the business being dealt with at the meeting but no such answer need be given if: (i) to do so would interfere unduly with the
preparation for the meeting or involve the disclosure of confidential information; (ii) the answer has already been given on a website in
the form of an answer to a question; or (iii) it is undesirable in the interests of the Company or the good order of the meeting that the
question be answered.
Except as provided above, members who wish to communicate with the Company in relation to the Annual General Meeting should do
so using the following means: (1) by writing to the Company Secretary at the registered office address; or (2) by writing to the Company’s
Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY. No other methods of communication
will be accepted. In particular you may not use any electronic address provided either in this Notice of meeting or in any related documents
(including the Chairman’s Statement, the Annual Report 2019 and the proxy form) to communicate with the Company for any purposes
other than those expressly stated.
Website information
(xv)
A copy of this Notice and other information required to be published in accordance with section 311A of the 2006 Act in advance of the
Annual General Meeting can be found at vistrygroup.co.uk.
Documents available for inspection
(xvi)
The following documents will be available for inspection at the Company’s registered office, during normal business hours, on any weekday
(excluding public holidays) from the date of this Notice until the date of the Annual General Meeting and on that date they will be available
for inspection at the place of the meeting from 11.30am until the conclusion of the meeting:
(a) copies of the directors’ service contracts;
(b) copies of the terms and conditions of appointment for each non-executive director;
(c) the register of directors’ interests; and
(d) the new Articles of Association.
(xvii) The results of the voting at the Annual General Meeting will be announced through a Regulatory Information Service and will appear on the
Company’s website, vistrygroup.co.uk, as soon as reasonably practicable following the conclusion of the Annual General Meeting.
Vistry Group PLC | vistrygroup.co.uk | 167
Notice of meeting continued
Data Protection
(xviii) Data protection statement: your personal data includes all data provided by you, or on your behalf, which relates to you as a shareholder,
including your name and contact details, the votes you cast and your Reference Number (attributed to you by the Company). The Company
determines the purposes for which and the manner in which your personal data is to be processed. The Company and any third party to
which it discloses the data (including the Company’s Registrar) may process your personal data for the purposes of compiling and updating
the Company’s records, fulfilling its legal obligations and processing the shareholder rights you exercise.
Explanatory notes to the notice of meeting
Resolutions 1 to 14 are proposed as ordinary resolutions. This means that for each of those resolutions to be passed, more than half of the votes
cast must be in favour of the resolution.
Resolutions 15 to 18 are proposed as special resolutions. This means that for each of those resolutions to be passed, at least three-quarters of the
votes cast must be in favour of the resolution.
Item 1: Reports and accounts
The directors are required to present to shareholders at the Annual General Meeting the report of the directors, the strategic report and the
accounts of the Company for the year ended 31 December 2019. The report of the directors, the strategic report, the accounts and the report of
the Company’s auditors on the accounts and on those parts of the directors’ remuneration report that are capable of being audited are contained
within the Company’s annual report and accounts for the year ended 31 December 2019 (the “2019 Annual Report and Accounts”).
Item 2: Directors’ annual remuneration report
Under section 439 of the 2006 Act, the directors are required to present the directors’ remuneration report prepared in accordance with
Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended), for the approval of
shareholders by way of an advisory vote. The directors’ remuneration report, the relevant pages of which can be found on pages 88 to 106 of
the 2019 Annual Report and Accounts, gives details of the directors’ remuneration for the year ended 31 December 2019 and sets out the way in
which the Company will implement its policy on directors’ remuneration during 2020. The Company’s auditors, PricewaterhouseCoopers, have
audited those parts of the directors’ remuneration report capable of being audited and their report may be found on pages 118 to 124 of the 2019
Annual Report and Accounts.
The vote on the directors’ remuneration report is advisory in nature in that payments made or promised to directors will not have to be repaid,
reduced or withheld in the event that this resolution is not passed. However, if the vote on the directors’ remuneration report is not passed, the
directors’ remuneration policy will be presented to shareholders for approval at the next Annual General Meeting.
A copy of the directors’ remuneration policy, which was approved at the December 2019 General Meeting, is available on the website at
vistrygroup.co.uk or in hard copy on request from the Group Company Secretary.
Items 3 to 11: Re-appointment of directors
The UK Corporate Governance Code (the “Code”) requires FTSE 350 companies to put all directors forward for re-appointment by shareholders
on an annual basis. The purpose of this requirement is to increase accountability to shareholders. Accordingly, all the directors of the Company
will retire at the Annual General Meeting and offer themselves for re-appointment. The Company’s Articles of Association require that any
director appointed by the Board shall hold office only until the first annual general meeting for which notice is first given after their appointment.
Accordingly, Graham Prothero will offer himself for re-appointment on this basis.
The Code contains provisions dealing with the re-appointment of non-executive directors. In relation to the re-appointment of Chris Browne,
Ralph Findlay, Nigel Keen, Mike Stansfield and Katherine Innes Ker as non-executive directors, the Chairman has confirmed following the formal
internal performance evaluation conducted during early 2020 that they continue to be effective in and demonstrate commitment to their roles,
including commitment of time for Board and committee meetings. In reaching its recommendations, the Board also considered the individual
skills and experience brought by each director, their relevance to the Company and its particular circumstances, and the overall skill set of
the Board. Chris Browne provides a strong commercial and operational background in a consumer facing industry. Ralph Findlay adds strong
commercial, financial and general management expertise, again from a consumer facing industry. Nigel Keen brings an in-depth construction and
property background and experience of managing property strategy and portfolios, once again from a consumer facing industry. Mike Stansfield
brings considerable housing developer experience. Katherine Innes Ker brings a broad range of business knowledge and skills to the Board.
Ian Tyler, non-executive Chairman, has considerable construction industry knowledge and international business experience.
The Board believes that the directors’ combined experience and contribution is a great asset to the Board and the Company and continues to be
important to the Company’s long-term sustainable success. The Board, therefore, strongly supports and recommends the re-appointment of the
directors to shareholders.
Biographical details of all the directors can be found on pages 68 to 69 of the 2019 Annual Report and Accounts.
Items 12 and 13: appointment of auditors and auditors’ remuneration
The auditors of a company must be appointed at each general meeting at which accounts are presented. Resolution 12 proposes the re-appointment
of the Company’s existing auditors, PricewaterhouseCoopers LLP, as the Company’s auditors, for a further year. PricewaterhouseCoopers LLP
were first appointed at the 2015 AGM. Resolution 13 gives authority to the directors to determine the auditors’ remuneration.
168 | Supplementary information
Explanatory notes to the notice of meeting continued
Item 14: Authority to allot shares
The authority given to your directors at last year’s Annual General Meeting under section 551 of the 2006 Act to allot shares expires on the date of
the forthcoming Annual General Meeting. Accordingly, this resolution seeks to grant a new authority under section 551 to authorise the directors to
allot-shares in the Company or grant rights to subscribe for, or convert any security into, shares in the Company up to an aggregate nominal amount
of £36,254,373 and also gives the Board authority to allot, in addition to these shares, further of the Company’s shares up to an aggregate nominal
amount of £72,508,746 in connection with a pre-emptive offer to existing members by way of a rights issue (with exclusions to deal with
fractional entitlements to shares and overseas shareholders to whom the rights issue cannot be made due to legal and practical problems).
This is in accordance with the latest institutional guidelines published by the Investment Association. This authority will expire at the conclusion of
the next Annual General Meeting (or, if earlier, 15 months from the date of the resolution). The directors intend to seek renewal of this authority at
subsequent Annual General Meetings.
The amount of £36,254,373 represents less than 33.3 per cent of the Company’s total ordinary share capital in issue as at 20 March 2020 (being
the latest practicable date prior to publication of this Notice). The amount of £72,508,746 represents less than 66.6 per cent of the Company’s total
ordinary share capital in issue as at 20 March 2020 (being the latest practicable date prior to publication of this Notice). The Company did not hold
any shares in treasury as at 20 March 2020.
The Board has no present intention to exercise this authority other than in connection with employee share schemes. It wishes to obtain the
necessary authority from shareholders so that allotments can be made (should it be desirable and should suitable market conditions arise) at short
notice and without the need to convene a general meeting of the Company which would be both costly and time consuming.
If the Board takes advantage of the additional authority to issue shares or grant rights to subscribe for, or convert any security into, shares in the
Company representing more than 33.3 per cent of the Company’s total ordinary share capital in issue or for a rights issue where the monetary
proceeds exceed 33.3 per cent of the Company’s pre-issue market capitalisation, all members of the Board wishing to remain in office will stand for
re-election at the next Annual General Meeting following the decision to make the relevant share issue.
Item 15: Articles of Association
Under resolution 15, the Company is proposing to adopt new Articles of Association (the “New Articles”) in substitution for the existing Articles of
Association (the “Existing Articles”). The principal changes introduced by the New Articles are summarised below. Other changes, which are of a
minor, technical or clarifying nature have not been noted:
(a) Increase in cap of ordinary remuneration for non-executive directors
Following the acquisition of Galliford Try, the Company is proposing to increase the cap on ordinary remuneration of non-executive directors
from £500,000 to £750,000, subject to shareholder approval at the Annual General Meeting. This increase is to reflect the market practice at
businesses of a similar size and complexity to the new combined group.
(b) Untraced member and forfeiture of proceeds
The Existing Articles of the Company allow, subject to certain conditions, for the Company to sell the shares of a shareholder, who is considered
untraced for a period of 12 years. In line with current practice, the New Articles provide greater flexibility by replacing the requirement to place
notices in newspapers with a requirement for the Company to take reasonable steps to trace the shareholders, including engaging a professional
asset reunification company or other tracing agent to search for shareholders who have not kept their details up to date. The 12-year time limit
has been retained and the proceeds of any such sale would be forfeited by the untraced shareholders as creditors for an indefinite period.
(c) Electronic meetings
In line with current market practice, the New Articles will give the Company the flexibility to hold ‘hybrid’ general meetings in the future whereby
members would be able to attend, speak and vote at the meeting by attending in a physical location or through the use of an electronic facility.
The option of having a physical meeting would still be available.
(d) Unclaimed dividends
Under the New Articles, the directors are empowered to invest or apply such outstanding dividend entitlements until they are claimed
by members. It is to be noted that the New Articles do not allow the Company to forfeit any unclaimed dividend until 12 years have lapsed
since the date on which the dividend was declared or became due for payment. This amendment brings the New Articles in line with the
position taken in the model articles of association for public companies.
(e) Borrowing restrictions
The New Articles clarify that the amount of Adjusted Capital and Reserves shown on the balance sheet should exclude any variation attributable
to the introduction and operation of the IFRS16 leasing standard. IFRS16 takes effect for accounting periods beginning from January 2019 and
means lease arrangements previously treated as operating leases will need to be accounted for as a liability on the lessee’s balance sheet.
The New Articles are intended to avoid a technical breach of the borrowing restrictions which may arise purely because of this change in
accounting treatment.
(f) Additional directors
The New Articles provide that no person may be elected as a director of the Company unless such person is recommended by the Board or the
person has confirmed his/her willingness to act no later than seven days before any such proposal is put to a general meeting.
A copy of the Company’s Existing Articles and the proposed New Articles marked to show all the changes will be available for inspection during
normal business hours (excluding Saturdays, Sundays and bank holidays) at the Company’s registered office from the date of this notice of meeting
until the close of the meeting. The proposed New Articles will also be available for inspection at the Annual General Meeting at least 15 minutes prior
to the start of the meeting and up until the close of the meeting.
Vistry Group PLC | vistrygroup.co.uk | 169
Explanatory notes to the notice of meeting continued
Item 16: Notice of general meetings
This resolution is required as a result of the implementation in 2009 of the Shareholder Rights Directive. The regulation implementing this
Directive increased the notice period for general meetings under the 2006 Act to 21 days. The Company will be able to continue to call general
meetings (other than an Annual General Meeting) on 14 clear days’ notice as long as shareholders have approved the calling of meetings on
14 days’ notice. Resolution 16 seeks such approval. The approval will be effective until the Company’s next Annual General Meeting, where it
is intended that a similar resolution will be proposed. The Company will also need to meet the requirements for electronic voting under the
Directive before it can call a general meeting on 14 days’ notice. It is confirmed that the ability to call a general meeting on 14 clear days’ notice
would only be utilised in limited circumstances and where the shorter notice period will be to the advantage of shareholders as a whole.
Item 17: Disapplication of pre-emption rights
Resolution 17 seeks authority for the directors to issue equity securities (as defined in the 2006 Act) in the Company for cash as if the pre-emption
provisions of section 561 of the 2006 Act did not apply. Other than in connection with a rights issue or any other pre-emptive offers concerning
equity securities, the authority contained in this resolution will be limited to the issue of equity securities for cash up to an aggregate nominal
value of £5,443,600 which represents approximately 5 per cent of the Company’s total ordinary share capital in issue as at 20 March 2020
(being the latest practicable date prior to publication of this Notice). In accordance with the Pre-emption Group’s Statement of Principles, the
directors confirm their intention that no more than 7.5 per cent of the issued share capital (excluding treasury shares) will be issued for cash on a
non pre-emptive basis during any rolling three-year period.
This resolution seeks a disapplication of the pre-emption rights on a rights issue so as to allow the directors to make exclusions or such other
arrangements as may be appropriate to resolve legal or practical problems which, for example, might arise with overseas members.
There are presently no plans to allot ordinary shares wholly for cash other than in connection with employee share schemes. Shares allotted
under an employee share scheme are not subject to statutory pre-emption rights.
The authority sought by resolution 17 will last until the conclusion of the next Annual General Meeting (or, if earlier, 15 months from the date of
the resolution). The directors intend to seek renewal of this power at subsequent Annual General Meetings.
Item 18: Authority to purchase own shares
This resolution renews the authority granted at last year’s Annual General Meeting to enable the Company to make market purchases of up
to 21,774,398 of its own shares, representing approximately 10 per cent of the Company’s total ordinary share capital in issue as at 20 March
2020 (being the latest practicable date prior to publication of this Notice). Before exercising such authority, the directors would ensure that the
Company was complying with the current relevant UK Listing Authority rules and Investment Association guidelines. No purchases would be
made unless the directors believe that the effect would be to increase the earnings per share of the remaining shareholders and the directors
consider the purchases to promote the success of the Company for the benefit of its shareholders as a whole. Any shares so purchased would
be cancelled. The directors have no present intention of exercising the authority to purchase the Company’s ordinary shares but would like to
have the flexibility of considering such purchases in the future.
Any purchases of ordinary shares would be by means of market purchases through the London Stock Exchange. The maximum price (exclusive
of expenses) which may be paid for each ordinary share shall be the higher of: (a) an amount equal to 105 per cent of the average of the middle
market quotations for an ordinary share as derived from the London Stock Exchange Daily Official List for the five business days immediately
preceding the day on which the Company agrees to buy the ordinary shares; and (b) an amount equal to the higher of the price of the last
independent trade of an ordinary share and the highest current independent bid for an ordinary share as derived from the London Stock
Exchange Trading System (SETS). The minimum price (exclusive of expenses) would be 50 pence, being the nominal value of each ordinary share.
The authority will only be valid until the conclusion of the next Annual General Meeting in 2021.
As at 20 March 2020 there were options over 502,851 ordinary shares in the capital of the Company which represent 0.23 per cent of the
Company’s issued ordinary share capital at that date. If the authority to purchase the Company’s ordinary shares was exercised in full, these
options would represent 0.26 per cent of the Company’s issued ordinary share capital.
The directors consider that all the resolutions to be put to the meeting promote the success of the Company for the benefit of its
shareholders as a whole. Your Board will be voting in favour of them and unanimously recommends that you do so as well.
170 | Supplementary information
Shareholder information
Registered office
11 Tower View, Kings Hill, West Malling, Kent ME19 4UY. Registered number 306718 registered in England.
Financial calendar
Annual report posted
Annual General Meeting
Payment of 2019 second interim dividend
Announcement of 2020 interim results
Announcement of 2020 final results
Analysis of shareholdings - at 31 December 2019
1 - 5,000
5,001 - 50,000
50,001 - 250,000
250,001 - 500,000
500,001 - 1,000,000
1,000,001 - and over
Total
6 April 2020
20 May 2020
29 May 2020
8 September 2020
February 2021
Number of
shareholders
1,693
278
131
48
26
34
%
76.61
12.58
5.93
2.17
1.17
1.54
Number of
ordinary shares
1,493,314
5,100,393
14,922,944
16,655,930
18,105,156
92,060,015
2,210
100.0
148,337,752
%
1.01
3.43
10.06
11.23
12.21
62.06
100.0
At end of year: 1,358.0p Lowest: 843.6p
Highest: 1,399.0p
Share price (middle market) - year to 31 December 2019
Advisers
Auditors
Principal bankers
Stockbrokers
PricewaterhouseCoopers LLP
Bank of China Limited
Financial advisers
Lazard
Solicitors
Linklaters LLP
Barclays Bank PLC
Handelsbanken plc
HSBC UK Bank plc
Lloyds Bank plc
National Westminster Bank plc
Qatar National Bank
Santander UK plc
Numis Securities Limited
The London Stock
Exchange Building
10 Paternoster Square
London EC4M 7LT
Insurance brokers
Arthur J Gallagher
Registrars
Computershare Investor
Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Registrar
Shareholder enquiries regarding change of address, dividend payment
or lost certificates should be directed to: Computershare Investor
Services PLC, The Pavilions, Bridgewater Road, Bristol BS99 6ZZ.
Vistry Group Shareholder Helpline: 0370 889 3236.
Please note that due to the regulations in the UK, Computershare
are required to check that you have read and accepted the terms and
conditions before being able to trade, which could delay your first
telephone trade. If you wish to trade quickly, we suggest visiting their
website and registering online first at computershare.trade.
Investor Centre: the easy way to manage your shareholdings online:
Many shareholders want to manage their shareholding online and do so
using Investor Centre, Computershare’s secure website. With Investor
Centre you can view shares balances, history and update your details.
Visit investorcentre.co.uk for more information.
Internet and telephone share dealing is available via Investor Centre:
Internet dealing - The fee for this service is 1% of the value of each sale
or purchase of shares (subject to a minimum of £30). Stamp duty of
0.5% is payable on purchases. Before you trade you will need to register
for this service. This can be done by going online at computershare.trade.
Telephone dealing - The fee for this service will be 1% of the value
of the transaction (plus £50). To use this service please call
0370 703 0084 with your SRN to hand.
Note: The provision of these services is not a recommendation to buy,
sell or hold shares in Vistry Group PLC
Dividend Reinvestment Plan (DRIP)
The DRIP gives shareholders the opportunity to reinvest their
dividends to buy ordinary shares in the Company through a special
dealing arrangement. For further information please contact the
Vistry Group Shareholder Helpline: 0370 889 3236.
Electronic communications
Instead of receiving printed documents through the post many
shareholders now receive their annual report and other shareholder
documents electronically, as soon as they are published. Shareholders
that would like to sign up for electronic communications should go to
investorcentre.co.uk/ecomms where they can register.
Vistry Group PLC | vistrygroup.co.uk | 171
Principal offices
North division
1 Yorkshire region
East Yorkshire
2nd Floor Spinner Point
South Quay
Lakeside Boulevard
Doncaster DN4 5PL
Tel: 01302 347 130
West Yorkshire
Suite 2/3 Ground Floor
1175 Thorpe Park
Century Way
Leeds LS15 8ZB
Tel: 0113 204 4400
2 Mercia region
Dunston Hall
Dunston, Stafford
Staffordshire ST18 9AB
Tel: 01785 714412
3 East Midlands region
Ashurst, Southgate Park
Bakewell Road
Peterborough PE2 6YS
Tel: 01733 396600
Partnerships
1 North East
2 Esh Plaza
Sir Bobby Robson Way
Great Park
Newcastle Upon Tyne
NE13 9BA
Tel: 0191 227 1000
4 West Midlands region
Bromwich Court
Highway Point
Gorsey Lane
Coleshill
Birmingham B46 1JU
Tel: 01675 437000
5 Cotswolds region
Cleeve Hall
Cheltenham Road
Bishops Cleeve
Cheltenham
Gloucestershire
GL52 8GD
Tel: 01242 388500
6 Northern Home
Counties region
St Annes House
Caldecotte Lake
Business Park
Milton Keynes
Buckinghamshire MK7 8JU
Tel: 01908 088500
6 London Contracting &
7 London Development
Broadway Chambers
2 Broadway
Stratford
London E15 4QS
Tel: 020 8221 5000
2 Yorkshire
8 Drew Smith
Thunderhead Ridge
Glasshoughton
West Yorkshire
WF10 4UA
Tel: 01977 555550
Drew Smith House
7-9 Mill Court
The Sawmills, Durley
Southampton SO32 2EJ
Tel: 01489 861 400
3 North West
9 West
Unit 2, West Point Row
Great Park Road
Bradley Stoke
Bristol BS32 4QG
Tel: 01454 270 600
10 South West
Killerton House, 4
Park 5 Harrier Way
Exeter, Devon EX2 7HU
Tel: 01392 880380
Innovation House
Kelburn Court
Birchwood
Warrington WA3 6UT
Tel: 01925 885 700
4 East Midlands
3 Smith Way,
Grove Park, Enderby
Leicester LE19 1SX
Tel: 0116 282 1100
5 West Midlands
2 Bromwich Court
Gorsey Lane, Coleshill
West Midlands B46 1JU
Tel: 01675 469290
172 | Supplementary information
South division
7 Eastern region
Eastwood House
Glebe Road
Chelmsford
Essex CM1 1QW
Tel: 01245 343 000
8 Kent region
11 Tower View
Kings Hill, West Malling
Kent ME19 4UY
Tel: 01732 280400
9 South East region
Linden House
Guards Avenue
Caterham
Surrey CR3 5XL
Tel: 01883 334400
10 Thames Valley region
Central 40
Lime Tree Way
Chineham Park
Basingstoke RG24 8GU
Tel: 0845 812 7777
11 Southern region
1A Guildford Business Park
Guildford
Surrey GU2 8XG
Tel: 01483 705100
12 Western region
Linden House
The Jacobs Building
Berkeley Place, Clifton
Bristol BS8 1EH
Tel: 0117 930 4949
13 South West region
Heron Road
Sowton Industrial Estate
Exeter
Devon EX2 7LL
Tel: 01392 344700
1
2
4
5
3
9
10
8
6,7
12137983625101411
Supplementary information
Vistry Group PLC, 11 Tower View
Kings Hill, West Malling, Kent ME19 4UY.
vistrygroup.co.uk
Designed and produced by the Bovis Homes Graphic
Design Department. Printed by Tewkesbury Printing Company Limited
accredited with ISO 14001 Environmental Certification.
Printed using bio inks formulated from sustainable raw materials.
Printed on Revive 50:50 silk a recycled paper containing 50% recycled
waste and 50% virgin fibre and manufactured at a mill certified with
ISO 14001 environmental management standard. The pulp used in this
product is bleached using an Elemental Chlorine Free process (ECF).
When you have finished with
this pack please recycle it.
When you have finished with
this pack please recycle it.
vistrygroup.co.uk
V
i
s
t
r
y
G
r
o
u
p
P
L
C
A
n
n
u
a
l
r
e
p
o
r
t
a
n
d
a
c
c
o
u
n
t
s
2
0
1
9