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Annual Report 2022
Contents
Strategic report
1
2
4
6
12
16
18
22
28
30
32
49
56
63
65
Introduction
Our Group at a glance
Chair’s statement
Chief Executive’s review
Market environment
Our business model
Our strategy
Financial review
Our stakeholders and engagement
Section 172 statement
Sustainability report
Climate-related financial disclosures (TCFD)
Risk management and our principal risks
Viability and going concern statements
Non-financial information statement
Governance report
67
70
72
74
83
84
87
90
98
124
128
Chair’s governance letter
Board of Directors
Code application
Board leadership and company purpose
Division of responsibilities
Composition, succession and evaluation
Nomination Committee report
Audit Committee report
Directors' Remuneration report
Directors’ report
Directors’ responsibility statement
Financial statements
130
142
142
143
144
146
Independent auditors' report
Group income statement
Group statement of comprehensive income
Balance sheets – Group and Company
Statement of changes in equity
– Group and Company
Statement of cash flows
– Group and Company
147
Notes to the financial statements
Other information
197
198
Five-year record
Shareholder information
Front cover images:
Top: Beaulieu, Chelmsford, Essex.
Centre left: Saffron View, Saffron Waldon, Essex.
Centre right: Twigworth Green, Twigworth, Gloucester.
Bottom: Great Eastern Quays Phase 2, East London.
Highlights1
Group revenue
£2,729m
(2021: £2,407m)2
HBF customer
satisfaction4
5-star
(2021: 5-star)
Profit before tax
£247.5m
(2021: £319.5m)
Legal completions3
11,951
(2021: 11,080)
Housebuilding
average sales price5
£324,600
(2021: £305,100)
Adjusted profit
before tax6
£418.4m
(2021: £346.0m)
Basic earnings per
share
86.5p
Adjusted earnings
per share6
137.5p
(2021: 114.6p)
(2021: 125.5p)
ROCE7
28.3%
(2021: 25.5%)
Net cash8
£118.2m
(2021: £234.5m)
1. The highlights above are presented on a consolidated basis and include Countryside's financials for the period
post 11 November 2022 to 31 December 2022.
2. 2021 Group revenue has been restated in relation to trading with joint ventures. See note 1.6 of the financial
statements.
3. Includes joint venture completions.
4. Based on responses from customers who legally completed between 1 October 2021 to 30 September 2022.
Star rating awarded according to the proportion responding ‘yes’ to the question ‘would you recommend your
builder to a friend?’ asked eight weeks after legal completion: 5-star rating 90% and above.
5. Average selling price shown on an adjusted basis to include the proportional contribution of joint ventures.
6. Adjusted to exclude exceptional items and the amortisation of acquired intangible assets. See note 2.4 of the
financial statements.
7. Return on capital employed is calculated as adjusted operating profit (prior to exceptional costs and
amortisation of acquired intangibles), divided by the average opening and closing shareholders’ funds plus
net cash, less goodwill and intangible assets and less retirement benefit asset. See note 5.12 of the financial
statements for full reconciliation.
8. Net cash includes cash and cash equivalents, non-current bank and other loans and current bank and other
loans. Net cash excludes lease liabilities. See note 4.2 of the financial statements.
Introduction
2022 was another landmark year for the Group, during which we made
significant strategic progress. Through our combination with Countryside
we are now one of the country’s major housebuilders and a leader in the
partnerships sector. We also delivered a strong financial performance
and continued to create quality homes and communities in line with
our purpose. Our sustainability strategy is progressing well and we are
evolving our design process to ensure our homes are fit for the future.
Top: Rochester Riverside, Rochester. Bottom: Collingtree Park, Northampton.
Vistry Group PLC | Annual Report | 1
Our Group at a glance
We are a leading player in the housebuilding industry.
What we do
We deliver high quality sustainable homes and help
create new communities. Our expertise and capabilities
cover all housing tenures and we are one of the largest
private sector providers of affordable housing in the UK.
Our purpose
To develop sustainable new homes and communities
across all sectors of the UK housing market.
Our Ethos
DO THE RIGHT THING
We endeavour to do the right thing for our customers,
our people and our shareholders.
Our values
Our values, integrity, caring and quality, reflect the
culture we aspire to embed across the Group. In line
with our ethos, at all times we endeavour to do the
right thing for all our stakeholders.
Our culture
• You can trust and count on me.
• I am always open and honest.
• I take ownership to get it sorted.
• I am committed to keeping people safe.
• I understand and adapt to the individual needs of my customer.
• I take time to listen and understand how people feel.
• I deliver on my promises and take pride in what I do.
• I am committed to getting it right first time.
• I am willing to go the extra mile.
Our purpose and values help us embed our One Vistry culture which shapes every day, every project and every home we build.
is our purpose and sits at the heart
of everything we do.
is our everyday aspiration, striving
through improvement through
the Group-wide values we know
and share.
is our collective ambition, to learn
from and lean on each other’s
knowledge and expertise.
2 |
Our business
Following our combination with Countryside, given the excellent reputation of the strong Countryside brand, our
enlarged Partnerships business has been renamed Countryside Partnerships. Our Housebuilding business is now known
as Vistry Housebuilding. The businesses have market-leading capabilities across all housing tenures at a time when the
need for affordable housing has never been greater.
Leading partnerships business with strong and proven
track record.
Top UK housebuilder with market-leading consumer
brands.
Delivers high-quality new homes across multi-tenures
including affordable, private rental and private for sale
homes, and plays a leading role in urban regeneration.
Plans, designs and builds high-quality new homes that
blend tradition and innovation and create contemporary
living standards.
Key strength includes strong established relationships
with housing associations, local authorities and private
rented sector providers.
Operates across England through 19 business units,
each with a regional office.
Aspires to strong growth and is committed to increasing
the much needed supply of affordable housing.
Products range from one-bedroom apartments through
to larger family homes.
Operates across England through 13 business units,
each with a regional office.
Owns and controls a valuable and deliverable land
bank totalling more than 37,000 owned and
conditionally contracted plots and the capacity to
deliver c.8,000 homes per annum from its existing
infrastructure.
Our brands
Operational
Retail
Vistry Group PLC | Annual Report 2022 | 3
Chair's statement
“It has been a transformational year during
which the Group has delivered another
excellent financial performance and made
significant strategic progress through its
combination with Countryside.”
Ralph Findlay OBE | Chair
This is my first Chair letter since succeeding Ian Tyler as Chair
of the Group at our Annual General Meeting (AGM) on 18 May
2022. Having been a Non-Executive Director of the Group since
April 2015, I was delighted to have the opportunity to take on
this role.
Following its launch in 2021, we are continuing to progress our
sustainability strategy. Some of the homes we provide already
exceed the Future Homes Standard requirements and we are
applying our experience to develop innovative technical solutions
that drive even greater energy efficiency and carbon reduction.
Overview
The Group continued to deliver an excellent financial
performance and through our combination with Countryside
Partnerships PLC (Countryside) (the Combination) we have
created a leading portfolio of housebuilding and partnership
assets. This transformational development has significantly
accelerated our strategy of rapidly growing our more resilient
Partnerships revenues and creates a platform to deliver material
value creation for all stakeholders, including sector leading
returns for shareholders over the medium term.
People
Our people are critical to the success of our business. On behalf
of the Board I would like to thank them for their continued
hard work and commitment, all of which has contributed to the
significant progress the Group has made during the year. I would
also like to take the opportunity to welcome those colleagues
who have joined the Group as a result of our combination with
Countryside.
Sustainability
We have a clear purpose: to develop sustainable homes and
communities across the UK. In fulfilling this purpose the health
and safety of all our stakeholders is a top priority. In April 2022
we signed The Building Safety Pledge Letter addressed to the
Secretary of State and Department for Levelling Up, Housing &
Communities (the Pledge Letter) and in March 2023 the Self-
Remediation Terms and Deed of Bilateral Contract (the Developer
Remediation Contract) (see page 81). Our signature of both
documents formalised the Group’s existing commitments to
support leaseholders and reflects our ‘do the right thing’ ethos
which underpins everything we do.
Dividends and capital allocation policy
The Board is committed to retaining a healthy and resilient
balance sheet. The Group’s priority remains to invest in high
returning land market opportunities in line with our land
investment strategy and growth targets for both Housebuilding
and the less capital-intensive Partnerships business. During
the more recent period of heightened market uncertainty, the
Group has maintained a selective approach to acquiring land,
particularly for the Housebuilding business.
The Board is recommending a final ordinary dividend of 32 (2021:
40) pence per share, bringing the total ordinary dividend for
2022 to 55 (2021: 60) pence per share. This represents a total
full year dividend payment of £162.3m (2021: £133.1m), which is
covered two times by Group adjusted net earnings1.
As previously announced, the Board is reviewing the enlarged
Group’s allocation policy to ensure it remains appropriate in the
context of the enlarged Group, and in doing so will be consulting
with shareholders.
Board and Committee changes
There were a number of Board and Committee changes during
the year. As highlighted above after eight and a half years in
the role Ian Tyler stepped down as Chair of the Group at the
conclusion of our AGM in May 2022. On behalf of the Board, I
would like to thank Ian for his invaluable contribution as Chair.
Graham Prothero, formerly Chief Operating Officer and a Director
of the Group, resigned during the year to take up a position of
CEO with MJ Gleeson PLC and left the Group on 31 December
2022. Graham has been a valued colleague at Vistry since joining
in 2020 and on behalf of the Board I would like to thank him for
his commitment and contribution.
1. Adjusted net earnings is calculated as adjusted profit before tax, net of tax calculated at the adjusted effective tax rate. The adjusted
effective tax rate is defined as the reported tax rate, as adjusted for exceptional items, amortisation of acquired intangble assets and
significant prior period adjustments.
4 |
At the AGM on 18 May 2022, the Board was delighted to
appoint Rowan Baker as a Non-Executive Director, Chair of
the Audit Committee and member of the Nomination and
Remuneration Committees. Rowan is a highly experienced
Chief Financial Officer in construction and development. She is
currently the Group Chief Financial Officer of Laing O’Rourke,
and from 2017 to 2020, was the Chief Financial Officer of
McCarthy Stone.
Following the completion of the combination with Countryside,
Tim Lawlor joined the Group and the Board as Chief Financial
Officer. Tim was the Chief Financial Officer of Countryside. He
has strong financial and commercial expertise. Previously he
served for seven years as CFO of Wincanton Plc, the largest
British third party logistics company and he is a qualified
Chartered Accountant. At the same time Earl Sibley, previously
the Group’s Chief Financial Officer for eight years, became the
Group’s Chief Operating Officer.
We have announced three further Board changes following
year end. Jeff Ubben has been appointed as a Non- Executive
Director with effect from 23 March 2023. Jeff is Managing
Partner and Founder of Inclusive Capital Partners L.P., one of
the Company’s largest shareholders. Jeff is a highly experienced
Board member and investor in both the United States and the
UK and his deep expertise and insights, particularly in ESG and
sustainability, will be of enormous value as we continue our
integration with Countryside.
Nigel Keen and Katherine Innes Ker are stepping down from
the Board with effect from 23 March 2023 and the close of
our Annual General Meeting on 18 May 2023 respectively. On
behalf of the Board I would like to thank Nigel and Katherine
for the strong contribution they have made to the Company
since 2016 and 2018 respectively. They have provided support
and oversight dedication, wise counsel through a period of
significant growth and transformational change of the business
culminating in the recent combination with Countryside. They
also provided guidance during the disruption to the business
as a result of the various lockdowns and ongoing Covid
restrictions. Searches for two new Non-Executive Directors
have been commissioned.
Fernleigh Park, Long Marston, Stratford-upon-Avon.
As a result of the Board changes described above there were
a number of changes to the Board's Committees. In line with
the recommendations of the UK corporate governance code I
stepped down as Chair of the Audit Committee and member
of the Audit and Remuneration Committees when I became
Chair of the Group. At the same time, Ashley Steel who joined
the Board in June 2021, was appointed as Senior Independent
Director. Ashley was also appointed Chair of the Remuneration
Committee with effect from 23 March 2023.
The future
The integration of Countryside is making excellent progress,
with the operating structure in place since the start of 2023
and the cultural fit exceeding expectations. Management now
expect synergy benefits from the Combination to be c.£60m
pre-tax recurring cost synergies on an annual run-rate basis by
the end of FY24, ahead of our target of £50m.
The Group’s strategy is to deliver strong growth in Partnerships
revenues, earnings resilience and a sector leading return
on capital employed (ROCE) in the medium term. Further
information about the Group's strategy is included on pages
18 to 21. We are also focused on realising the procurement
benefits from the Group's enlarged scale and leveraging
expertise and best practice across all business units. Integration
of our timber frame manufacturing operations across both
Vistry Housebuilding and Countryside Partnerships will help
drive the use of modern methods of construction, de-risk the
supply chain and deliver cost and sustainability benefits.
Partnerships will continue to target strong growth in its more
resilient revenues, supported by the acute need for affordable
homes across our country. Central to the Partnerships strategy
is a target ROCE of above 40%. Housebuilding remains focused
on controlled volume growth and progressing towards its
target of a 25% gross margin and 25% return on capital
employed.
Following an excellent performance in FY22, the Group is in
a strong position for FY23 as reflected in the forward sales
totalling £4.2 billion. We are committed to maximising the
opportunities from our unique market position and have a
strong and experienced management team in place across all
areas of the business to deliver on this.
Ralph Findlay OBE
Chair
22 March 2023
Vistry Group PLC | Annual Report 2022 | 5
Chief Executive's review
“2022 was another landmark year for
the Group. Our combination with
Countryside has created one of the
country's leading housebuilders.”
Greg Fitzgerald | Chief Executive Officer
2022 review
2022 was another landmark year for the Group. The combination
with Countryside presented a unique and exciting opportunity for
Vistry and has created one of the country’s leading homebuilders,
comprising a leading partnerships business and a high quality
major housebuilder. It has accelerated the Group’s strategy of
rapidly growing its more resilient partnerships revenues and
of targeting a sector leading return on capital employed. The
transaction completed on 11 November 2022 and the businesses
have come together extremely well. There is a good cultural fit,
and the integration process is making excellent progress. As a
result, we are confident of delivering synergy benefits of £60m,
ahead of the £50m previously announced target, and with the full
annual run rate achieved by the end of FY24.
The Group made excellent progress in 2022 despite the more
challenging market conditions experienced in the fourth quarter.
It continues to deliver high quality homes and outstanding
customer service and we were pleased to have been awarded
a 5-star HBF Customer Satisfaction rating for the fourth
consecutive year and to have seen a significant improvement in
our 9-month HBF customer satisfaction score. Our people are
key to the Group’s success, and I would like to thank all of our
employees, subcontractors and supply chain for their continued
hard work and dedication.
2022 saw a further significant step up in financial performance,
with Group adjusted revenue in 2022 up 14.1% to £3,073.2m
(2021: £2,693.6m), adjusted profit before tax increasing
by 20.9% to £418.4m (2021: £346.0m) and adjusted basic
earnings per share of 137.5p (2021: 125.5p), up 9.6% on prior year.
On a reported basis, the Group delivered revenue of £2,729.4m
(2021: £2,407.2m1), profit before tax of £247.5m (2021: £319.5m)
and earnings per share of 86.5p (2021: 114.6p). This was after
exceptional expenses of £153.9m (2021: £12.2m) including £97.0m
fire safety provision and £56.9m transaction and integration
related costs.
Executive Leadership Team (ELT)
The Group operates through its Board of Directors with
day-to-day management and operation delegated to the
Chief Executive Officer (CEO) and the ELT. The CEO leads, and
is a member of, the ELT.
Earl Sibley
Chief Operating Officer
Tim Lawlor
Chief Financial Officer
Keith Carnegie
Chief Executive – Housebuilding
Stephen Teagle
Chief Executive – Partnerships
Michael Stirrop
Strategic Operations Director
Clare Bates
General Counsel and
Group Company Secretary
ELT biographies are available at www.vistrygroup.co.uk/
about-us/leadership/executive-leadership-team.
6 |
Debbie Hulme
Customer Experience Director
Mike Woolliscroft
Group Business Improvement
Director and London Divisional Chair
Vistry Partnerships, the Group’s partnerships business prior to
the combination with Countryside, had another excellent year
of delivering against its strategy of rapidly growing its more
resilient revenues, improving margin and delivering at least a
40% return on capital employed. Mixed tenure completions
were up 17.6% to 2,455 units (2021: 2,088), adjusted operating
margin increased to 10.7% (2021: 9.2%), and Partnerships’ return
on capital employed in the period was 77.6% (2021: >100%).
Housebuilding effectively executed its strategy of delivering
controlled volume growth and margin progression from its
existing business structure, with completions increasing by 3.4%
to 6,774 units (2021: 6,551) and adjusted gross margin increasing
to 23.4% (2021: 22.3%).
The contribution of Countryside to the Group’s result for FY
2022 was minimal given the timing of the acquisition, with its
performance in line with expectations.
This strong financial performance combined with a stronger
than expected net cash contribution from Countryside and
the Group’s on-going focus on good working capital
management, resulted in a year end net cash position of £118.2m
(31 December 2021: £234.5m). This was after a net cash outflow
of £95.2m for the acquisition of Countryside, £35.2m share
buy-back and £138.9m of dividend distribution. As part of its
disciplined approach to capital allocation, the Board is committed
to retaining a healthy and resilient balance sheet.
The Board is recommending a final ordinary dividend of 32
(2021: 40) pence per share, bringing the total ordinary dividend
for 2022 to 55 (2021: 60) pence per share. This represents a
total full year dividend payment of £162.3m (2021: £133.1m),
which is covered two times by Group adjusted net earnings2.
As previously announced, the Board is reviewing the enlarged
Group’s allocation policy to confirm whether it remains
appropriate in the context of the enlarged Group, and in
doing so will be consulting with shareholders.
Bidford Leys, Bidford-on-Avon, Warwickshire.
Operational update
Trading performance
The Group delivered a strong operational performance in 2022
with good progress made across all business areas. We saw a
very strong start to the year with high levels of demand resulting
in increased sales rates and higher house prices. This trend
continued throughout the first half and the Group reported an
average weekly private sales rate per outlet in H1 22 of 0.84 (H1
21: 0.76), up 11% on the prior year.
The second half started strong, with our sales performance
across both businesses remaining robust during the typically
quieter summer months. There was a step-change in market
conditions in the fourth quarter with the mini-budget delivered
on 23 September 2022 heightening macro uncertainty and
leading to a significant increase in mortgage costs. Demand
for private sales reduced markedly with the Group achieving
a weekly private sales rate per outlet3 of 0.46 in Q4 2022. For
the year as a whole, the Group achieved a weekly private sales
rate of 0.71 (FY21: 0.76). Despite the drop in demand, our pricing
remained firm in the final quarter of 2022.
In the partnerships market, the wider macro uncertainty and
concern around the Government’s social housing rent ceiling
generated hesitancy amongst housing providers during the
fourth quarter. The Government confirmed its position on the
rent ceiling in the 17 November 2022 Autumn Statement, with
the 7% ceiling at the better end of expectations. We saw demand
in our partnerships business pick up accordingly towards the end
of 2022.
Our sites have operated well during the year, and we were
delighted to have achieved our highest number of NHBC Pride
in the Job Quality Awards in 2022, totalling 34 for the enlarged
Group. Our NHBC reportable items remain below industry
benchmark at 0.23 (FY22: 0.22) for the Group. In a year that has
been characterised by heightened labour and material supply
constraints as well as price increases, the Group has been highly
focused on working in close partnership with our supply chain
and sub-contractors to best manage this. With increased output
from the supply chain in the first half, we saw an improvement in
the availability of materials.
1. Revenue and cost of sales for 2021 have been restated in relation to trading with our joint ventures.
2. Adjusted net earnings is calculated as adjusted profit before tax, net of tax calculated at the adjusted effective tax rate. The adjusted
effective tax rate is defined as the reported tax rate, as adjusted for exceptional items, amortisation of acquired intangble assets and
significant prior period adjustments.
3. Excludes any contribution from Countryside.
Vistry Group PLC | Annual Report 2022 | 7
Wider industry cost pressures however continued, specifically
rising energy costs and wage inflation, resulting in an increase
in our overall cost base of c.9 to 10% in the year.
In Partnerships, where we have a higher element of fixed
revenue, we manage our risk in the pre-procurement phases
through passing elements of cost risk to our subcontractors,
include a sensible level of cost contingency or fixed price
allowances to cover some level of inflation, and for the long
duration contracts, seek to link the pre-sold revenue to a build
cost inflation index.
Partnerships1,2
Vistry Partnerships made excellent progress in the year with
its strategy of rapidly growing higher margin mixed tenure
revenues, with mixed tenure completions up by 17.6% to 2,455
(2021: 2,088) which includes 738 (2021: 904) delivered in joint
ventures (JVs). The average selling price of mixed tenure units
in the year on an adjusted basis was £256k (2021: £237k).
Partnerships operated from an average of 28 (2021: 33) active
mixed tenure sites in 2022 which was lower than forecast
reflecting stronger sales rates on existing sites and some
planning delays.
Vistry Partnerships continued to drive its operating margin
through increasing the proportion of higher margin mixed
tenure revenues, and in 2022 adjusted operating margin
increased to 10.7% (2021: 9.2%).
Housebuilding1,2
Housebuilding had an excellent year delivering 6,774 units
(2021: 6,551) in 2022, which includes 1,343 (2021: 1,287) in
JVs. Private units in the year totalled 5,184 (2021: 4,891) with
1,590 (2021: 1,660) affordable units, representing 23.5% (2021:
25.3%) of total completions.
Total Housebuilding average selling price for 2022 increased by
6.2% to £324k (2021: £305k) on an adjusted basis, reflecting
changes in mix and house price inflation across the year.
Housebuilding’s private average selling price increased to
£376k (2021: £356k) and affordable average selling price
increased to £163k (2021: £158k). Adjusted revenue from
Housebuilding activities in the year totalled £1,982.4m (2021:
£1,829.3m). Housebuilding operated from an average of 142
(2021: 143) active sites in 2022 and we expect this to increase
to an average of c.150 in FY23 reflecting the transfer of sites to
Housebuilding from Countryside.
Housebuilding adjusted gross margin saw a further step-up,
increasing to 23.4% (2021: 22.3%) with the business making
good progress towards delivering its adjusted gross margin
target of 25%.
Countryside
In the period post-acquisition Countryside delivered 649
units, which includes 70 from JVs. The Countryside adjusted
operating profit for the period post-acquisition was £0.5m.
The contribution of Countryside to the Group’s FY 2022 result
was minimal, which is in line with expectations given that Q4 is
typically a quieter period for Countryside.
Integration of Countryside
The combination with Countryside Partnerships completed on
11 November 2022. The integration, which has moved at pace,
has been collaborative and focused on building on the best
from each business. The Group expects to deliver c.£60m of
pre-tax recurring cost synergies on an annual run-rate basis
by the end of FY24, up from our previous target of £50m. Of
this, c.£25m are expected to be delivered in FY23, ahead of our
original £19m target.
The integration is being managed by the Integration Oversight
Board, a subset of the Executive Leadership Team, and is
supported by a central management office and a number of
integration workstreams with appropriate expertise from Vistry
and Countryside.
The transition to date has been very positive reflecting the
active engagement and common culture of our people, detailed
planning through the various phases of integration, and our
continued focus to deliver a timely integration with minimal
operational disruption.
Key achievements to date include the restructuring of
Partnerships, with the new organisation structure in place
from 1 January 2023 all operating under the Countryside
Partnerships name and the combination of all central functions
under the banner of Vistry Services. We are making good
progress on aligning our corporate governance and the full
alignment of our business policies, processes, and procedures
including the Group’s SHE Management System is expected
to be completed by April. We have implemented a number of
key IT changes and are well on our way to unification of our
systems, which is expected to complete in the Autumn of 2023.
Vistry Works
The timber manufacturing operations acquired with
Countryside have been fully rebranded and relaunched as Vistry
Works. The Group sees Vistry Works as a valuable opportunity
to create an industry leading manufacturing capability with the
potential to deliver significant benefit to the broader Group in
the medium term.
The business currently operates from its two factories at
Warrington and Leicester which together have the capacity
to deliver c.2,800 units in FY23. The Group is committed to
re-opening the Vistry Works East Midlands factory and this
is targeted for the second half of 2023. Good progress is
being made with recruitment, electric capacity enhancement
and machine remobilisation, and a review of additional
manufacturing options to utilise surplus floor space is being
undertaken. In the medium term, the business is targeting the
manufacture of c.5,000 units.
Establishing good working relationships between the business
units and Vistry Works is a priority, and a framework has been
put in place to improve coordination between factories and the
relevant business unit to help ensure capacity levels are as fully
utilised as possible going forwards.
House type standardisation is fundamental to the efficiency
1. Excludes any contribution from Countryside.
2. Completions include 100% of JVs. All other financials are shown on an adjusted basis to include the proportional contribution of the
joint ventures.
8 |
Chief Executive's review
continued
of the manufacturing operations, and we are working hard to
ensure all three of our brands’ house types incorporate timber
frame construction with a heavy focus on delivering Future
Homes Standard. The current closed panel solution is being
scaled back with an open panel without plasterboard (hybrid)
solution being the preferred option to allow a more cost
effective product offering to the Group nearer term. We have a
strong emphasis on R&D and will evolve the product over time
as the business gains momentum.
Fire safety
The Group is committed to playing its part in delivering a lasting
industry solution to fire safety and its strong view remains that
the costs of remediation should not be borne by leaseholders.
Both Vistry and Countryside signed the Building Safety Pledge
Letter in April 2022 and on 13 March 2023, Vistry signed
the Department for Levelling Up, Housing and Communities'
Developer Remediation Contract.
We are making progress with the remediation works and of the
304 buildings identified, work has been completed on 59, we
are on site on 30, are engaged in the remediation process on
188, with 27 buildings to yet commence. The dedicated teams
in both Vistry and Countryside have been integrated under
single management following completion of the Countryside
transaction and the cladding and remedial fire safety provisions
have been consolidated and aligned under a consistent method
of estimation.
As at 31 December 2022, the Group fire safety provision was
£309.2m. This includes a provision of £191.8m acquired through
the combination with Countryside, a charge of £97.0m in the
year covering additional requirements under the Pledge and
the Developer Remediation Contract and the adoption of a
consistent approach across the enlarged Group, and net spend
of £4.8m on remediation work in the year.
In addition, from 1 April 2022, the Group has been paying
the 4% Residential Property Developer Tax (RPDT) as part of
the contribution from the UK’s largest residential property
developers towards the Government’s cost of dealing with fire
safety and cladding remediation work. RPDT is intended to raise
at least £2bn from the industry over a ten-year period.
Balance sheet
The Group had a net cash position of £118.2m as at 31 December
2022 (31 December 2021: net cash of £234.5m) following a
net cash outflow of £95.2m for the acquisition of Countryside,
£35.2m share buy-back and £138.9m of dividend distribution.
This is ahead of our expectations for the Group post acquisition
and reflects stronger cash generation in the second half at both
Vistry and Countryside.
Inventories have increased by £876.0m year on year, primarily
driven by the Combination which added £792.3m of WIP and
continued investment in land and WIP during the period.
Similarly, land creditors have increased to £667.4m at 31
December 2022 from £414.2m at the beginning of the year.
This is driven primarily by the acquisition of £246.0m in
land creditors on the Combination with Countryside and the
investment in land in the period.
We will continue to ensure the Group has a healthy and resilient
balance sheet and retain the opportunity to selectively invest in
land and development opportunities as they arise.
Sustainability
Our purpose is to deliver sustainable new homes and
communities across all sectors of the UK housing market and
our strategy is split into three priority areas: our people, our
homes and communities, and our operations.
Timber frame home under construction at Beehive Mill, Bolton.
Vistry Group PLC | Annual Report 2022 | 9
We made significant progress with our sustainability strategy
in 2022 which is covered in detail in our Sustainability Report.
Key highlights include the linking of three key sustainability
metrics to executive remuneration and our sustainability linked
loan, the SBTi (science based targets initiative) verification
of our carbon reduction targets, and the publication of our
Carbon Action Plan focused our direct emissions, which
complements our existing roadmap to net zero carbon homes.
Following the success of our Europa Way development, which
delivered 54 zero-embodied carbon homes for Warwickshire
District Council, we commenced another joint venture with the
Council to deliver 310 zero-carbon homes at our Kenilworth
site. This unique partnership, which broke ground in March
2022 and was the first of its kind to get underway in the
UK, will deliver zero carbon affordable homes at scale with
improved building fabric efficiencies and air source heat pumps.
For the year ahead, and following our combination with
Countryside, we are undertaking a review of our sustainability
strategy to ensure that it continues to be relevant to the
business and stakeholders of our enlarged Group and we
will incorporate a number of Countryside’s best practice
sustainability processes into our existing procedures. In 2023,
we will conduct a full review of our materiality assessment,
update our sustainability strategy as required and set new
targets.
Quality and customer service
Delivering high quality new homes and excellent customer
satisfaction remain our key priorities and we consider our
customers in all of our decision making.
We were pleased to have been awarded the maximum 5-star
HBF customer satisfaction rating in the most recent annual
review for the fourth consecutive year, with our score for
Q3 2022 at 92.6% (Q3 2021: 92.2%), in the most recently
published HBF 12-month rolling customer satisfaction data.
We have focused on improving our score for the HBF customer
satisfaction survey which is sent out nine months after
completion and are pleased to have seen our score on this
ended at over 79% in the last closed survey year.
The Group welcomes the introduction of the New Homes
Ombudsman and fully supports the New Homes Quality Code.
It has completed registration and is working on activation
following the need for alignment following the acquisition of
Countryside.
During the year we expanded our customer relationship
management (CRM) capabilities across our Partnerships
business, enriching the customer experience and supporting
our teams to work more effectively across the customer
journey. Rolling out our CRM capabilities across the
Countryside business is a key part of our integration
programme.
We continue developing our digital capabilities and our
immersive portal has played a key role in strengthening our
customer experience, giving them more choice about how,
when and where they do business with us. Over 77% of our
customers are now choosing to use our portal to make their
reservation within six clicks. Customers are also increasingly
using the virtual personal experience, which includes the
opportunity to virtually visit our developments, look around
the homes and personalise them, including changing worktops,
cupboards, and flooring.
People
Our people make Vistry and are critical to the on-going
success of the Group. As was expected with the integration of
Countryside, we saw a decline in our latest Peakon employee
engagement survey carried out during March 2023, with
the score at 7.8 (August 2022: 8.6), in-line with the Peakon
benchmark. We are very focused on maintaining an open
and informative dialogue with all our employees during this
integration period and the Executive Leadership team and
other senior management have hosted drop-in Q&A sessions
and delivered ad hoc video updates to keep people informed.
We were pleased to have recently achieved certification as
a ‘Top Employer’ with the Top Employers Institute which
recognises our people strategy and workplace environment.
The safety of our people, and those who work with us, is also
a top priority. Health and safety is one of the first topics to
be covered in executive meetings, with clear linkage to our
values and ethos. Our year on year reduction in both accident
incident rate and service strike incident rate demonstrates our
commitment to continual improvement driven by a positive
safety behaviour culture.
Recognising the cost of living crisis and the heightened levels
of inflation over the past 12 months, we were pleased to award
a minimum 4% pay rise for all employees at the start of 2023.
In addition, in April 2022 we put in place a temporary cost
of living allowance of up to 3.75%, ensuring that the lowest
paid employees received the most support. These allowances
became a permanent part of all annual salaries under £60,000
from January 2023.
Land
The Group has a high quality, deliverable land bank reflecting a
successful year in the land market.
Vistry Partnerships continued to invest in its owned land
bank to support the growth of mixed tenure completions
and in the year secured 3,213 (2021: 4,131) plots on 19
(2021: 23) sites for mixed tenure development, significantly
ahead of replacement level. Following our combination with
Countryside, the enlarged Partnerships business had an owned
and controlled land bank of 44,258 (2021: 11,756) plots as at
31 December 2022.
10 |
Chief Executive's review
continued
Partnerships is well positioned on land and has 93% of the land
required for forecast FY23 completions secured and 80% of
the land for FY24 completions secured. There is a good pipeline
of attractive development opportunities, in particular working
alongside Housing Associations and Local Authorities.
Housebuilding secured 5,334 (2021: 7,667) plots across 32
(2021: 38) developments at an average gross margin and
ROCE hurdle rate of at least 25%. The rate of land acquisition
in Housebuilding consciously slowed in the fourth quarter
reflecting the increased level of uncertainty in the housing
market. Following our combination with Countryside, 32 sites
totalling 5,039 plots have been transferred from Countryside
Partnerships to Vistry Housebuilding from 1 January 2023.
As at 31 December 2022, Housebuilding had a total controlled
land bank of 37,084 (2021: 31,014) plots. The business has a
strong deliverable pipeline of land with all of the land required
for forecast 2023 completions secured and 95% of the land for
FY24 completions secured. Housebuilding continues to progress
high quality land opportunities on a selective basis and with
deferred payment terms.
Strategic land is a key component of the Group’s land supply,
and we are targeting a greater proportion of total completions
to be delivered from higher margin strategic land in the medium
term. Our strategic land team delivers consented land to both
our Housebuilding and Partnerships businesses, with the two
businesses co-developing sites, particularly larger strategic sites,
to maximise returns. On average, our strategic land delivers an
incremental 150 to 300 basis points to the development gross
margin. The Group added 4,503 (2021: 7,721) strategic land
plots across 9 (2021: 12) developments to its strategic land bank
in the year and a further 22,204 strategic land plots across 48
developments following our combination with Countryside.
In total, the Group had 65,813 (2021: 40,000) strategic land
plots as at 31 December 2022.
Capital allocation and dividends
The Board is committed to retaining a healthy and resilient
balance sheet. The Group’s priority remains to invest in high
returning land market opportunities in line with our land
investment strategy and growth targets for both Housebuilding
and the less capital-intensive Partnerships business. During
the more recent period of heightened market uncertainty, the
Group has maintained a selective approach to acquiring land,
particularly for the Housebuilding business.
The Board is recommending a final ordinary dividend of 32
(2021: 40) pence per share, bringing the total ordinary dividend
for 2022 to 55 (2021: 60) pence per share. This represents a
total full year dividend payment of £162.3m (2021: £133.1m),
which is covered two times by Group adjusted net earnings.
As previously announced, the Board is reviewing the enlarged
Group’s allocation policy to ensure it remains appropriate in
the context of the enlarged Group, and in doing so will be
consulting with shareholders.
Current trading and outlook
Our Partnerships business is seeing a good level of demand
from Housing Associations and Local Authorities, with the
PRS market also improving. In the year to date, Partnerships
has secured a number of new development opportunities
which at least meet our targets of 40%+ ROCE and 50% pre-
sold revenues and has a good pipeline. The resilience of our
Partnerships business is reflected in its strong forward order
book totalling £2,840m (25 Feb 2022: £1,338m), with 68% of
mixed tenure FY23 units and all of partner delivery revenues
secured, providing us with the confidence it will deliver revenue
growth in FY23, on pro forma FY22.
For the Group overall, we have seen an improving trend on
private sales in the first 11 weeks of the year, with the Group’s
average private sales rate per site per week for the year to date
at 0.54, increasing to 0.62 in the last four weeks. We have
seen increased consumer confidence from Q4 2022, particularly
as mortgage rates have trended downwards and availability has
improved.
Housebuilding is focused on delivering operational excellence in
this more competitive marketplace, with top quality customer
service and the highest build standard critical to success.
The business has a very experienced management team, and
with its focus on and investment in high quality site teams,
is well positioned. Housebuilding’s forward order book totals
£1,339m (25 Feb 2022: £1,324m) with 55% of FY23 units
secured.
Net pricing has held relatively firm in the first 11 weeks
supported by an increase in the use of incentives. The Group
sees opportunity for cost reduction in the year, with some
success achieved in the year to date. The expected year on year
reduction in private sales rates is reflected in our current build
rates, with a key focus on working capital management.
The integration of Countryside Partnerships is making excellent
progress and we are now expecting to deliver c.£25m of
synergies from the combination in FY23. We expect total
synergies to be c.£60m, up from our previous target of £50m,
with the full annual run rate achieved by the end of FY24.
Based on these assumptions, we expect the Group to deliver
adjusted profit before tax for FY23 in excess of £440m1. As part
of a disciplined approach to capital allocation, we will continue
to ensure the Group has a healthy and resilient balance sheet
and will continue to invest selectively in high quality land and
development opportunities as they arise.
Greg Fitzgerald
Chief Executive Officer
22 March 2023
1. Refinitiv Eikon mean FY23 adjusted PBT: £396m, Bloomberg mean FY23 adjusted PBT: £409m (20/03/2023).
Vistry Group PLC | Annual Report 2022 | 11
Market environment
We are a leading player in the UK housebuilding industry which is
impacted by a number of economic, social and regulatory trends.
In response we are continuing to evolve the Group to ensure we are
well positioned to deliver sustainable value for all stakeholders.
Trends and developments
Our response
Demand for new homes continues to outstrip supply
There continues to be a shortage of new homes in the UK with
studies estimating a need for c.340,000 new homes per annum1
in England. In recent years delivery has continued to fall short
of this need (2019/20: 242,700 new homes, 2020/21: 216,490
new homes), which has increased the cumulative level of unmet
demand. Within this there is a chronic shortage of affordable
housing and professionally managed private rental.
The Department for Levelling Up, Housing and Communities
has re-affirmed its commitment to build 300,000 new homes
every year by the mid 2020s – a target originally set out in the
Conservative Government’s 2019 manifesto.
Key initiatives in place to support new home supply include:
• The Government’s ongoing affordable housing programme
which has £11.5bn of committed funding from 2021 to 2026,
and is intended to deliver 180,000 homes across England.
• More organisations capable of securing funding, including
local authorities and housing associations.
• The First Homes scheme.
The planning system
Before we can start any development work we must obtain
planning permission and discharge conditions. Securing timely
planning permission on an economically viable basis is key to
our value creation process.
Planning delays are common, reflecting continued capacity
issues within local planning authorities and continued political
uncertainty. Preparation or publication of new local plans has
been significantly delayed over the last year.
In addition, the Levelling Up and Regeneration Bill (LURB),
which will introduce significant reforms to the existing planning
regime, is continuing its passage through the House of Lords
however much of the detail is still to be confirmed or will need
to be set out in secondary legislation.
As well as changes proposed via the LURB, a short term
update to the National Planning Policy Framework (NPPF) was
published in December 2022, alongside proposals for wider
changes which will be consulted on in due course.
As one of the largest housebuilders, we are committed to
increasing the supply of quality new homes across England.
The Group delivered a total of 11,9512 new homes in 2022.
Our enlarged Partnerships business is a leading provider of
affordable, multi-tenure housing and we are focused on leveraging
its assets and capabilities to continue to increase our delivery of
affordable housing across all tenures and all of our regions.
We have an established track record of successfully working
alongside local authorities and housing associations to determine
the right development solutions for their communities.
Vistry Group was selected by Homes England as a strategic partner
for the delivery of affordable housing through its Affordable Homes
Programme, the only listed housebuilder to be included in the
programme.
Our Housebuilding business has a strategy of controlled volume
growth with a target of increasing homes delivered to 8,000 per
annum (2022: 6,774). Approximately 24% of these are affordable
homes delivered through Section 106 obligations.
We have healthy consented and strategic land banks and only
purchase new land that meets our specific land buying criteria.
We work with Government departments and other key
stakeholders to help shape planning reform. We have concerns
that the proposed amendments to the NPPF will create further
delays and discretion around local housing targets and reduce
the number of homes Councils plan to deliver. We continue to
engage with the HBF and other organisations, including the Land
and Property Developers Federation and Royal Town Planning
Institute, to try to speed up the planning process. Moreover, we
are working pro-actively with the Future Homes Hub3 to ensure
that the industry is ready to adapt to change and deliver strong
sustainability outcomes, including biodiversity net gain.
We are well placed to continue to support the Government’s
aspiration to maximise brownfield redevelopment and
regeneration. We continue to promote our wider sustainability
strategy recognising that the range of benefits that development
can bring to a community will be increasingly important to secure
local support for proposals. We have a strong track record of on
and off-site infrastructure delivery to ensure that new homes are
supported by the right level of infrastructure and contribute to the
communities in which they are located.
1. Heriot-Watt University - Housing Supply Requirements across Great Britain for low-income households and homeless people commissioned by
Crisis and the National Housing Federation, May 2019.
2. Includes joint venture completions and 2,073 partner delivery equivalent units.
3. The Future Homes Hub was established to facilitate collaboration to help meet climate and environmental challenges.
12 |
Beam Park, Rainham, Essex.
Meeting the growing demand for affordable homes
Countryside Partnerships is building 5,000 homes, half of which will be
affordable housing, on regeneration land at Beam Park, Rainham, one of
London’s largest new regenerated neighbourhoods. The development is
being delivered by our joint venture partnership with L&Q, and in partnership
with the Greater London Authority and the London Boroughs of Barking and
Dagenham and Havering. The development spans 29 hectares and in addition
to the new homes will also include two primary schools, a neighbourhood
centre and 2.5 hectares of improved green space.
Vistry Group PLC | Annual Report 2022 | 13
Trends and developments
Our response
The economic environment
Historically, the strength of the UK residential property market
has been linked to that of the UK economy, which in turn
is influenced by both European and global macroeconomic
conditions. As a result the market is cyclical.
Recent interest rate and energy price rises, cost-of living
increases and the headwinds from higher inflation, are impacting
household incomes and savings and as a result affordability,
demand for housing and house prices.
Increased material costs, supply chain challenges, and
labour shortages
During 2022, various factors including significant energy cost
increases, resulted in constraints on the materials supply
chain and increased material costs. In the second half we
saw improvements in the materials supply chain as capacity
increased.
A constrained labour market, skills shortages and wage inflation
also led to increased labour costs in the year. This abated
somewhat in the second half of the year and we see some
opportunity to reduce labour costs during the year ahead.
Fast changing regulatory environment and Future
Homes Standard
Government regulation continues to be an ever-greater factor in
driving decision making. New regulations include:
• The Building Safety Act and the establishment of a New Homes
Ombudsman with statutory powers to award compensation
and fix poor building work. This will raise quality standards
while the introduction of building safety and materials
regulators in the wake of the Grenfell Tower disaster will
enhance safety across the industry.
• The Future Homes Standard, effective from June 2025,
requires new homes to achieve c.80% lower CO2 emissions
than current standards through low carbon heating systems
and improved levels of energy efficiency.
• The New Homes Quality Code (NHQC) introduces a broad
range of additional requirements for developers. Its aim is to fill
the gaps in current protections and ensure that every aspect
of a new home purchase, from when a customer walks into
a sales office, through to two years after occupation of the
home, is covered.
Regulatory issues are also affecting land availability, including
challenges created by nutrient neutrality and the interpretation
of the Habitat Regulations. Biodiversity net gain is mandated
by the Environment Act 2021 and will be a requirement in all
planning applications by November 2023.
14 |
Our combination of Housebuilding and Partnerships assets
and increased exposure to the partnerships sector through our
combination with Countryside, provides greater resilience to the
cyclical housing market.
Countryside Partnerships works alongside local authorities,
housing associations and private rented sector providers to
supply much needed affordable, multi-tenure schemes. It targets
pre-sales of at least 50% on each development and therefore is
less reliant on more cyclical open market demand.
Vistry Housebuilding invests in high quality development
opportunities, maintaining a balanced regional portfolio whilst
leveraging its multi-branded strategy to target a broad range of
customers.
Our suppliers are key stakeholders in our business and through
our centralised procurement team, we proactively work with
them to best manage our supply chain needs. Regular dialogue
allows both parties to understand expectations and plan ahead,
and this has delivered positive results during 2022. Following
our combination with Countryside, to maximise efficiency, we
are reviewing all material supply contracts across the enlarged
Group.
Our Countryside Partnerships business has a higher element
of fixed revenue schemes, and we manage our risk in the pre-
procurement phase through passing an element of cost risk to
our subcontractors, including a sensible level of cost contingency
or fixed price allowances to cover some level of inflation.
To address labour and skills shortages we invest in a range of
initiatives including apprenticeships, trainee programmes and
our Vistry Skills Academies (see page 41).
We deliver high quality sustainable homes and high levels of
customer satisfaction as measured by the NHBC and HBF,
and we welcome the New Homes Ombudsman Service and
the NHQC. The ‘Vistry Customer Journey’ (see page 39) and
Countryside's 'gateway' embed procedures and checks to
ensure that we continue to deliver high quality homes. We
are continuing to enhance Keys, our customer relationship
management system, and we provide training across the Group
on an ongoing basis, to ensure we continue to deliver excellent
customer service.
Sustainability is core to our purpose and we have a clear
roadmap to deliver net zero carbon homes and we are already
delivering new homes that meet The Future Homes Standard.
We are applying the knowledge and experience gained from
these projects to develop innovative technical solutions to help
us achieve our stretching carbon reduction targets and meet
future regulatory requirements.
We have introduced biodiversity action plans on all new
development sites and we are committed to meeting the
10% biodiversity net gain requirements introduced by the
Environment Act (see page 42). Our strategic land portfolio
provides a real opportunity to deliver this requirement as a key
component of high quality placemaking.
Tolgus Farm, Redruth, Cornwall.
Delivering tomorrow's homes today
Tolgus Farm, Redruth, is a net carbon zero ready contracting scheme, where
we are building 185 homes for private rent and affordable housing on behalf
of Treveth Holdings LLP. The homes are being constructed using a 140mm
timber frame with a range of enhanced external elevational treatments. The
houses will achieve an ‘A’ rated energy performance certificate which will
result in lower energy bills for occupants. The scheme's sustainable homes
will complement the natural surroundings and will all incorporate low carbon
heating solutions, highly insulated walls and roofs, air source heat pumps,
underfloor heating and roof-mounted solar panels.
Vistry Group PLC | Annual Report 2022 | 15
Our business model
Our combined housebuilding and partnerships business model and
‘One Vistry’ strategy is focused on creating long-term value for all
of our stakeholders.
Key inputs that support value creation
Diverse and skilled workforce
Our success is dependent on our employees who
underpin the delivery of our strategy. Recruiting,
developing and retaining highly skilled and
competent people at all levels is a key priority.
Strong market position and capability
across all housing tenures
We are a leading player in the housebuilding and
partnerships sectors and have proven capabilities
across all housing tenures.
Excellent customer service
Our customers are at the heart of everything we
do. We provide a range of quality new homes
and a high level of service that aims to meet
customers' expectations throughout their entire
journey with us. Both Vistry Housebuilding and
Countryside Partnerships have retained a 5-star
HBF customer satisfaction rating for the fourth
consecutive year.
Renowned technical and building
expertise, quality and delivery
At the 2021 Housebuilder of the Year Awards we
were proud to win the large housebuilder
category and in 2022 we achieved 34 National
House Building Council (NHBC) Pride in the Job
quality awards. Modern Methods of Construction
(MMC) operate across the Group supported
by Vistry Works' modular timber frame
manufacturing capability.
Strategic land capability and its
effective utilisation
Our experienced in-house strategic land capability
effectively delivers land for our Housebuilding and
Partnerships businesses. As at 31 December 2022 the
enlarged Group's strategic land plots totalled over
65,000.
Multiple leading brands
We own a differentiated brand portfolio which makes
us more competitive in the land market and enables
us to target a broader range of customers.
Trusted partner with strong
stakeholder relationships
For over 40 years Countryside Partnerships has
been a trusted partner of housing associations,
public bodies and institutional private rental
operators and has played a lead role in regenerating
urban areas and creating new communities. In 2021
our Partnerships business secured Homes England
strategic partnership status.
One of our Vistry Works manufacturing facilities - Warrington.
16 |
How we create value
ment
We leverage the strengths and
maximise the opportunities
arising from our combined
Housebuilding and
Partnerships assets to
generate sustainable value.
A partnership approach
underpins everything
we do.
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g
a
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e
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sustainable
homes and
communities
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e
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e
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planning
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ouseexperti s e
For further information about our strategy:
See pages 18 to 21.
The value we create
People
We provide employment and development
opportunities in a diverse and inclusive
working environment.
5,200+ People employed
Customers
We build high-quality homes.
5-star HBF customer satisfaction
Shareholders
We are focused on long term value creation.
86.5p basic earnings per share
for year ended 31 December 2022
1. Includes joint venture completions and 2,073 partner delivery equivalent units.
Homes and communities
We support the regeneration of urban areas and
help create new sustainable communities.
11,9511
new homes delivered in 2022
Regulators
We contribute to consultations and proactively
engage in relation to key industry issues.
Supply chain
We support a network of nationwide suppliers.
c.£400m nationwide supplier
annual spend
Vistry Group PLC | Annual Report 2022 | 17
Our strategy
Our One Vistry strategy is aimed at leveraging the strengths and maximising
the opportunities from our combination of Vistry Housebuilding and
Countryside Partnerships assets, generating sustainable value for all
stakeholders, including sector–leading ROCE in the medium term.
Our combination with Countryside was a transformative opportunity with the enlarged Group having the scale and expertise to
accelerate our strategy, including the rapid growth of our less cyclical Partnerships revenues and the delivery of high returns.
The key pillars of our strategy are detailed below. Our people underpin all aspects of its delivery and our success is dependent on
building high quality homes, providing excellent customer service and operating in a sustainable way.
Our strategic pillars
1
Maintaining a strong market position and capability across all housing tenures, including being
a leading provider of high demand, high growth affordable housing.
2 Delivering customers high quality sustainable homes that at least meet the continually evolving
future homes standards.
3 Leveraging our combined Vistry Housebuilding and Countryside Partnerships assets to
maximise overall returns, particularly on larger multi-tenure developments.
4 Utilising our differentiated multiple brand portfolio to target a broader range of customers and
increase our competitive positioning in the land market.
Link to risks
1 2 3
6 8 10
1 4 5
6 7 9 10
1 3 4
6 8
3 6
5 Maintaining a high quality, deliverable operational land bank and effectively deploying our
leading strategic land capability.
4 6 7 8
6 Maximising the opportunity from Vistry Works' timber frame manufacturing capability through
improved operating efficiency and establishing the use of its timber frame output across all
business areas.
1 3 4
6 10
Information about our principal risks:
See pages 58 to 62.
One Vistry
The Group exists to develop sustainable new homes and communities across all sectors of the UK housing market. The Group holds
a unique market position. As a top housebuilder with a leading partnerships business, Vistry is well positioned to deliver strong
growth, earnings resilience and sector leading return on capital employed in the medium term.
Our combination with Countryside has materially accelerated our One Vistry strategy of rapidly growing the more resilient
Partnerships revenues, and we expect Partnerships revenue to represent at least 50% of total Group revenues in the near term.
The Group has a strong market position and capability across all housing tenures. It has three leading retail brands, Bovis Homes,
Linden Homes and Countryside Homes, each of which has its own differentiated housing range and combined, gives the Group a
broader market reach. With a high quality, deliverable consented land bank and an excellent strategic land capability, as One Vistry
we are especially focused on maximising absorption rates and returns from larger multi-tenure developments where Partnerships
and Housebuilding develop alongside each other.
18 |
One Vistry - Stoneleigh View, Kenilworth
Partnerships and Housebuilding working together to secure a highly sought after
development opportunity, deliver much needed housing and sector leading returns.
Representatives from Warwick District Council, local housing company Milverton Homes and the Group inspecting progress
at Stoneleigh View, Kenilworth.
• Working together, Partnerships and Housebuilding were able to secure a highly
sought after development opportunity.
• Partnerships’ established relationship with Warwick District Council and track
record of delivery, led to the creation of a new joint venture with Warwick District
Council, who are funding 100% of the project.
• 310 of the total 620 new homes will be affordable, and have been pre-sold to
Warwick District Council, de-risking the project.
• 50% of the homes will be built to zero carbon standards, ahead of current
standard requirements.
• To help sustain wildlife we have created a dedicated area that includes bee friendly
flowers, bee houses and a flowering lawn.
• All three brands will be used to maximise output and the delivery of much needed
new homes.
• Bovis Homes’, Linden Homes’ and Countryside Homes' differentiated and broad
product range is designed to meet open market local needs.
Vistry Group PLC | Annual Report 2022 | 19
Our strategy
continued
We are focused on realising the procurement cost benefits from
the Group's enlarged scale and on leveraging expertise and best
practice across all business units. In particular, our Partnerships
business is leading the way on Future Homes Standards on a
number of developments where it is working in partnership with
Local Authorities or Housing Associations. The experience and
knowledge gained is incredibly valuable across the entire Group.
In addition, we are integrating Countryside’s timber frame
manufacturing operations across both Partnerships and
Housebuilding and effectively utilising modern methods of
construction with the objective of achieving procurement
savings and de-risking the supply chain.
Our strategy is to deliver greater profitability and higher returns
as One Vistry than would be achievable from the standalone
businesses. However, if the market does not recognise the full
value of the enlarged Group by 2025, it is expected that each
of Housebuilding and Partnerships would be large enough
to succeed as independent businesses, giving the option to
separate them at that time if the Board considered this to be in
the best interest of shareholders.
Partnerships
Countryside Partnerships holds a leading position within
the high growth, high demand affordable housing market,
with its unrivalled track record, established relationships and
operational capability, being its key competitive advantages.
Successfully integrating Countryside Partnerships and Vistry
Partnerships and maximising the benefits of the combination
and being part of the larger Group is our key focus for 2023,
and we are making excellent progress.
The enlarged Partnerships business has good geographical
coverage through its 19 business units and three operating
divisions, each with a highly experienced management team.
The business is targeting strong revenue growth of c.10%
per annum over the medium term, which is supported by the
acute need for affordable housing across the country, the
programme of Government funding for affordable housing
including through Homes England, and the strong demand
for affordable housing and private rental stock from Housing
Associations, Local Authorities and other housing providers
including institutional investors.
Central to the Partnerships strategy is a target ROCE of above
40%. Vistry Partnerships has a strong track record of delivering
ROCE significantly in excess of 40%. Historically Countryside has
not prioritised ROCE resulting in a level below our 40% target.
The business is focused on increasing the proportion of pre-sold
revenues on a number of sites, particularly the more capital
intensive, high-rise developments in London, in order to drive
ROCE towards our target. All new development opportunities
for Partnerships have a minimum 40% ROCE hurdle and
minimum 50% pre-sold revenue hurdle.
Partnerships is targeting an adjusted operating margin of
12%+ (FY22: 10.7%) in the medium term, primarily through
driving operational efficiency, the benefits of scale, and
procurement savings.
20 |
Housebuilding
Near term, our high quality housebuilding business is focused
on maximising its performance against a more constrained
market backdrop. Key is operational excellence, with delivering
the highest quality build and customer service experience
critical to success in a more competitive sales environment.
Our housebuilding business has the management, site teams
and embedded controls and disciplines in place for this. On
costs, our business units are working closely with our preferred
suppliers, and in particular our subcontractors to deliver cost
efficiencies whilst maintaining a quality supply. Working capital
is tightly managed on a site by site basis and Housebuilding
is selectively acquiring land and is seeing increased success in
securing land with deferred payment terms.
Countryside’s non-core legacy assets have been transferred
to Vistry Housebuilding, with all the sites expected to trade
out during FY23/FY24 other than two longer dated sites.
In addition, as highlighted at the time of acquisition, we have
identified a number of other schemes that we believe have
the attributes of housebuilding developments and these have
been transferred in to the Housebuilding business from
1 January 2023. Housebuilding is also to retain a number of yet
to be developed land opportunities which were to be sold by
Countryside, de-risking the Housebuilding land pipeline and
reducing its land acquisition requirements.
Housebuilding’s medium term focus remains to deliver
controlled volume growth and further margin progression from
its existing operating structure. It is targeting 25% adjusted
gross margin and 25% return on capital employed in the
medium term.
The business has national coverage through its 13 operating
regions with each targeting annual output of between 550
to 625 units including JVs, giving an overall capacity for
Housebuilding of more than 8,000 units (2022: 6,774 units).
Key to driving gross margin and return on capital employed are:
Land buying: leveraging the ‘One Vistry’ proposition and
relationships including joint bids with Vistry Partnerships on
larger developments.
Strategic land: maximising our strong in-house capability,
targeting 30% of completions from strategic land.
Operating structure: increasing volumes through the business’
existing infrastructure, with a highly experienced leadership
team in place.
Future Homes Standard: continual review of build product and
processes, realisation of a ‘Green Premium’.
Multiple branding: increasing proportion of multiple branded
developments on Housebuilding sites.
Extras: our improving offering and customer proposition is
delivery strong growth in profitable ‘Extras’ revenues.
One Vistry - Fletton Folly, Great Haddon
Partnerships and Housebuilding working together to secure a highly sought after
development opportunity, deliver much needed housing and sector leading returns.
Fletton Folly, Great Haddon, Peterborough.
• Our multi-tenure capability and track record gives us a competitive advantage
particularly on larger sites, and enabled us to secure a high quality, competitively
bid for development opportunity that neither businesses would have been able to
secure on their own.
• Vistry Partnerships, working with Peterborough City Council and a partnered
housing association, will deliver 500 new homes, with a high percentage pre sold.
• Vistry Housebuilding will deliver 1,000 new homes.
• Utilisation of Bovis Homes, Linden Homes and Countryside Homes brands with
their differentiated product ranges will drive output and deliver much needed
housing in the area, all meeting Future Homes Standards.
• The development will also include a new primary school, a large sports facility and
community centres.
Vistry Group PLC | Annual Report 2022 | 21
Vistry Group PLC | Annual Report 2022 | 21
Financial review
“The Group has delivered strong financial
results despite challenging market
conditions in the fourth quarter.”
Tim Lawlor | Chief Financial Officer
Group performance
The Group has delivered strong financial results despite
challenging market conditions in the fourth quarter of FY22.
The market outlook remains uncertain but the Group,
strengthened by the Combination, is well placed both to
overcome potential difficulties and to capture opportunities that
may be presented by the changing economic conditions.
Completions
Housebuilding
2022
2021
Change
6,774
6,551
+3.4%
Partnerships mixed tenure
2,455
2,088
+17.6%
Countryside
(12 Nov to 31 Dec 2022)
649
N/A
N/A
Total Group completions
9,878 8,639
+14.3%
Partner delivery equivalent units
2,073
2,441
-15.1%
During the year, the Group delivered 9,878 (2021: 8,639)
legal completions, including 100% of JV completions.
Excluding completions in the acquired Countryside business,
there were 9,229 completions representing a 6.8% increase
to the prior year.
Total adjusted revenue, including share of joint venture revenue,
was £3,073.2m, 14.1% higher than prior year (2021: £2,693.6m).
Excluding revenue from the Countryside acquisition, adjusted
revenue was up 8.4%. The average selling price across the Group
was £305,000, up 5.2% on the prior year. On a reported basis,
revenue was £2,729.4m, 13.4% higher than last year (2021:
£2,407.2m after restatement for trading with joint ventures).
There was a step up in adjusted gross profit in 2022 to £636.9m
(adjusted gross margin: 20.7%) from £543.0m in 2021 (adjusted
gross margin: 20.2%). The gross margin improvement was
driven by the improved margin in the land bank brought
into the year and supported by sales price increases despite
significant build cost inflation in the year.
We have seen material availability return to pre-pandemic
levels in early 2023 and a softening in overall build cost
inflation, but some risk remains around categories impacted
by global macro-economic factors, in particular those materials
exposed to high energy use in the manufacturing process.
Group purchasing agreements have provided some protection
against a number of material price increases and we expect
to see increased benefits from our central procurement
with the increased scale of the business following the
Countryside acquisition.
The Group delivered an adjusted operating profit for the year
of £451.1m (2021: £368.4m) and an adjusted profit before tax
of £418.4m (2021: £346.0m), with the year-on-year increase
coming through from higher levels of gross margin partially
offset by a small increase in administrative expenses and finance
costs. Adjusted operating margin was 14.7% (2021: 13.7%).
On a reported basis, the Group saw a profit before tax of
£247.5m (2021: £319.5m), comprising operating profit of
£212.5m (2021: £285.4m) after exceptional costs of £153.9m
(2021: £12.2m), net financing expense of £12.2m (2021: net
income of £4.1m) and share of joint venture profit of £47.2m
(2021: £30.0m).
Partnerships performance
Mixed tenure
JV’s (100%) Private
JV’s (100%) Affordable
2022
1,717
601
137
2021
Change
1,184
+45.0%
630
-4.6%
274
-50.0%
Total mixed tenure completions
2,455
2,088
+17.6%
Partner delivery units
2,073
2,441
-15.1%
Adjusted revenue
£938.4m £864.3m +£74.1m
Adjusted operating profit
£100.8m £79.7m +£21.1m
Adjusted operating margin
10.7%
9.2% +1.5ppts
TNAV1
£159.1m £78.8m
>100%
22 |
Orchard Grove, Taunton, Somerset.
Partnerships completed a total of 2,455 units (2021: 2,088 units)
from its mixed tenure operations (including 100% of JVs), with an
average selling price of £256,000 (2021: £237,000) and partner
delivery revenue generated equivalent units of 2,073 (2021:
2,441). The Partnerships business operated from an average of
28 active mixed tenure sites in 2022, with this number expected
to be over 80 in 2023.
In line with our strategy, the mix of revenue has continued to
switch towards mixed tenure developments in the year. Of the
£938.4m total Partnerships adjusted revenue, 54% derived
from mixed tenure (£507.7m) with 45% (£422.0m) from partner
delivery projects, compared with 46% deriving from mixed
tenure last year (2021: total £864.3m, partner delivery: £468.7m,
mixed tenure: £395.6m). This shift in mix is partly responsible for
the improved adjusted operating margin which has increased to
10.7% (2021: 9.2%) and contributes to the increase in adjusted
operating profit to £100.8m (2021: £79.7m).
On a reported basis, the Partnerships business delivered revenue
of £854.5m (2021: £785.5m), and operating profit of £57.5m
(2021: £47.8m).
The Partnerships business has experienced similar build cost
inflation pressures to Housebuilding and has been able to
mitigate some of these pressures through strong supplier
relationships, matching cost arrangements to pre-sale pricing
arrangements.
The recently acquired Countryside business performed in line
with expectations in the seven weeks between the Combination
and the year end. Adjusted revenue of £152.5m was delivered
in the period, with adjusted gross profit of £16.2m and adjusted
operating profit of £0.5m. This is historically a quieter period for
the Countryside business with its annual peak trading occurring
in the quarter ending 30 September.
Housebuilding performance
Private
Affordable
JV’s (100%) Private
JV’s (100%) Affordable
2022
4,076
1,355
1,108
235
2021
Change
3,895
1,369
996
291
+4.6%
-1.0%
+11.2%
-19.2%
Total completions
6,774
6,551
+3.4%
Adjusted revenue
£1,982.4m £1,829.3m +£153.1m
Adjusted gross profit
£464.5m £407.1m +£57.4m
Adjusted gross margin
23.4%
22.3% +1.1ppts
Adjusted operating profit
£383.4m £305.4m +£78.0m
Adjusted operating margin
19.3%
16.7% +2.6ppts
TNAV1
£1,368.8m £1,373.1m
-0.3%
Total completions in Housebuilding (including 100% of JVs)
showed controlled growth of around 3%, as planned, at 6,774
units which included 1,590 affordable homes representing 23.5%
of total completions (2021: 1,660 affordable homes, 25.3% of
total completions).
Housebuilding pricing and demand was strong in the first three
quarters of the year prior to the September mini-budget, after
which there was a sharp reduction in demand although pricing
remained firm. Over the year there was a 5.6% increase in
average private sales price to £376,000 (2021: £356,000). The
total average sales price increased to £324,600 (2021: £305,000)
as a result of the reduction in proportion of affordable housing
and house price inflation in the private market. The average
number of sales outlets was 142 broadly in line with the previous
year, as expected.
1TNAV represents tangible net asset value and is calculated as net assets, less goodwill, intangible assets, cash and debt.
Vistry Group PLC | Annual Report 2022 | 23
Housebuilding adjusted gross profit of £464.5m and
Housebuilding adjusted gross margin of 23.4% advanced from
2021 (adjusted gross profit: £407.1m, adjusted gross margin:
22.3%), benefitting from a greater share of completions on sites
with strategically sourced land.
Housebuilding adjusted operating profit of £383.4m has
risen by 25.5% from the previous year (2021: £305.4m) with
adjusted operating margin also growing to 19.3% (2021: 16.7%).
The Housebuilding segment has maintained its operating
structure, with 13 regional business units and has capacity
within this structure to accommodate the transfer of those
sites from the Countryside acquisition which more closely fit the
characteristics of a Housebuilding business.
Housebuilding reported revenues were £1,737.9m (2021:
£1,621.7m), and reported operating profit was £244.3m (2021:
£260.7m).
Finance costs
The net financing expenses of the Group of £12.2m during 2022
compares to a net finance income of £4.1m during 2021 with
primary components as follows:
£m
2022
2021
Change
The Group’s effective tax rate for FY23 is expected to be in the
region of 27.5% with nine months of the higher Corporation
Tax rate of 25% being introduced in April 2023 and a full year
impact of the RPDT of 4%.
Adjusting items
The Group manages the business by focussing on non-GAAP
measures, which we refer to as adjusted measures as we believe
they provide a better comparison of underlying performance
measures from one period to the next. GAAP measures can
include one-off, non-recurring items and recurring items.
The Group’s share of revenue, gross profit and operating
profit from joint ventures and associate is included within
the respective adjusted measures in order to more accurately
reflect the full scale of the Group’s operations and performance.
At an adjusted revenue level, revenue recognised on
transactions with joint ventures is eliminated. The impact of
these transactions at a gross profit level is de minimis.
The adjustments made to performance measures include the
following items:
i) an incremental fire safety provision and unwinding of discount
on the provision (2022: £97.0m, 2021: £5.7m),
Bank, commitment fees and
other interest
Interest on land creditors and
lease liabilities and provisions
(£17.4m)
(£12.9m)
(£4.5m)
(£9.4m)
(£6.0m)
(£3.4m)
ii) exceptional costs of £56.9m relating to the Combination,
consisting of £29.5m of transaction costs and £27.4m of
acquisition-related integration and restructuring costs (2021:
£6.5m in relation to the integration of Linden and Partnerships),
Interest income
£14.6m £23.0m
(£8.4m)
Net finance (cost)/ income
(£12.2m)
£4.1m (£16.3m)
iii) the amortisation of acquired intangible assets 2022: £17.1m
(2021: £14.2m).
The increase in bank, commitment fees and other interest is
largely driven by the higher rates on our variable interest rate
debt.
The Group also incurred a £7.1m charge (2021: £5.1m),
reflecting the imputed interest on land bought on deferred
terms and an additional £1.4m charge (2021: £0.9m) in
relation to lease liabilities.
Joint ventures which are funded through loans are charged
interest by the Group, and this generated the majority of the
£14.6m of finance income recognised (2021: £23.0m).
Taxation
The Group has recognised a tax charge of £43.1m at an
effective tax rate of 17.4% (2021: £65.4m, at an effective rate of
20.5%). The effective tax rate reduction is driven by prior year
adjustments and the write off of provisions in the period.
The introduction of the Residential Property Developer Tax
(RPDT) at a rate of 4% on profits from 1 April 2022 was
substantively enacted on 2 February 2022. The anticipated
liability arising post 1 April 2022 and prior to 31 December 2022
has been included in the reported tax charge.
Fire safety provision
On 7 April 2022, the Group signed up to the government’s
Developer Pledge for fire safety remedial work required on
developments over 11 metres high. A provision of £71.4m was
recognised in the Interim accounts for 30 June 2022.
On 13 March 2023 the Group became a signatory to the
Developer Remediation Contract which they were committed
to signing at the year end, and as such this has been treated
a post-balance sheet adjusting event. This contract clarifies
the extent of the obligations of the Group regarding fire safety
remedial works; resulting in the recognition of an incremental
£24.7m in provision. The acquired fire safety provision on the
Combination with Countryside was £191.8m, which included
the additional commitments of the Developer Remediation
Contract.
The Group has spent £4.8m during the year on remediation
(2021: £1.4m) resulting in the Group’s closing provision for
remedial works being £309.2m at 31 December 2022, after
unwinding £0.9m of interest. A combined portfolio of 304
buildings is provided for in respect of remediation costs for
multi-occupancy buildings, with work complete on 59.
24 |
24 |
Financial review
continued
Net assets
£m
Goodwill and intangibles
2022
2021
Vistry
(excl. Countryside)
Countryside
Vistry
(excl. Countryside)
Change in Vistry
(excl. Countryside)
£657.2m
£603.5m
£675.3m
(£18.1m)
Tangible net assets excluding investments in joint ventures
and associate
£1,486.9m
£130.2m
£1,305.6m
+£181.3m
Investment in joint ventures
£204.8m
£48.9m
£175.1m
+£29.7m
Net cash
Net assets
Acquisition accounting
The acquisition accounting in relation to the Combination is
well progressed and we continue to review the provisional fair
values for intangibles and inventories. We will complete this
work in 2023 as the accounting standards require that the
provisional fair values are finalised within twelve months from
the acquisition date of 11 November 2022.
Prior to performing the fair valuation exercise, the accounting
policies of Countryside first had to be aligned to those of the
Group. The policies differ in the treatment of the capitalisation
of certain personnel and pre-development costs, which has
resulted in an £86m write down, net of deferred tax, to
Countryside’s assets at acquisition date. Simply put, on an
assumption the level of activity remained the same as prior
years, the reduction in future cost of sales arising from the
write-down of these assets is expected to be broadly offset by
the increase in period costs arising from the non-capitalisation
of such costs going forward.
The provisional fair value exercise has allocated the purchase
price of Countryside of £1,137m as follows: inventories of £792m,
investments, right of use assets and PP&E of £140m, intangibles
such as brands and relationships of £349m and goodwill of
£257m, less £209m of provisions and £192m of net working
capital and other items, including cash and deferred tax. The
total fair value adjustments which will unwind to underlying
earnings is a credit of £107m and this will unwind predominantly
in underlying earnings over the next 6 to 8 years.
Net assets
As at 31 December 2022, net assets of £3,249.7m were £859.2m
higher than at the start of the year, primarily driven by the
Combination and partially offset by the costs incurred in relation
to the Combination and incremental fire safety provisioning. Net
assets per share were 937p (2021: 1,075p).
Goodwill and intangibles totalled £1,260.7m at 31 December
2022 (2021: £675.3m) with the increase resulting from the
recognition of £349.1m of intangible assets following the
Combination relating to the Countryside Partnerships brand
name, customer relationships and secured customer contracts
(which were then amortised in the period post acquisition), and
the recognition of £257.2m in goodwill.
(£196.5m)
£314.7m
£234.5m
(£431.0m)
£2,152.4m
£1,097.3m
£2,390.5m
(£238.1m)
Tangible net assets, including investments in joint ventures,
increased from £1,480.6m at 31 December 2021 to £1,870.8m
at 31 December 2022 driven by the Combination, with the
provisional acquisition balance sheet (shown in Note 5.13 to the
financial statements), as well as investment in land and work in
progress which increased by £876.0m to £2,838.1m.
Trade and other receivables increased by £208.0m to
£449.4m, and trade and other payables increased by £589.8m
to £1,767.2m; both movements primarily driven by the
Combination.
Cash flow and financing
As at 31 December 2022 the Group’s net cash balance was
£118.2m. Having started the year with £234.5m, the Group
generated an operating cash inflow before land expenditure
of £554.7m (2021: £635.6m). Net cash payments for land
investment increased to £502.9m (2021: £368.6m).
Investing cash inflows totalled £19.3m, mainly driven by net
inflows from joint ventures of £97.7m and offset by net outflows
of £95.2m related to the Combination with Countryside.
In order to fund the Combination the Group took out a
£400m Acquisition Term Loan, which matures in March 2025.
As part of the same re-financing process, the Group exercised
an option to extend its existing £500m Revolving Credit Facility
(RCF) arrangement for a further year, meaning that it will now
mature in December 2026. Together with a £100m US Private
Placement, a retained £50m Bilateral Term Loan (repaid in March
2023), an overdraft of £5m and a Homes England loan facility
of £10.7m, the Group had external funding facilities totalling
£1,065.7m (2021: £665.7m) at 31 December 2022. These facilities
are used to fund intra-period working capital movements and
land investments with average monthly debt for the full year
2022 of £110.0m.
Shareholder distributions
The Group has stated a dividend expectation of two times
earnings cover. In line with this policy, the Group is proposing
to distribute 50% of the full year Adjusted Net Earnings3 of
£324.7m as dividends. Total interim dividend payments of
£50.1m were made in November 2022. The proposed final
dividend payments total £112.2m and represent a final dividend
per share of 32p.Total dividend payments in respect of the
financial year 2021 were £133.1m. Subject to AGM approval, the
final dividend will be paid on 1 June 2023.
3. Adjusted Net Earnings is calculated as adjusted profit before tax, net of tax calculated at the adjusted effective tax rate.
The adjusted effective tax rate is defined as the reported tax rate, as adjusted for exceptional items, amortisation of acquired
intangibles and significant prior period adjustments.
Vistry Group PLC | Annual Report 2022 | 25
Housebuilding land bank
As at 31 December
Consented plots added
Sites added
Sites owned at year end
Sites controlled at year end
2022
5,334
32
210
26
2021
6,432
28
216
14
Total plots in land bank at year
end incl joint ventures
Average selling price incl share
of joint ventures
32,763
31,014
£346,000
£319,000
The Housebuilding land bank including joint ventures of 32,763
plots as at 31 December 2022 represents c.4.1 years of supply
based on 2022 completion volumes (2021: 31,014 plots and
4.8 years), including plots acquired with Countryside. A total
of 5,039 plots were added to the Housebuilding land bank
through the Combination and includes sites previously classified
as Legacy Operations within Countryside Partnerships.
The land bank reflects our Housebuilding strategy to deliver
controlled growth in the medium term using existing operating
structures and improving both gross margin and return on
capital employed to 25%.
The 6,744 plots that legally completed in the year were replaced
by a total of 5,334 plots from a combination of site acquisitions
representing 4,285 owned plots and a further 1,049 plots
secured on a conditional basis across 10 sites. Of the 4,285
owned plots, 2,273 were sourced strategically.
The average selling price of all units within the consented land
bank increased over the year to £346,000 (2021: £319,000). The
estimated embedded gross margin in the consented land bank
as at 31 December 2022, based on prevailing sales prices and
build costs is 23.6% (2021: 25.0%). The decrease in margin is
primarily driven by the inclusion of the Countryside sites.
Following the announcement of the Group’s share buy back
scheme in May 2022, 4,056,968 shares were purchased in July
2022, representing a total share buy back of £35.2m.
As outlined in the shareholder circular dated 7 October
2022, following a period of integration we will now review, in
consultation with shareholders, the enlarged Group's capital
allocation policy to confirm whether it remains appropriate
for the enlarged Group. Under the existing policy, any surplus
capital, following investment in the business to support the
enlarged Group’s growth strategy and the payment of the
ordinary dividend, is expected to be returned to the Group’s
shareholders through either a share buyback or special
dividend.
Land bank
Partnerships land bank
As at 31 December
Consented plots added
Sites added
Sites owned at year end
Sites controlled at year end
2022
3,213
19
131
88
2021
2,266
11
72
14
Total plots in land bank at year end
incl joint ventures
48,579
11,756
Average selling price incl share of
joint ventures
£325,000 £285,000
Average consented land plot ASP
£41,000
£42,000
The Partnerships land bank including joint ventures as at 31
December 2022 consisted of 48,579 plots across 219 sites.
The land bank benefitted from the acquisition of 34,623 plots
through the Combination from 62 owned and 79 controlled
sites.
The 2,455 mixed tenure plots that legally completed in the year
were more than offset by the acquisition of 2,371 owned plots
on 14 sites. In addition, 842 plots were secured on a conditional
basis on 5 sites. Of the 3,213 owned plots, 298 were sourced
strategically. All sites acquired for Partnerships will support
future returns on capital employed for the segment in excess of
40%.
The average selling price of all units within the consented land
bank increased over the year to £325,000 (2021: £285,000).
The estimated embedded gross margin in the land bank as at
31 December 2022, based on prevailing sales prices and build
costs is 19.4% (2021: £19.3%).
26 |
Financial review
continued
Strategic land
As at 31 December 2022
Total sites
Total plots
By size
0 – 150 plots
150 – 300 plots
300 – 500 plots
500 – 1,000 plots
1,000+ plots
Total
By planning status
Planning agreed
Planning application
Ongoing application
Total
As at 31 December 2021
62
48
20
20
17
5,457
10,230
8,698
13,221
28,207
167
65,813
11
15
141
167
118
8,839
3,212
53,762
65,813
40,000
Strategic land continues to be an important source of supply
and during the year 2,571 plots have been converted from the
strategic land pipeline into the consented land bank. A further
4,503 plots were secured under options and planning consent
gained on 1,453 plots over the year. 22,404 plots were added
to strategic land as a result of the Combination.
Strategic land remains well positioned to deliver high quality
developments in the near to medium term with good progress
on a number of significant projects.
Risks and uncertainties
The Group is subject to a number of risks and uncertainties
as part of its activities. The Board regularly considers these
and seeks to ensure that appropriate processes are in place to
manage, monitor and mitigate these risks.
Risks relating to sustainability are becoming increasingly
important in the medium term, especially with the emerging
transitional risks which are becoming enshrined in regulation.
Tim Lawlor
Chief Financial Officer
22 March 2023
Blue Mountain, Thames Valley
Vistry Group PLC | Annual Report 2022 | 27
Our stakeholders and engagement
If we are to fulfil our purpose and create sustainable value it is essential that we
understand and respond to our stakeholders' issues.
Stakeholder
Stakeholder key issues
How we engage
Outcomes
People
Our employees who
underpin the delivery of our
purpose and strategy.
Customers
People and organisations
who buy our homes
and buildings.
• Pay and rewards.
• Regular two-way briefings including Executive Director hosted roadshows
• Development opportunities.
• Safe, fair and diverse working
environment.
• Open communications.
and discussions with our Housebuilding and Partnerships CEOs.
• Weekly Vistry Voice podcast hosted by the CEO and members of the ELT.
• Introduced enhanced rates for business mileage to reflect the increase in energy prices and launched a
• Regular employee representative meetings including participation in our
People Forum, feedback from which is communicated to the Board and
actioned.
• Confidential Peakon employee engagement surveys.
• Group leadership conference and Vistry Awards.
• Our DUG intranet.
• High quality, safe and energy
• Face-to-face and digital engagement including via our digital portal.
• A customer service metric is included in our annual bonus scheme to enhance focus on customer service and
efficient homes.
• Affordable homes and
mortgage availability.
• Excellent customer service.
• ‘Meet the builder’ and detailed home demonstration and inspection
build quality (see page 106).
meetings.
• Customer satisfaction surveys.
• Dedicated affordable housing team that liaises with our registered provider
• Trusted partner.
partners.
• Ongoing commercial dialogue.
• Signed the Building Pledge Safety Letter and the Developer Remediation Contract that formalise our
commitments in relation to cladding and fire safety remediation costs (see page 81).
• Expanded our customer relationship management capabilities across our Partnerships business.
Read more on page 31 and pages 39 and 40.
• Provided temporary cost of living allowances (COL) of up to 3.75% with effect from April 2022.
From January 2023 made COL allowance a permanent part of all annual salaries under £60k.
programme to install electric charging stations at our offices across the UK.
• Enhanced our benefits package and the mental health guidance and support we provide (see pages 36 to 38).
• Launched ‘Vistry Learn’, our Learning Management System which provides access to both mandatory and
discretionary training programmes to all our people.
• Enhanced our employee induction programme for all new starters.
Read more on pages 35 to 38.
Link to principal risks
1 3 6 10
1 2 5 7 9 10
Investors
• Sustainable returns.
• Investor meetings and roadshows.
• Strategy and delivery.
• Effective ESG practices.
• Trading updates and bi-annual results announcements and presentations.
• AGM and General Meeting.
Investors who provide
capital to fund our activities.
Homes and
communities
People who are impacted
by what we do.
Regulators
Entities that set the
framework, including
legislation, we must
operate within.
• Quantifiable positive social
• Regular engagement and meetings with registered providers of social
• Create social value and piloting a tool to monitor its delivery (see page 40 and 41).
impact.
housing, housing associations and the HBF.
7 9 10
• Increased delivery of
affordable homes.
• Minimal impact from
operations.
• Effective implementation of
legislation and regulations
including building safety,
biodiversity net gain, Future
Homes Standards and New
Homes Quality Code.
• Undertake and participate in public consultations.
• Support local community initiatives.
• Direct discussions with Government departments.
• Engagement with Homes England and local authorities.
• HBF engagement.
• Participation in Government consultations.
• Pre-application engagement with local planning authorities, town and
• Delivering homes that meet and exceed the Future Homes Standard requirements for 2025 on certain
7 9 10
developments (see pages 45 and 46).
• Targeting 10% biodiversity net gain on all development sites (see pages 41 and 42)
• Signed the Building Pledge Safety Letter and the Developer Remediation Contract (see page 81).
• Worked with leaseholders and freeholders to agree terms to remove ground rent doubling clauses across four
• Trusted partner.
parish councils and local communities.
• Factored investor perspectives into strategic developments during the year including the Group’s combination
with Countryside and the share buyback programme (see pages 80 and 81).
• Further progressed our sustainability strategy including publication of our Carbon Action Plan in December
1 2 3 4 5
6 7 8 9 10
2022 (see page 45).
Read more on about our sustainability strategy on pages 32 to 48.
• Our Vistry Skills Academies create job opportunities in the communities where we operate (see page 41).
• Embedded our Biodiversity Action Plan into our business management processes (see page 41 and 42)
• Committed to increasing the delivery of affordable homes year-on-year (see page 42).
• Support national and local charities (see page 42).
Read more on pages 40 to 42.
Supply chain
• Long-term relationships.
• Regular ELT level engagement with key suppliers.
• Collaborate with suppliers including participating in workshops covering our most important (and shared)
1 4 7 9 10
• Equitable commercial and
• Undertake account reviews and gather 360 supplier feedback which is
payment terms.
• Modern slavery.
• Fair pay.
Businesses and companies
that provide us with
materials and services for
our building projects.
28 |
28 |
shared with Risk Oversight Committee and the Board.
• Supply chain onboarding process ensures that our suppliers and subcontractors confirm compliance to the
• Regular project meetings.
• Host product development forums.
developments.
Read more on page 14.
challenges (see page 48).
Modern Slavery Act.
Read more on page 43.
• Development opportunities.
• Safe, fair and diverse working
environment.
• Open communications.
Our employees who
underpin the delivery of our
purpose and strategy.
• Regular employee representative meetings including participation in our
People Forum, feedback from which is communicated to the Board and
actioned.
• Confidential Peakon employee engagement surveys.
• Group leadership conference and Vistry Awards.
• Our DUG intranet.
Customers
• High quality, safe and energy
• Face-to-face and digital engagement including via our digital portal.
People and organisations
• Excellent customer service.
who buy our homes
and buildings.
• Trusted partner.
partners.
• Dedicated affordable housing team that liaises with our registered provider
efficient homes.
• Affordable homes and
mortgage availability.
meetings.
• Customer satisfaction surveys.
• Ongoing commercial dialogue.
Investors
• Sustainable returns.
• Investor meetings and roadshows.
• Strategy and delivery.
• Effective ESG practices.
• AGM and General Meeting.
• Trading updates and bi-annual results announcements and presentations.
Investors who provide
capital to fund our activities.
Homes and
communities
People who are impacted
operations.
by what we do.
impact.
housing, housing associations and the HBF.
• Increased delivery of
affordable homes.
• Minimal impact from
• Undertake and participate in public consultations.
• Support local community initiatives.
Regulators
• Effective implementation of
• Direct discussions with Government departments.
legislation and regulations
including building safety,
biodiversity net gain, Future
Homes Standards and New
Homes Quality Code.
• Engagement with Homes England and local authorities.
• HBF engagement.
• Participation in Government consultations.
• Trusted partner.
parish councils and local communities.
• Pre-application engagement with local planning authorities, town and
Entities that set the
framework, including
legislation, we must
operate within.
For information about the Board’s role in stakeholder engagement and how
See page 78.
the Directors build understanding of stakeholders’ issues:
For information about our principal risks:
See pages 58 to 62.
Stakeholder
Stakeholder key issues
How we engage
Outcomes
People
• Pay and rewards.
• Regular two-way briefings including Executive Director hosted roadshows
and discussions with our Housebuilding and Partnerships CEOs.
• Provided temporary cost of living allowances (COL) of up to 3.75% with effect from April 2022.
From January 2023 made COL allowance a permanent part of all annual salaries under £60k.
• Weekly Vistry Voice podcast hosted by the CEO and members of the ELT.
• Introduced enhanced rates for business mileage to reflect the increase in energy prices and launched a
• ‘Meet the builder’ and detailed home demonstration and inspection
build quality (see page 106).
programme to install electric charging stations at our offices across the UK.
• Enhanced our benefits package and the mental health guidance and support we provide (see pages 36 to 38).
• Launched ‘Vistry Learn’, our Learning Management System which provides access to both mandatory and
discretionary training programmes to all our people.
• Enhanced our employee induction programme for all new starters.
Read more on pages 35 to 38.
• A customer service metric is included in our annual bonus scheme to enhance focus on customer service and
Link to principal risks
1 3 6 10
1 2 5 7 9 10
• Signed the Building Pledge Safety Letter and the Developer Remediation Contract that formalise our
commitments in relation to cladding and fire safety remediation costs (see page 81).
• Expanded our customer relationship management capabilities across our Partnerships business.
Read more on page 31 and pages 39 and 40.
• Factored investor perspectives into strategic developments during the year including the Group’s combination
with Countryside and the share buyback programme (see pages 80 and 81).
• Further progressed our sustainability strategy including publication of our Carbon Action Plan in December
1 2 3 4 5
6 7 8 9 10
2022 (see page 45).
Read more on about our sustainability strategy on pages 32 to 48.
• Quantifiable positive social
• Regular engagement and meetings with registered providers of social
• Create social value and piloting a tool to monitor its delivery (see page 40 and 41).
7 9 10
• Our Vistry Skills Academies create job opportunities in the communities where we operate (see page 41).
• Embedded our Biodiversity Action Plan into our business management processes (see page 41 and 42)
• Committed to increasing the delivery of affordable homes year-on-year (see page 42).
• Support national and local charities (see page 42).
Read more on pages 40 to 42.
• Delivering homes that meet and exceed the Future Homes Standard requirements for 2025 on certain
developments (see pages 45 and 46).
7 9 10
• Targeting 10% biodiversity net gain on all development sites (see pages 41 and 42)
• Signed the Building Pledge Safety Letter and the Developer Remediation Contract (see page 81).
• Worked with leaseholders and freeholders to agree terms to remove ground rent doubling clauses across four
developments.
Read more on page 14.
Supply chain
• Long-term relationships.
• Regular ELT level engagement with key suppliers.
• Collaborate with suppliers including participating in workshops covering our most important (and shared)
• Equitable commercial and
• Undertake account reviews and gather 360 supplier feedback which is
shared with Risk Oversight Committee and the Board.
payment terms.
• Modern slavery.
• Fair pay.
• Regular project meetings.
• Host product development forums.
challenges (see page 48).
• Supply chain onboarding process ensures that our suppliers and subcontractors confirm compliance to the
Modern Slavery Act.
Read more on page 43.
1 4 7 9 10
Businesses and companies
that provide us with
materials and services for
our building projects.
Vistry Group PLC | Annual Report 2022 | 29
Section 172 statement
Our Directors are required by law to act in a way that promotes the
success of the Company for the benefit of its shareholders and other
stakeholders having regard to the matters set out in section 172(1) of the
Companies Act 2006. These matters shape the Group’s strategy.
Board decision-making process
Information
• The Directors engage directly with stakeholders.
• The Board regularly reviews and discusses feedback from
stakeholder engagement.
• Stakeholders’ critical role factored into strategy development
and risk management processes.
•• The Board and ELT receive training on directors’ duties and
responsibilities and specifically section 172 obligation.
Discussion
• Group values and ‘Do the right thing’ ethos informs all debates.
• The Board’s significant experience and diverse set of skills ensure
that debate is well-informed, challenging and constructive.
Outcomes
• The Board monitors any follow up actions.
• The Board receives regular updates on the outcomes of decisions
made, including any impact on stakeholders.
Our stakeholders and the critical role they play in the delivery
of our strategy are set out on pages 28 and 29. The channels
we use to ensure the Board builds an understanding of
the issues that are most important to our stakeholders are
explained on page 78.
As part of its decision-making process the Board considers
the long-term consequences of the decisions it makes and the
impact the decision will have on all stakeholders. As very often
stakeholders’ interests differ the Board endeavours to balance
conflicting needs and, in certain circumstances, prioritise the
interests of one or more stakeholders over others. At all times
the principle that guides the Board’s decision making is that the
outcome of each decision supports the delivery of the Group’s
strategy and its long-term success.
The framework to ensure all stakeholder interests are properly
considered and outcomes support the Group’s strategy and its
long-term success is set out in the adjacent panel.
Information about how the Board considered stakeholder
interests in some of the principal decisions it made during
the year is set out on pages 80 and 81 and should be read in
conjunction with this statement.
Section 172 statement
During 2022, the Directors confirm that they continued to
exercise all their duties, while having regard to the section
172(1) (a) to (f) Companies Act 2006 matters detailed below,
which were factored into the Board’s discussions and decision-
making process:
a. The interests of, and actively engaging with, its employees.
b. The need to engage and foster business relationships with
suppliers, customers and others.
c. The need to act fairly between members of the Company.
d. The likely consequences of any decision in the long-term.
e. The desirability of maintaining a reputation for high
standards of business conduct.
f. The impact of the Company’s operations on the community
and the wider environment.
30 |
30 |
Our customers are at the heart of everything
we do
Our success is dependent on delivering high quality sustainable
homes and experience our customers want. This approach is
a key pillar of our strategy and customer satisfaction is one of
our KPIs. While not every Boardroom decision relates directly
to our customers, the impact of any decision on our customers
is always considered.
The Board reviews feedback from customers and receives
regular updates from the Group Customer Experience Director
about market trends. When reviewing the Group’s business
plan, and specifically proposed initiatives to further enhance
the customer experience, the Directors take customer insights
into account to ensure that all new marketing, sales and service
experiences address customers’ needs.
During the year as part of the Group’s business plan review,
the Board considered various initiatives to enhance the digital
customer experience including the expansion of our customer
relationship management (CRM) capabilities across our
Partnerships business. The Partnerships sales and customer
service teams now have access to full CRM capabilities enabling
them to enrich the marketing, sales and service experience
customers want, while at the same time supporting the teams to
work more effectively together across the customer journey.
Government regulation is a key-factor in the Board’s decision
making process. During the year it considered the impact
of regulatory changes plus the introduction of the New
Homes Quality Code and the appointment of the New Homes
Ombudsman (see pages 76, 78 and 81). The Directors welcome
this development which will protect all new home customers by
continuing to ensure quality standards across the industry.
So seamless, so fluid, so fast
"There wasn’t a huge amount of detail to fill in on each
screen and there weren’t too many screens so within a
few moments I found myself having reserved a brand-
new property on my phone without even thinking about
it. It was only on reflection later on that I thought how
incredible it was that I was able to just pull out a phone
and make it happen. So much easier than having to make
an appointment and fill in paperwork. So seamless, so
fluid, so fast."
Customer who reserved and subsequently bought one of
our Bovis Homes at Witney in the Cotswolds, using our
digital portal.
Vistry Group PLC | Annual Report 2022 | 31
Sustainability report
Our sustainability strategy underpins the fulfilment of our purpose and
is focused on the issues that are most important to our stakeholders and
our business.
Our approach
Our sustainability strategy is split into three priority areas: our people, our homes and communities and our operations.
Our purpose: To deliver sustainable new homes and communities across all sectors of the UK housing market.
Our people
Homes and communities
Our operations
- Delivering safe and efficient operations.
- Putting our customers first.
- Operating responsibly.
- Putting people at the heart of what
- Creating quality homes and communities.
- Environmental management.
we do.
- Ecology and biodiversity.
- Waste and resources.
- Climate change.
See pages 35 to 38.
See pages 39 to 42.
See pages 43 to 48.
Social and Governance
Social and Environmental
Environmental and Governance
To ensure our approach remains focused and impact-driven, we
regularly review progress and monitor our performance against
our targets. Our sustainability targets and performance against
them during 2022 are set out in the table on page 34.
Following the completion of our combination with Countryside,
in the coming year we will undertake a review of our
sustainability strategy to ensure that it continues to be relevant
to the business and stakeholders of our enlarged Group.
Our sustainability strategy was developed in 2020 using a risk-
based materiality assessment that considered inputs from key
stakeholder groups. The assessment identified the priority areas
detailed above, as the issues that are most important to both
our stakeholders and our business. The assessment was
undertaken by a team drawn from across the Group, ensuring
that our areas of focus are relevant to our business, inspiring
to our teams and owned by our operating businesses.
Information about our most recent materiality assessment
(which was undertaken in 2021) is contained within our 2021
Annual Report and is available at www.vistrygroup.co.uk/
investor-centre/results-reports-presentations.
As part of this review, we will look to incorporate a number of
Countryside’s best practice sustainability processes into our
existing procedures. For example, reviewing the current waste
collection procedures across the business to ensure a best
practice approach across the enlarged Group. In 2023 we will
conduct a full review of our materiality assessment, update our
sustainability strategy as required and set new targets.
32 |
Information in this section
Unless stated otherwise, the data in this Sustainability report
includes relevant Countryside data for the period 11 November
2022 to 31 December 2022.
Independent assurance
The Group engaged two assurance providers in 2022. In 2023
the data will be assured with one provider.
The Group engaged DNV Business Assurance Services UK Limited
(DNV) to undertake independent limited assurance of Vistry’s
2021 and 2022 sustainability data detailed in the table below.
Countryside data was not included in the DNV 2022 assurance
process.
The data assurance was completed in line with the International
Standard on Assurance Engagements 3000. DNV’s full Assurance
Statement and supplemental information is available at
www.vistrygroup.co.uk/sites/vistrygroup/files/Vistry/
reports-and-presentation/2023/dnv-independent-assurance-
statement-2022.pdf.
Going forward the Group intends to expand its assurance scope
by including use of sold product (i.e. the gas and electricity used
in the homes we build during occupation) and waste tonnage.
The Group engaged RPS, A Tetra Tech Company, to undertake
independent limited assurance of the following Countryside 2022
sustainability data which is contained within this Annual Report:
• Scope 1: Natural gas, gas oil, business travel for company cars
and LPG use.
• Scope 2: Electricity including EV company cars.
• Scope 3: Business travel, well-to-tank, and transmission and
distribution.
Verification of the above Countryside data has been completed in
accordance with the World Resources Institute/World Business
Council for Sustainable Development Greenhouse Gas Protocol,
Corporate Accounting and Reporting Standard, Revised Edition,
and adheres to the best practice reporting principles of
relevance, completeness, consistency, transparency and accuracy.
In conducting the verification, RPS used the appropriate
verification planning, validation, GHG assessment and evaluation
steps in accordance with the requirements of ISO 14064:3, and in
adherence to the standard’s principles of independence, ethical
conduct, fair presentation and due professional care.
Countryside carbon emissions have been reported as an
apportioned figure based on data from 1 October – 31 December
2022. This is required due to the method of data capture being
suited to quarterly reporting. There is risk that this may result
in overstating the footprint as equal weighting has been given
throughout the time period.
2021 Vistry assured data
2022 Vistry assured data
• Scope 1 greenhouse gas (GHG) emissions:
• Scope 1 GHG emissions:
Natural gas directly purchased fuels and Company fleet.
Natural gas directly purchased fuels and Company fleet.
• Scope 2 GHG emissions:
Purchased electricity - Location based.
• Scope 3 GHG emissions:
Category 6: Business travel - Road and rail.
• Number of additional affordable homes completed beyond
planning policy compliance requirements (see page 42).
• Scope 2 GHG emissions:
Purchased electricity - Location based.
• Scope 3 GHG emissions:
Category 6: Business travel - Road, rail, ferry, air and
overnight hotel stays.
• Number of additional affordable homes completed beyond
planning policy compliance requirements (see page 42).
Vistry Group PLC | Annual report 2022 | 33
2025 sustainability targets and 2022 progress update
Target and Metric
2025 target
2022 target
2021
baseline
2022
performance
Further information
Our people
Jobs and Training
Increase the number of learners passing
through our on-site skills academy.
Metric: Number of learners
800 learners
to have passed
through our on-site
skills academies1
50 learners to pass
through our on-site
skills academies
162
233
Page 41.
Our homes and communities
Affordability
To deliver a year-on-year increase in
additional affordable homes beyond our
planning compliance requirements.
Metric: Number
Social value and Placemaking
Use the social value portal on every new
land acquisition >500 units and on every
project with an on-site skills academy.
Metric: Number
Ecology
Ensure every site has a completed
Biodiversity Action Plan.
Metric: Number
Our operations
Waste
Reduce construction waste.
Metric: Tonnes
Year-on-year
increase
>744
744
898
Page 42.
100%
100%
100%
25%
0
0
100%
Pages 40 and 41.
100%
Pages 41 and 42.
Reduce waste
tonnes per plot
by 20%
Reduce waste tonnes
per plot by 5%
9.42 tonnes
per plot
7.5 tonnes per
plot
Page 44.
Waste
Increase in diversion of construction waste
from landfill.
Metric: %
100% of non-
hazardous
construction waste
diverted from
landfill
98% of non-
hazardous
construction
waste diverted
from landfill
98%
98%
Page 44.
Resources
Increase re-use of construction materials.
n/a
Launch a material
re-use database
for sites
n/a
Yes
Page 44.
Metric: Yes/No
Climate Change
Reduce Scope 1 and 2 carbon emissions.
Metric: CO2e
Climate Change
Reduce Scope 3 carbon emissions.
Metric: CO2e
Product design and life cycle
management: Operational energy.
Reduce carbon emissions from regulated
energy of new homes.
Metric: CO2e
Reduce Scope 1
and 2 emissions
by 16.8% against a
2021 baseline
Reduce Scope 1
and 2 emissions by
4.2% against a 2021
baseline
Reduce Scope 3
emissions by
22.4% against a
2021 baseline
Reduce Scope 3
emissions by 5.6%
against a 2021
baseline
17,685
tonnes3
19,401
tonnes
Pages 47 and 48.
1,560,506
tonnes3
2,137,643
tonnes
Pages 47 and 48.
-75-80% reduction
in CO2e in new
homes planned
-31% reduction
in CO2e in new
homes planned
77 tonnes
per plot
(per annum)3
79 tonnes per
plot
(per annum)
Page 46.
Product design and life cycle
management: Embodied carbon.
Set a target for reduction in embodied
carbon in line with the science-based
target initiative (SBTi) reduction pathway.
n/a
Metric: CO2e
Develop a
2025 target
297kg CO2e
No
Page 46.
1. Enhanced target of 800 learners to have passed through our on-site skills academies (previously a target of 550) is to be achieved by 2026 to comply with the sustainability linked loan requirements.
2. Our 2021 baseline figure has been restated to 16 learners to account for more accurate reporting methods to meet limited assurance requirements (previously disclosed as 40 learners).
3. This is a restated 2021 baseline. We have restated following methodology improvements achieved through the DNV third party assurance processes. Further information about the assurance
process and the Assurance Statement is available at www.vistrygroup.co.uk/sustainable-approach/policies-and-publications.
34 |
Sustainability report
continued
Maximising Vistry Works’ capabilities
Following completion of the Combination we are
integrating Countryside’s timber frame manufacturing
capabilities across our Vistry Housebuilding and
Countryside Partnerships businesses. Using more
timber frame construction aligns with our sustainability
strategy and is a key part of our plan to deliver net zero
carbon homes. Vistry Works, our new timber frame
manufacturing operation, is focused on growing our
MMC capabilities and improving operational efficiency.
Prioritising safe working is our paramount priority. Safety
audits are regularly undertaken across the business’
manufacturing operations and on site to ensure our teams
of erectors are working to the highest safety and quality
standards.
Our people
Delivering safe and efficient operations
The safety of our people, and those who work with us, is our top
priority. Health and safety is one of the first topics to be covered
in every ELT meeting, and is highlighted early on in our new
starter inductions, with clear linkage to our values and ethos.
Our Safety, Health and Environment (SHE) Leadership Team
committee meets regularly to discuss performance and best
practice. Meetings are chaired by a member of the ELT with
representation from senior management from across the Group,
including the General Counsel and Group SHE Director.
We operate a SHE Management system that complies with
the international occupational health and safety standard
ISO 45001:2018 & environmental management system ISO
14001:2015. These standards drive us to continually improve our
performance through an iterative process of risk assessment,
inspection, auditing and review. During 2022, we carried out
3,016 internal SHE site inspections (2021: 2,560) and for the
second consecutive year achieved 94% compliance.
To reinforce our commitment to safety we are a Building a Safer
Future Registered Signatory. We also work closely with Build
Force, an organisation set up to create formal pathways between
the military community and the construction industry. Their aim
is to establish direct links with employers like Vistry and provide
visibility on careers in the construction sector and the training
required to access them. We also operate an Armed Forces
Mentoring & Coaching Programme to help those with a keen
interest in health and safety gain important practical experience
and make the transition into the construction sector.
Accident incident rate
Whilst it is difficult to completely mitigate risk, we believe injuries
are avoidable and we work tirelessly to improve performance
and ensure our accident incident rate (AIR) remains below the
construction industry standard.
Vistry started the year with an AIR of 270, which was slightly
better than the Health and Safety Executive (HSE) construction
industry average of 272 and we were very pleased to see AIR
reduce further to 226 at the end of the year.
Utility strikes (also known as service strikes) continue to be an
industry concern; however, Vistry started the year with a Service
Strike Incident Rate (SSIR) of 439 and improved this by the
end of the year finishing on 399. We will seek to improve this
further by continuing to work with the Homebuilders Federation
Safety Forum and exploring new technology and behaviour
change programmes.
Health and safety performance for the 12 month
period ended 31 December
Vistry AIR1
Countryside AIR2
Enlarged Group AIR
Vistry SSIR
Countryside SSIR
Enlarged Group SSIR
2022
2021
226
232
228
399
531
439
270
181
240
439
505
462
1. AIR and SSIR calculations in this table are based on number of
reportable accidents divided by number of people on site x 100,000.
2. Countryside previously reported accident injury incident rates based
on the number of accidents per 100,000 people during the business
financial year.
Vistry Group PLC | Annual report 2022 | 35
There is no room for complacency within our businesses and we
remain committed to reducing the likelihood of low-frequency,
high-impact catastrophic incidents while aspiring to have a positive
health impact on all those employed and affected by what we do.
We operate a zero-tolerance policy regarding working under the
influence of illegal drugs and alcohol and operate a rigorous testing
programme designed to help improve the safety of our sites.
According to HSE statistics, being struck by a moving vehicle is
one of the top common causes of fatal injury on a construction site
according to HSE statistics. We are passionate about managing
people and plant interfaces to ensure everyone returns home
safely at the end of each day. Through enhanced learning and
technology, we aim to raise more awareness of the hazards
associated with people and plant interfaces. We use advanced
technology installed to telehandlers to monitor how safely they
are being operated. The data supplied enables an additional layer
of proactive monitoring that contributes to improved safety across
our sites.
Our health and safety priorities in the coming year include:
• Developing and implementing a combined SHE management
system across the enlarged Group that compliments best practice
previously identified within both Vistry and Countryside and
meets the requirements of ISO 14001 & 45001.
• Ensuring all sites and factories meet the annual SHE Site
Inspection target of 91% through regular recorded and scored
SHE visits, to monitor compliance and identify non-conformance
before there is opportunity for any type of negative impact, thus
ensuring we provide a safe working environment.
• Continuing to drive standards to achieve a year-on-year
reduction in reportable accidents and service strikes.
Putting people at the heart of what we do
We recognise that a committed, motivated and engaged workforce
is essential if we are to fulfil our purpose and create value for all
our stakeholders. We work hard to understand our employees’
views and ensure that we provide a supportive environment in
which they can thrive. We are committed to creating an inclusive
and caring workplace and where everyone feels valued and has a
sense of belonging.
As at 31 December 2022, the Group directly employed 5,213 people
(2021: 3,145). This number includes 1,988 colleagues who joined
the Group following the completion of the Combination with
Countryside in November 2022.
This year the total employee turnover rate (dismissals and
redundancies) decreased to 20.7% (2021: 24%) and our voluntary
labour turnover (resignations) decreased to 17.7% (2021: 21%).
This is reflected in our stability index which has increased to 82.6%
(2021: 79%). Our stability index, which measures the retention of
experienced employees, is the percentage of employees who have
been employed for more than 12 months as a percentage of all
employees. Much of this improvement is attributable to actions
taken to address feedback gathered through our regular employee
Peakon surveys and the effective delivery of our People strategy
that is focused on attracting, developing and retaining our people.
36 |
Pleasingly our engagement score, which is measured via our
Peakon surveys, increased to 8.6 (2021: 8.1). As was expected
with the integration of Countryside, we saw a decline in our
latest Peakon employee engagement survey carried out during
March 2023, with the score at 7.8 (August 2022: 8.6), in-line
with the Peakon benchmark. Our people play a significant role in
the Group’s success and undoubtedly their pride in the Group has
contributed to our strong HBF 5-star customer satisfaction score.
An employer of choice
We recently achieved certification as a ‘Top Employer’ with the
Top Employers Institute. This recognises our people strategies
and workplace environment. As part of the certification process
we were provided with a dashboard of suggested areas where we
could make further improvements. To address this feedback, in
the coming year, we will enhance technology to support personal
development plans, create communities for knowledge and best
practice sharing and use clear KPIs to measure the effectiveness of
our development programmes. Throughout 2022 we successfully
rolled-out the digitalisation of our people processes. This included
the use of MyView, accessibility of documents, payslips and an
improved holiday and expenses system. Following our combination
with Countryside we are reviewing our people-related processes
and during the coming year we will look to incorporate a number
of Countryside’s people processes to ensure a best practice
approach across the enlarged Group.
Communication and engagement
We recognise the importance of keeping employees informed
of operational, financial, and strategic business matters. The
channels we operate to engage with our people, listen to
their views and gather their feedback are detailed on page 28.
Employee representatives were involved in collective consultation
across the Group to ensure a fair and transparent approach to
the Combination and feedback from employees following the
announcement of the proposed Combination was gathered during
an in-person employee roadshow hosted by members of the ELT in
autumn 2022.
Making Vistry
Our Vistry Employee Value Proposition ‘Making Vistry’ was
rolled out internally and externally during 2022. Our proposition
showcases what Vistry stands for as an employer, and is based on
Peakon employee engagement survey results and feedback from
focus groups and one-on-one interviews. What makes us stand
apart from our competitors is that we seek out opportunities.
Then, we use them to build something brilliant. Every single
person in the Group has their part to play in the building process,
regardless of which brand they work for. We all have the same
values, vision and ambition to do right by our customers and to
make a difference in our industry.
Rewards
There is active engagement on workforce remuneration.
During the 2022 ELT roadshows our people provided feedback on
salaries, the cost of living and benefits. In response we:
• Introduced an additional minimum 4% pay rise for all employees.
• Put in place temporary cost of living allowances (COL) of up to
3.75% with effect from April 2022, ensuring the lowest paid
employees received most support. From January 2023 the
COL allowance became a permanent part of all annual salaries
under £60k.
Sustainability report
continued
• Enhanced our benefits package including increasing life
assurance policies, introducing subsidised health screening and
further improving our industry leading maternity, paternity and
adoption policies.
The Group became accredited as a Real Living Wage employer in
November 2021. We apply the Real Living Wage as a minimum
across the Group and continue to review rates of pay with each
update. Our Group Commercial team are also working with our
suppliers to update their contracts to ensure that all third party
contracted colleagues are paid the Real Living Wage.
Learning and development
Following our combination with Countryside we are one of the
UK's largest housebuilders and we are now able to provide even
more opportunities for our people to develop and progress
within the enlarged Group. We are committed to providing
careers, not just jobs, and our career development plans help us
retain and grow our talent.
A key part of our People strategy is our continued focus
on developing and retaining our people. We use a range
of engaging, blended, learning solutions including virtual
classrooms, physical workshops, and e-learning modules to
enable them to achieve their career goals and ambitions.
During 2022 we continued to support our peoples’ professional
development and funded 324 yearly professional memberships
on behalf of employees.
In January 2022 we launched ‘Vistry Learn’ our integrated
Learning Management System (LMS) which provides all
colleagues with access to comprehensive, engaging, learning
solutions, tailored to their individual needs that can be accessed
when working at home, in the office or on site. Our LMS has
been very well received and as at 31 December 2022:
• Over 3,400 employees had used the system.
• Over 4,500 courses were booked.
• Over 8,300 online personal development courses were
completed.
Leading Better Together
During Q2 of 2022 our ‘Leading Better Together’ executive
framework was launched to ensure our senior and future leaders
are fully equipped with the expertise and skills the Group needs
to support its continued success. As at 31 December 2022 three
cohorts totalling 39 senior leaders from across the business
have attended our bespoke Cranfield School of Management
programme. Formal feedback from attendees has been very
positive averaging 4.8/5.
The future leaders programme is aimed at our middle,
frontline and trainee managers with potential for senior roles.
It provides essential learning pathways to develop key skills
for managers and potential leaders as well as supporting the
Group’s succession planning. During the year, 68 people, over
six separate cohorts, participated in the programme that was
designed and delivered by internal experts. Again, formal
feedback from attendees has been very positive averaging 9.5/10.
Both programmes will continue and will be expanded in the
coming year.
Apprenticeships and trainee programmes
We continue to focus on supporting early careers and emerging
talent as well as encouraging the upskilling of existing
employees. Across the enlarged group we currently have over
380 apprentice, trainees and graduates, as well people who are
upskilling through the use of apprenticeships.
We are proud to be able to offer qualifications across many
disciplines, such as; quantity surveying, accounting, legal, site
supervision, civil engineering, business administration, marketing,
carpentry and joinery, bricklaying and leadership.
During 2022 to support our supply chain we used the
Government’s apprenticeship levy transfer initiative to transfer
some of our unused apprenticeship levy to support local trades
by funding their apprenticeship qualifications. In 2023 we will
focus our resources on supporting T-Levels and work experience
across the enlarged Group and ensure that we integrate
Countryside best practice to support this.
Supporting early careers
Lewis joined the company In June 2021, aged 16, as
‘Apprentice Business Administrator’. We funded his
15-month long Level 2 Customer Service Practitioner
City and Guilds Apprenticeship, which Lewis successfully
completed in December 2022. He was promoted to
‘Business Administrator’ and he is now enjoying taking
on more responsibility and is aiming to become an Admin
Team Leader. Showcasing his commitment to the business
he is also a fire warden, first aider and charity champion
for his business unit.
Vistry Group PLC | Annual Report 2022 | 37
Gender diversity across the Group as at 31 December 2022
Role
Board
ELT1
Senior management2
Other employees
Total
Female Male
Total
Female % Male %
4
2
26
5
3
23
9
5
49
1,739
1,771
3,411
5,150
3,442
5,213
44
40
53
34
34
56
60
47
66
66
1. The ELT is the first layer of management below the Board and, for the purpose of
this table, the three Executive Directors who are members of the ELT are included as
members of the Board. 2. The ELT’s direct reports.
Diversity and inclusion (D&I)
We believe in diversity, equality and inclusion for all. The table above
shows our gender diversity across the Group. We have processes in
place to attract and retain a diverse workforce and we continue to
rigorously enforce and promote our Diversity and Inclusion policy.
Our diversity and inclusion policy is available at www.vistrygroup.
co.uk/sustainable-approach/policies-and-publications.
Gender pay gap
Our gender pay gap performance has significantly improved year-
on-year. In 2022 the mean gender pay gap reduced to 11.7% (2021:
19.4%) and the median gender pay gap reduced to 25.31% (2021:
28.7%). Further information including what we are doing to further
reduce the gap will be included in our 2022 Gender Pay Gap Report
which will be published in due course.
Key 2022 activities and developments included:
• Promoted 11 women into director roles across the Group.
• Continued to build a more equal workforce. For example women
now represent 69% of the project management team at our Bovis
Homes’ Bay View development in Northam, covering a range of
roles including electrician, carpenter, apprentice assistant site
manager, senior quantity surveyor, buyer, area sales manager and
sales consultant.
• Participating in Women into Construction’s new nationwide
employment programme that aims to address the gender imbalance
in the construction workforce.
• Set up a D&I unconscious bias training programme and provided
additional ‘skills booster’ D&I training.
• Launched successful mentor and reverse mentor programmes.
• Significantly improved existing family-friendly policies and continued
to support agile working and continued to support agile working.
WM People promotes D&I best practice and we were pleased to
be shortlisted for its ‘Career Progression for Women’ award which
recognises initiatives aimed at developing women’s leadership
potential, including women’s networks, training and return to
work programmes.
Our D&I Committee leads the development and delivery of the D&I
diversity agenda. It is supported by four active networks that operate
across the Group: Accessibility Allies Network; Pride Network;
Women’s Network; and Culture & Communities Network.
During the year the D&I Committee commenced a review of our
facilities with a view to ensuring they are accessible to all employees
and visitors. During the year we celebrated all major events in the
D&I calendar including Pride, Black History Month, International
Disability Awareness Day and International Women's Day.
In the coming year our key D&I priorities include:
• Reviewing our D&I strategy, objectives and activities to ensure a
combined and consistent approach across the enlarged Group.
• Recruiting across more diverse platforms.
• Working with our recruitment partners on diverse shortlisting
of candidates.
• Graduate programme & formal working experience scheme.
• Collecting protected characteristic data to establish baseline data
which we will use to monitor progress.
Disability
It is 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) to ensure requirements
of these persons are adequately covered and to comply with any
current legislation with regard to disabled persons. This includes:
the full and fair consideration of applications for employment; the
provision of training whilst employed, and; ongoing opportunities
for career development and promotion. The Group’s policies are
supported by the Group’s Dignity at Work policy which prohibits
bullying, harassment or victimisation.
Mental health and wellbeing
Our intranet platform (DUG) has a dedicated section providing mental
health guidance and support, as well as a platform for our people to
share their own personal achievements, experiences and stories.
In 2022, National Grief Awareness was marked with personal stories
shared from across the Group in addition to a number of events
during mental health awareness week in October. The intranet
page also provides information to access our employee assistance
programme, useful resources (such as posters and leaflets) and
links to external organisations and helplines, such as Mind and
The Samaritans. As part of our employee assistance programme,
alongside Aviva who provide 24/7 support, all employees have free
access to the Thrive: Mental Wellbeing App which was deployed onto
all Group owned iphones and ipads during the first half of 2022.
We have a formal dedicated Mental Health Committee. Its members
are charged with raising awareness of mental health issues that affect
those in our industry. The committee introduced a network
of health and wellbeing champions in each regional business unit
during 2022 with aims of further supporting mental health and
wellbeing initiatives.
To help spot the signs of a mental health problem and provide our
people with an opportunity to talk to someone about their struggles,
we have more than 200 trained volunteer Mental Health First Aiders.
In 2022 we created a community network for our mental health
first aiders to ensure they also have access to support and help
where needed.
In February 2023 we were proud to be awarded WM People’s Best
for Mental Health Award in recognition of the steps we take to
protect our peoples’ mental health and well-being and our work
with Papyrus to address suicide awareness within our industry
(see page 42).
38 |
Our homes and communities
Putting our customers first
Our customers are at the heart of everything we do, from the
range and quality of homes that we deliver to the journey that
they have with us.
During 2022 we are proud to have welcomed nearly 10,000
customers into their new home with over 90% in the 8-week
survey stating they would recommend us to their family and
friends. Reflecting our quality homes and relentless focus on
excellent customer service, for the fourth consecutive year, we
have retained our 5-star rating based on the independent HBF
customer satisfaction survey1.
We also continue to track customer satisfaction using the HBF
9-month survey, which provides us with insight and
feedback on our homes and developments once customers
have settled in. In the last closed survey year, over 79% of
customers stated they would recommend us.
Sustainability report
continued
To ensure the voice of our customers are embedded across
the Group we have introduced the role of Customer Service
Directors, who sit on the management teams of each business.
We also utilise data and insights from the CRM to ensure
continued focus and delivery of service improvement plans.
Feedback from our customers is critically important and during
the year insights from customer research groups has informed
the development of our 2025 product range as well as ensuring
we meet future building standards.
Customer journey
Our Customer Journey continues to provide a framework to
ensure we deliver consistent high standards of service to all
our customers. Following its launch during 2021 we continue
to use insights from our customers and best practice gathered
from across our market leading retail brands to ensure it
meets requirements. Information about the Bovis Homes',
Linden Homes' and Countryside Homes' customer journeys are
available at www.bovishomes.co.uk/buying-a-home/the-
buying-journey, www.lindenhomes.co.uk/buying-a-home/
the-buying-journey and www.countrysidepartnerships.com/
helping-you-buy/new-home-buying-guide.
1. Based on responses from customers who legally completed between 1 October 2021 to 30 September 2022. Star rating awarded
according to the proportion responding ‘yes’ to the question ‘would you recommend your builder to a friend?’ asked eight weeks after
legal completion: 5-star rating 90% and above.
Vistry Group PLC | Annual Report 2022 | 39
Enhancing the customer journey
To enhance the customer journey and provide increased
transparency around each home’s new-build properties,
Countryside Partnerships’ development in Sherford,
South Devon includes a state-of the-art ‘Unwrapped
Home’. Within the Unwrapped Home walls, flooring and
ceiling fixtures can all be easily removed to reveal the
inner workings of key construction features including
plumbing and electrical and structural components.
The development is part of a £1bn investment scheme to
deliver a new community in South Devon which includes
new homes, schools, retail and community buildings, and
green spaces.
Our customer journey framework is embedded within our
CRM system which ensures we interact with our customers in
a cohesive and efficient way. In 2022 we rolled out our CRM
system across our Partnerships business and now the business’
sales and customer service teams all have access to full CRM
capabilities enabling them to enrich the marketing, sales and
service experience customers want, while at the same time
supporting the teams to work more effectively together across
the customer journey.
Our customers have access to our digital immersive portal
which gives them more choice about how, when and where
they do business with us. Available on our Linden Homes
and Bovis Homes websites the portal offers a virtual personal
experience including the opportunity to visit our developments,
walk into any home and personalise it including changing
worktops, cupboards and flooring. Over 77% of our customers
are now choosing to use our portal, including our ‘6 Clicks’
reservations process which allows customers to reserve their
new home at any time.
2023 customer priorities
We continue to enhance our service offering to ensure we meet
our customers evolving expectations and needs and at all time
provide a 5-star rated service. Areas of focus in the coming year
include:
• Continuing to train and develop our people and provide them
with the skills and the tools they need to ensure they are fully
equipped to meet our customers’ expectations.
• Rolling out our full CRM capabilities across the Countryside
business as part of our Combination integration programme.
• Utilising our multi-brand portfolio, including the Countryside
brand, to target a broader range of customers and offer them
more choice.
• Align our processes to meet requirements for activating and
operating across the Group under the New Homes Quality
Code following completion of our registration last year.
Creating quality homes and communities
Placemaking and social value
Placemaking and social value are both core to delivering our
purpose. Quantifiable social value is important to our people
and is becoming increasingly important to Local Authorities
who are preparing their own social value strategies and starting
to embed social values policies into their local plans.
Our Group Planning and Communities Director chairs the Future
Home Hub’s Placemaking sub-group and sits on the Place
and Nature Steering Group. The two groups are designed to
support the industry in responding to the Government’s drive
to improve design and placemaking. Our Group Planning and
Environment Director is also engaging with the Future Homes
Hub on the delivery of biodiversity net gain.
Countryside’s commitment to placing people and communities
at the heart of the development journey, is set out in their
‘Building Communities’ approach. During 2023, the key pillars
of engagement, empowerment, partnership and stewardship
will be reviewed, and consideration given to how these will
influence the enlarged Group’s placemaking approach going
forward, particularly in light of the Government’s agenda for
planning reform and community participation.
Social Value Portal
During 2022, we adopted the use of the Social Value Portal
to aid our sustainability reporting and monitor our delivery of
social value. The portal has helped us to quantify and influence
our approach to place making and social value for clients and
partners at development stage. Vistry are part of the Social
Value Portal Planning Taskforce, a cross sector collaborative
group that is focused on how social value can be embedded
in the planning process. In line with our 2022 target, we have
used the Social Value Portal on 25 of our live developments
which are either delivering over 500 units or are hosting a skills
academy plus our corporate measures.
40 |
Creating a modern garden city
Countryside Partnerships’ joint venture with Clarion
Housing Group is working in collaboration with landowner
Henley Camland and Ebbsfleet Development Corporation
to deliver Ashmere a landmark scheme that is part of
Ebbsfleet Garden City. The development comprises
2,600 mixed tenure homes, of which 25% will be
affordable. In keeping with the garden city concept,
Ashmere will also deliver extensive green open spaces
including a neighbourhood green, landscaping and play
area – promoting a healthy, safe and sustainable lifestyle
for residents.
The key findings from these 26 live developments, which have
been third-party assured, are detailed below. While the findings
represent only a small element of the enlarged Group’s social
value output, they do indicate the type of outputs we would
see if we were to expand use of the Social Value Portal to all
developments. Use of the portal across the enlarged Group is
currently being explored. More information is provided in the
assurance report, which is available at www.vistrygroup.co.uk/
sustainable-approach/policies-and-publications.
Breakdown of delivered TSLEV
£84,466,835
Total social and local economic value (TSLEV)
£81,666,589
Local economic value (LEV)
£2,800,246
Social value (SV)
£79,584,549
£3,129,767
£832,375
£829,689
£90,453
Growth Jobs Social Innovation Environment
Delivery overview
• More opportunities for micro, small and medium enterprises and local voluntary
community and social enterprise.
• £107m spent in the local (15- miles radius) supply chain.
• 88.9 People FTE locally employed.
• £622,609 invested in innovative initiatives to promote local skills and employment.
• 1,788 hours of career support sessions provided.
• 1,206 weeks of meaningful work placements/pre-employment course delivered.
• £124,229 invested in innovative initiatives to safeguard the environment.
Sustainability report
continued
Our Vistry skills academies
We are passionate about creating employment opportunities
within the communities in which we operate. Our academies
create opportunities for the local existing workforce, create
employment and skills pathways for those whose are
unemployed and those looking to change career.
Our on-site skills academies offer opportunities for people to
gain the required entry level qualifications needed to ensure
they are on the correct pathway to gain employment. Delivered
nationwide, each academy provides training, mentoring and
skills development, creating opportunities, to gain work
experience and vocational qualifications. Combining classroom
and practical learning, the academies allow training to take place
within a live site environment. Participants have the opportunity
to engage and network with our subcontractors, and there have
been many cases of participants being successfully recruited
within the supply chain upon completion of an academy.
We have recently set a revised enhanced target of 800 learners
to complete one of our academies by at least 2025. This target
is linked to our employee remuneration and our sustainability
linked loan. To date, the academies have supported more than
800 learners. Over the next 12 months, nine academies are
planned to run across the UK, totaling 21 academies to date
since the programme launched in 2017.
Ecology and biodiversity
Biodiversity as an increasingly important issue and we strive to
not only mitigate our impacts in this area but also to positively
support and enhance biodiversity. Last year in response to the
provisions of the Environment Act 2021, which will require us
to achieve a 10% biodiversity net gain on our new sites across
the Group, we established a biodiversity net gain (BNG) working
group. Biodiversity net gain is an approach which aims to leave
the natural environment in a measurably better state than
beforehand. The BNG working group met throughout 2022
and coordinated our response to DEFRA on the Biodiversity
Net Gain Regulations, implementation consultation and on
the Biodiversity Metric. The group also consulted on the
Nature Recovery Green Paper: Protected Sites and Species and
participated in DEFRA user research on the Statutory Credit Sale
Service and prototype testing of emerging software.
Vistry Group PLC | Annual Report 2022 | 41
Delivering affordable homes at a time when the
need has never been greater
Rebecca and her six-year-old son Fin were renting privately
in Kidderminster. After Rebecca was registered disabled, and
living in a property that could not be adapted, she contacted
her local council. She was subsequently offered one of
our affordable homes at Lea Castle, Kidderminster, a joint
venture development with Citizen New Homes Limited, that
includes 240 affordable homes and 360 homes available for
open market sale by Linden Homes and Bovis Homes.
Rebecca, who hopes to be able to adapt her new Lea Castle
home said: “My home means everything to me, it’s going to
change our lives”.
We anticipate the need for some gains to be secured off-site
where they cannot be achieved on-site in accordance with the
mitigation hierarchy. In response to this, we have engaged with
a wide range of off-site credit providers to understand how the
market is functioning and have also undertaken a high-level review
of our freehold assets to establish where there are opportunities to
consider creating our own habitat banks.
Biodiversity action plan
During 2022 the BNG working group embedded a Biodiversity
Action Plan (BAP) into relevant documentation and business
management processes to ensure that all new developments
are evaluated consistently. To support this activity the group
also ran several online workshops for colleagues to enhance
their awareness surrounding biodiversity and ecology risks and
opportunities in developments.
We were targeting completion of the new BAP by 25% of our new
sites by 2022 and 100% of new sites by 2025. As at 31 December
2022 100%1 of new sites completed a BAP. Our Strategic Land
teams are ensuring that all the group's strategic sites are capable
achieving at least a minimum of 10% BNG, in line with adopted or
emerging policy.
We have continued our partnerships with the Bat Conservation
Trust, The British Hedgehog Preservation Society and the
Bumblebee Conservation Trust. In July 2022 we began creating
dark corridors and roosting habitats to support bats and other
wildlife at new-build locations across the country and continued to
install hedgehog highways in all existing and future developments
where possible.
Our ‘Pollinate in Partnerships’ project, which was shortlisted in the
‘Big Biodiversity Awards’ in June 2022, is aimed at supporting the
declining UK bumblebees’ species and other insects. We adapt our
landscapes including creating mini orchards, sub-rain gardens and
edible hedgerows, and provide wildflower seeds and information
leaflets to the communities where we build.
Affordable housing
Building quality, affordable homes is the right thing to do for our
communities, as it addresses the biggest supply / demand gap in
the housing sector. As the largest developer of affordable homes in
England, we are committed to delivering a year-on-year increase
in additional affordable homes beyond our planning compliance
requirements and during 2022 we delivered 8982 affordable homes
(2021: 744). Following our combination with Countryside we are
well placed to deliver affordable homes beyond policy compliance.
Charitable support
Our charity committee, that is supported by a network of charity
champions in each business unit, drives the delivery of engaging
events throughout the year. While the committee leads on Group
events, the business unit charity champions and leadership teams
are encouraged to support local causes that are important to them
including sponsoring local sports teams and food banks. In addition
to participating in events, employees are able to take two days paid
leave in a 12-month period to undertake volunteering activities.
We are proud to have raised over £257,000 (almost £100k more
than our target) on behalf of our 2022 Group charity Papyrus,
the UK charity dedicated to the prevention of suicide and the
promotion of positive mental health and emotional wellbeing in
young people.
Raising awareness of suicide prevention
A ‘book’, signed by employees pledging their support to
raise awareness of suicide prevention was transported to all
business units without the use of motorised transport. The
book’s 1,163-mile Vistry Voyage’ began in September 2022,
the week of World Suicide Prevention Day. The journey was in
memory of a colleague we sadly lost in late 2020.
1. Calculated from Vistry only new sites that have started since 31 August 2022, when the new documentation was published.
2. Vistry figure of 858 plus apportioned Countryside figure of 40 for the period 11 November 2022 to 31 December 2022 (Q4 2022: 65) .
42 |
Sustainability report
continued
Our operations
Operating responsibly
Our purpose and our values (see page 2) help to embed our
One Vistry culture and ‘Doing the right thing’ is at the core of
everything we do. The Board is responsible for imparting and
monitoring our culture and the mechanisms it uses to do this are
described on page 75.
Our Ethical code of conduct policy outlines our commitment
to high ethical and moral standards and the responsibility
framework we have embedded to deliver our standards and
appropriate behaviours. Following our combination with
Countryside and the critical importance of aligning the Vistry and
Countryside cultures, a new Code of Conduct is being created and
will be rolled out across the enlarged Group during 2023.
The Board is also responsible for setting the overall direction of
the Group’s sustainability strategy and its execution is led by our
Head of Sustainability who is supported by a sustainability team.
Dedicated forums, policies, procedures and management systems
support our best practice governance, while our sustainability
targets, reporting and verification drive continual improvement.
Our Speak Up hotline is operated by an independent third party,
Ethics Point, and can be used by employees report suspected
wrongdoing including concerns in relation to modern slavery.
Modern slavery
We recognise that modern slavery can occur in the construction
industry. We operate an Anti-Slavery and Human Trafficking
Policy which outlines our zero-tolerance approach to modern
slavery and human trafficking and supports our efforts to combat
modern slavery. Our Modern Slavery Act working group oversees
the Group’s approach to eliminating modern slavery from the
business. It comprises a collaborative cross-functional team
which meets on a quarterly basis to drive forward our work
against modern slavery. Our people have access to a dedicated
Modern Slavery awareness training which provides guidance on
understanding modern slavery in the construction industry, how
to spot the signs of modern slavery, contact details for relevant
agencies and details of our SpeakUp hotline. No reports of
modern slavery within the Group were made to the hotline
in 2022.
We are a partner with Supply Chain Sustainability School and are
a member of the Modern Slavery Engagement Programme which
aims to increase awareness and provide guidance and training to
our supply chain. We have also pledged our commitment to the
Gangmasters and Labour Abuse Authority Construction Protocol.
Our supply chain onboarding process ensures that our suppliers
and subcontractors confirm compliance to the Modern Slavery
Act, provide details of their own modern slavery policies and are
aware of our modern slavery commitments and expectations.
Preserving history for the nation
In December 2022 Vistry-funded archaeologists working
on ground being prepared for new homes at Harpole,
Northamptonshire, discovered a 1,300-year-old precious
necklace in what is believed to be one of the most
significant female burial sites of the early medieval period.
RPS Archaeology Consultant Simon Mortimer said:
“This find is truly a once-in-a-lifetime discovery. It shows
the fundamental value of developer-funded archaeology.
Had Vistry not funded this work this remarkable burial
site may never have been found.”
The Group has gifted the necklace to the nation and
waived all ownership rights to ensure it remains protected
for years to come.
Vistry Group PLC | Annual Report 2022 | 43
Environmental management
We take our responsibilities for environmental management
very seriously. Our Group Environmental Team with support
from the wider Safety, Health & Environmental (SHE) team are
dedicated to protecting our natural environment. In collaboration
with our sustainability function they ensure potential impacts
are identified and that appropriate control measures are
implemented.
Our environmental standards and policies are fully integrated
into our Business Management System. Use of our Standard
Operating Procedures ensures consistency, governance and
control and effective risk management including mitigating
issues at source. Throughout the year we have focused on
further embedding our environmental management practices at
project incept by enhancing the procedures themselves and the
communication of them with our regional teams.
We make our people aware of standards and policies through
coaching, mentoring and training to ensure we plan, manage
and implement robust site-specific control measures. In October
2022 our Group Environmental Team began the roll-out an
environmental awareness training programme to our regional
commercial and technical teams. This programme is expected to
complete by summer 2023.
The Group Environmental Team also works with our regional
offices and sites to identify any potential risks from our
operations which may result in a negative impact to the
environment. We work closely with Natural England and local
authorities to preserve protected species and ensure appropriate
translocation where appropriate. For example, at Freight Village
(part of the Gateshead Regeneration Partnership in the North-
East) we are currently in the process of relocating an area of
butterfly habitat (Birdsfoot Trefoil) and creating gabion walls
to mitigate the impact upon the Dingy Skipper and Grayling
population in the area.
Waste and resources
Reducing waste and maximising re-use, recovery and recycling is
an important part of our strategy. We look to promote circularity
in our supply chain at every level. This means operating take-
back schemes with many of our suppliers and collaborating with
organisations offering innovative solutions to the industry’s
waste problem.
Non-hazardous waste
Produced (tonnes) per plot
Produced (tonnes) per 100m2
Diverted from landfill (%)
2022
7.5
8.08
98
2021
9.42
10.23
98
During the year we have continued to support the Community
Wood Recycling Scheme, a nationwide network of social
enterprises that reuses wood materials and provides workplace
opportunities for disadvantage people. In 2022, 975 tonnes
of timber were collected from our sites (2021: 1,202 tonnes).
In addition, in 2022 we had over 53,034 pallets collected from
our sites for re-use (2021: 46,936 pallets).
In line with our target, we launched a material re-use database
on our intranet to facilitate resource sharing. However, uptake
has been limited (beyond office supplies) and we recognise that
more work is needed to leverage regional relationships.
Our 2022 consolidated reported waste figures have been
reported through our waste brokers using weighbridge data
and waste carrier reports. Last year our Vistry reported waste
figure was manually reported via our site teams. Therefore, our
2022 reported figures do not necessarily represent a reduction in
waste volume, and are indicative of more accurate reporting and
less human error.
As part of our strategy development in 2023, we will consider
amending our target to be against floor area rather than plot for
improved accuracy.
Developing our waste reduction strategy
To ensure our future projects reduce waste as far as
possible we are conducting a research study at our Cam
site in the Cotswolds.
All the waste produced from the start to completion of
two standard Linden house types is being collected and
analysed and resulting data will be used to develop
more sustainable site practices including standardising
materials and reducing supply chain packaging.
The outputs from the study will also be used to
identify cost saving opportunities as a result of
more effective waste management.
44 |
Sustainability report
continued
Climate change
Reducing our carbon emissions is a key priority. To demonstrate
our commitment, we have signed up to the Business Ambition
for 1.5°C and therefore also the United Nations Framework
Convention on Climate Change Race to Zero. We also support
the TCFD recommendations and our relevant disclosures are set
out on pages 49 to 55. Our carbon reduction targets, which are
set out on page 34, were verified by the SBTi during 2022. We
will reconfigure these for the enlarged Group and submit for
re-verification in 2023.
In December 2022, we published our Carbon Action Plan
focused our direct emissions, which complements our existing
roadmap to net zero carbon homes and outlines the steps we will
implement to meet our stretching carbon reduction targets.
It is based on trials of carbon reduction technologies, such as
hybrid generators, eco cabins, remote energy monitoring and
hydrotreated vegetable oil fuel. The full plan is available at
www.vistrygroup.co.uk/sustainable-approach/policies-and-
publications.
Climate Disclosure Project
In 2022 Vistry scored a B on the Climate Disclosure Project
(CDP) an improvement from a D score in 2019. Countryside also
scored a B (an improvement from a D score in 2020). A combined
disclosure for the enlarged Group will be submitted in 2023.
Building standards
Based on lessons learned and experience on recent projects we
have developed our own roadmap to delivering net-zero carbon
homes which was published in 2021 and will be submitted to the
SBTi during 2023 for verification.
To make homes zero-carbon ready the Future Homes Standard
is introducing a 75-80% reduction and a move away from gas
fired fossil-fuel heating. We are gearing up to this and trialing
technology that will ensure we meet these requirements. We
are also trialing net zero carbon developments as part of our
business plan for 2030, and carefully reviewing materials and
completing whole life carbon assessments. Using more timber
frame construction throughout the Group is also a key part of
our plan.
During the year a key focus area has been how we address
changes in building regulations relating to energy efficiency and
other areas, such as ventilation, and new areas such as the risk of
overheating, and providing electric vehicle (EV) charging points
to our homes. As part of our Vistry25 Project, we are designing
new house type ranges to meet future requirements for energy
efficiency and many other elements to make our homes fit for
the future. We are designing our homes to have adequate space
requirements for low-carbon technologies such as air source heat
pumps, rather than trying to fit it into existing designs, as well as
ensuring our house types are resilient to the changing climate.
Our low / zero carbon homes roadmap
2021
Setting
our plan
2022/231
2025
20302
20352,3
20402,3
-31% CO2
on homes
built on new
developments
1. Zero Carbon
Ready
-75-80% CO2
on homes built
on new
developments
2. Net Zero
Carbon
(regulated energy)
-100% CO2
on homes built
on new
developments
2a. Net Zero
Carbon
(including
unregulated energy)
-130% CO2
on homes built
on new
developments
3. Net Zero
Carbon Homes
construction
-130% CO2
+
Zero Carbon
Homes
(construction)
1. June 2022 new developments/June 2023 existing developments.
2. We are committed to build net zero carbon homes (regulated energy) by 2030 and net zero carbon homes (unregulated energy) by 2035. Regulated
energy includes emissions coming from lighting, heating and ventilation. Unregulated energy includes emissions coming from plug-in loads such as TVs,
laptops and white goods and is currently estimated to be c.30% above regulated energy.
3. We will achieve our -130% target by reducing emissions from both the regulated and unregulated energy sources described in footnote 2 above.
Vistry Group PLC | Annual Report 2022 | 45
Meeting zero carbon requirements
We are working with Warwick District Council to
deliver 310 net zero carbon homes (regulated energy) at
Stoneleigh View, Kenilworth. The homes are all designed
to meet a net zero carbon specification in relation to
heating, hot water, lighting and ventilation, and will be
constructed using a mix of timber frames and masonry.
They will also utilise low carbon technologies including air
source heat pumps and solar panels, supported by high
performing building fabric. The project will help further
support and enhance our journey to delivering net zero
carbon homes.
Working with our partners to deliver
sustainable solutions
At North Whitley near Fareham we are building 54 highly
energy efficient homes on behalf of Winchester Council,
to support the Council’s zero carbon strategy. Accredited
by the Association for Environment Conscious Building,
the homes are designed to Passivhaus principles, utilising
a high-performing fabric standard and supported with
increased levels of airtightness meaning homes stay
warmer as less heat escapes and less energy is required to
heat. Alongside the high levels of insulation, mechanical
ventilation with heat recovery is installed to ensure
adequate levels of ventilation are maintained.
Embodied carbon
We are committed to reducing our embodied carbon by 2025,
in particular by using more timber frame construction. We
have seen an increase in local authorities requesting Life Cycle
Analysis (LCA). We have undertaken an embodied carbon analysis
of a standard house type (The Beckett). This was to help set a
benchmark for embodied carbon and enhance our understanding
on how embodied carbon can be reduced in the future. Our
analysis shows that our current design produces less than 300kg
of CO2e per 100m2 which is ahead of the 2030 benchmark set by
the London Energy Transformation Initiative (LETI).
We are continuing to monitor any recommendations from
the House of Commons Environmental Audit Committee to
Government to keep abreast of any future regulations. We are
working closely on the Embodied and Whole Life Carbon: 2023-
2025 implementation plan with the Future Homes Hub, from
which we will take any necessary actions.
Operational energy
Our specification for existing house types has been updated to
meet Parts L1A, O and F of the building regulations and achieve
the required 31% reduction in carbon. All new homes planned
are now being delivered with a 31% carbon reduction (regulated
energy) and all new homes starting construction from 15 June
2023 will be delivered to the new building regulations to meet
the required 31% carbon reduction (regulated energy).
Research and development
During the year we established a Technical Innovation team that
provides sustainable and innovative solutions to support the
delivery of our carbon reduction plan and respond to changing
building regulations. The team’s current 2022 areas of focus
included identifying our Parts L, F, O and S specification, as well
as research into low carbon heating and hot water solutions, and
MMC. A programme of carbon literacy has also been developed
for all employees to educate them on the changes to building
regulations and what this means for the way we build homes.
Delivering greater energy efficiency
98% of the homes we built in 2022 had an energy performance
certificate of an A or B.
We commissioned an independent study by Elmhurst Energy to
look at the energy and carbon savings that can be made from
living in a new home over an older, less efficient home. Due to
modern construction methods and designs, new-build homes
are typically more energy efficient than older properties as they
have lower heating demands and higher performing fabric. By
analysing a number of Bovis Homes and Linden house types,
Elmhurst reported an average three-bedroom home saved
4,381kg CO2e per year compared to an equivalent Victorian-era
home (75% saving) and over £1,448 on energy bills (65% saving),
with this figure growing since energy prices increased.
46 |
46 |
Sustainability report
continued
Our energy consumption and carbon emissions
Our carbon footprint has been calculated on an operational
control basis. The operational boundary covers emissions
arising from the Group’s direct operations and includes Scope
1, 2 and 3 emissions from our live construction sites, offices and
manufacturing facilities.
Summary of our 2022 carbon footprint
Our Scope 3 emissions represent more than 99% of our overall
footprint, with the most significant impact from occupant energy
use in the homes we build.
The percentage of our goods and services Scope 3 emissions has
decreased to less than 1% due to our switch to using more recent
and reliable US EEIO factors instead of Quantis factors. This
change in approach has led to a subsequent rise in percentages
for both regulated and unregulated occupant energy and capital
goods, shifting our carbon footprint composition.
To ensure data completeness of Scope 1 and 2 emissions, we have
completed an extrapolation of gas and electricity consumption.
Details of this methodology can be read in our basis of reporting
which is available at www.vistrygroup.co.uk/sustainable-
approach/policies-and-publications.
Scope 1 and 2
1%
4%
Other Scope 3 emissions*
Scope 3
Capital
goods
22%
Scope 3
Unregulated
occupant
energy
19%
2,157,044
tCO2e
Scope 3
Regulated
occupant
energy
54%
Scope 3 Regulated occupant energy
Scope 3 Unregulated occupant energy
Scope 3 Capital goods
Other Scope 3 emissions*
Scope 1 and 2
Group carbon emissions
Emissions1
Scope 1 emissions tCO2e
Scope 2 location-based emissions tCO2e
Scope 1 and 2 location-based emissions tCO2e
Scope 3 emissions tCO2e
Scope 1, 2 and 3 emissions tCO2e
Scope 1 and 2 emissions tCO2e per plot completed4
Scope 1 and 2 emissions tCO2e per 100m2 completed5
Scope 3 emissions tCO2e per plot completed4
Scope 3 emissions tCO2e per 100m2 completed5
Energy consumption
Scope 1 energy consumption (kWh)
Scope 2 energy consumption (kWh)
20222
16,797
2,604
19,401
2,137,643
2,157,044
1.32
1.42
146
157
20213
14,911
2,774
17,685
1,560,506
1,578,191
1.60
1.73
141
153
72,925,000
13,466,000
38,679,970
13,114,160
1. 100% of our Scope 1 and 2 emissions are UK based. Elements of Scope 3 emissions relate to the UK including commuting and business travel, use of sold product
(emissions from occupant energy use) and emissions from fuel use on site. Other elements of our Scope 3 emissions relate to a global supply chain and we are
unable to specify to what extent they are UK based.
2. 2022 consolidated Vistry and Countryside data (for the period 11 November 2022 to 31 December 2022). Vistry: Scope 1 = 16,224 tCO2e, Scope 2 = 2,502 tCO2e,
Scope 3, business travel = 245 tCO2e (assured by DNV see page 33); Countryside: Scope 1: 573.74 tCO2e, Scope 2 = 102.35 tCO2e, Scope 3 = (WTT, T&D and
business travel) = 168.96 tCO2e (assured by RPS see page 33). Countryside carbon emissions have been reported as an apportioned figure based on data from 1
October – 31 December 2022. This is required due to the method of data capture being suited to quarterly reporting. There is risk that this may result in over- or
under-stating the footprint as equal weighting has been given throughout the time period. For the full quarter, Countryside’s Scope 1 = 1034.98 tCO2e, Scope 2 =
184.64 tCO2e and Scope 3 (WTT, T&D and business travel) = 304.79 tCO2e, with 129,971 m2 of build completion.
3. This is a restated 2021 baseline. We have restated following methodology improvements achieved through the DNV third party assurance processes.
Further information about the assurance process and the Assurance Statement is available at www.vistrygroup.co.uk/sustainable-approach/policies-
and-publications.
4. Intensity measure of per plot completions is based on: 2021: 11,084 and 2022: 14,687.
5. Intensity measure of per 100m2 completions is based on the following developed areas: 2021: 1,020,818m2 and 1,363,263m2.
Vistry Group PLC | Annual Report 2022 | 47
Scope 1 and 2
Our total Scope 1 and 2 carbon emissions have increased by 9.7%
against our restated 2021 baseline (2022 target: 4.2% reduction
against 2021 baseline). This increase in carbon emissions is a
result of our business growth and the inclusion of a combined
heat and power (CHP) system in 2022 that was not accounted for
in the 2021 emissions. The CHP contributed 1,110 tCO2e (7%) to
the 2022 Scope 1 emissions.
The largest challenge we face to achieve our absolute carbon
reduction targets is realising the ability to decouple our business
growth from our carbon emissions. However, in terms of plot
consumption, we have observed a decline in both electric and
gas usage, resulting in a 18% reduction in intensity of our
Scope 1 and 2 tCO2e per plot and 18% per 100m2. This can be
attributed to two main factors. Firstly, as Covid restrictions have
eased, average metered periods have reduced to a more typical
business-as-usual level. Secondly, due to the rising energy
markets, there is an increased awareness of consumption,
resulting in more restrictive usage on site.
Electricity consumption has decreased by around 7% overall,
with only sales showing a slight increase. This increase can be
attributed to more showhomes in 2022 than in 2021. Gas usage
has significantly decreased by almost 44%. This is due to the
implementation of restrictive heating profiles used in the plots,
resulting in a cut in consumption.
Our approach to carbon reduction is centred around behaviour
change and creating meaningful efficiencies in our activities and
designs before switching to lower carbon emitting fuels.
Although we are still developing the right systems, procedures,
and programmes to drive down our Scope 1 and 2 carbon
emissions, during 2022 we trialled various technologies. This is
to ensure we are confident in their performance before rolling
them out at scale across the Group. For example, at our Meridian
Water development we are utilising battery storage technology
to supplement power to our office accommodation which we
estimate over 30 days saved over 2,300 litres of fuel (the amount
of fuel that would have been required by a diesel generator had it
been running the equivalent time as the battery).
In 2022, we embedded carbon considering measures into our
project environmental plans (part of our business management
documentation) to ensure that site set-up and low carbon energy
provision are considered during the project planning stage of all
our developments.
Countryside reduced its Scope 1 and 2 emissions by 32%
during 2022 and we will look to embed the learnings from this
achievement into the enlarged Group's revised carbon action
plan and carbon reduction activities throughout 2023.
Scope 3
During the year Scope 3 emissions intensity increased by
3% per 100m2. This increase is partly due to an increase in
regulated energy consumption. In addition, because different
methodologies were used to estimate Countryside and Vistry's
respective Scope 3 emissions, comparison to the 2021 data is
not reliable. In 2023 a single methodology will be used and our
Scope 3 emissions will be restated. In 2023 we expect emissions
to decrease due to a reduction in regulated energy use following
the Part L Building Regulations changes that came into force
during 2022.
Scope 3 emissions account for around 99% of our total
emissions. The greatest impact is from the energy used in
the homes we build. We recognise that significant impact
on our carbon footprint sits within our supply chain, and we
are continuing to work collaboratively to address this. We
are addressing the reduction of Scope 3 emissions as part of
our carbon reduction targets. Given the relative maturity of
the technologies available to deliver these reductions, will be
delivering most of these reductions in the years 2025 to 2030
(all in line with our SBTi targets).
Supply chain and collaboration
Our business is dependent on a complex supply chain and our
ability to build responsibly relies on our partners to procure safe,
ethical and sustainable labour and materials. Our supply chain
is also pivotal if we are to deliver net carbon homes and Future
Homes Standard.
We are a member of the supply chain sustainability school (SCSS)
and sit across multiple SCSS leadership groups. We collaborate
with peers on some of the biggest sustainability challenges,
which keeps us up to date with industry developments.
Throughout the year we have attended various collaboration
workshops with some of our biggest suppliers to facilitate cross-
industry collaboration and a joined-up approach to some of our
most important (and shared) challenges. A key 2023 priority is to
ensure adoption of a consistent approach to responsible sourcing
across the enlarged Group.
Sustainable timber
As we increasingly use modern methods of construction,
we must sustainably source timber and use it efficiently. We
require that all timber supplied to Vistry across all methods of
construction must be PEFC (Programme for the Endorsement of
Forest Certification) or FSC (Forest Stewardship Council) chain
of custody.
We only stipulate and report on the timber we procure directly,
but we are working with subcontractors so that in the future
we can also report on our indirect timber use and its sources.
This will give us greater confidence that all timber used in our
operations is purchased through internationally recognised
certification.
48 |
Climate-related Financial Disclosures (TCFD)
We are committed to minimising the environmental impact and carbon
footprint of our operations and managing the risks and opportunities
associated with climate change.
TCFD statement
In accordance with Listing Rule 9.8.6(8) our disclosures in relation to the Task Force on Climate-related Financial Disclosure (TCFD)
recommendations are set out in the table below. We have assessed the TCFD’s updated October 2021 guidance on implementing
its recommendations, including ‘The Guidance for All sectors’, and confirm that the disclosures are consistent with the TCFD
recommendations other than:
• Metrics and targets: Our sustainability strategy was developed in 2020. The metrics and targets we use to monitor and measure
its progress are detailed on page 34. Currently these do not cover physical and transitional risks and all opportunities. Following our
combination with Countryside, in the coming year we will review our sustainability strategy to ensure it continues to be relevant
to our enlarged Group and its stakeholders. As part of this review we will consider whether additional metrics and targets will be
introduced.
• Impact of climate-related risks and opportunities on the business, strategy, and financial planning: We do not disclose the impact of
overheating and water stress. This is because additional modelling is required for the impact to be quantified. Additional modelling
will be undertaken during 2023 and reported in our next disclosure. Other than the impact of the Future Homes Standard we do not
take account of other climate-related risks and opportunities in our financial planning for the reasons explained below. Additional
modelling and more confidence in the potential financial impacts is required before this can be completed.
• Risk management: Currently management of our climate-related risks are not integrated into our existing risk management
framework. In the coming year such risks will be integrated into the framework.
Progress in 2022 and priorities for 2023
During the year, we have focused on improving our data collection processes and have achieved limited assurance of our Scope 1 and
2 carbon emissions (see page 33). We also gained approval of our carbon reduction targets through the SBTi and published a Carbon
Action Plan outlining how we will reduce our Scope 1 and 2 emissions. This action plan for our direct emissions compliments our net-
zero carbon pathway which outlines how we will deliver net-zero carbon homes and reduce Scope 3 emissions (see page 45). In 2022
carbon targets formed part of senior management and executive incentive targets for the first time.
Our priorities in relation to climate change in the year ahead include:
• Evolving our disclosures in the areas highlighted above to be consistent with the TCFD recommendations.
• Resubmitting our post-Combination carbon reduction targets to the SBTi.
• Increasing the scope of our assured carbon data to include additional Scope 3 emissions.
• Implementing a consistent and efficient carbon-related data collection and internal reporting processes.
• Implementing our Carbon Action Plan (Scope 1 and 2) and net-zero carbon pathway (Scope 3).
TCFD recommended disclosures
Recommended disclosure
Our disclosure
Governance
See page 77.
Describe the Board’s
oversight of climate-related
risks and opportunities.
The Board approves the sustainability strategy and associated targets. In 2022 climate change was discussed
at the Board strategy day, with a particular focus on a Carbon Action Plan. Performance reports that include
general updates on progress against sustainability strategy targets are reviewed and discussed at each Board
meeting. A more detailed report, including an update on climate change targets, is considered by the Board
on a bi-annual basis.
A Non-Executive Director will attend each meeting of the new Sustainability Committee (see below).
Climate-related issues are embedded in our purpose – To deliver sustainable new homes and communities.
They are also embedded in and underpin the delivery of the Group’s strategy through alignment with our
sustainability priorities: Our people, our homes and communities and our operations.
Climate-related metrics also form part of the Group’s executive remuneration (see pages 101 and 102) and
sustainability linked loan.
Vistry Group PLC | Annual Report 2022 | 49
Recommended disclosure
Our disclosure
Describe management’s
role in assessing and
managing climate-related
risks and opportunities.
Responsibility for climate-related issues resides with the ELT and the COO is the executive sponsor.
The Group’s Commercial Director and Head of Sustainability are responsible for the implementation and
monitoring of our sustainability strategy and climate-change targets. These individuals have the requisite
qualifications and experience to take responsibility for climate-related issues.
‘Sustainability champions’ operate across the Group and regularly gather climate-related data from all
business units. Data is also gathered by the Group Sustainability team. This data is collated and reported
at Group level. Guidance notes and standard operating procedures to help address climate change are
included within our ISO14001 Environmental Management System. Updates on climate-related issues and our
sustainability strategy form part of our regular internal communications.
In 2022 our COO chaired a Sustainability Forum. The forum met three times in 2022 with representatives
from across the Group in attendance. In 2023 we will establish a Committee that will replace the
Sustainability Forum. The new Committee’s objectives will include making recommendations to the
ELT relating to the effective implementation of our sustainability strategy and monitoring the Group’s
performance and progress against its sustainability targets (see page 34).
Our sustainability strategy drives our approach to sustainability and climate change. It is based on
an extensive materiality assessment undertaken in 2021 which considered climate-related risks and
opportunities by geography. Information about this assessment is included in our 2021 Annual Report
which is available at www.vistrygroup.co.uk/investor-centre/results-reports-presentations.
During 2023 the materiality assessment process will be reviewed to ensure it serves the enlarged
Group and all its stakeholders.
Risks and opportunities have been identified for the short, medium and long term. Despite our scenario
analysis looking as far ahead as 2070, the time frames below have been chosen to align with our strategic
planning cycles.
Short term (0-5 years)
We see risks and opportunities associated with the forthcoming future homes standard including the
following which have been highlighted by the HBF:
• Consumers will need to be consulted and educated for emerging technologies (to ensure technology
performs as designed).
• Supply chains will need to be developed, for example for air source heat pump supply and installation as
well as lower carbon alternative fuels for plant and equipment (e.g. Hydrotreated Vegetable Oil).
• New skills and training will need to be developed and person capacity built, for example air source heat
pump engineers.
We are part of the HBF Future Homes Task Force that is working to address these issues. We are also already
delivering homes beyond the Future Homes Standard and our experience and learnings from these projects is
informing our plans to deliver these homes at scale and helping to shape our net-zero carbon roadmap.
Medium term (5-10 years)
In line with the HBF we believe there are risks associated with electrical infrastructure as the shift to electric
heating and car charging increases pressure on local networks. We have undertaken simulations of various
scenarios based on typical developments to help understand potential future cost uplift, so that these can be
considered as part of overall development costs.
We also recognise that there are medium-term opportunities including an increase in the use of MMC
and timber frame which we are already utilising through our three manufacturing operation locations.
These opportunities will be considered as part of the review of the Bardon site. Countryside Partnerships
is an established market leader in the delivery of low carbon homes.
Long term (10+ years)
We have considered how risks associated with flooding, overheating, water stress and subsidence may
increase in the long term. To mitigate climate change across the whole building lifecycle, in particular
embodied carbon, we are exploring how increasing our timber frame manufacturing capabilities can be
utilised to reduce embodied carbon in our standard house types.
Strategy
See pages 18 to 21.
Describe the climate-
related risks and
opportunities identified
over the short, medium
and long term.
50 |
Climate-related Financial Disclosures (TCFD)
continued
Recommended disclosure
Our disclosure
Describe the impact of
climate-related risks and
opportunities on the
business, strategy, and
financial planning.
See climate change risks
and opportunities table
on pages 54 and 55.
Products and services
We have developed a road map to deliver net zero carbon homes by 2040 (aligned to the UK Green Building
Council definition) based on our learnings from several developments that go beyond the Future Homes
Standard (see page 45). In particular our approach has been informed by:
• Completing post-occupancy evaluations relating to energy-efficiency measures and testing future
technology.
• Working with our regional business units to understand the impact on trades, site management and sales
staff and helping to develop training courses to support future projects.
• Understanding the impact of electric heating and EV installation on substations and network upgrades,
producing guidance for future uptake and providing scenario options.
• Gathering real project cost information arising from energy-efficiency measures for future cost modelling
and undertaking value engineering exercises that enable us to accurately consider these costs in land
viability and financial planning.
Supply chain
New supply chains are emerging in response to increasing demand for low carbon homes. This is a key
development that underpins the delivery of our strategy. At Group level our technical and commercial teams
are working to ensure we have the most technically robust solutions, that are cost effective and at the right
capacity. Group deals will be put in place to ensure we have the right level of availability. This will help us to
meet our growth ambitions whilst also delivering on our net zero carbon road map (see page 45).
Adaptation and mitigation activities
Site specific flood risk statements/assessments are prepared for all Vistry sites. The majority of our
developments take place within Flood Zone 1 which has the lowest risk of river or sea flooding.
We have:
• Approved carbon reduction targets through the SBTi.
• Linked our carbon reduction commitments to executive remuneration and a sustainability linked loan.
• Completed an overheating analysis. Its findings will be considered in the development of our 2025 standard
house types.
Operations
We have produced a Carbon Action Plan, outlining how we will meet targets associated with our Scope 1 and
2 emissions (see page 45). A significant challenge will be achieving ambitious targets for absolute emissions
reductions, whilst pursuing our committed targets for business growth. The Carbon Action Plan compliments
our net-zero carbon pathway that addresses our Scope 3 emissions.
Pricing for the cost of climate change
We continue to categorise the risks relating to climate change into two classes – transitional risks and
physical risks. Requirements relating to the mitigation of transitional risks are well defined and are
accordingly priced into the financial statements as outlined below. Physical risks are less well defined, and
whilst an estimation of their potential impact is assessed and disclosed they are also reviewed regularly to
assess if their potential realisation has changed.
Transitional risks: The requirements for mitigating these risks are defined for the Group, and the industry
more broadly, through government regulation in particular the Future Homes Standard which will come into
effect in 2025 and the nearer term progressive steps including Part L and Part F.
To meet these requirements, we have designed new house types to meet these standards. The build of these
house types is then priced using today’s costs for materials and labour. For sites yet to be acquired new house
types are factored into our land appraisals to ensure the cost of meeting these new regulations is factored
into the targeted returns.
For existing sites that will need to meet these standards build costs are included in our site Cost Valuation
Reports (CVRs) which impacts site wide margins and gross margin.
As a Group we target improvements in both technical design and procurement to continue to reduce the
costs of meeting these new standards. These improvements will either improve gross margins or ensure we
are more competitive when acquiring new land.
Both CVRs and future land appraisals are rolled into our in-year and multi-year planning cycles which
form the basis for our cash and funding requirements over these periods. As a result, they are a key
component part of our going concern, viability and goodwill impairment assessments and acquisition
accounting where relevant.
Vistry Group PLC | Annual Report 2022 | 51
Recommended disclosure
Our disclosure
Physical risks: These risks are outlined below and on pages 54 and 55 and relate to the potential impact of
meeting climate change risks. These risks are priced using the services of a third-party consultancy and their
approximate financial impact is disclosed in the respective risk outlines.
As there is inherent uncertainty as to the timing and size of any realisation of these impacts these risks are
regularly reviewed to assess whether their potential has advanced. When the costs associated with these
risks are actually realised it is possible that no direct link can be made to meeting climate change challenges
but that does not detract from the relevance of continual risk scanning. For example, recent rises in UK
energy prices - which impacts both customer affordability and materials pricing - stems in part from the
lifting of energy price caps to meet Government emission reduction targets but also from the impact of the
war in Ukraine on the security of energy supply.
Describe the resilience of
the strategy, taking into
consideration different
climate-related scenarios,
including a 2°C or lower
scenario.
We have considered the resilience of our strategy under two different climate scenarios, including a ‘2°C
scenario with an orderly transition’ and a ‘>4°C scenario and with a failure to transition’. Both scenarios
were developed with the University of Exeter, using Inter Governmental Panel on Climate Change (IPCC)
RCP2.5 and IPCC RCP8.5 scenarios. The risks and opportunities identified in the scenarios were discussed in
a workshop facilitated by external consultants and attended by Finance, Risk, Sustainability and Technical
teams. The key findings are summarised below.
2021 - 2030 An orderly transition to a low carbon economy
Transition risks and opportunities:
• Embodied carbon: Our strategy is resilient. Our roadmap to 2030 goes beyond current legislation and the
embodied carbon of our standard house type is below the LETI 2030 benchmark. We are considering the
impact of the Future Homes Standard on embodied carbon as part of our standard house type review and
see opportunities to reduce embodied carbon through increased timber frame construction through our
manufacturing operations
• Increasing demand for low carbon homes: Our strategy is resilient. We are in a strong position based on
our experience of delivering low carbon homes to satisfy increased demand, particularly from Countryside
Partnerships' clients. We need to build a more detailed understanding of demand within our market
sale customers. Industry research indicates increasing demand for low carbon homes (https://group.
legalandgeneral.com/en/newsroom/press-releases/legal-general-research-shows-buyers-will-pay-
up-to-20-premium-for-low-carbon-homes). We are also continuing to work with the HBF, as part of the
Future Homes Task Force, to address market challenges.
Physical risks:
• Heat stress: Our strategy is resilient. Following the Government proposal to mitigate overheating risks, we
have carried out dynamic assessments of all our house types to help us understand this risk to our business.
In summary there is a very low risk of overheating in the area representing regions outside London,
Southampton and the South East. There are risks of overheating in London, Southampton and the South
East area that are being addressed.
• Water stress: Our strategy is resilient. Water efficiency is addressed in Part G of the Building regulations and
our homes achieve at least a 16% reduction of water use compared to these regulations. This is achieved
through low flush toilets with part flush options, water efficient showers with low flow rates, basins and
baths that are designed for water efficiency and taps with low flow restrictors. There is a geographical
consideration here, for example one third of the water resource zones in the UK’s East and South East
regions are already in water demand deficit. This is expected to increase to 54% within the next five years.
We are exploring how we can achieve improved water efficiency in these areas through water reduction and
reuse technology, such as rainwater harvesting.
2030 - 2070 A failure to transition
Physical risks:
• Heat stress: Overheating could become an issue in our properties as summers become hotter and risk of
heatwaves increases. This could increase demand for cooling and increase operational energy use as well as
impact occupant comfort. Overheating risk will be considered in the development of our 2025 house type.
Further modelling is required to assess the impact of this risk.
• Subsidence: Within the South East region there is a future risk of subsidence as a result of soil shrinkage
within areas of shrinkable clay due to hotter, drier summers. Further modelling is required to assess the
impact of future precipitation anomaly projections for different scenarios.
• Extreme weather: The increase in frequency of extreme weather events such as storms has the potential
to delay construction due to heavy rain and high winds which may impact cranes and other site machinery.
This could impact construction programmes. Further modelling is required to assess the impact of this risk.
52 |
Climate-related Financial Disclosures (TCFD)
continued
Recommended disclosure
Our disclosure
Risk management
See page 56 and 57.
Describe the processes for
identifying and assessing
climate-related risks.
Describe the processes for
managing climate-related
risks.
Describe how processes for
identifying, assessing, and
managing climate-related
risks are integrated into
overall risk management.
Metrics and targets
Disclose the metrics used
to assess climate-related
risks and opportunities in
line with strategy and risk
management process.
Climate change and sustainability is one of our principal risks (see page 62). Specific climate risks
were identified as part of a research project we undertook with the University of Exeter. The project’s
findings formed the basis of a workshop which was facilitated by independent consultants, and involved
representatives from our finance and sustainability team and members of the RO Committee and
Sustainability Forum. Climate risks and opportunities identified in the workshop with a medium or high
impact are described on pages 54 and 55.
Our risk management process is explained on pages 56 and 57. During 2023 management of our climate-
related risks will be integrated into our existing risk management framework.
As part of its annual strategic review the Board considers the Group’s five-year financial plan, the
core assumptions underpinning this plan and how the current economic, regulatory and sustainability
environment may impact this plan. The climate change impacts considered in relation to the plan are those
related to pricing the cost of climate change. See pages 51 and 52.
In the coming year climate-related risks will be integrated into our existing risk management framework.
Climate change risk is identified, assessed and managed as a principal risk through our RO Committee. See
pages 56 and 57.
Key metrics used to assess climate-related risks and opportunites and our targets are set out below.
• Metric: Scope 1 and 2 emissions: By 2025 reduce by 16.8% against a 2021 restated baseline (see page 34).
• Metric: Scope 3 emissions: By 2025 reduce by 22.4% against a 2021 baseline (see page 34).
• Climate change is linked to senior management and executive incentive targets (see page 102).
See our TCFD statement on page 49 which explains the steps we will take in the coming year to determine
whether additional metrics and targets are required to assess and manage our climate-related risks and
opportunities.
Disclose Scope 1, Scope 2,
and, if appropriate, Scope
3 GHG emissions, and the
related risks.
Our Scope 1, 2 and 3 emissions and historical data is set out on page 47.
Our carbon action plan outlines how we intend to meet our Scope 1 and 2 targets and our net zero carbon
pathway indicates how our Scope 3 targets will be met. Information about our plan and net-zero roadmap is
available at www.vistrygroup.co.uk/sustainable-approach/policies-and-publications.
Our targets together with our progress during 2022 are set out on page 34. Our carbon reduction targets
have been approved by the SBTi and our Scope 1 and 2 data has achieved limited assurance (see DNV’s
assurance statement which is available at www.vistrygroup.co.uk/sites/vistrygroup/files/Vistry/reports-
and-presentation/2023/dnv-independent-assurance-statement-2022.pdf).
Vistry Group PLC | Annual Report 2022 | 53
Climate change related risks and opportunities
Risk/Opportunity
Point of contact
TCFD type
Type of financial
impact (£)
Time horizon
and likelihood1
Magnitude
of impact
Potential
annual
financial
impact2
Alternative fuel use
The introduction of a carbon tax on fuels is likely.
Supply chains are likely to pass this cost on to
their customers. This is likely to cause a mass
move to alternative fuels such as Hydrogenated
Vegetable Oil, increasing demand and putting
pressure on supply. We have trialled the use
of HVO fuel during 2022 and will review our
strategy in 2023.
Upstream
Direct
Downstream
Emerging
regulation
Increased direct and
indirect (operating)
costs
Medium-term
High
Low
Likely
Green skills gap
Delays and constraint on installation of new
technologies to meet the Future Home
Standards. Group deals will be put in place to
ensure we have the right level of availability.
Extreme weather event
Increased severity and frequency of flooding
could delay construction due to heavy rain and
high winds. Delays could impact employees,
site workers and customers. More modelling is
required to understand this long term risk.
Performance gap
Negative feedback from customers due to the
performance gap between design performance
and as-built performance, leading to increased
energy bills. Post-occupancy evaluations are
planned for 2023.
Direct
Market
Increased indirect
(operating) costs
Short-term
High
Low
Upstream
Direct
Acute physical
Increased indirect
(operating) costs
Very likely
Long-term
Medium
Unlikely
Difficult to
predict and
quantify at
this stage
Downstream
Technology
Decreased
revenues
Short-term
Medium
Low
More likely
than not
54 |
Climate-related Financial Disclosures (TCFD)
continued
Climate change related risks and opportunities (continued)
Risk/Opportunity
Embodied carbon
Emerging regulation around embodied carbon
and unintended consequences of replacing
existing products with lower carbon alternatives
(e.g. different types of insulation) may increase
end product embodied carbon and increase cost
of raw materials. We have completed a life cycle
assessment to improve our understanding.
Point of contact
TCFD type
Type of financial
impact (£)
Time horizon
and likelihood1
Magnitude
of impact
Potential
annual
financial
impact2
Increased
direct costs
Upstream
Downstream
Emerging
regulation
Long-term
Medium
High
More likely
than not
Subsidence
Hotter and drier summers could lead to
increased risk of soil shrinkage resulting in
an increased risk of subsidence. More modelling
is required to understand this risk.
Downstream
Chronic physical
Increased indirect
(operating) costs
Increased costs due to
remediation
Difficult to
predict and
quantify at
this stage
Long-term
Medium
More likely
than not
Modern methods of construction
(MMC)
Upstream
Market
Reduced indirect
(operating) costs
Long-term
Medium
Medium
Increasing the use of MMC leads to construction
efficiencies, lower embodied carbon and quicker
construction times.
Increased demand for low
carbon homes
Large scale trials of homes beyond the Future
Homes Standard to help inform our net-zero
carbon roadmap.
Virtually Certain
Upstream
Market
Increased potential for
more local authority
contracts
Short-term
High
Medium
Increased revenue
as better energy
performant homes
Decreased capital costs
Likely
1. Short term 0-5 years, Medium term 5-10 years, Long term >10 years. 2. Low = <£1m, Medium = £1m-£5m, High = >£5m
Vistry Group PLC | Annual Report 2022 | 55
Risk management
Effective risk management is critical in enabling us to achieve our strategic
and operational objectives.
Risk management framework
The Board has ultimate responsibility for risk management and
on an annual basis the Board undertakes a robust assessment
of the principal and emerging risks that could impact the
delivery of the Group’s strategy and its business. Responsibility
for reviewing the effectiveness of the Group’s internal controls
and risk management on an ongoing basis has been delegated
by the Board to the Audit Committee (see page 82). The ELT is
accountable for identifying, assessing and managing the principal
risks through the Risk Oversight Committee (the RO Committee).
The RO Committee is made up of representatives from all parts of
the Group and on a rotational-basis Non-Executive Directors and
the external auditors participate in its meetings to improve the
level of transparency and challenge.
Our risk management framework and the roles of the Board,
Audit Committee ELT and RO Committee are described below.
Following the Combination with Countryside, as part of the
integration process, a review of our risk management processes
was undertaken to ensure the mechanisms and risk monitoring
processes are fit for purpose given the size and complexity of
the enlarged Group. This review confirmed that our existing
framework and risk oversight processes are effective, subject
to some minor adjustments that will be implement during
early 2023.
Risk management framework
Board
Audit Committee
Sets risk appetite.
Assesses principal risks.
Reviews effectiveness of
internal controls and
risk management.
Executive Leadership Team
Identifies, assesses and monitors principal risks.
Risk appetite
The Board is responsible for setting the level of risk the Group
is prepared to accept. The impact of each principal risk on the
Group is considered across a number of different categories
including financial, reputational, operational, health & safety,
environment and sustainability. Each principal risk is then
allocated a risk appetite rating (see our risk appetite statement
below) which reflects the amount of risk the Group is prepared
to accept to achieve its strategic objectives. Our risk appetite
statement is regularly reviewed and updated by the RO
Committee and the ELT. On an annual basis the Board also
reviews and approves the statement. During the year Internal
Audit interviewed each business unit managing director to
discuss their perception of the impact of each risk, and the effort
required at a local level to manage these issues. This provided an
aggregated view reflecting the risk appetite of the entire Group.
Risk appetite statement
Principal risk
1 Materials and subcontractor labour
Economic and sales environment
Combining the enlarged Group
Project delivery
Customer service
2
3
4
5
6
7
8
9
People, talent and business continuity
Medium
Legislation, planning and building safety
Low
Liquidity and funding
Climate change and sustainability
Rating
Medium
Medium
Medium
Medium
Medium
Medium
Low
Zero
Risk Oversight Committee
10
Safety, health, and environment
Supports identification of the principal risks.
Considers the risk environment and the interplay between
individual risks.
Housebuilding and
Partnerships
Executive Leadership Teams
Maintain risk registers.
Deliver mitigating actions.
Horizon scan for
emerging risks.
Internal audit
Evaluates internal controls.
Provides advice, assurance
and support.
Undertakes investigations
and inquiries.
Ratings
Zero: No tolerance of any risks.
Low: Take a highly cautious approach and risk prevention is
prioritised, even if prevention costs are high or material.
Medium: Accept risk as part of the course of business, and
endeavour to minimise it through the Group’s risk management
framework, mitigation actions and regular performance
monitoring.
56 |
Principal and emerging risks
The enlarged Group’s principal risks are set out in order of priority
on pages 58 to 62. Changes to the profile of each risk during the
year are highlighted and include the following:
Using this information the Committee assesses the likelihood of
emerging risks occurring together with their likely trajectory and
impact. This process of looking forward ensures that our principal
risks and mitigations evolve and that emerging risks are integrated
into our risk management framework.
- The addition of a new integration risk (risk 3) following our
combination with Countryside.
The emerging risks we have identified include:
- Increased risk associated with the economic and sales
environment (risk 2) due to the deteriorating economic
environment.
- Conflict in East Asia and resulting supply chain disruption.
- Financial stress or insolvency of a registered provider of
affordable homes.
Our principal risks are identified through a top down and
bottom-up approach that covers all parts of the Group and they
are continuously reviewed and monitored. Each principal risk is
sponsored by a member of the RO Committee, with support from
Internal Audit and updates on the trajectory of each risk and
associated mitigation effectiveness are discussed at each of the RO
Committee’s quarterly meetings.
The RO Committee horizon scans for emerging risks using a
number of processes including monitoring macro-economic and
regulatory trends and external insights. Senior management
and members of the ELT also regularly participate in the RO
Committee’s meetings and provide updates on new and changing
market and sector developments and associated risks.
- The emergence of new strains of Covid and/or another pandemic.
Following the pandemic and more recent geo-political events we
recognise that risks can materialise very quickly and mean that
what we once considered as very low probability can no longer
be considered to be unlikely to occur. As a consequence, the
RO Committee maintains and regularly monitors a ‘watch list’ of
unlikely and improbable risks to ensure such risks are also regularly
assessed as part of our risk management framework.
Summarised below is our assessment of the likelihood of each
principal risk occurring together with its potential impact
taking into account the mitigating actions and controls we are
implementing to manage each risk.
Heat map
2
1
4
5 6 7
8
3
t
c
a
p
m
I
10
9
Likelihood
Low
Medium
Medium to high
High
Principal risk
1 Materials and subcontractor labour
2
3
4
5
6
7
8
9
Economic and Sales Environment
Combining the enlarged group
Project delivery
Customer service
People, change and business continuity
Legislation, planning and building safety
Liquidity and funding
Climate change and sustainability
10
Safety, health and environment
Vistry Group PLC | Annual Report 2022 | 57
Our principal risks
Below, listed in order of priority are the principal risks that could impact the
Group’s performance and strategy, together with an overview of the steps
we are taking to manage and mitigate such risks.
Risk and link to strategy
Potential impact and 2022 change
Mitigation
1. Materials and
subcontractor labour
Increasing production
across the industry
may lead to shortages
of both materials and
subcontract labour.
Supply chain pressures
caused by increased
market demand, UK and
overseas distribution
issues, alongside Brexit
and labour availability,
could materially
impact the supply and
cost of materials or
subcontractor services.
1
2
3
6
2. Economic and
sales environment
UK economic decline
brought about by
uncertainty, loss of
consumer confidence,
higher interest
rates and increasing
unemployment,
leading to decreased
affordability, reduced
demand for housing and
falling house prices.
1
• Build is constrained and profitability impacted if costs
• Increased and regular supply chain engagement
rise beyond levels of house price inflation.
• We are unable to source raw materials or experience
unplanned delays which hinders our completion rates
and build profile.
• Our people are placed under significant pressure,
particularly at key periods during the year, whilst trying
to manage customer expectations in the event of
unforeseen build delays.
Change in 2022
Increased
Remains a significant risk due to the relatively high cost
of both materials and labour, supply interruptions and
shortages of certain components. The war in Ukraine
has added significant inflationary pressures to all aspects
of the supply chain largely due to rising costs of energy.
Combined with the cost-of-living crisis, suppliers and
subcontractors are continuing to grapple with higher
cost bases and wage bills.
Whilst the housebuilding sector remains under significant
supply chain pressure, material price rises were offset by
strong house demand and solid house prices during most
of 2022.
• Adverse effects on consumer confidence and demand
for new homes, with consequential impact on revenues,
profits and potentially asset carrying values.
• Our partners are unable or unwilling to invest in social
housing due to restricted capital or reluctance to invest
until market certainty returns.
Change in 2022
Increased
The cost-of-living crisis, interest rate increases, together
with rising inflation have placed significant pressure on
household finances within the UK, as price increases have
not been matched by growth in average salaries. There
also remains uncertainty as to how the UK economy
may perform with the media continuing to report the
prospect of a recession or slow growth, with expected
reduction in output of the housebuilding sector alongside
falling house prices.
Whilst we continue to see strong demand across our
business areas, our Q4 sales rate was below forecast.
at both a regional and Group level to better
understand the live issues impacting the market
and reacting accordingly to maintain supply.
• Greater visibility of risk through increased
communications across the Group including
reporting supply issues that could impact our
build programme at each monthly ELT meeting.
• The Combination with Countryside creates
opportunities to realise significant cost savings
across the enlarged Group including the
identification of improved Group-wide deals
with key suppliers based upon increased scale
and targets.
• Centralised sourcing of the majority of the
Group’s requirements from within the UK,
including subcontractor materials, ensuring
reduced import risks, economies of scale
and improved relationships with key trades
and suppliers.
• Continued deployment of an agile procurement
strategy to mitigate the impact of supply
chain risks.
• Regular inflation adjustments to cost to complete
forecasts to help highlight and manage risks.
• Consideration given as to the level of cost
increases that can be reflected within future sales
prices or negotiated into land purchase price.
• Closely monitor lead housing market indicators,
notably visitors to sales outlets, sales rates and
price achieved, and review at each monthly
ELT meeting.
• Leading capability and increased partnerships
exposure as a result of combining Countryside
with our growing Partnerships business offers
greater resilience to the cyclicality of the housing
market and a consistently strong forward order
book underpinned by a high and sustained level
of demand for affordable housing.
• Our greater proportion of affordable and partner
delivery locks in an increased fixed sales revenue
that is unimpacted by short-term fluctuations of
market prices.
• Monthly forecasting processes control
investment and commitment of costs, and
carefully manage work in progress capital
investment to mitigate against short-term
economic change.
• Comprehensive sales price review process,
including regular ELT assessment, to monitor
change but also maximise opportunity.
58 |
Our principal risks
continued
Strategic pillars
1 Maintaining a strong market position
and capability across all housing
tenures, including being a leading
provider of high demand, high growth
affordable housing.
3 Leveraging our combined Vistry
Housebuilding and Countryside
Partnerships assets to maximise overall
returns, particularly on larger multi-
tenure developments.
5 Maintaining a high quality, deliverable
operational land bank and effectively
deploying our leading strategic land capability.
2 Delivering customers high quality
sustainable homes that at least
meet the continually evolving future
homes standards.
4 Utilising our differentiated multiple
brand portfolio to target a broader
range of customers and increase
our competitive positioning in the
land market.
6 Maximising the opportunity from Vistry
Work’s timber frame manufacturing capability
through improved operating efficiency and
establishing the use of its timber frame output
across all business areas.
Further information about our strategy:
See pages 18 to 21.
Risk and link to strategy
Potential impact and 2022 change
Mitigation
3. Combining the
enlarged Group
A failure to integrate
Countryside’s business
within the Group without
impacting operational
performance. A failure to-
realise the Combination’s
anticipated benefits and cost
savings. A failure to retain
key personnel or retained
knowledge within the
enlarged Group.
1
3
4
6
4. Project delivery
Inability to convert land
assets to support required
housing development.
Failure to achieve our
operational targets due to
new programme complexity
within our Countryside
Partnerships business, an
inability to execute our
housebuilding programme,
or a failure to control our life
of site costs.
2
3
5
6
New risk in 2022
• Whilst the synergies of the Combination have
been reasonably estimated, unanticipated events,
liabilities, tax impacts or unknown pre-existing
issues may arise which result in integration costs
being higher than the realisable benefits and/
or the synergies being lower than expected,
resulting in a material adverse effect on the
Group’s results and share price.
• Integration activities fail to be managed
effectively leading to delays, distraction or
adverse change impact.
• Our people are negatively impacted by the
integration programme leading to fatigue or
employee dissatisfaction. Retained knowledge
could be diluted or lost as a small number of
roles exit the Group.
• Established an oversight board and an
integration board to manage the Combination
and change processes that are required.
The integration board includes Countryside
senior management who are responsible for
closely managing site transfer activity using
a gated process that ensures appropriate
knowledge and record transfer.
• Ongoing risk assessment of key integration
activities undertaken by Internal Audit who
will provide updates and assurance to the RO
Committee, ELT and Audit Committee.
• We operate a multi-channel approach to
employee engagement ensuring employees are
listened to, and kept abreast of operational,
financial and strategic business matters.
The channels we operate to engage with our
people, listen to their views and gather their
feedback are detailed on page 28.
• We are unable to deliver the committed level of
• Monthly build and cost forecasting processes
returns from our developments.
• Unforeseen operational impact on sites that
have transferred to new business units or
management teams.
• Cost overruns on our large and complex sites may
have a material impact on financial performance.
• We are unable to source the required land or
opportunities at the rate we require to maintain
our forecasted margin or match the requirements
of our enlarged Partnerships business.
Change in 2022
Unchanged
Whilst there was pressure across building materials
and supply chain resulting in extended lead
times and inflationary price increases on certain
products, working in close partnership with our
suppliers we were able to manage these issues
without any impact on our 2022 completions.
presented through the ELT as part of the
oversight of regional performance.
• Our COINs ERP system embeds a standardised
set of Group processes to ensure conformity
across our build programme. This is being rolled
out across the enlarged Group
• Closely monitor build performance and delivery
against plan including regular onsite visits from
the ELT.
• Robust land viability process and a strategic
land function that allows for a balanced review
process and considers regional differences.
Strategic land allows for the combined
opportunities of both our Partnership and
Housebuilding businesses to be considered with
improved economies of scale.
Vistry Group PLC | Annual Report 2022 | 59
Risk and link to strategy
Potential impact and 2022 change
Mitigation
5. Customer service
A failure to deliver product
quality and service
standards that meet our
customers’ expectations or
fall short of the standards
expected from supervisory
bodies.
2
• The Group’s reputation is diminished with an
adverse effect on sales volumes and returns.
• All homes built are subject to external provider
building control inspections.
• Multi-quality inspections undertaken by build
staff, sales staff, and regional directors.
• CRM system that puts customers in control
when raising issues and communicating with
customer care teams.
• Standardised customer journey operates across
the Group together with mechanisms and
controls that report key metrics and will likely
be required by the New Homes Ombudsman
(see pages 39 and 40).
• We are impacted by the excessive time and
expense of rectification and compensating
customers, which may impact planned business
operations.
• Our people take great pride in building homes
for our customers, and any decline in customer
satisfaction will impact our employees.
Change in 2022
Increased
Quality standards remain at the heart of our
business and we are proud that all parts of the
Group continue to hold 5-Star accredited builder
status. While supply-chain issues have impacted
our ability to undertake remedial work and can on
occasion slow the move in process, our sales and
customer care teams have been able to manage
the impact through transparent communication.
The profile of this risk has increased year-on-year
to take account of the integration risks associated
with site transfers and embedding new processes
in the Countryside business. The increased risk
profile also takes account of The New Homes
Quality Code (NHQC) requirements (see page 14).
6. People and
business continuity
An inability to attract,
develop or retain good
people. In addition, a
failure to modernise our
business and the impact of
a major IT failure or cyber-
attack that disables critical
systems and/or results in
data loss.
1
2
3
4
5
6
• Our growth plans could be hampered by a loss of
• Monitor employee satisfaction through Group
critical functions or skills.
Peakon survey (see page 36).
• A major IT failure, cyber-attack or data loss
could cause significant disruption or financial
harm to the Group and result in fines or
compensation claims.
• Prioritise engagement and communication
across priority employee issues including
diversity & inclusion, sustainability and mental
health and wellbeing.
Change in 2022
Increased
The labour market within the wider construction
industry remains challenging due to relatively
buoyant job availability and particularly aggressive
recruitment. Retention of trained employees
is proving particularly challenging with salary
expectations increasing significantly, in part due
to the cost of living crisis.
Cyber risk continues to increase due to
relations with Russia and the general economic
environment. The enlarged Group’s IT environment
is more complex and further work will need to
be undertaken during 2023 to ensure consistent
standards across the technology estate.
• Agile working policy allows flexible working for
office-based employees.
• Measurement of key indicators, including
churn, diversity and stability index, and regular
reporting to the ELT and Board to ensure we are
trending positively and responding to employee
impacting issues.
• We recently achieved certification as a ‘Top
Employer’ with the Top Employers Institute.
This recognises our people strategies and
workplace environment. As part of the
certification process we were provided with
a dashboard of suggested area for which
improvements are being made.
• Continued effort to further improve employee
engagement (see page 36).
• IT Governance Committee oversees cyber
and continuity risks, including data security,
supported by external penetration testing and a
Cyber Essentials accreditation.
60 |
Risk and link to strategy
Potential impact and 2022 change
Mitigation
Our principal risks
continued
7. Legislation,
planning and
building safety
An inability to fulfil
regulatory planning,
building, customer
service and climate-
related technical
requirements for new
homes and communities.
In addition, the threat
of new unquantified
liabilities from past
developments
becoming material.
2
5
• We fail to build properties that meet current and
future regulatory planning, building, fire safety, and
climate-related technical requirements.
• Group Head of Design and Technical oversees home
build standards ensuring a standardised approach to
our homes where appropriate.
• Our Vistry25 project covers a wholesale review of our
entire product range and includes the development
of a new brand product range and assessments of
the impact of the Future Homes Standard. Dedicated
programmes to review areas such as overheating,
ventilation, water efficiency and carbon reduction
across our house range will be rolled out in advance
of the new legislative changes. The integration of new
categories such as adaptable and wheelchair user
dwellings and the Nationally Described Space Standards
will also be reviewed.
• Undertaken a specialist team led review of all the
Group’s current and legacy buildings where a potential
liability has been identified. Provision has been made
for the expected costs of any remedial works that may
be required. Ongoing assessment continues based on
the latest Government position and legislative changes.
In addition, we continue to assess and prepare for the
Residential Property Developer Tax.
• A dedicated Special Projects Team is in place to manage
fire remediation issues and review our provision to
ensure it meets all known liabilities, with sufficient
contingency, including new requirements as part of the
Developer Remediation Contract. As part of our due
diligence in relation to the Combination, we reviewed
the basis and composition of Countryside’s cladding and
fire remedial safety work provisions, and these have
been adjusted accordingly (see note 5.9 (Provisions) of
the financial statements).
• Insufficient financial provision to cover the portfolio
of legacy developments, particularly high-rise
schemes, depending on any future legislative
changes regarding direct or indirect liability.
• A change in the law that either increases the tax
burden on the Group or creates an additional levy to
fund fire safety related issues.
Change in 2022
Increased
Ongoing political changes and uncertainty including
the future of planning reform which is yet to be
finalised, may have potential impacts on land supply,
our ability to achieve planning permissions and reform
of S106/community infrastructure levy mechanisms.
Government has committed to building 300,000 new
homes overall every year by the mid-2020s. While
some of these new homes will be delivered through
the Affordable Homes Programme, there is no target
for how many of the new builds should be affordable.
The Revocation and Reform Bill is having an impact
on Habitat Regulations, including nutrient neutrality
which is leading to planning delays in certain UK
regions. The Environment Act 2021 also mandates the
achievement of at least a 10% biodiversity net gain by
November 2023.
In April 2022 we signed the Department for Levelling
Up, Housing and Communities’ pledge, which sets
out our commitment to address life-critical fire-safety
issues on all buildings of 11 metres and above in
England we have developed in the 30 years prior to
5 April 2022. We have also agreed not to claim any
funds from the Government’s Building Safety Fund and
to reimburse claims made by leaseholders and other
affected parties to the Building Safety Fund.
In January 2023, the UK Government published its
response to certain sections of its consultation on
the new safety regime for higher-risk buildings under
the Building Safety Act 2022 and in March 2023 we
signed the Developer Remediation Contract.
8. Liquidity
and funding
A failure to generate
enough liquidity
to manage short-
term and long-term
funding or investment
requirements.
1
3
5
• A failure to service debt, comply with borrowing
covenants or generate sufficient cash to meet
working capital requirements.
• Our capital-light Countryside Partnerships business
requires reduced upfront funding, enabling the business
to expand without the need for significant borrowing.
• 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.
Change in 2022
Increased
Strong trading aligned to expectation and an above
target net cash position has delivered continued
progress. We recognise that economic uncertainty
and increased Group borrowing for the purpose of
the Combination does increase the level of risk going
forward, albeit well within appetite which has been
reflected in our viability and going concern assessment
(see pages 63 and 64).
• Vistry operates a centralised treasury function which
is responsible for managing liquidity, interest and cash
forecasting processes. Rigorous procedures are in
place to assess both cash and work in progress, with
continual monitoring by the ELT. Successful refinancing
during the second half of 2022 highlights the strength
of the Group's covenant and availability of funding.
• As set out as part of our scenario testing (see pages
63 and 64), we have opportunities to reduce our
building programming and subsequent work in
progress requirements, defer land purchases or reduce
overheads to respond to any reduction in available
liquidity.
• The Board reviews the Group's capital allocation policy
on a regular basis.
Vistry Group PLC | Annual Report 2022 | 61
Our principal risks
continued
Risk and link to strategy
Potential impact and 2022 change
Mitigation
9. Climate change and
sustainability
Failure to articulate our pathway
to carbon net zero targets and
consider the impact of climate
change in terms of physical
and transitional risks. A failure
to keep up with the increasing
levels of interest and reporting
requirements from Government,
investors, customers, and society
to build in more environmentally
considerate and sustainable ways
could result in penalties and
negative attention.
2
See Sustainability report
(pages 32 to 48).
See Climate-related financial
disclosures (TCFD)
(pages 49 to 55).
10. Safety, health and
environment
A loss of trust in the Group’s
ability to build communities
safely and in an environmentally
responsible way. Preventable
accidents that harm people,
communities, or the environment.
1
2
6
• We are unable to deliver sufficient year on
• Delivery of sustainability strategy assigned to
year improvements across all aspects of social
value to meet the expectation of internal and
external stakeholders or customers.
• We fail to deliver against our own stretching
carbon reduction targets (see page 34).
• We fail to record or maintain appropriate data
sets and are unable to demonstrate actual
improvements made.
• We fail to meet the TCFD recommendations or
other reporting requirements.
Change in 2022
Unchanged
Whilst external awareness and the level of
scrutiny has increased following recent events
such as COP 27, the Group has made significant
progress in setting up our risk-based strategy
and climate response initiatives to ensure this
risk is well managed and remains a key part of
the Group's strategy.
• The reputation and financial health of the
Group is adversely affected.
• Investigations or fines that diminish the
Group’s reputation and impact its finances.
Change in 2022
Unchanged
Our unified Group-wide SHE system continues
to support a single set of processes across
all businesses. We recognise the impact of
increased homeworking and social isolation on
our peoples’ mental wellbeing and have taken
appropriate steps to address this.
the COO with a dedicated function coordinating
our approach, target setting and performance.
Progress against targets are regularly reported
to the ELT and Board. See pages 49 and 50.
• Signatory to the Business Ambition for 1.5°C
and committed to science-based targets.
• Developed a roadmap to deliver net-zero
carbon homes and delivered a carbon action
plan to reduce Scope 1 and Scope 2 emissions
(see page 45).
• Disclosures consistent with the TCFD
recommendations. See pages 49 to 55.
• Member of the UK Green Building Council.
• Signatory to the social value portal to measure
social value return on investment.
• Review and consider health and safety issues at
every meeting of the Board, ELT, Housebuilding
ELT and Partnerships ELT.
• Dedicated SHE Director and team, supported by
independent third-party providers undertaking
site and office visits and regular audits.
• Best practice shared across the Group and ISO
45001 and 14001 certification in place for our
Partnership business and UKAS Accredited ISO
45001, ISO14001 and ISO9001 Management
Systems in place in Countryside.
62 |
Viability and going concern statements
The Board has assessed the prospects of the Group and its longer-term
viability, taking account of its current position and principal risks.
The assessment context
The Board has assessed the longer-term viability of the Group,
over a five-year period to December 2027. The average life cycle
of our developments falls within a five-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. As part of this review the Board also assessed the
ability of the business to remain a going concern out to December
2024 which is a little over 21 months from the date of signing
the financial statements and aligns to the Group’s two-year
budget. The first review of the five-year period was undertaken
in conjunction with the Board’s consideration of the Group’s
proposed combination with Countryside. As part of this review the
Board approved new financing facilities including a term loan to
finance the Combination (see note 4.2 of the financial statements).
Due to changing market conditions, a second review of both the
five- year and two-year periods were undertaken after the 2022
year end to ensure that Vistry Housebuilding and Countryside
Partnerships’ respective business plans aligned with the significant
step-down in private sales rates in Q4 2022. This review factored
in some of the plausible downside case scenarios and offsetting
mitigating actions that were considered as part of the first review
referred to above. The assessment also took into account the
Group’s strategy (see pages 18 to 21), current performance and
principal risks.
Assessment considerations
The Board considered the following key considerations in its
assessment:
• The Group’s strong market position and multiple brands that
offer differing propositions across all housing tenures including
the high demand, high growth affordable housing sector.
• The different risk profiles of Vistry Housebuilding and
Countryside Partnerships, and in particular the expectation that
the latter will have more resilient and less cyclic revenues.
• The Group’s strong balance sheet, good cash generation
capabilities and substantial funding headroom.
• Maintaining financial discipline including a clear capital allocation
policy that prioritises investment in operating businesses and
sustainable dividend cover.
• A high-quality land bank with in excess of 80,000 plots to
safeguard future growth commitments.
As part of our annual strategy review process the following
matters are taken into account:
• The Group’s five-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 based on the
development of our existing land bank, and the depth and
length of any near term housebuilding market deterioration
and the pace and timing of any recovery have been thoroughly
assessed. There is inherently more uncertainty in the later years
of the plan as it incorporates a higher level of assumed housing
completions from owned land currently without planning or land
not currently owned by the Group.
• The Group’s risk management processes and its principal risks
including the measures in place to mitigate these risks (see pages
56 to 62).
Assumptions
As highlighted above, due to changing market conditions towards
the end of 2022 and a significant step down in sales rates, Vistry
Housebuilding and Countryside Partnerships’ respective business
plans were reviewed. As part of this review process we factored
in assumptions in relation to the depth and length of any market
deterioration and the pace and timing of any recovery based on
our previous experiences most notably during the period from
2008 to 2009. The considered view was that the market would
return to 2019 levels of private homes demand during the first half
of 2023 and that this would remain for a two-year period, when
it is expected that demand would pick back up. This view was
supported by an assessment of Bank of England interest rate
yield curves.
We tested with our banking group a plausible worse-case scenario
in the context of the Group’s debt position having acquired
Countryside. Current market conditions are well inside of this
scenario so we are assuming the Group’s debt facility will be
available as currently contracted.
We also assumed that the Countryside Partnerships business will
be more resilient to market conditions as registered providers (our
partners) and the private rental sector are not impacted in the
same way as our private customers and the demand for affordable
housing and the Government’s ongoing support for this sector
continues to be strong.
Scenario testing
The financial plan has been tested using the following scenarios
to determine whether the Group could continue in operation over
the five-year assessment period to December 2027:
• A 10-20% reduction in volume of private homes sold in 2023
and 2024 respectively.
Vistry Group PLC | Annual Report 2022 | 63
Viability and going concern statements
continued
• A 10% reduction in average sales price over the same two-
year period.
• A 100bps increase in sterling overnight index average base
interest rates.
• A subsequent reduction in uncommitted land investment.
• A 50% reduction in dividend pay out ratio from second half
2023 onwards.
The scenario testing applies the downside cases in aggregate
and are considered severe but plausible downside cases.
The offsetting mitigating actions are also considered achievable
and have been borne out in practice in previous years when
needed.
The potentially highest impact risks, from a Group viability point
of view, are those which arise from either a downturn in the
economic environment or fundamental changes in Government
policy, leading to decreased affordability, reduced demand for
housing, increased costs and falling house prices. See note 1.3 to
the financial statements for further detailed information.
Viability Statement
Based on the results of this analysis, the Board has a reasonable
expectation that the Group has adequate resources to continue
in operation, meet its liabilities as they fall due, maintain
sufficient available cash across the five-year assessment period
to December 2027 and stay within any required banking
covenants to ensure the continued availability of committed
financing facilities.
Going Concern
The Board 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 of the financial statements.
In forming this view, the Board reviewed a cash flow forecast
using two scenarios – a likely base case and a severe but plausible
downside scenario. In the severe but plausible downside scenario
the same assumptions were made around volumes and sales
pricing as per the viability assessment. In each of these scenarios,
the forecasts indicated that there was sufficient headroom and
liquidity for the business to continue based on the facilities
available to the Group. In each of these scenarios the Group was
also forecast to be in compliance with the required covenants on
the aforementioned borrowing facilities.
At 2022 year end the Group had £1,050m in committed financing
facilities (£1,000m at the end of March 2023) with well-spread
maturities out to 2027, including a £500m revolving credit
facility expiring in December 2026 with a one year extension
option with lender consent available in the second half of 2023,
£400m of term borrowings maturing in March 2025 and a £100m
US private placement facility. The Group regards its current
banking arrangements as adequate for its needs in term of
flexibility and liquidity and will address the need to re-finance any
of these facilities at the appropriate time. Given there have been
two recent re-financings of the Group, appetite from lenders has
been shown to be strong and there is no known reason why any
re-financing may not be possible if required. As at 31 December
2022, the Group had £118.2m net cash including £557.3m drawn
down under facilities. See note 4.2 of the financial statements for
further information.
64 |
64 |
Non-financial information statement
In accordance with Section 414CA and 414CB of the Companies Act 2006, the information below is provided
to help our stakeholders understand our position in relation to key non-financial matters. Where to find
relevant further information, including details about policy implementation and outcomes, is indicated below
and such information is incorporated into this statement by cross-reference.
Key matter and
risk management
Relevant policies
(available at www.vistrygroup.co.uk/sustainable-approach/policies-and-publications)
Further
information
Employees
1 3 6 10
Principal risks pages
58 to 60 and 62.
Health, safety and welfare policy: Our approach to managing the health, safety and welfare
of our employees, workplaces and others affected by our operations.
Diversity and inclusion policy: Outlines our commitment to build and sustain an inclusive
culture and diverse workforce, our approach and how we monitor it.
Ethical code of conduct policy: Outlines our commitment to high ethical and moral
standards and the responsibility framework we have embedded to deliver our standards and
appropriate behaviours.
Business continuity policy: Our approach to minimising the impact of serious disruption to
our operations.
Speak up policy: The processes we operate to encourage employees to speak up about
suspected wrongdoing.
Social and community
5 7 9 10
Principal risks pages
60 to 62.
Environment policy: Our approach to managing our environmental performance to optimise
the impact of our business processes on the natural environment and the community at large.
Climate change policy: Our approach to mitigating climate change risks associated with
the homes and communities we build, whilst at the same time reducing the greenhouse gas
emissions associated with our operations.
Speak up policy.
Human rights
6
Principal risks page 60.
Anti-slavery and human trafficking policy: Outlines our commitment to acting ethically and
with integrity in all our business dealings and relationships and describes our approach to
ensuring modern slavery is not taking place anywhere in our own business or in any of our
supply chains.
Diversity and Inclusion policy.
Speak up policy.
Privacy policy: Our approach to protecting the privacy of all our stakeholders including how
we use, collect and store personal data.
Anti-corruption and
anti-bribery
6
Principal risks page 60.
Anti-bribery and corruption policy: Our approach to preventing bribery and corruption
from taking place and our commitment to preventing, detecting, investigating and reporting
such events.
Anti-fraud policy: The procedures we operate to reduce the likelihood of fraud and our
commitment to its prevention, detection, investigation and reporting.
Speak up policy.
Anti-money laundering policy: The procedures we operate to prevent money laundering
from taking place and our commitment to preventing, detecting and reporting such events.
Environment
7 9 10
Environment policy.
Speak up policy.
Principal risks pages 61
and 62.
Our business model
Non-financial KPIs
Employee engagement score and voluntary labour turnover.
Accident incident rate and service strike incident rate.
HBF customer satisfaction.
NHBC reportable items.
Affordable housing completions.
page 35.
page 38.
page 43.
page 60.
page 43.
page 44.
page 45.
page 43.
page 43.
page 38.
page 43.
page 43.
page 96.
page 43.
page 44.
page 43.
pages 16
and 17.
page 36.
page 35.
page 39.
page 7.
page 42.
The Strategic Report outlined on pages 1 to 65 was approved by the Board and has been signed on its behalf by the Chief Financial Officer.
By Order of the Board.
Tim Lawlor, Chief Financial Officer
22 March 2023
Vistry Group PLC | Annual Report 2022 | 65
Governance report
Contents
67
70
72
74
83
84
87
90
98
Chair's governance letter
Board of Directors
Code application
Board leadership and company purpose
Division of responsibilities
Composition, succession and evaluation
Nomination Committee report
Audit Committee report
Directors' Remuneration report
124
Directors’ report
128
Directors’ responsibilities statement
Bay View, Northam, Devon.
66 |
Chair's letter
“The Board has a key role to play in
ensuring that the significant value creation
opportunities resulting from the Combination
are effectively harnessed for the benefit of
all the Group’s stakeholders.”
Ralph Findlay OBE | Chair
Dear Shareholder
I am pleased to explain the Company’s approach to corporate
governance in my first letter as Chair. I succeeded Ian Tyler as
Chair at the AGM on 18 May 2022 and was delighted to take
up leadership of the Board. It has been a transformational year
during which the Group has delivered another excellent financial
performance and made significant strategic progress through its
Combination with Countryside.
The corporate governance section of this Annual Report explains
the governance structures that are in place, how the Board
operates to support the Group’s long-term success and our
plans to continue to enhance our governance processes. The
Board’s role in relation to specific developments during the
year is set out on pages 76 and 77 and we explain how we have
applied the core principles of the UK Corporate Governance
Code 2018 (the Code).
Strategy
The primary role of the Board is to lead the Group in a way
that ensures long-term sustainable success. The Board has
discharged this responsibility by focusing on the following key
priorities during the year:
• Approval and oversight in September 2022 of the Combination
and oversight of the integration programme that commenced
in November 2022 following completion.
• Oversight of the performance of Housebuilding and
Partnerships and, in particular, quality and customer service
levels notwithstanding ongoing supply chain pressures.
• Approval of the signing of the Pledge Letter and oversight of
associated remediation activities and costs. Subsequently in
March 2023 the Board approved the signing of the Developer's
Remediation Contract.
• Undertaking succession planning for the Chair of the Audit
Committee, Non-Executive Directors, Executive Directors and
broader senior management resulting in various Board and
senior management changes.
• Approving a £35m share buyback programme.
Appointment and succession
There were a number of Board changes during the year. In April
2022 it was announced that Graham Prothero was to resign
as Chief Operating Officer and Director to take up the role of
CEO at M J Gleeson PLC. Graham remained as an employee of
the Group until the end of the year and has provided invaluable
support during his time, both as a Director and through his work
on the Countryside transaction. He stepped down as a Director
on completion of the Combination in November 2022.
I succeeded Ian Tyler as Chair at the AGM in May 2022, at which
time Ian stepped down from the Board. I would like to thank Ian
for his important contribution as Chair for eight and half years.
Alongside Greg and the senior team, Ian played an instrumental
role in helping Vistry become one of the UK's top housebuilders.
Rowan Baker was appointed as a Non-Executive Director and
Chair of the Audit Committee at the 2022 AGM, and I would
like to welcome her to the Board. She has financial expertise
and sector experience which will further strengthen the Board.
Ashley Steel was also appointed as Senior Independent Director
on the same date.
Following the year end, Nigel Keen and Katherine Innes Ker
indicated their intention to step down from the Board with
effect from 23 March 2023 and the close of our AGM on 18 May
2023 respectively. Nigel has been a Board member for over six
years, and Katherine for over four years. On behalf of the Board,
I would like to thank them for their contribution and support
particularly in recent years, during which the Group has changed
significantly.
We are also pleased to have appointed Jeff Ubben as a Non-
Executive Director with effect from 23 March 2023 (see page
88).
Changes to the composition of each of the Board's Committees
as a result of the changes detailed above are highlighted in the
Committee reports included on pages 87, 90 and 98.
The Group has become larger and more complex as a result of
the Combination with Countryside. Earl Sibley was appointed
as COO on the closing of the transaction to provide focus on
the integration of the businesses and operational delivery of
the strategy. We were pleased to welcome Tim Lawlor as CFO
on the same date. Tim was previously the CFO of Countryside,
and his appointment provides continuity and knowledge of
Countryside’s business as well as significant CFO plc experience
both at Countryside and previously with Wincanton Group.
Vistry Group PLC | Annual Report 2022 | 67
Looking forward the Board, through the Nomination Committee,
commenced a succession planning process to address likely
changes over the medium term, taking into account the tenure
of Non-Executive Directors, the importance of diversity and the
need to evolve the Board's skills and experiences to reflect the
enlarged and more complex Group and to support its growth
strategy. As part of this process we have commissioned searches
for two additional independent Non-Executive Directors.
Purpose, values and culture
Earning trust, doing the right thing and acting with integrity
underpins our ability to deliver long-term sustainable value for
all of our stakeholders. We have a clear purpose with a set of
values that reflect the culture we aspire to embed throughout
the Group.
The Board assesses and monitors the Group’s culture through a
number of channels which are described on page 75. Establishing
a common culture is a key element of the integration of Vistry
and Countryside, and reflecting this the Board has approved the
creation of a new Code of Conduct that will be launched and
embedded across the enlarged Group in 2023.
Stakeholder engagement
The sustainable success of our business is dependent on a wide
range of stakeholders, (see pages 28 and 29), and the Board
and each of the Directors take seriously their duties to consider
all stakeholders’ needs and concerns in its discussions and
decision-making processes. The mechanisms we use to ensure
we understand stakeholders’ issues, and how we factored
stakeholders’ interests into our decision making during 2022, is
explained on pages 28 to 31, page 78 and pages 80 and 81. Our
section 172 statement is set out on page 30.
As part of the Board evaluation process our stakeholder
engagement mechanisms were considered. Subsequently it
was agreed that more direct engagement with Countryside
Partnerships' partners, including registered providers, would
further enhance understanding and board room discussions.
The Board remain disposed to engage with shareholders at
their request. In March 2022 myself, Nigel Keen and the former
Chair, Ian Tyler, held governance meetings with a number of our
larger institutional shareholders. The key themes arising from
the discussions related to Board succession, remuneration, ESG/
sustainability and capital allocation. I also engaged with new
investors in the Company that became shareholders through the
Combination and remain available to meet with shareholders.
People
The Board is committed to achieving diversity and inclusion
across the Group. As of 31 December 2022, the proportion
of women on the Board was 44% with the role of Senior
Independent Director held by a woman. The current Board
female representation satisfies two of the new diversity targets
set by the Financial Conduct Authority. Such targets will form a
key consideration as the search for two additional Non-Executive
Directors commences.
68 |
68 |
Currently no member of the Board is from a minority ethnic
background and the Board intends to address this through Non-
Executive Director succession arising from the tenure of certain
Directors and the evolving need for skills and experience.
Sustainability and ESG
We launched our sustainability strategy in 2021 and the
Board regularly monitors and oversees progress against our
sustainability targets. As explained on page 50, we have
established a new Sustainability Committee and to enhance the
Board's oversight of climate-related risks and opportunities a
Non-Executive Director will attend each of its meetings. Further
information on our sustainability strategy and developments
during the year are set out on pages 32 to 48.
Corporate governance statement
The Board confirms that throughout the financial year ended 31
December 2022 and as at the date of this Annual Report we have
complied with all of the provisions of the Code other than:
• Provision 38: Pension contribution rates should be aligned to
those available to the workforce. As described on page 111, the
stepped reduction to align with the applicable rate of the wider
workforce was achieved from 1 January 2023.
• Provision 41: Engagement with the workforce on how executive
remuneration aligns to the wider workforce arrangements.
It was intended that executive remuneration be discussed at
the People Forum in 2022, but due to the economic backdrop
and Combination, focus turned to the cost of living crisis and
consultations for integration.This is now proposed to be an
agenda item in 2023.
We explain how we have applied the Code’s core principles
on pages 72 and 73 and throughout this governance section.
A copy of the Code is available on the Financial Reporting
Council’s website at www.frc.org.uk.
Board evaluation
In accordance with good governance practice we undertake an
annual evaluation to ensure that the Board, its Committees and
each Director performs effectively. The Code requires that such
evaluation is externally facilitated at least every three years.
As our most recent external evaluation took place in 2020, in the
coming year we will facilitate another external evaluation.
Information about the 2022 internal effectiveness evaluation,
including the outcome, which was positive, and detail of the
actions agreed to address recommendations resulting from the
Board’s discussion, are set out on page 86.
Conclusion
I believe that your Board remains effective and continues to work
very well. Whilst I am also pleased with the Board’s activity and
approach with regard to corporate governance,
we will continually look for ways to learn and improve.
Ralph Findlay OBE
Chair
22 March 2023
Our governance framework
Our governance framework, which includes the Board and the three
Committees it has established, is set out below.
The Board
Responsible for the long-term success of the Group through its leadership direction, and for ensuring there is a
framework of appropriate and effective controls which enables risk to be assessed and managed.
Sets the Group's strategic aims, determines resource allocation to ensure the necessary financial and human
resources are in place for the Group to meet its objectives.
Monitors overall performance and progress against business plans using KPI’s coupled with numerous development
site visits to assess the delivery of quality, delivering sustainable homes to customers and meeting their
expectations.
Sets, monitors, and reviews the Group's culture, values, and purpose, and ensures that its obligations to
shareholders and other stakeholders are understood and met.
Nomination Committee
Audit Committee
Remuneration Committee
• Reviews size and balance and
composition of the Board.
• Oversees financial statements
and reporting.
• Maintains focus on succession
planning for Board and Senior
Management.
• Review significant accounting and
reporting judgements.
• Monitors internal controls and
• Leads recruitment process for
risk management.
• Ensures remuneration policies
and practices are designed to
support the Group's strategy and
long-term success.
• Oversees implementation of
remuneration policy for executive
directors and senior management,
including structure of incentive
plans and setting performance
criteria for incentive plans.
• Monitors reporting and
effectiveness of external and
internal audit process.
See pages 90 to 97.
• Reviews workforce remuneration.
See pages 98 to 123.
the Board.
• Proposes appointments to
the Board.
• Sets diversity and inclusion
objectives, and targets for the
Board and Senior Management.
See pages 87 to 89.
Executive Leadership Team
• Oversees the implementation of Group strategy.
• Responsible for operation and performance of the Group in line with the Group's established risk
management framework.
Housebuilding Executive Leadership Team
Partnerships Executive Leadership Team
• Responsible for the operational management of
• Responsible for the operational management of
Housebuilding Divisions and business units.
Partnership Divisions and business units.
Vistry Group PLC | Annual Report 2022 | 69
Board of Directors
Ralph Findlay OBE
Non-Executive Chair (Effective 18 May 2022)
Rowan Baker
Independent Non-Executive Director
Chris Browne OBE
Independent Non-Executive Director
Appointed to the Board: 07 April 2015
Appointed to the Board: 18 May 2022
Committee memberships: N
Key skills and experience:
Ralph became Chairman of the Board on 18 May 2022. He is
a Chartered Accountant with extensive listed company
experience. Ralph was Chief Executive Officer of Marston’s PLC,
between 2001 to 2021, having been Finance Director from 1996
to 2001 and Group Financial Controller from 1994 to 1996.
In 2023, Ralph was awarded an OBE for services to hospitality.
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.
Committee memberships: A N R
Key skills and experience:
Rowan is a highly experienced chief financial officer in
construction and development. She is currently the Group
Chief Financial Officer of Laing O'Rourke, and from 2017 to
2020, was the Chief Financial Officer of McCarthy Stone.
Prior to joining McCarthy Stone in 2012, she worked in finance
for Barclays Bank plc and professional services for PwC.
Rowan has a masters degree in Law from Cambridge
University and is a qualified accountant (FCA) and chartered
tax adviser.
What she brings to the Board:
Extensive experience of the construction sector and the
challenges it faces to improve productivity, deliver greater
certainty for clients and overcome a long-standing skills
shortage.
External appointments:
Listed: Chair of C&C Group plc.
External appointments:
Non-Listed: Laing O’Rourke PLC.
Appointed to the Board: 01 September 2014
Committee memberships: A N R
Key skills and experience
Chris has previously held a number of senior leadership
positions within the aviation industry, most recently as
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 of 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 appointments:
Listed: Non-Executive Director of Kier Group plc and Non-
Executive Director of Constellium SE (NYSE).
Nigel Keen
Independent Non-Executive Director
(Stepping down with effect from 23 March 2023)
Katherine Innes Ker
Independent Non-Executive Director
(Stepping down with effect from 18 May 2023)
Ashley Steel
Independent Non-Executive Director and
Senior Independent Director
Appointed to the Board: 15 November 2016
Appointed to the Board: 09 October 2018
Appointed to the Board: 10 June 2021
Committee memberships: A N R
Key skills and experience:
Nigel is a Chartered Surveyor and has extensive knowledge
and experience of property and construction. He 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. Nigel 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.
What he brings to the Board:
Property, construction, and customer experience in a
consumer facing industry. Property strategy, land acquisition
and development.
External appointments:
Listed: Non-Executive director of PPHE Hotel Group Limited.
Non-listed: Non-Executive director of RG Carter Construction
and Trustee of Maudsley mental health charity.
Committee memberships: A N R
Key skills and experience:
Katherine has gained extensive executive and non-executive
experience across a range of sectors in a career spanning over
30 years. She was a Non-Executive Director at Go-Ahead
Group PLC until November 2020. Katherine has also held
positions as a Non-Executive Director of Taylor Wimpey PLC,
also chairing its 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 appointments:
Listed: Chair of the Mortgage Advice Bureau (Holdings)
PLC, Senior Independent Director of Forterra PLC and Non-
Executive Director of Ground Rents Income Fund PLC.
Non-listed: Independent chair of the Remuneration
Committee of Balliol College, Oxford and toob Ltd.
Committee memberships: A N R
(Chair of Remuneration Committee with effect from
23 March 2023)
Key skills and experience:
Ashley has significant board and executive level experience
from being Vice Chair at KPMG and a member of the firm’s
UK and European boards. She was also Global Chair for the
Transport and Logistics practice and the UK Infrastructure
and Government practice. Previously, Ashley was Member
for England on the board of the BBC and served on the boards
of online comparison provider GoCo Group PLC, law firm
Ince&Co LLP and the UK Civil Aviation Authority. She was
also a Non-Executive Director of National Express Group
PLC until December 2021. Ashley holds a PhD from Henley
Business School.
What she brings to the Board:
Significant experience of delivering profitable growth and
advising on the development and implementation of strategy
with strong focus on transactions, retention, reward and
incentivisation of management in delivery of strategy.
External appointments:
Listed: Non-Executive Director of Cineworld Group PLC.
70 |
Greg Fitzgerald
Chief Executive Officer (CEO)
Appointed to the Board: 18 April 2017
Committee memberships: None
Key skills and 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 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 the house building and
construction industry, business growth and value creation.
Earl Sibley
Chief Operating Officer (COO)
(Effective 11 November 2022)
Tim Lawlor
Chief Financial Officer (CFO)
(Effective 11 November 2022)
Appointed to the Board: 16 April 2015
Appointed to the Board: 11 November 2022
Committee memberships: None
Committee memberships: None
Board skills matrix
Board skills matrix
100
100
Key skills and experience:
Earl was previously the Group’s Chief Financial Officer and
became COO on 11 November 2022. Earl is a Chartered
Accountant and re-joined the Company as Group Finance
Director in April 2015 having previously worked as Group
Financial Controller from 2006 to 2008. He served as Interim
Chief Executive from January to April 2017. Earl 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.
50
50
What he brings to the Board:
Leadership, strategic focus, financial and accounting expertise.
%
%
External appointments:
None.
Retail
Retail
Financial
Financial
Construction and
Construction and
property
property
Key skills and experience:
Tim joined the Group following the combination with
Countryside where he served as CFO. He has strong financial
and commercial expertise having served for seven years as
CFO of Wincanton Plc, the largest British third party logistics
company, before joining Countryside. Prior to Wincanton Plc,
Tim held a number of senior group, divisional and international
finance roles at large listed companies, including Serco and
Sea Containers. Tim qualified as a Chartered Accountant at
Deloitte where he worked for seven years based in the UK
People and culture
People and culture
and North America. He holds an MA in Economics from
Health and safety
Health and safety
Cambridge University.
and regulation
and regulation
Strategy and
Strategy and
business development
business development
What he brings to the Board:
Leadership, strategic focus, financial and accounting expertise.
Public sector
Public sector
External appointments:
Non-listed: Chair of Ardent Hire Solutions Limited and Baker
Estates Limited.
0
0
External appointments:
None.
Environment and
Environment and
sustainability
sustainability
Tenure
Tenure
(Number of Directors)
(Number of Directors)
Diversity
Diversity
(%)
(%)
3
3
6
6
44
44
56
56
0-2 years
0-2 years
4+ years
4+ years
Male
Male
Female
Female
Clare Bates
General Counsel and Group
Company Secretary
Appointed to the Board: 04 May 2021
Committee memberships:
Secretary to the Board and Board committees
Key skills and experience:
Clare is a qualified solicitor with over twenty years’ experience.
She joined the Group in May 2021 and was previously Deputy
General Counsel and Company Secretary at ConvaTec Group
Plc from its listing in 2016 to 2021. Prior to ConvaTec, Clare
held increasingly senior legal roles at listed businesses after
leaving private practice in 2007.
What she brings to the Board:
Governance, regulation, compliance and corporate legal
expertise.
External appointments
Listed: RCB Bonds PLC
Key for the Committees
A – Audit Committee
N – Nomination Committee
R – Remuneration Committee
– Chair of Committee
Board skills matrix
100
%
50
0
Construction and
property
Retail
Financial
Strategy and
business development
People and culture
Health and safety
and regulation
Public sector
Environment and
sustainability
Directors who served during the year
Diversity
Ian Tyler stepped down as Chair of the Board on 18 May 2022.
(%)
Graham Prothero stepped down as an Executive Director on 11 November 2022.
Tenure
(Number of Directors)
3
Vistry Group PLC | Annual Report 2022 | 71
44
56
6
0-2 years
4+ years
Male
Female
Code application
How we have applied the principles of the Code during the year is explained
in this Governance section. Key content and where it is located in this
Annual Report is set out below.
Board leadership and company purpose
Division of responsibilities
A. Board’s role
The primary role of the Board is to lead the Group in a way that
ensures long-term sustainable success. The Board discharges
its responsibilities through a programme of activities that
include the reviewing and approving the Group’s strategy,
receiving regular updates on its implementation, discussing
key issues that arise and monitoring performance. All of these
activities are carried out within a robust governance framework
(see page 69). The matters the Board considered during the
year are set out on pages 76 and 77 which also explain the
linkage to the Group’s strategic pillars and the stakeholders
considered as a part of the decision-making process.
B. Purpose, culture, and strategy
The Board reviewed the implementation of the Group’s
strategy during a dedicated strategy day which took place in
July 2022. As part of this review process continued alignment
with the Group’s purpose, values and culture was considered.
The Board uses a number of mechanisms to assess and
maintain a good understanding of the Group’s culture (see
page 75).
C. Resources, controls and risk profile
The Board approves the Group’s capital allocation policy and
regularly reviews its financial and non-financial resources to
ensure that sufficient resources are available to support the
delivery of the Group’s strategy. The Board has established an
effective risk management framework (see page 56) which is
monitored frequently through the Board’s Audit Committee.
The Group’s risk appetite statement which the Board sets
(see page 56) determines the level of risk the Group is
prepared to accept to deliver its strategy and create long-term
sustainable value.
D. Stakeholder engagement
Board members take an active role in engaging with the
Group’s stakeholders (see page 28 and 29) and receive regular
updates in relation to their issues (see page 78). As part of
its decision-making process the Directors factor relevant
stakeholder issues and information into the Board’s decision-
making process (see pages 30 and 31 and pages 80 and 81).
E. Workforce policies
The Board has ensured that workforce policies and practices
are consistent with the Group’s values of Integrity, Caring
and Quality. Our Speak up policy encourages employees to
raise concerns confidentially and the Board reviews its reports
and the outcome of investigations. Following the Group’s
combination with Countryside the Board endorsed the creation
of a new Code of Conduct that will be launched in the coming
year and implemented to embed the Group’s purpose, values
and culture across the enlarged Group.
72 |
72 |
F. Chair’s role
Ralph Findlay, our Non-Executive Chair, has a clearly defined
role (see page 83). He is responsible for driving Board
effectiveness through promotion of a culture of constructive
debate and openness.
G. Board composition and division of responsibilities
In addition to the Chair, at the year end the Board consisted of
three Executive Directors and five Independent Non-Executive
Directors. The role and responsibilities of the Non-Executive
Directors are distinct from those of the ELT (see page 83).
H. Role of Non-Executive Director and time
commitment
The Non-Executive Directors have relevant knowledge and
provide specialist advice and strategic guidance. Their diverse
skills and experience promotes constructive challenge during
Board discussions and ensures that management are held
to account. They exercise objective judgement in respect of
Board decisions. All Directors have demonstrated that they
have sufficient time to fulfil their duties and responsibilities.
In addition to scheduled Board and Committee meetings the
Non-Executive Directors also commit time to meeting with
stakeholders (see page 78).
I. Company Secretary
The role and responsibilities of the Company Secretary are set
out on page 83. She also serves as secretary to each of the
Board’s Committees. All Directors have access to an encrypted
electronic portal which enables them to receive accurate and
timely information. They also have access to the advice of the
General Counsel and independent professional advice at the
expense of the Group.
Composition, succession and evaluation
J. Appointments and succession planning
The Nomination Committee reviews the composition of
the Board and succession plans for the ELT and their direct
reports. Board appointments are made in accordance with a
formal, rigorous, and transparent procedure. The Nomination
Committee is committed to ensuring that all appointments
are made on merit having evaluated the capabilities of all
potential candidates against the requirements of the Board,
with due regard for the benefits of all types of diversity. Rowan
Baker and Tim Lawlor joined the Board during the year and
information about their respective appointments is included on
page 88.
Remuneration
P. Remuneration policy and practices
The Group’s Remuneration Policy (see pages 119 to 123), which
was approved by shareholders at the 2022 AGM, is designed to
be aligned to our purpose and values, support the Group’s long-
term growth strategy and its competitive market position and
deliver the best outcomes for stakeholders, including enhancing
shareholder value.
Q. Developing executive remuneration policy and
pay packages
The Group’s Remuneration Policy is used to formulate pay
packages for Executive Directors and members of the ELT.
The Remuneration Committee considers such remuneration
packages in the context of corporate governance best practice,
alignment with the pay and employment conditions across the
Group and benchmarks against peers in similar roles. During
the year, the Remuneration Committee determined new
remuneration packages for the newly appointed CFO and COO
(see page 107).
R. Remuneration outcomes and discretion
In setting the remuneration packages the Remuneration
Committee applied independent judgement which took account
of a number of factors including individual performance. In
relation to the vesting outcome of the 2020 LTIP award the
Remuneration Committee considered whether to use discretion
to better reflect both financial performance and stakeholder
experience over the performance period. Full details of the
application of discretion and the vesting outcome for the 2020
LTIP award can be found on pages 110 and 111.
K. Skills, knowledge, and experience
The Board is balanced and diverse and its members have
proven leadership capabilities, relevant experience and broad
housebuilding, operational and financial skills (see pages 70
and 71). The Nomination Committee when considering
appointments evaluates the existing skills and experience of the
Board and compares this to the skills and experience it believes
are appropriate for the Group’s overall business and strategic
needs now and in the future. Consideration is also given to
the tenure of Non-Executive Directors on the Board and the
benefits of refreshing the composition of the Board.
L. Board evaluation
An internal evaluation was undertaken in 2022 (see page 86)
and an externally facilitated evaluation will be undertaken in
2023. The Board considers the key issues arising from the
evaluations and, if required, agrees actions to address issues
arising and monitors progress.
Audit, risk, and internal control
M. Internal and external audit
The Board has delegated a number of responsibilities to the
Audit Committee including oversight of the Group’s financial
reporting processes and ensuring the effectiveness and
independence of the external and internal audit process. Details
of how the Committee assesses the integrity of the financial
statements and the effectiveness and independence of the
external auditors is included on page 91 to 97.
N. Fair, balanced, and understandable assessment
The Directors consider this Annual Report, taken as a whole,
to be fair, balanced and understandable (FBU) and provides
information necessary for shareholders to assess the Group’s
position, performance, business model and strategy. The FBU
assessment process is described on page 94.
O. Risk management
The Board has ultimate responsibility for risk management.
It sets the Group’s risk appetite and on an annual basis
undertakes a robust assessment of the principal and emerging
risks (see pages 57 to 62) that could impact the Group’s
performance and delivery of its strategy. Annually, the Board
also reviews the effectiveness of the Group’s risk management
and internal control systems and processes which are set out on
pages 82, 96 and 97. The Audit Committee regularly reviewed
these systems and processes throughout the year and details
of their findings are set out in the Audit Committee report on
pages 96 and 97.
Vistry Group PLC | Annual Report 2022 | 73
Vistry Group PLC | Annual Report 2022 | 73
Board leadership and company purpose
The Board and its Committees
At the date of this Annual Report, the Board consisted of nine
Directors, namely: the Chair, three Executive Directors and
five Independent Non-Executive Directors. The role of the
Independent Non-Executive Directors is to offer advice, guidance
and constructive challenge to the Executive Directors, using
their wide experience gained in business and from their diverse
backgrounds. Relevant biographical information for each Director
is set out on pages 70 and 71.
Appointments and succession
During 2022, the Nomination Committee continued to review
the composition, structure and balance of skills and experience
of the Board. Details of the resultant changes to the composition
of the Board that took effect during the year and are planned for
2023 are set out in the Nomination Committee report on pages
87 to 89.
Board meetings and attendance
During the year, the Board convened on eight occasions
including fifteen meetings arranged in addition to the scheduled
meetings. The attendance at Board meetings is set out below.
The Board has adopted a hybrid model of physical and virtual
meetings, with five scheduled meetings in person and three
scheduled meetings held virtually. All additional meetings were
held virtually. There are eight meetings scheduled each year with
additional meetings called as and when necessary to address
specific issues that may arise.
In addition, and in accordance with the Code, the Chair and
the Senior Independent Director, independently of each other,
hold meetings at least annually with the Independent Non-
Executive Directors without the Executive Directors present. All
Directors, other than Tim Lawlor who did not join the Board until
November 2022, attended the Annual General Meeting in May
2022 (the AGM).
The AGM was held as a hybrid meeting with shareholders able to
join and vote through a secure video link. Shareholders were able
to put questions live in the meeting in addition to having access
to a Q&A on our corporate website before and after the meeting.
The Company Secretary attended all Board meetings. External
advisors also attended meetings where independent guidance
and expertise was required to facilitate the Board in carrying
out its duties. Senior executives below Board level, including
members of the ELT, also attended relevant parts of meetings to
make presentations and provide their input on a range of topics.
All the Directors, with the exception of Nigel Keen and Katherine
Innes Ker, who will be stepping down from the Board on 23
March 2023 and 18 May 2023 respectively, will be offering
themselves for election or re-election (as applicable) 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 70 and 71 and the notes to the AGM Notice which
accompanies this Annual Report together provide details
explaining why their individual contributions are, and continue to
be, important for the Group’s long-term sustainable success.
The Board has a schedule of matters reserved for its decision,
which is reviewed and approved on an annual basis. This
schedule dovetails with a formal structure of delegation of
authority which operates across the Group’s activities and down
through the governance structure. A copy is available at
www.vistrygroup.co.uk/investor-centre. The delegations of
authority are reviewed on an annual basis to ensure that they
provide appropriate controls and are understood by those
responsible for their effective operations.
The principal activities undertaken during the year by
the Nomination, Audit and Remuneration Committees are set
out in their respective reports in this Annual Report.
The paragraphs under the heading ‘Directors Remuneration
Report’ on pages 98 to 123 are incorporated by reference into
this Corporate Governance report.
Director
Ralph Findlay
Role
Chair
Chris Browne
Non-Executive Director
Nigel Keen
Non-Executive Director
Katherine Innes Ker Non-Executive Director
Non-Executive Director
and Senior Independent
Director
Scheduled
meetings
Ad hoc
meetings
8/8
8/8
8/8
8/8
15/15
15/15
15/15
13/15
8/8
13/15
Non-Executive Director
4/5
8/8
CEO
COO
CFO
8/8
8/8
15/15
15/15
1/1
0/0
Former Chair
4/4
7/7
Former COO
7/7
15/15
Ashley Steel
Rowan Baker
(member since
18 May 2022)
Greg Fitzgerald
Earl Sibley
Tim Lawlor
(member since
11 November 2022)
Ian Tyler
(member until
18 May 2022)
Graham Prothero
(member until
11 November 2022)
74 |
Culture
If we are to fulfil our purpose and successfully execute our strategy we must deliver quality homes and provide our customers with
excellent service. Our people underpin this delivery and it is essential that we promote a culture and behaviours that align with our
purpose and strategy. Our values help embed our One Vistry culture of 'Building Better Together' and our new employees attend an
induction programme which helps to instil behaviours that align behaviour with our culture. We prioritise our ‘Do the right thing’
ethos and integrity, both of which are essential if we are to maintain trust and positive relationships with our customers and other
stakeholders. We also prioritise health and safety, the need to be responsive to our customers and we strive to create a positive
collaborative work environment. Through our commitment to quality, in the homes that we build and everything we do, we drive
continuous improvement across all aspects of our business. Information about our purpose, values and culture is set out on page 2 and
the policies and processes we implement to embed our One Vistry culture across the Group are detailed on page 65.
During the year to further align our purpose and strategy with our culture, the Remuneration Committee approved the inclusion of a
customer service metric into the annual bonus to enhance focus on customer service and build quality. We also rolled out Our Vistry
Employee Value Proposition ‘Making Vistry’ which showcases what the Group stands for as an employer and what sets us apart from our
competitors (see page 36). Following the Combination, given the critical importance of aligning the Vistry and Countryside cultures, the
Board endorsed the creation of a new Code of Conduct that clearly sets how we expect our people to align to the Group’s purpose, values
and culture. This new Code of Conduct will be launched and embedded across the enlarged Group during 2023.
The Board is responsible for imparting and monitoring our One Vistry culture across the Group and ensuring it is aligned with our
purpose, values and strategy. Throughout 2022, the Board used a number of mechanisms to assess and better understand the Group’s
culture as described below.
Activity
Insight and resulting action
Nigel Keen is the employee
engagement Non-Executive
Director. He attends
the People Forum with
representatives from across
the Group and makes
reports to the Board.
Directors also attend the
regular Vistry employee
roadshows.
Provides understanding of employees’ views and the issues that they consider to be important.
Feedback both positive and negative is discussed at Board meetings and where required actions to
address issues are agreed with the ELT.
Based on employees' feedback in relation to the cost of living and salaries and benefits temporary cost
of living allowances were introduced and made a permanent part of all annual salaries under £60,000
(see page 36). Our existing family friendly policies have been significantly improved and we continue
to support agile working. Also taking account of employees' views, the format of our regular Peakon
employee surveys have been simplified and surveys are undertaken bi-annually.
On-site Board meetings.
Directors also visit sites
across the Group and
feedback to the Board.
Enable assessment of working environments, culture and the application of Group policies. Site visits also
create an opportunity for the Directors to meet our people and gain further insight into their views and
the issues they consider important. See page 79 for information about the Board on-site meeting that
took place in October 2022.
Review of key performance
indicators for health and
safety and associated trends
at every Board meeting.
Trend analysis enables the Board to understand the culture and behaviours regarding site safety and the
effectiveness of mechanisms in place to ensure we operate a healthy and safe working environment for
all our employees and sub-contractors. Information about our health and safety performance during the
year is included on page 35.
Approval of the Group’s
Modern Slavery Statement.
Scrutiny and oversight of the steps taken to prevent modern slavery provides insight into the Group’s
culture and in particular the effectiveness of the mechanisms used to embed the Group’s ‘Do the right
thing’ ethos. No modern slavery related reports were made to our Speak up hotline during the year.
Attendance at the Risk
Oversight Committee.
Provides insight into the principal risks and effectiveness of mitigation plans with particular focus on the
attraction, retention and development of our people and the impact on them of integration activities
following the combination with Countryside. Following Board discussions integration and oversight
boards have been established to manage the integration process and provide regular updates to the
Board (see page 59).
Review of Speak up
whistleblowing reports and
investigation outcomes.
Provides insight into employee concerns and workforce behavioural trends. Such insights have resulted
in the reinforcement of certain internal policies and internal controls to ensure compliance across
the Group.
Vistry Group PLC | Annual Report 2022 | 75
Our stakeholders
People
Customers
Investors
Homes and
Communities
Regulators
Supply chain
Board focus and principal matters considered in 2022
The principal matters considered by the Board during 2022 and the
link to the Group’s strategic priorities are set out in the table below.
As part of the business of each Board meeting the CEO submits
a progress report on the Group’s performance including areas of
progress and areas which are not progressing to plan.
The report also provides details on business developments, risks
and their mitigation and operating decisions within Housebuilding
and Partnerships. At each meeting the Board receives a report from
the CFO providing updates on financial progress and forecasted
performance. The Board also receives reports from internal and
external speakers on topics relevant to the business and the
environment it operates in.
Areas of focus
Activities
Link to
strategic
pillars
Strategy
• Overseeing the Group’s strategy and any changes and
• Reviewed implementation of the Group’s strategy
including participation in strategy session.
monitoring delivery.
• Approving any major capital project, corporate action
or investment by the Company including investment in
land, joint ventures and development arrangements.
Stakeholders considered:
• Considered risks and issues arising during the year
including impact of regulatory changes and macro-
economic factors on strategic plan.
• Reviewed detailed plans from Housebuilding and
Partnerships for implementation.
• Approved a number of major investments in land, joint
ventures and development arrangements brought
forward by Housebuilding and Partnerships.
• Approved the recommended cash and share combination
to effect the Combination by means of a scheme of
arrangement to strengthen the Group’s position across
both housebuilding and partnerships and accelerate
growth plans for Partnerships.
• Approved the signing of the building safety Pledge Letter
committing to remediation of life critical fire safety work
of buildings over 11m, and the subsequent Developer
Remediation Contract.
Leadership
• Changing the structure, size and composition of the
Board following recommendations from the Nomination
Committee.
• Making appointments to the Board, following
recommendations from the Nomination Committee.
• Overseeing the Chair transition.
• Approved the appointment of Rowan Baker in May 2022.
• Noted the resignation of Graham Prothero in April 2022.
• Approved the change of role of Earl Sibley to COO and
appointment of Tim Lawlor as CFO with effect from
closing of the Combination on 11 November 2022.
• Reviewing the performance of the Board and its
Committees, individual Directors and the Group’s overall
corporate governance framework.
• Reviewed progress against the action plan arising from
the 2021 Board evaluation, considered findings of 2022
evaluation and agreed priority actions for 2023.
Stakeholders considered:
Business plan and performance
• Approving annual budget and business plan and
regularly reviewing actual performance and latest
forecasts against the budget and business plan,
including proposed actions by management to address
performance issues.
Stakeholders considered:
• Approved 2023 budget and business plan.
• Received reports on supply chain challenges and steps
being taken by management to manage and mitigate the
issues and risks.
• Received reports on the integration of the Combination
and plans for alignment of systems, processes and
internal controls.
• Approved the refinancing of the external debt facilities as
part of the Combination.
• Reviewed the business plan for the enlarged Group and
intended synergies as part of the assessment of the
Combination.
76 |
76 |
1
2
3
4
5
6
1
3
5
6
1
2
3
4
5
6
Strategic pillars
1 Maintaining a strong market position
and capability across all housing
tenures, including being a leading
provider of high demand, high growth
affordable housing.
3 Leveraging our combined Vistry
Housebuilding and Countryside
Partnerships assets to maximise overall
returns, particularly on larger multi-
tenure developments.
Board leadership and company purpose
continued
5 Maintaining a high quality, deliverable
operational land bank and effectively deploying
our leading strategic land capability.
2 Delivering customers high quality
sustainable homes that at least
meet the continually evolving future
homes standards.
4 Utilising our differentiated multiple
brand portfolio to target a broader
range of customers and increase
our competitive positioning in the
land market.
6 Maximising the opportunity from Vistry Work’s
timber frame manufacturing capability through
improved operating efficiency and establishing
the use of its timber frame output across all
business areas.
Areas of focus
Activities
Financial reporting
• Approving final and interim results, trading updates,
the Annual Report and the release of price sensitive
information.
• Approving the capital allocation policy, determination of
any interim dividend and the recommendation (subject to
the approval of shareholders in general meeting) of any
final dividend to be paid by the Company or any other
distributions by the Company or purchase of own shares.
Stakeholders considered:
• Approved viability and going concern statements.
• Approved final results announcement.
• Confirmed and approved the final dividend following strong
performance in 2022.
• Approved Annual Report and Notice of AGM.
• Approved the share buyback programme taking into account
stakeholder perspectives.
• Approved interim results announcement and interim dividend.
• Approved trading updates in May and November 2022 and
January 2023.
Link to
strategic
pillars
1
5
Risk
• Ensuring the Group has effective systems of internal
control and risk management in place including
approving the Group’s risk appetite.
Stakeholders considered:
• Reviewed the effectiveness of the Group’s risk management
and internal control systems.
• Reviewed and approved the Group’s risk appetite statement
and concluded that the Group had operated within the
Group’s risk appetite throughout the year.
• Reviewed the Group’s principal risks and uncertainties.
• Received reports from the Risk Oversight Committee on the
process for the management of risks and their associated
mitigation plans, and the identification of emerging risks.
Stakeholder engagement
• Considering the balance of interests between the Group’s
• Considered investor feedback on 2021 full year results and
2022 interim results.
stakeholders.
• Meeting with stakeholders to receive and consider their
views.
• Receiving and considering the views of the Group’s
shareholders.
Stakeholders considered:
• Received monthly reports on shareholder base and briefings
from corporate advisors and independent analysts for capital
market perspectives.
• Considered feedback from Peakon employee surveys
undertaken during the year and management’s action plans to
address the feedback.
• Reviewed progress report on diversity and inclusion initiatives
and diversity and inclusion strategy.
• Received regular reports on engagement with the HBF,
government departments and Homes England.
Sustainability
• Overseeing the Group’s sustainability strategy.
• Reviewing the Group’s sustainability strategy and its
implementation.
Stakeholders considered:
• Reviewed progress against sustainability strategy and targets
and agreed priorities for 2023.
• Considered the implementation of the Group's Carbon Action
Plan (see page 45).
• Participated in deep-dive review of biodiversity net gain
during 2022 strategy day.
1
2
5
1
2
3
4
5
6
1
2
3
4
5
6
Vistry Group PLC | Annual Report 2022 | 77
Board-level stakeholder engagement
When making decisions, the Board acts in a way that the Directors consider most likely to promote the success of the Company, for
the benefit of its members as a whole, while also considering the broad range of stakeholders who interact with the business. Clear
communication and engagement to understand the issues and factors which are most important to stakeholders is key.
Our Section 172 statement is set out on page 30 and information about our stakeholders and how we engage with them is included on
pages 28 and 29. In the table below we describe the Board’s role in stakeholder engagement and how the Directors’ build understanding
of stakeholders’ issues.
How the Board understands stakeholders’ interests
Stakeholder
Board-level engagement
People
• The Board places great importance on continuing
engagement with the Group's workforce. Nigel Keen leads
the Group’s employee engagement programme. During the
year he attended two meetings of the People Forum where
he participated in discussions with employees and provided
relevant feedback to the Board.
• The Board attended two formal site visits and meetings with
divisional management teams during the year. In addition the
Directors undertook individual visits to offices and sites and
engaged with business unit teams which helped build their
understanding of employee concerns and matters impacting
the workforce.
• The Board reviews the findings of the Peakon employee
engagement surveys that are commissioned bi-annually.
• Members of the management team regularly attend Board
meetings to provide input on discussion items.
Customers
• Reports on customer satisfaction are provided at every Board
meeting through the HBF Customer Satisfaction 8-week and
9-month survey results.
• The Board receives reports on brand and product
development, and in particular development of zero carbon
homes and alternative methods of construction, which
address the customer perspective.
• The Board and Audit Committee receive reports from
the Group’s Internal Audit function detailing reports
made to the Group’s ‘Speak up’ hotline, and where
relevant the details of investigations arising from such
reports and the resulting outcome.
• The Remuneration Committee receive updates on
workforce remuneration policies and practices, and
how these align with the Company’s strategy and
culture.
• Members of the Board attend the Company’s RO
Committee which is comprised of employees from
across the Group where the principal risks and their
mitigation plans are discussed, and emerging risks are
identified and debated.
• Management also held in-person and virtual employee
roadshows in 2022, where employees are able to raise
questions and common themes are shared back to
the Board.
• Customer service is included as a metric in the senior
management annual bonus arrangements.
• In April 2022 the Board received a detailed
presentation by the Group's Customer Experience
Director covering customer feedback and actions
being implemented to address customers' needs.
• During the year the Board considered various
initiatives to enhance the digital customer experience
including expanding CRM capabilities across the
Partnerships business.
Investors
• The Executive Directors and Investor Relations team
attend an annual programme of investor meetings to
discuss investors’ priorities and any questions which are of
importance following the Group’s trading updates and both
half-year and full year results announcements. They also hold
investor roadshows for shareholders. The Board are kept up
to date on the Group’s shareholder meetings and investor
relations activities, as well as reviewing analyst feedback.
• The Group held a fully hybrid AGM, during the year
to encourage shareholders to attend either in person
or virtually and engage by submitting Q&A to the
Board. A further in-person general meeting was held
in November 2022 in respect of the Combination.
In addition, the Group’s Company Secretariat team
assisted with shareholder enquiries and information
requests throughout the year.
• The Chair, Chair of Remuneration Committee and former
Chair held corporate governance meetings with a number
of institutional shareholders in March 2022 to discuss
succession planning, remuneration issues, sustainability and
other governance issues that shareholders wished to raise.
Homes and
communities
• The Board receives reports on social value and placemaking
strategy implementation and community engagement
activities within the Group, including Skills Academies and
specific community engagement programmes at sites visited.
• The Board receives regular reports on the Group's
progress to achieving its carbon reduction and
biodiversity targets.
Regulators
• The NHBC met with the Board to provide information on the
services that they provide to the Group, and share feedback on
the performance of the Group across their NHBC construction
quality and customer service metrics.
• Reports on engagement with the HBF, Government
departments and Homes England are provided to
the Board through the year on key topics including
successful grant for First Homes, new NHQB code, New
Homes Ombudsman and the Building Safety Pledge.
Supply chain
78 |
• CEO, CFO and COO maintain relationships with directors of the
• The Board receives an annual report on the Group’s
Group’s key suppliers.
• Reports on supply chain management are provided at every
Board meeting.
Modern Slavery Act procedures including steps taken
to engage with the Supply Chain on the topic and
the continuing improvements being made to combat
modern slavery.
• Through the Audit Committee, the Board monitors
reports made via the Speak up hotline and any
subsequent investigations.
Board leadership and company purpose
continued
October 2022 Board site meeting at Monument View in Wellington, Somerset.
2022 Board site meeting
Each year the Board holds two of its meetings at a Group site. During 2022 the second
site meeting took place in October when the Board visited Orchard Grove in Taunton
(a Housebuilding development) and Monument View in Wellington, Somerset (a joint
Housebuilding and Partnerships development). During the site visits the Directors had an
opportunity to meet with local management and a number of the site team personnel.
They also received several formal presentations including on customer and sales initiatives
and production and construction methods.
Vistry Group PLC | Annual Report 2022 | 79
How the Board considers stakeholder interests in its decision making and
the impact on the outcome of its decisions
The Directors recognise that section 172 of the Companies
Act 2006 requires each of them to act in a way that he or she
considers, in good faith, would most likely promote Vistry’s
long term success for the benefit of its shareholders and other
stakeholders. The Board’s engagement with stakeholders
and the information it receives about stakeholders’ issues are
factored into the Board’s decision making process. The Board
acknowledges that not every decision will result in a positive
outcome for all stakeholders. In the case of some decisions the
interests of different stakeholders have to be prioritised and
difficult outcomes decided.
At all times however the Board strives to make consistent
decisions intended to support the delivery of the Group’s
strategy and ensure its long-term success.
Set out below are examples of how key stakeholders were
considered in principal decisions made by the Board in 2022,
and the outcome. A ‘principal decision’ includes discussion and
decision relating to a material or strategic Group matter or any
matter that is significant to our stakeholders.
Principal decision
and stakeholders
considered
Stakeholder consideration in decision-making process and outcome
The Combination
of Vistry and
Countryside
In September 2022 the Board approved the recommended cash and share combination of Vistry with Countryside
by means of a scheme of arrangement. The Board determined that the Combination had a strong strategic rationale
and a number of key advantages as detailed in the announcement made on 5 September 2022.
The Board considered:
• Feedback from investor roadshows and shareholder engagement meetings unrelated to the Combination which
supported the One Vistry model and the Group’s strategy to drive margin progression in the Housebuilding division
and grow the Partnerships business. The Board determined that the Combination would create the potential for
material value creation for shareholders in the enlarged Group as a result of a number of factors including the
Group’s strengthened position across both housebuilding and partnerships; its increased exposure to the capital
light, high ROCE partnerships business which offers greater resilience to the cyclicality of the housing market;
significant benefits from the increased scale of the enlarged Group, expected synergies and increased utilisation of
Countryside’s timber frame capability; combined brand strength and extensive management capability.
• Feedback from employees following the announcement of the proposed Combination which was gathered during
an in-person employee roadshow hosted by members of the ELT in autumn 2022. This feedback indicated that
employees were positive about the development opportunities likely to become available in a larger organisation.
Prior to announcement, the Board also assessed the proposed management structure of the enlarged Group to
understand how the best talent of both Vistry and Countryside would be retained. It also reviewed the synergy
work undertaken prior to announcement which confirmed the need to reduce duplication of roles, particularly in
overlapping central and support functions and with regard to senior management, Based on the work undertaken
at that time, Vistry recognised that there would be a reduction in the total number of roles by approximately
4% of the enlarged Group’s total number of employees (on a full-time equivalent basis) some of which would
take place via natural attrition. In addition, Vistry expected that the growth plans for its Partnerships business
could be resourced through employees and management of the Countryside Group rather than through active
recruitment. Vistry noted that it intended to look, where possible, to reallocate staff from discontinued roles arising
from the integration to other appropriate new roles or growth-related new opportunities as referred to above
(including where there are existing vacancies). In addition, as the Vistry Group and the Countryside Group each
engage members of staff on a temporary or contractor basis, rather than on a permanent basis, whilst vacancies in
permanent positions in each business are filled, Vistry noted that it intended to first retain employees in permanent
positions in relation to any reduction of roles.
• The Board also reviewed the analysis of synergies arising from the Combination and noted in particular the
expected procurement related savings (primarily direct materials) to be achieved through price harmonisation,
rebate optimisation and volume based price leverage and harmonisation of specifications.
• Partnerships’ customer feedback on Countryside and in particular its excellent reputation across the partnerships
housebuilding sector together with its trusted partner status with housing associations, public bodies and
institutional private rental operators. The Board identified a significant opportunity as a result of leveraging the
Countryside brand across the enlarged Group’s Partnerships business.
• The opportunity to create a business that would be uniquely placed to meet the growing demand for
affordable housing.
80 |
Board leadership and company purpose
continued
Our stakeholders
People
Customers
Investors
Homes and
Communities
Regulators
Supply chain
Principal decision
and stakeholders
considered
The Building
Safety Pledge
Letter addressed
to the Secretary
of State and
DLUHC (the
Pledge Letter)
Stakeholder consideration in decision-making process and outcome
In April 2022 the Board approved the signing of the Pledge Letter confirming the Group’s commitment to meet the
costs associated with life critical fire safety remediation work arising from the design, construction or refurbishment
of buildings of 11m and above that the Group had developed or refurbished (other than solely as a contractor) on the
basis of agreed principles set out in the letter. In March 2023 the Board also approved the signing of the Developer
Remediation Contract.
The Board considered:
• The impact on investors. Prior to the signing of the Pledge Letter during investor meetings in March 2022
shareholders had been made aware of the Group’s commitment in relation to remediation costs of cladding and
fire safety, which should not be borne by leaseholders, and that the Group had already made provisions for known
liabilities and expected additional cost. Therefore, the Board considered that the agreed principles in the Pledge
Letter were consistent with the existing expectations of shareholders.
• Engagement with customer leaseholders about fire safety issues in relation to buildings developed by the Group
and their expectation that the Group would support remediation of such fire safety defects. The Pledge Letter was a
formalisation of the Group’s existing commitment to support leaseholders and to do the right thing.
• Existing supply chain constraints and the fact that the remediation work required under the Pledge Letter would
add further strain on the capacity of the supply chain. The Board was also aware that claims had been issued
against specific supply chain providers and further potential claims could be made. Whilst recognising the potential
threat to project delivery, long term supplier relationships and customers and communities awaiting delivery of
new homes, the Board determined that the Group should do the right thing and formalise commitments previously
made.
• The long term consequences of any decision and in particular the Group’s ability to conduct its business in future
and its relationship with regulators. In particular the Board considered the Secretary of State and DLUHC’s
expectations in relation to remediation costs and changes made to the Building Safety Act which provided that
developers who declined to sign the Pledge Letter and meet their remediation obligations would not participate
in the ‘Responsible Actors Scheme’. As this would prevent a developer from commencing planning permission or
getting building control sign off, in the long term interests of the Group the Board determined that the Group’s
previous commitments should be formalised.
Share buyback
programme
In May 2022 the Board approved a share buyback programme to repurchase up to £35m shares in the Company;
1,500,000 shares purchased under the programme were placed into treasury with the remaining shares that were
purchased cancelled.
The Board considered:
• The perspective of larger shareholders. In 2021 the Board approved an updated capital allocation strategy including
the expectation that any excess capital would be returned to shareholders. The Group experienced a strong start
to 2022 with an improved month end average net debt position against the previous target. The Group’s capital
allocation strategy had been discussed with institutional shareholders during corporate governance meetings held
with the Chair, Chair of the Remuneration Committee and former Chair. Investor feedback from these meetings
had been supportive of a share buyback programme provided excess capital existed, the quantum of the buyback
was proportionate and ongoing investment in the business would not be affected. As part of its decision-making
process the Board considered the relative returns available from capital allocated to the Group's Partnerships and
Housebuilding assets and the ongoing investment required to deliver the Group's growth strategy. The Board
concluded that excess capital existed, and such surplus could be returned to shareholders whilst retaining a strong
balance sheet.
• The interests of our people, many of whom are participants in the Group’s various employee share plans. The Board
considered that the purchase of shares into treasury would provide shares ‘set aside’ to be used to satisfy employee
share awards that may vest in the future.
• How our customers, regulators, communities and supply chain would react to the development. The Board
concluded that the share buyback would send a positive message regarding the strength of the Group’s balance
sheet, cash generation and liquidity and, as a result, increase stakeholders’ confidence in the Group.
Vistry Group PLC | Annual Report 2022 | 81
Statement of review
During 2022, the Board has directly and through delegated
authority to the Audit Committee, monitored and reviewed the
Group’s risk management activities and processes, including a
review of the effectiveness of all material risk mitigations and
the financial, operational and compliance internal controls.
The Audit Committee’s activities in these areas are set out
in the Audit Committee report on pages 96 and 97.
Following this review the Board concluded that the Group’s
risk management framework and internal controls provided
assurance that there were no material control failures in
the year.
Operation of Board and its Committees
The Directors have access to an encrypted electronic portal
system which enabled them to receive and review Board and
committee papers quickly and securely electronically. During
the year the Board and its committees have met in person and
virtually. This hybrid format of physical and virtual meetings has
worked well and has not impacted the quality of discussions or
our decision-making process.
Board leadership and company purpose
continued
Integration oversight
The integration of Vistry and Countryside following closing of
the Combination is a key area of oversight for the Board. The
failure to successfully integrate the two businesses has been
identified as a new principal risk (see page 59). The Board
receives updates on the progress of the integration planning
at each meeting. It has also approved a revised Delegation of
Authority to apply across the enlarged Group which reflects
the outcome of an assessment of the changes required to the
internal controls framework as a result of the new business
structures. Internal Audit undertake ongoing risk assessment
of the key integration activities and will report and provide
assurance to the Audit Committee on an ongoing basis.
Investing for the long term
Much of the Board's decision making is focused around ensuring
the sustainable long-term success of the Group. Each year
the Board considers the Strategic Plan, which assesses the
opportunities and risks for the Company over the following five
years, and forms the basis of our Viability Statement (see pages
63 and 64). The Board also devotes a day to considering the
long-term strategy of the business, incorporating presentations
and discussions on longer term-opportunities, risks and threats.
Throughout the year, the Board considers material and strategic
land acquisition opportunities, and material contracts, for
sites that will contribute to profits in the medium term. It has
adopted a framework for investment to support sustainable
profits and growth in the future.
Board assessment of risk management and internal
control effectiveness
The Board is ultimately responsible for overseeing how we
manage both internal and external risks that could impact our
business model and strategic goals. The Board also determines
the Group’s risk appetite, regularly reviews the Group’s
principal and emerging risks and, on an annual basis, reviews
the effectiveness of our risk management and internal control
systems and undertakes horizon scanning to identify new
emerging risks. The Group's principal risks are set out on pages
58 to 62.
During the year the Board, and the ELT, received detailed
guidance from the external auditors on changes and new
standards of oversight for internal controls, fraud and audit
reform. In response, a new risk assessment for evaluating
fraud has been put in place that explores in a much greater
depth the level of control and vulnerability. Furthermore, the
Internal Audit team have established much greater testing of
our business unit controls, documentation and self-assessment,
with further improvements to be made as part of the integration
activities and planned assurance mapping through 2023.
82 |
Division of responsibilities
The Chair and Chief Executive Officer
There is a clear division of responsibility between the running
of the Board by the Chair, Ralph Findlay, and the day-to-day
management of the Group by the CEO, Greg Fitzgerald. Each
has Board approved roles and responsibilities and specific details
of their roles are available at www.vistrygroup.co.uk and
summarised below.
Time to properly fulfil roles and responsibilities
Each of the Directors has confirmed and clearly demonstrated
that they have sufficient time to properly fulfil their duties
including preparing for Board and Committee meetings, reading
all papers associated with such meetings, attending meetings
scheduled to take place in 2023 and spending separate time
with management.
The Senior Independent Director
Ashley Steel, Senior Independent Director (SID), has specific roles
and responsibilities which are detailed in documentation available
at www.vistrygroup.co.uk and summarised below.
Balanced Board
The Board comprises a Chair, five Independent Non-Executive
Directors and three Executive Directors. Their key roles and
responsibilities are also set out below. The Non-Executive
Directors provide valuable constructive challenge, independent
perspective and specific expertise. The independence of the Non-
Executive Directors is kept under review and assessed annually.
The Board considers that all Non-Executive Directors who served
during the year are independent in character and judgement,
with no relationships or circumstances that are likely to affect, or
could appear to affect their judgement.
On occasions where a Director is unavoidably absent from a
Board or Committee meeting, they still receive and review the
papers for the meeting and typically provide verbal or written
input ahead of the meeting, usually through the Chair or the
Chair of the relevant Committee. This ensures that views of
absent Directors are made known and considered at the meeting.
Given the nature of the business to be conducted, some Board
meetings are convened at short notice, which can make it difficult
for some Directors to attend due to prior commitments.
Board support and role of the Company Secretary
The General Counsel and Group Company Secretary, Clare Bates,
attends all Board and Committee meetings. She is responsible
for advising and supporting the Chair, the Board and its
Committees on corporate governance matters as well as
ensuring that there is a smooth flow of information to enable
effective decision making.
Key Board roles and responsibilities
Chair
Senior Independent
Director
Non-Executive
Directors
CEO
General Counsel & Group
Company Secretary
• Leads the Board.
• Sounding board for the
• Provide constructive
• Leads the ELT in
• Responsible for advising
challenge and
independent perspective.
• Monitor strategic
execution and
performance in
accordance with risk and
control framework.
• Serve on the Board’s
Committees.
Chair.
• Serves as an intermediary
for other Directors.
• Available to shareholders
if they have concerns
which contact through the
normal channels has either
failed to resolve or would
be inappropriate.
• Lead meetings of the Non-
Executive Directors without
the Chair present to
appraise the performance
of the Chair.
• Promotes high
standards of
governance.
• Ensures Board
effectiveness.
• Sets Board agenda.
• Supports and guides
the CEO.
• Engagement with
major shareholders
to understand
their views on
governance and
performance against
strategy.
delivering the Group
strategy, objectives and
culture as determined
by the Board.
• Day-to-day
responsibility for
executive management
matters.
• Responsible for
maintaining dialogue
with the Chair, the
Group’s shareholders
and other stakeholders.
• Ensures the Board is
aware of the views of
the workforce.
the Board on all corporate
governance matters and
best practice.
• Works with the Chair to
ensure Directors receive
accurate and timely
information to enable
them to discharge their
duties.
• Works with Chair
to design induction
programme for new Board
members and coordinates
ongoing Board training.
Vistry Group PLC | Annual Report 2022 | 83
Composition, succession and evaluation
Board composition
Appointments to our Board are made solely on merit with
the overriding objective of ensuring that the Board maintains
the correct balance of skills, length of service and knowledge
of the sector to successfully determine the Group’s strategy.
Appointments are made based on recommendations from the
Nomination Committee with due consideration given to the
benefits of diversity in its widest sense, including gender, social
and ethnic backgrounds. The Nomination Committee also
review the ongoing commitments of candidates prior to making
recommendations for the appointment of new Directors.
Directors are required to seek Board approval prior to taking
on additional commitments to ensure that existing roles and
responsibilities continue to be met and conflicts are avoided
or managed.
Re-appointment of Directors
All Directors (other than Nigel Keen and Katherine Innes Ker)
are subject to annual re-election and will be proposed for
election or re-election (as appropriate) by shareholders at the
AGM to be held on 18 May 2023. In relation to the re-elections,
the Chair has confirmed that following evaluation, all Directors
continue to be effective and have the time available to commit
to their role. The Board strongly supports the election or
re-election (as appropriate) of all individual Directors.
Jeff Ubben will join the Board as a Non-Executive Director with
effect from 23 March 2023. Further details on his appointment
can be found on page 88. All Directors, with the exception
of Nigel Keen and Katherine Innes Ker who will be stepping
down from the Board on 23 March 2023 and 18 May 2023
respectively, intend to seek election or re-election at the
Company’s 2023 AGM.
The Directors’ biographies on pages 70 and 71 and the notes
to the AGM Notice that accompanies this Annual Report,
together provide details explaining why the Director’s individual
contributions are and continue to be important for the Group’s
long-term sustainable success.
Board induction and development
On joining the Board all Directors participate in a formal
induction programme. The programme is monitored by the
Chair and is the responsibility of the Company Secretary. Its
purpose is to ensure that each newly appointed Director is able
to contribute to Board discussions as quickly as possible. While
each induction programme is tailored to the individual Director’s
needs based on their skills and experience, typically each
programme provides new Directors with insight into the Group’s
strategy, culture and operations and informs them about the
governance and internal controls processes and procedures that
we operate.
Rowan Baker and Tim Lawlor joined the Board in May 2022 and
November 2022 respectively. Some of the activities included
in Rowan Baker’s induction programme are detailed below.
Tim's induction was less formal and more iterative due to him
interacting with members of senior management and advisors
through the Countryside transaction, and him already being a
director of Countryside for a period of time.
The Board has received corporate governance updates through
the year as well as training on sector specific topics. All Directors
have access to the advice and services of the Company Secretary
and, through her, have access to independent professional
advice in respect of their duties, at the Group’s expense.
Relevant skills and expertise
The Board benefits from a wide variety of skills, experience and
knowledge as detailed in the biographies of the Directors on
pages 70 and 71.
Chair evaluation
The evaluation of the performance of the Chair by the other
Directors was led by the SID and absent the Chair. The overall
conclusion was that he had performed well in all aspects of the
role. He chairs effective meetings, allows debate and encourages
contribution and challenge. He has a strong relationship with
the Executive Directors and provides appropriate challenge and
support. He proactively led the recruitment of Rowan Baker as a
Non-Executive Director. The SID provided feedback to the Chair
after the review of his performance.
Rowan Baker's induction programme
Strategy and culture
External and internal audit
Operations
Individual meetings with
members of the ELT.
Meeting with external auditors'
lead partner.
North Whiteley and Pembers
Hill, Southampton site visits.
Meeting with Internal Audit &
Risk Director.
84 |
2021 Board evaluation progress report
During 2021 the Board undertook an internal evaluation of its effectiveness. Following a Board discussion the Board agreed a plan
for 2022. The actions arising from the plan and progress to date is detailed below.
Actions
Board engagement
A structured and coordinated programme of Non-Executive
Director site and regional office visits to be re-established.
Strategy
2022 annual strategy review to include:
• Impact of government action and regulatory change on land
demand / supply balance and building design.
• The long-term impact of changing ESG expectations.
• Look-forward to how the housing market may look in
five to ten years.
• The impact of projected cyclicality in the market on our short and
medium term allocation of capital.
Progress
The Board undertook two collective site visits in the year, one
at Housebuilding sites and one at Partnerships sites. In addition
individual Non-Executive Directors undertook periodic site visits.
Each of the identified topics were addressed as part of the full
agenda at the July 2022 strategy day. These detailed reviews
informed the directors when assessing the Combination and
assessing the risks of the transaction.
Customer
• Greater visibility to be provided on the key outputs from the
Group’s customer engagement activities.
• The Board to receive direct input from and engagement with a
registered social housing provider relating to their interaction
with Partnerships.
Key outputs from the Group’s customer engagement activities
were provided at each Board meeting. In addition, a deep dive was
provided by the Group Customer Experience Director into customer
insights, data outputs and the delivery of capabilities to meet
customer needs along with performance insights. The attendance of
a Registered Provider at a Board meeting has been deferred to 2023
due to the intense activity in relation to the Combination.
Sustainability
• Focus on continuing development and implementation of the
sustainability strategy and reporting on verifiable baseline data
and SBTi targets.
• Sustainability metrics to be included in routine reporting to
the Board.
Board composition
• Further development of the work undertaken in 2021 on Board
composition and succession, to take into account natural
attrition within the Board, the evolving need for skills and
experience and the importance of diversity.
Succession planning
• The succession planning for the senior leadership of the Group to
continue at both CEO/ELT and sub-ELT levels.
Progress against the sustainability strategy is reported on at each
Board meeting. The Group’s carbon targets have been validated
by the SBTi. However, because the methodology used by Vistry
and Countryside for the setting of their respective carbon targets
is different, revised targets for the enlarged Group will require
SBTi validation in 2023.
Rowan Baker was appointed as a Non-Executive Director and
Chair of Audit Committee in May 2022. At the same time Ashley
Steel became the SID. Following completion of the Combination
Tim Lawlor joined the Board as CFO and Earl Sibley became the
COO. The Nomination Committee has commenced a succession
planning process to address likely changes over the medium term,
taking into account the tenure of Non-Executive Directors, the
importance of diversity and the need to evolve the Board's skills
and experiences to reflect the enlarged and more complex Group
and to support its growth strategy. Searches for two additional
independent Non-Executive Directors have been commissioned.
The Nomination Committee received a succession planning
update from EgonZehnder which included individual assessments
and development planning at both CEO/ELT and sub-ELT levels.
An executive leadership development programme delivered
by Cranfield has been introduced, with feedback from the
programme provided to the Board.
Board meetings
Meetings have been split over two days wherever possible.
• Continue to make greater use of splitting all-day Board and
Committee meetings over two days to give more time for the
agenda and discussion.
Vistry Group PLC | Annual Report 2022 | 85
Composition, Succession and Evaluation
continued
2022 Board evaluation and priority actions
In December 2022 the Board undertook an internal evaluation of effectiveness. The evaluation took the form of a detailed
questionnaire. The evaluation questionnaire explored the functioning of the Board as a unit and the relationship between Board
members. It was established that the Board considered it had worked well and effectively through the strategic issues that arose in the
year.
The key findings from the 2022 Board evaluation process, including the actions agreed to address recommendations resulting from
the Board’s discussion, are set out below. The priorities for each Committee in 2023 arising from the evaluation are set out in each
Committee's report.
Key finding
Priority actions for 2023
Strategy/
Integration
Oversee the integration of Countryside, a key activity for the Board and the Group in 2023. This should not be at the
detriment of other strategic priorities which are to be reviewed in detail during the coming year including:
• Continuing development of the investment case.
• Capital allocation.
• Sustainability.
• Customer.
• Brand proposition.
• Culture.
• Political/regulatory issues and changes.
Stakeholders
• Receive direct input from and engagement with a Registered Provider about their interaction with Countryside
Partnerships; this item was deferred from 2022.
• Receive more frequent feedback and insights from the Group’s customer engagement activities.
• Deepen understanding of shareholders' views.
Sustainability
• Focus on continuing to develop reporting on verifiable baseline data and SBTi targets.
• Incorporate sustainability metrics into the KPIs.
Board
composition
Succession
planning
• Continue to address Board composition and succession, taking into account natural attrition within the Board and the
importance of diversity.
• Evolve the Board's skills and experience to reflect the enlarged and more complex Group and to support its growth strategy.
• Continue succession planning for the senior leadership of the Group at both CEO/ELT and sub-ELT levels.
• Focus on people development, including plans for the development of more diverse leadership.
Board papers
• Review the monthly financial information and KPIs to assess appropriateness for the enlarged Group and adapt as required.
86 |
Nomination Committee report
“We are committed to achieving diversity and
inclusion across the Group. Through our succession
planning process we will further strengthen the
Board’s collective skills and experience and
recruit a new Non-Executive Director from a
minority ethnic background.”
Ralph Findlay OBE | Nomination Committee Chair
Key responsibilities
• 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.
2022 highlights
• Recommending the appointment of Rowan Baker as Non-
Executive Director and Chair of the Audit Committee and the
appointment of Ashley Steel as Senior Independent Director.
• Recommending the appointment of Earl Sibley as COO and
Tim Lawlor as CFO.
• Succession planning update from Egon Zehnder which
included individual assessments and development planning at
both CEO/ELT and below ELT levels.
2023 priorities
• Planning for executive leadership succession across the
enlarged Group.
• Continuing the Board succession planning process to address
likely changes over the medium term, taking into account
Non-Executive Directors’ tenure, the evolving need for skills
and experience and the importance of diversity.
• Overseeing search process for two additional independent
Non-Executive Directors.
Committee membership, meetings and attendance
The table below sets out the number of scheduled meetings attended
out of the meetings members were eligible to attend.
Director
Ralph Findlay
(Chair since 18 May 2022)
Joined
Attendance
7 April 2015
5/5
Chris Browne
1 September 2014
5/5
Nigel Keen
(Member until 23 March 2023)
Katherine Innes Ker
(Member until 18 May 2023)
Ashley Steel
Rowan Baker
15 November 2016 5/5
9 October 2018
5/5
10 June 2021
18 May 2022
5/5
2/2
Ian Tyler
(Chair and member until 18 May 2022)
29 November 2013 3/3
The CEO attended all meetings and the COO and CFO attended
one meeting by invitation. The General Counsel & Group
Company Secretary acts as secretary to the Committee.
The Committee's terms of reference are available at
www.vistrygroup.co.uk/investor-centre/corporate-
governance.
Attendance
100%
Vistry Group PLC | Annual Report 2022 | 87
Dear Shareholder
This report provides a summary of the Nomination Committee’s
activities during the course of the year.
Our role
If we are to create sustainable value for all of our stakeholders, we
must ensure that we have a skilled, diverse and effective Board
and senior leadership team. In 2022 the Committee has continued
its keen focus on Board composition, considering and supporting
changes to the Executive Directors and Non-Executive Directors
and overseeing the Chair transition.
As a Committee we must ensure that we attract the best senior
management talent to lead our business. And having attracted
the best we must also ensure that we develop our people and
retain them.
Changes to membership
During the year there were a number of changes to the
composition of the Committee. At the AGM in May 2022 Ian Tyler
stepped down from the Board and Committee and as Chair and I
was delighted to succeed him and take up the role of leadership of
the Board. Rowan Baker was also appointed to the Board at the
AGM as a Non-Executive Director and joined the Committee.
Nigel Keen and Katherine Innes Ker are stepping down from
the Board with effect from 23 March 2023 and 18 May 2023
respectively and will cease to be members of the Committee at
the same time.
All members of the Committee are independent Non-Executive
Directors, with the exception of the Chair.
Board composition
In November 2021 it was announced that I would succeed Ian
Tyler as Chair, and in line with Code requirements, step down
as Chair of the Audit Committee on taking up the role as Chair.
Shortly thereafter I commenced a recruitment process to appoint
a new Non-Executive Director and Chair of the Audit Committee.
The Company engaged Russell Reynolds to undertake this search.
As a result of this search process, in May 2022 the Committee
recommended the appointment of Rowan Baker as a Non-
Executive Director and Chair of the Audit Committee. Rowan is
a highly experienced Chief Financial Officer in construction and
development. She is currently the Group Chief Financial Officer of
Laing O'Rourke, and from 2017 to 2020, was the Chief Financial
Officer of McCarthy Stone. Her financial expertise and sector
experience will further strengthen the Board.
As highlighted above, following the year end, Nigel Keen and
Katherine Innes Ker stepped down from the Board with effect
from 23 March 2023 and 18 May 2023 respectively. We are
also pleased to have appointed Jeff Ubben as a Non-Executive
Director with effect from 23 March 2023. Jeff is Managing
Partner and Founder of Inclusive Capital, one of the Company’s
largest shareholders. Inclusive Capital is focused on increasing
shareholder value and promoting sound environmental, social
and governance practices. Jeff's deep expertise and insights,
particularly in ESG and sustainability, will be of enormous value as
continue our integration with Countryside.
I had also held the role of Senior Independent Director and, after
considering the skills and experience required for the role, the
Committee recommended the appointment of Ashley Steel as
Senior Independent Director in May 2022. Ashley will also assume
the roles of Chair of the Remuneration Committee and employee
engagement Non-Executive Director with effect from 23 March
2023.
When recruiting new Non-Executive Directors, members of
the Committee interview selected candidates, who also meet
with the Executive Directors. The Committee then recommends
candidates for appointment to the Board. Decisions relating to
such appointments are made by the entire Board based on a
number of criteria including the candidate’s skills and experience
and the contribution they can make to our business and their
ability to devote sufficient time to properly fulfil their duties and
responsibilities.
The Group has become larger and more complex as a result of
the transformational Combination with Countryside. During the
assessment of the Combination prior to announcement, the
Committee considered the executive leadership structure of the
enlarged Group and the importance of continuity of Countryside
senior leadership. As a result of this assessment, the Committee
recommended the appointment of Earl Sibley as COO on the
closing of the transaction to provide focus on the integration of
the businesses and operational delivery of the strategy, and the
appointment of Tim Lawlor as CFO. Tim was previously the CFO
of Countryside, and his appointment provides continuity and
knowledge of Countryside’s business as well as significant CFO
plc experience both at Countryside and seven years as CFO of
Wincanton Group.
In April 2022 it was announced that Graham Prothero was to
resign as Chief Operating Officer and Director to take up the role
of CEO at M J Gleeson PLC. Graham remained as an employee of
the Group until the end of 2022 and provided invaluable support
through the Countryside transaction. He stepped down as a
Director on completion of the Combination in November 2022.
Succession planning
During the year the Committee commenced a succession planning
process to address likely changes to the composition of the Board
over the medium term, taking into account the tenure of Non-
Executive Directors, the evolving need for skills and experience
and the importance of diversity. As part of this process a skills
matrix assessment was undertaken late in 2022 to assist the
Committee to identify the skills and experience that it would
seek to bring into the Board. The Committee is keenly aware
of the importance of diversity and that currently no member
of the Board is from a minority ethnic background. It intends
to address this through the Non-Executive Director succession
planning process. In March 2023, as part of our succession
planning process, we commissioned the search for two additional
independent Non-Executive Directors.
Our employees underpin the delivery of our strategy and they
are key to our success. Recognising this the Group’s ability to
attract, retain and develop a committed, motivated and engaged
workforce is a key area of focus for the Board. During the year we
rolled out our Vistry Employee Value Proposition ‘Making Vistry’,
which showcases what we stand for as an employer.
88 |
Nomination Committee report
continued
During the year the Committee received a detailed succession
planning update on the senior leadership from Egon Zehnder.
This update, which included individual assessments and
development planning at both CEO/ELT and below-ELT levels,
provided valuable information which the Committee took into
account when considering the executive leadership structure of
the enlarged Group.
We have been pleased to see a number of internal promotions to
the senior leadership in the year, including the promotion of Earl
Sibley to COO and Michael Stirrop to the ELT as Group Strategic
Operations Director. We are also pleased to have retained senior
leaders within Countryside in the enlarged Group, including Mike
Woolliscroft, who has also joined the ELT as Group Business
Improvement Director and London Divisional Chair.
A key part of our People strategy is focused on developing
and retaining our people to enable them to achieve their career
goals and ambitions. During the year our ‘Leading Better
Together’ executive framework was launched to ensure our
senior and future leaders are fully equipped with the expertise
and skills the Group needs to support its continued success.
Further information about our learning and development
programmes and other new initiatives launched during the year
are set out on page 37.
Following our combination with Countryside we are now able
to provide more opportunities for our people to develop and
progress and feedback from employees has been positive about
the development opportunities that are likely to be available in
the enlarged Group.
During 2023 the Committee will continue the longer term
succession planning for both the Executive Directors and senior
management, at both ELT and below ELT levels, taking into
account evaluations and other key information arising from our
leadership development programmes.
Diversity and inclusion
We are committed to achieving diversity and inclusion (D&I)
across the Group. As of 31 December 2022, the proportion
of women on the Board was 44% with the role of Senior
Independent Director held by a woman. This Board female
representation meets or exceeds two of the new diversity targets
set by the Financial Conduct Authority. Currently no member of
the Board is from a minority ethnic background and as stated
above the Committee intends to address this through Non-
Executive Director succession arising from the tenure of certain
Directors and the evolving need for skills and experience.
The Committee has continued to monitor the implementation
of the Group’s Diversity and Inclusion policy and the plans
and activities in place to ensure that we attract and retain a
diverse range of employees and create an inclusive working
environment. The Diversity and Inclusion policy applies to the
Board and the Company as a whole and can be accessed
at www.vistrygroup.co.uk/investor-centre/corporate-
governance. The ongoing oversight of succession planning for
senior management addresses the importance of an appropriate
balance of skills, experience and knowledge along with diverse
representation.
Our D&I Committee leads the development and delivery of our
D&I diversity agenda and it is supported by four active networks
that operate across the Group: Women’s Network, Culture &
Communities Network, Pride Network and Accessibility Allies
Network. During the year we launched a D&I unconscious bias
training programme and provided additional ‘skills booster’
D&I training. In January 2022, our regular Peakon employee
engagement survey was expanded to cover diversity and
inclusion and the score returned in relation to this area improved
throughout the year (January: 8.3 and August: 8.9). We were
pleased to see that the August score was 0.8 above the Peakon
benchmark and in the top 5% of companies utilising the Peakon
tool. As was expected with the integration of Countryside, we
saw a decline in our latest Peakon employee engagement survey
carried out during March 2023, with the score at 7.8 (August
2022: 8.6), in-line with the Peakon benchmark.
The Group continued to make a number of senior appointments
in the year to women with 25% of all promotions to Managing
Director and Heads of Vistry Services being female. We will
continue to focus on all aspects of diversity within the senior
leadership. Further information about our D&I agenda and
priorities for the coming year, including recruiting across more
diverse platforms and working with our recruitment partners on
diverse shortlisting of candidates, are set out on page 38.
Corporate governance
Non-Executive Directors’ service contracts are renewed on
a three year basis, with rigorous scrutiny being applied prior
to approval of a third three-year term, subject to satisfactory
performance and there being no need to re-balance the Board.
The third year of the third term extends until the subsequent
AGM.
The work of the Committee also comprised more routine
business, including nominations for appointment at the 2022
AGM, approval of the Committee report for inclusion in the
2021 Annual Report and discussion of the outcomes and
determination of the actions coming out of the Committee’s 2021
internal performance evaluation.
As highlighted above, from time to time we engage international
search and selection firms including Russell Reynolds and Egon
Zehnder. Russell Reynolds and Egon Zehnder have no connection
with the Group other than they may be engaged to assist with
senior management appointments and leadership development
from time to time. Both firms are signatories to the Voluntary
Code of Conduct for Executive Search.
Performance evaluation
In November and December 2022, the Board and each of the
Committees undertook an internal evaluation of effectiveness.
The priorities for the Committee in 2023 arising from the
evaluation are set out on page 86.
Ralph Findlay OBE
Nomination Committee Chair
22 March 2023
Vistry Group PLC | Annual Report 2022 | 89
Audit Committee report
“Ensuring ongoing effectiveness of
the enlarged Group’s controls and risk
management processes is a key priority.”
Rowan Baker | Audit Committee Chair
Key responsibilities
• Oversees financial statements and reporting.
• Monitors internal controls and risk management.
• Monitors reporting and effectiveness of internal and
external auditors.
2022 highlights
• Welcomed Rowan Baker as Chair of the Committee.
Rowan’s skills and experience strengthen the Committee’s
financial expertise and sector experience.
• Reviewed various aspects of the Group’s proposed
combination with Countryside including the risks related
to the enlarged Group.
• Reviewed the fire and building safety provision and
associated disclosures.
• Reviewed the Group’s financial reporting, internal control
systems and risk management processes.
• Maintained oversight of external and internal audit.
2023 priorities
• Continuing to monitor the progress of key integration
activities.
• Overseeing the embedding of the risk management
framework and standardisation of controls across the
enlarged Group.
Committee membership, meetings and attendance
The table below sets out the number of scheduled meetings
attended out of the meetings members were eligible to attend.
Director
Joined
Attendance
Rowan Baker
(Chair since 18 May 2022)
Chris Browne
Nigel Keen
(Member until 23 March 2023)
Katherine Innes Ker
(Member until 18 May 2023)
Ashley Steel
Ralph Findlay
(Chair and member until 18 May 2022)
18 May 2022
1 September 2014
15 November 2016
2/2
4/4
4/4
9 October 2018
4/4
10 June 2021
7 April 2015
4/4
2/2
Regular other attendees include: the Chair, CEO, COO, CFO,
Group Financial Controller, Internal Audit & Risk Director, the
external auditors and the General Counsel & Group Company
Secretary (who acts as secretary to the Committee).
Following two meetings, the Committee met with the external
auditors and the Head of Internal Audit & Risk, without
management present. During the year, the Committee Chair
also met privately with the external auditors' lead audit partner.
The Committee's terms of reference are available at
www.vistrygroup.co.uk/investor-centre/corporate-
governance.
Attendance
100%
90 |
Dear Shareholder
I am pleased to present the report of the Audit Committee
for the year ended 31 December 2022, my first as Chair of the
Committee having taken over from Ralph Findlay when I joined
the Board in May 2022. I am a qualified accountant (FCA) and
chartered tax advisor and I am currently the Chief Financial
Officer of Laing O’Rourke. Previously I was the Chief Financial
Officer of McCarthy Stone.
I am pleased to report that the Committee works well and
provides effective oversight of the Group’s financial reporting and
internal and external audit processes. It also diligently monitors
the Group’s controls and the management and mitigation of its
principal risks.
Overview
In November 2022 the Group’s Combination with Countryside
was completed. Ahead of completion the Committee reviewed
various aspects of the transaction including the enlarged
Group’s identified risks including risks relating to integration and
economic factors. Following completion of the transaction, the
Committee has received regular updates from the ELT and senior
management as to the progress of the Combination and the
integration of the two businesses.
The Group recognised an incremental provision for fire safety
remedial costs in 2022 as a result of signing up to the Pledge
Letter in April 2022 and being committed to signing the long
form of the Pledge at the year end. The Committee has reviewed
the underlying analysis behind the additional provision and
understood the process followed by management to assess the
most likely cost to remediate. The Committee has also discussed
with the external auditors the procedures performed over the
provision. The Committee is satisfied that it was appropriate to
recognise an incremental provision in 2022 and that the risk of
material misstatement has been appropriately addressed.
During the year, the Committee also reviewed the integrity of the
Group’s financial statements, significant areas of judgement and
the viability statement. It also continued to monitor the Group’s
operating, financial and accounting practices. Given the current
cost of living crisis and rising interest rates, the Committee
considered the appropriateness and monitored the application
of the Group’s accounting policies in relation to gross margin
recognition. In addition, the Committee considered a range of
control matters, including cyber security and assured itself that
the Group’s control environment was fit for purpose.
The Risk Oversight Committee met regularly throughout the year
with Non-Executive Directors regularly joining these meetings.
Committee membership, meetings and attendance
Information about the membership of the Committee during
2022, its meetings and attendance at its scheduled meetings
is set out on the adjacent page. Committee membership is
determined by the Board following a recommendation from the
Nomination Committee and is kept under review as part of the
Committee’s performance evaluation.
The composition of the Committee changed during the year to
reflect changes to the Board’s membership. Ralph Findlay stepped
down as Chair of the Committee upon taking up the role of Chair
of the Board. On behalf of the Committee, I would like to thank
Ralph for his leadership of the Committee and I am grateful
for his ongoing support and counsel. Following the year end,
Nigel Keen and Katherine Innes Ker stepped down from the
Board with effect from 23 March 2023 and 18 May 2023
respectively. I would like to also thank them both for the
contribution they have made to the Committee.
The Committee members collectively have a wide range of
financial, audit, risk management and relevant sector and
business experience that enables the Committee to provide
constructive challenge and support to management. In
accordance with the Code, the Board has determined that I have
recent and relevant financial experience and is satisfied that the
Committee had competence relevant to the sector and its overall
responsibilities throughout the year.
Detailed papers and information are circulated sufficiently in
advance of meetings to allow full and proper consideration of the
matters for discussion.
Role and responsibilities
The role of the Committee is to assist the Board in fulfilling
its corporate governance responsibilities. The Committee’s
key responsibilities are detailed on the adjacent page. As the
Group’s risk profile continues to evolve, the Committee adjusts
its scrutiny of relevant risk areas and key judgements, including
going concern, gross margin recognition and the valuation of
intangible assets.
The Committee’s oversight role also includes ensuring the
integrity of the financial statements and related announcements.
During the year the Committee achieved this by:
• Maintaining appropriate oversight over the work and
effectiveness of the Internal Audit department, including
confirming it is appropriately resourced, reviewing its audit
findings and monitoring management’s responses.
• Monitoring and evaluating the effectiveness of the Group’s
risk management and internal control systems, including
obtaining assurance that controls are operating effectively and
are evidenced as such through, for example, the internal self-
certification exercise and subsequent testing by internal audit.
• Scrutinising the independence, approach, objectivity,
effectiveness, compliance and remuneration of the external
auditors.
• Assessing the going concern and medium-term viability of the
Group.
• Assisting the Board in confirming that, taken as a whole,
the Annual Report is fair, balanced and understandable, and
provides the information necessary for shareholders to assess
the Group’s position, performance, business model and strategy
(see page 94).
• Reviewing and challenging the critical management judgements
and estimates which underpin the financial statements, drawing
on the views of the external auditors in making an informed
assessment, particularly in relation to each of the key matters
detailed on pages 92 to 94.
• Monitoring and reviewing the awareness of the Group's
whistleblowing process, the effectiveness of the process and the
types of issues raised and how such matters are investigated.
Vistry Group PLC | Annual Report 2022 | 91
Significant issues and other accounting judgements considered by the Committee during the year
Focus area
Why this area is significant
How we as an Audit Committee addressed this area
Sales and materials
price inputs into
Cost Valuation
Reports (CVRs)
A view on the
sensitivity of the
Group to pricing
inputs can be
found in note 1.5
(Critical accounting
judgements) of the
financial statements.
Acquisition
accounting
For more detail on the
acquisition accounting
in relation to the
Combination with
Countryside, refer to
note 5.13 (Business
combinations) of the
financial statements.
Use of adjusted
measures
For more detail see
note 5.14 (Alternative
performance
measures) of the
financial statements.
CVRs are used to calculate gross
margin for the life of a development
or project and as a result prescribe
the level of work in progress to be
allocated to each sale. The input of
materials, labour and sales pricing
into the CVR process will have a
significant impact on in year gross
profit delivery.
The Group has an accounting policy which dictates that only current
pricing can be used in life of site margin calculations, such that neither
inflation nor deflation for future pricing can influence the gross margin
attributable to sales made in year.
During the second half of 2022, sales prices, material and subcontractor
costs have been impacted by rising interest rates and inflation. As a result
of these external factors management has been required to exercise
judgement around the appropriate revenue and costs assumptions to be
included in CVR calculations. Management have considered and reflected
the prevailing pricing and market conditions at the year end date within
their CVR calculations; post year end trading supports these assumptions.
The Committee reviewed management’s approach and was satisfied that
this was appropriate.
On 11 November 2022 the Group
completed its combination with
Countryside.
Management has undertaken a comprehensive exercise to identify and
align the accounting policy differences between the Vistry and Countryside
businesses.
The alignment of accounting
policies and fair valuation of
the enlarged Group’s opening
balance sheet required significant
professional judgement, including
the identification and valuation
of goodwill and other identified
intangible assets.
In the 2022 financial statements management has presented the
provisional fair values of the acquired assets and liabilities, with all fair
values being calculated in accordance with IFRS 3 Business Combinations.
The Group has utilised a professional services organisation for the
identification and valuation of intangible assets acquired with Countryside.
The Committee reviewed management’s key assumptions on the fair
valuation of the Countryside opening balance sheet, particularly in relation
to inventories and the resultant goodwill, and was satisfied that they
correctly reflect a market participant’s view.
Non-GAAP or adjusted measures
provide an appropriate and useful
assessment of business performance
and reflect the way the business
is managed. They are also used in
determining annual and long-term
incentives for remuneration and are
widely used by our investors.
There is a risk that their
inappropriate use could distort the
performance of the business.
The Group primarily uses adjusted measures to cover three main areas:
• The exceptional costs associated with integration activity for the enlarged
Group and other items that are one off in nature and are material
enough to disclose separately, including fire safety provisioning.
• The amortisation of acquired goodwill and intangibles.
• The share of joint venture operating results.
The Committee has satisfied itself of the continued treatment of
amortisation of acquired goodwill and intangibles and the share of
joint venture operating results as adjusting items to arrive at adjusted
performance measures. Additionally, the Committee agreed with
management's view that the costs associated with the Combination with
Countryside, and fire safety provisioning, are exceptional in nature.
Provisions for fire
safety cladding
For more detail see
note 5.9 (Provisions)
of the financial
statements.
Remedial work for fire safety and
cladding is a topic very much in the
public eye and there is considerable
uncertainty as to the eventual cost
to the industry for remediation
work.
The assessment of the provision for remedial fire safety and cladding
work is an area where significant judgement is applied. The treatment
of additional charges as exceptional is consistent with the prior
year treatment.
The Committee reviewed the underlying analysis to understand the
potential remedial work required, the number of buildings affected and
management's methodology for quantifying the most likely case for cost
to remediate.
The Committee agreed with management's judgement to recognise
incremental provisions based on the Group signing up to the Pledge
Letter in April 2022 and the Group being committed to signing the
Developer Remediation Contract at December 2022. The Committee also
agreed with management's fair valuation of an incremental provision
for the long form obligations of the former Countryside group at the
date of acquisition, as this reflects a market participant's expectations in
accordance with IFRS3 Business Combinations. The Committee discussed
with the external auditors the procedures performed over this analysis to
address the risk of any material misstatement of the provision.
92 |
Audit Committee report
continued
Focus area
Why this area is significant
How we as an Audit Committee addressed this area
Goodwill and
intangible asset
impairment review
For more detail see
note 5.7 (Goodwill)
of the financial
statements.
Goodwill and intangible assets form
a significant part of the Group’s
balance sheet and their current
valuation must be supported by
prospective income streams.
Going concern and
viability statements
For more detail see
pages 63 and 64.
There are many external factors
impacting the Group currently,
both positively and negatively
including the cost of living crisis,
rising interest rates and the UK
Government’s hardening stance on
fire safety cladding remediation.
In this context the Directors are
required to consider whether or
not it is appropriate to prepare the
financial statements on a going
concern basis, and whether or not
the Group remains viable in the
medium-term
The Committee has reviewed note 5.9 (Provisions) of the financial
statements in the context of the requirements of IAS 37 Provisions,
contingent liabilities and assets and is satisfied that the disclosures made
correctly reflect the Group’s position.
Management undertakes an annual review, or at other times if
circumstances indicate a possible issue, to determine if the carrying value
of goodwill and other intangible assets is impaired. This impairment
review requires the exercise of considerable judgment and application of
assumptions by management, including estimates used in deriving future
cash flows and discount rates applied to these cash flows, reflecting
current market assessments of the specific risks.
The Committee has reviewed cash forecasts for the three Cash Generating
Units (CGUs) that are used to support the Group’s goodwill and intangible
asset balances – Housebuilding, Partnerships and Countryside. Within
this review the potential impacts of climate change were considered
through the incremental costs to implement the Future Homes Standard
2025 and the 1.5°C carbon reduction commitment. The outcome
of the goodwill and intangible asset related reviews were discussed
with management. Having considered such outcome, the Committee
concurred with management that there was significant headroom from
the discounted cash flows for each CGU above the book value of the net
assets allocated to it.
The Committee also considered detailed reporting from, and held
discussions with, the external auditors on the matters concerned, whose
view was consistent with management’s conclusions. The Committee
concluded that there was no requirement to impair goodwill and
intangible assets, that the disclosure of sensitivities was appropriate and
on this basis approved the note disclosure in the financial statements.
In July 2022 the Committee members, as part of the main Board,
reviewed the overall five year strategy for the Group and had the
opportunity to further understand and challenge the risks associated with
delivering the Group’s growth strategy.
Following the Combination management have prepared a revised
cashflow forecast for the enlarged Group with an overlay for expected
synergies.
The forecasted cash flows and income statement prepared by
management and approved by the Board have formed the base line
for the modelling used to assess the Group as a going concern and its
medium-term viability, as well as the assessment for the impairment of
goodwill.
The Committee reviewed a series of stress tests performed by
management on these cash flows and income statement and satisfied
themselves of the impact these tests would have on the ability of the
Group to remain a going concern, remain compliant with banking
covenants and be viable in the medium-term. The Committee have
formed an opinion on the likelihood of these stressed events occurring,
the proposed mitigations in a severe but plausible downside scenario and
have also reviewed the circumstances required for the Group to not be
able to access cash or committed funds.
The Committee also reviewed the key terms of the Group's refinancing
undertaken in 2022 to fund the Combination and has concluded that the
borrowing facilities available to the Group are appropriate.
Vistry Group PLC | Annual Report 2022 | 93
Focus area
Why this area is significant
How we as an Audit Committee addressed this area
Together these points have allowed the Committee to form an opinion
as to the ability of the Group to remain a going concern for at least 12
months from the date of this report and make its recommendation to the
Board.
In addition, the Committee also reviewed management’s view of the
Group’s ability to remain viable, for the agreed five year period, following
the forecast realisation of a number of key risks, including the possible
impacts of climate change. The Committee approved and recommended
the going concern and viability Statements to the Board.
Segmental
reporting
Management use segments to
better describe the underlying
performance of the Group.
The different segments –
Housebuilding, Partnerships and
Countryside – have a differing
basis for valuation from many of
the sector’s analysts. As such it is
important that the integrity of the
segments is preserved for FY22 and
that sites are correctly allocated
between segments to accurately
report segment performance.
The Committee reviewed the disclosure of three segments for FY22 and
concluded that management’s treatment of Countryside as a separate
segment in the current year was correct and reflects the way that the
Chief Operating Decision Makers reviewed the business in the post-
acquisition period through to year end.
In 2023, the acquired Countryside business will be fully integrated into
the Group and HY23 and FY23 disclosures are therefore expected to
reflect only two segments prospectively. In addition, the Committee
sought and received responses from the external auditors to confirm that
management have applied the correct accounting treatment for these
segmental changes.
As a result of the above the Committee concluded that management’s
treatment of segmental changes in the year was correct.
Fair, balanced and
understandable
The Board is required to state that
the Group’s external reporting is
fair, balanced and understandable.
The Committee is requested by the
Board to provide advice to support
the assertion.
The Committee received a report from management summarising the
processes that had been undertaken to ensure that the Group’s external
reporting is fair, balanced and understandable.
In addition, the Committee received a verbal update as to the level of
internal review of the reporting (subject matter experts, the ELT) and the
level of external review (external audit, company brokers).
After consideration of the Annual Report against the fair, balanced and
understandable criteria the Committee recommended to the Board,
which accepted the recommendation, that taken as a whole, the Annual
Report is fair, balanced and understandable and provides the information
necessary for shareholders and other stakeholders to assess the Group’s
position, performance, business model, strategy and principal risks and its
disclosures in relation to TCFD and ESG.
Land held for
development and
work in progress
The Group has a significant
investment in working capital
predominantly in land and housing
work in progress. It is important
that the value of this working
capital is recorded at the lower
of cost or net realisable value to
avoid the level of working capital
being overstated in the financial
statements.
The Committee has reviewed the key accounting judgements
of management in this area primarily through consideration of
management’s appraisal of likely revenue generated when these
inventories are combined as residential properties for sale and sold (the
CVR process).
The Committee has received regular updates from the internal audit
team on, and discussed with the external auditors, the CVR process and is
satisfied that the process is functioning as intended and that any concerns
over future sales not exceeding current inventory valuations would be
identified by management and reflected in their judgement as to the
valuation to be recorded in the financial statements.
94 |
Audit Committee report
continued
Cyber security
An IT security update was provided to the Committee in 2022
following the deep dive discussion in 2021. This update detailed
the progress made during the year in relation to the IT security
strategy as well as an overview and results from security
breach simulations undertaken in the period. The Committee
was also updated on the outcome of an external audit of the
Group’s cyber security. The findings of this audit were found
to be satisfactory. The Committee recognised the significant
progress that had been achieved in implementation of the cyber
security strategy, thereby reducing the Group’s cyber security
risk including the business achieving Cyber Essentials Plus
accreditation.
TCFD reporting
The Committee has continued to review the Group’s progress
in meeting the increasing stakeholder focus on sustainability
and the related regulatory reporting requirements including
the TCFD recommended disclosures. During the year the
Committee received an update on the development of the
Group’s TCFD reporting including an analysis of the Group’s
reporting compared to its peer group and key areas identified
for improvement.
2021 financial statements restatement
During the year it became apparent a restatement was required
to be made to partner delivery revenue and costs of sales to
correct a prior period error in calculating the revenue and
associated cost of sales that can be recognised in relation to
assets previously sold by the Group to joint ventures that have
subsequently been sold by these joint ventures to external
parties. The gross profit impact of this error was de minimis.
The Committee reviewed and agreed with management’s
decision to restate the 2021 comparatives for revenue, cost of
sales and adjusted revenue.
In addition, the note disclosure for remuneration of key
management personnel has also been restated for the year
ended 31 December 2021 to reflect all elements of remuneration
required under IAS24 and related to only the ELT and Executive
Directors.
The Committee challenged management as to what controls
have been put in place to prevent such an instance occurring
again. The Committee acknowledged circumstances
surrounding the event that contributed to the error and
management's response to strengthened controls.
Management confirmed to the Committee that the restatement
only impacts reported and adjusted revenue, and reported
cost of sales, and has no impact on any of the Group's other
reported or adjusted measures, the Group net assets or net
cashflows (and therefore no impact on the remuneration of
Directors), and would have had no impact on any consideration
made by the Board as to the Group's going concern assessment
including no impact on covenant compliance or viability
statement.
For more details please see note 1.6 (Restatement of 2021
financial statements and notes) of the financial statements.
Financial Reporting Council (FRC) review
During 2022, the FRC conducted a review of the Group’s
2021 Annual Report and wrote to the Group with a series of
questions about disclosures made in relation to land options,
remuneration of key management personnel and parent
company pension arrangements.
The FRC’s review was based solely on the Group’s 2021 Annual
Report disclosures and the FRC’s Corporate Reporting Review
team did not have any discussions with any of the Group’s
management or Directors and they did not request additional
information. The review related only to compliance with
reporting requirements and did not challenge the full contents
of the 2021 Annual Report.
The Group has responded to the FRC’s letter and made certain
amendments to relevant disclosures that take account of the
FRC’s feedback. These amendments included:
• The clarification of the accounting policy relating to land
options in Note 3.1 of the financial statements.
• The restatement of the remuneration of key management
personnel for 2021 in Note 5.3 of the financial statements.
• The correction to the name of the entity accountable for
the Group’s pension schemes in Note 5.10 of the financial
statements.
The Committee reviewed and agreed with the proposed
disclosure amendments and restatements that resulted. There
was no impact on the primary financial statements as a result of
the FRC's letter.
External auditors
PricewaterhouseCoopers LLP (PwC) were appointed as external
auditors at the 2015 AGM, following the completion of a
competitive audit tender process supervised by the Committee.
The current lead audit partner is Richard French.
The Group has complied with the provisions of the Competition
& Markets Authority Order, including the provisions in relation
to the external auditors' appointment highlighted above and
the appointment of the external auditors for non-audit services.
Our 2023 AGM Notice contains a resolution for the
re-appointment of PwC as auditors to the Group. 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
auditors. The AGM Notice also contains a resolution to give the
directors authority to determine the auditors' remuneration,
which provides a practical flexibility to the Committee.
The external audit contract is put out to tender every ten years.
PwC was appointed at the 2015 AGM; accordingly it is intended
to commence a retendering process during the second half of
2023, which will allow sufficient time for a thorough process to
be undertaken.
Vistry Group PLC | Annual Report 2022 | 95
Audit process, quality and independence
The Committee is responsible for overseeing the external audit,
its quality and effectiveness and in fulfilling this responsibility:
• Reviewed and challenged the proposed audit plan. In particular
how the acquisition of Countryside would be incorporated into
scope, timing and risk assessment.
• Reviewed the proposed audit scope and level of materiality.
• Reviewed and approved PwC’s letter of engagement and
audit fee.
• Reviewed the independence and objectivity of the external
auditors, which was confirmed in an independence letter
containing information on procedures providing safeguards
established by the external auditors. The Committee took
into account regulation, professional requirements and
ethical standards were taken into account, together with
consideration of all relationships between the Group 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 external
auditors' work. Key areas of challenge in relation to the 2022
external audit included:
• Fire safety provisioning
• Going concern and viability
• Goodwill impairment
Non-audit services and audit fees
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 auditors are 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.
For an analysis of fees paid to PwC for audit and non-audit
services see note 2.1 of the financial statements. Certain non-
assurance services were provided by PwC during the year in
relation to the Combination in addition to a de-minimis technical
accounting subscription service.
Internal controls and processes
The Committee regularly reviews the Group’s internal controls
and risk management processes and receives reports on their
effectiveness. These controls and processes include:
• A defined organisational structure with appropriate delegation
of authority across all levels of the organisation.
• Formal authorisation of all land purchases, with clear guidelines
on appraisal criteria and process.
• The distribution of a Group Finance Manual which outlines
accounting policies to be followed.
• Acquisition accounting for Countryside
• The preparation and review of monthly management accounts
• Impact of inflation on the Group
External audit effectiveness
At its meeting in March 2023, the Committee reviewed the
external audit report as part of its consideration of the 2022
financial statements. This review involved an assessment of the
delivery of the audit against the audit plan for the 2022 year
end, including how key audit risks have evolved through the
audit process, an update on significant areas of judgement, and
an overview as to the timeliness and efficiency of the year end
process.
It was recognised that continuity has been maintained within
the audit team, business knowledge continues to improve
year on year, and that communication between the Group and
external auditors has been constructive and timely.
including balance sheet reconciliations.
• Comprehensive reporting against annual budgets, KPIs and
regular forecasting.
Internal audit
The internal audit function’s role is to systematically,
independently and objectively assess the adequacy and
effectiveness of the risk management systems and key internal
controls over the Group’s operations, financial reporting, IT
systems, and risk and compliance processes. The function is
a critical component of the Group’s corporate governance
framework providing support and assurance to the Board,
Committee and management in the execution of the Group’s
strategy. It provides recommendations to address key issues
identified and improve processes and controls and delivers
important insight on issues of culture and employee values and
behaviours.
The internal audit team has a blend of experience consisting
of core expertise in risk and assurance, alongside industry
experience from within the Group. This enables the team to
provide general risk and business specific assurance. The internal
audit team also oversees business unit control compliance and
undertakes commercial and cost auditing using specialist skilled
resource. It continues to maintain a budget for co-sourced
expertise to be brought in to provide more specialised reviews,
such as IT, and to take advantage of focused data analytics.
96 |
During 2022, internal audits were undertaken in accordance
with the Committee’s agreed plan for the year, as adjusted
to reflect transaction related activities. Regular updates were
provided to the Committee on the status of ongoing audits
and action closure. The Committee monitored progress against
the plan, discussed the results of all audits undertaken and
monitored relevant actions to address recommendations.
During the year the Board and the ELT were provided detailed
guidance from the external auditors covering changes and new
standards of oversight for control, fraud and audit reform as
part of the BEIS White Paper. In response, a new risk assessment
for evaluating fraud has been put in place that explores in much
greater depth the level of control and vulnerability.
This process was supported by the Finance Director community
from our operational businesses who, through both interview
and a questionnaire, detailed at length all known possible
threats and instances of fraud. The combined insights from this
exercise have been reviewed by the Risk Oversight Committee
and reported to the Audit Committee, with action taken to
ensure we have adequate preventative measures. Whilst our
fraud risk assessment is an annual activity, it has been agreed to
run this exercise again at the half-year to ensure we recognise
any new or changing threats from the recent integration.
Furthermore, management have established much greater
testing of business unit controls, documentation and self-
assessment, with further improvements due as part of the
integration and planned assurance mapping throughout
2023. The Group's finance team is working on new control
standards that will be documented and subsequently tested
in accordance with these new standards, with independent
assessment provided by Internal Audit. The Group has also
consulted externally to ensure their plan and response is
sufficient should the new standards be required for the
beginning of 2024.
As part of the Combination integration activities, the
Countryside Audit & Assurance Director continued in his role
for a period of time to ensure a smooth handover. He also
inputted into the review and enhancement of the existing risk
management framework to ensure that it continues to be
effective for the enlarged Group.
Given the size and complexity of the enlarged Group, the Audit
Committee considered and approved both the headcount and
organisational design of the Internal Audit & Risk team to
ensure appropriate scale and expertise. It has been agreed that
this will remain under review during 2023 so that the level of
assurance can be flexed to match any change in requirement.
In the coming year a key priority for the internal audit team is to
embed our control framework and standardise controls across
the enlarged Group while at the same time driving continuous
improvement across our risk management processes. In
addition, as part of the ongoing risk oversight, the team will
monitor the Combination integration activities using processes
that will be established during the early part of 2023.
Audit Committee report
continued
The Committee approved the 2023 internal audit plan that
provides a balance of thematic reviews across the whole Group,
alongside specific audits of business units and individual projects,
including those reviews planned by the previous Countryside
internal audit team.
Enterprise risk management
The framework and processes the Group operates to
manage risk are set out on pages 56 and 57. During the year,
the Committee monitored and reviewed the Group’s risk
management activities and processes through reports at each
Committee meeting. The Committee reviewed the work of the
Risk Oversight Committee’s bottom up and top down process
utilised to identify risks, the movement of principal risks,
identification of emerging risks and the risk appetite. Following
the closing of the Combination, the Committee was updated on
how the approach of the Risk Oversight Committee was evolving
to reflect the key challenges impacting the Group from external
factors, integration and economic factors.
Whistleblowing
Throughout 2022 the Committee has reviewed the operation of
the independent third party managed whistle-blower hotline to
enable employees and third parties to report matters of concern.
The Committee has continued to receive reports on ongoing and
concluded investigations. The Committee also considered the
actions taken by management as a result of the investigations.
Performance evaluation
In December 2022, the Board undertook an internal evaluation
of effectiveness. The priorities for the Committee in 2023 arising
from the evaluation are set out on page 86.
Rowan Baker
Chair of the Audit Committee
22 March 2023
Vistry Group PLC | Annual Report 2022 | 97
Remuneration Committee report
“The Committee has continued to focus on
aligning pay with performance and the
experience of our stakeholders remains a key
consideration when determining pay outcomes.”
Nigel Keen | Remuneration Committee Chair
Committee membership, meetings and attendance
The table below sets out the number of scheduled meetings
attended out of the meetings members were eligible to attend.
Director
Joined
Attendance
Nigel Keen
(Chair until 23 March 2023)
15 November 2016
5/5
Chris Browne
1 September 2014
5/5
Katherine Innes Ker
(Member until 18 May 2023)
9 October 2018
5/5
Ashley Steel
(Chair with effect from 23 March 2023)
10 June 2021
5/5
Rowan Baker
18 May 2022
3/3
Regular other attendees included: Ralph Findlay, Greg Fitzgerald, Earl
Sibley, Tim Lawlor and representatives from Willis Towers Watson.
The Committee’s terms of reference are available at
www.vistrygroup.co.uk/investor-centre/corporate-governance.
Attendance
100%
Key responsibilities
• Sets and reviews remuneration policy.
• Determines remuneration and incentives of the Executive
Directors and the Chair.
• Sets performance criteria for incentive plans.
2022 highlights
• Policy: approval of the Group’s Remuneration Policy and the
introduction of a Deferred Bonus Plan.
• Remuneration packages: approved salary and incentives for
Earl Sibley as COO and Tim Lawlor as CFO
• Remuneration packages: approved 2022 salaries and
2021 bonus outcomes for Executive Directors and ELT and
2022 LTIP awards levels for Executive Directors and Senior
Management.
• Workforce remuneration: endorsement of a temporary cost
of living allowance introduced in April 2022, which was
subsequently embedded into the 2023 salaries for those
earning below £60,000.
• Effectiveness: considered external trends in light of the
ongoing cost of living crisis, received updates on the UK
executive remuneration landscape, conducted and internal
evaluation on Committee effectiveness.
• Governance: approved the Remuneration Report for the 2022
Annual Report.
2023 priorities
• Balancing reward and recognition with expectations of
a changing shareholder base, including consideration of
appropriate remuneration structures.
• Monitoring the effectiveness of the incentives to drive
enhanced performance of the new enlarged Group.
• Continuing to assess and develop incentives related to the
sustainability targets that are fair and reasonable.
• Continuing to be informed on pay within the wider Group
with particular focus on how workforce pay keeps pace with
inflation and market conditions.
98 |
• Sustainability: We have significantly progressed our
sustainability strategy as demonstrated through verification
of our carbon reduction targets by SBTi and publication
of our Carbon Action Plan that is focused on our direct
emissions and steps to implement our stretching carbon
reduction targets.
• Growth: There was strong demand across all areas of
the Group until the end of September 2022, resulting in
increased sales rates and higher house prices. Following the
mini-budget delivered on 23 September 2022, there was
a step-change in market conditions which led to a marked
reduction in demand for private sales in the fourth quarter.
For the year as a whole, the Group achieved a weekly private
sales rate of 0.71 (FY21: 0.76).
Financial performance: 2022 was an excellent year for the
Group with progress and success achieved across all areas of
the business including:
• Profit: Significant step up in performance across all business
areas, with full year adjusted profit before tax increasing by
21% to £418.4m from £346m in 2021.
• Cash: Strong financial performance combined with a stronger
than expected net cash contribution from Countryside
and the Group’s on-going focus on good working capital
management, resulted in a year end net cash position of
£118.2m (31 December 2021: £234.5m).
• Build: Housebuilding had an excellent year delivering 6,774
units (2021: 6,551) and Vistry Partnerships made excellent
progress in the year with its strategy of rapidly growing
higher margin mixed tenure revenues, with mixed tenure
completions up by 17.6% to 2,455 (2021: 2,088).
• Operating margin: Vistry Partnerships continued to drive
its operating margin through increasing the proportion of
higher margin mixed tenure revenues, and in 2022 adjusted
operating margin increased to 10.7% (2021: 9.2%).
• Gross margin: Housebuilding adjusted gross margin saw
a further step-up, increasing to 23.4% (2021: 22.3%) with
the business making good progress towards delivering its
adjusted gross margin target of 25%.
Dear Shareholder
I have great pleasure in laying out in my annual letter a
summary of the key decisions and changes made by the
Committee in the year together with the context
in which those changes occurred and decisions taken.
The implementation of policy in respect of 2022 and this
report will be presented to shareholders at the upcoming AGM
for an advisory shareholder vote.
Committee membership, meetings and attendance
Information about the membership of the Committee during
2022, its meetings and attendance at its scheduled meetings is
set out on the adjacent page. Following our 2022 AGM, Rowan
Baker joined the Committee. I would like to welcome her and
thank her for the valuable contribution she has already made.
As I am stepping down from the Board with effect from 23
March 2023 this is my last Remuneration Chair letter.
I would like to thank the Committee members I have worked
with over the past six years for their hard work and the
Board for its support. Ashley Steel, who has been a member
of the Committee since June 2021, will become chair of the
Committee with effect from 23 March 2023.
Role and responsibilities
The Committee’s key responsibilities are also detailed on the
adjacent page.
Remuneration in context
In determining the Executive Directors’ remuneration
outcomes for the financial year, the Committee maintained
a clear and rigorous focus on aligning pay with performance
but was equally focused on taking into consideration the
experience of all our key stakeholders.
The key drivers of our decisions are outlined below.
Corporate performance
Strategic priorities: Throughout 2022 we have made
significant strategic progress in creating One Vistry. Key
strategic achievements include:
• Combination: The combination of Vistry with Countryside
was a landmark transaction for the Group. The Combination
supports the One Vistry model by strengthening the Group’s
position across both housebuilding and partnerships,
increasing exposure to the capital light, high ROCE
partnership business which offers greater resilience to
the cyclical housing market, combined brand strength,
extensive management capability and increased utilisation
of Vistry Works.
• Customer: Our HBF 8-week customer satisfaction score
increased with the Group with both Housebuilding and
Partnerships retaining 5-star ratings for a fourth consecutive
year, and improvement in our score for HBF 9-month survey
reflecting customer satisfaction once customers have settled
into our homes and developments.
Vistry Group PLC | Annual Report 2022 | 99
Stakeholder experience
Shareholders: The Board is pleased that the shareholder
experience over 2022 has been positive, with the share price
outperforming within the UK housebuilding sector. We have
continued payment of regular dividends with a total dividend
payment for FY22 of £162.3m and total ordinary dividend of 55
pence per share in line with our current capital allocation policy
to prioritise investment in the business to support the Group’s
growth strategy, pursue a sustainable two times dividend cover
policy, and return any excess capital generated in the future to
shareholders via either a share buyback or special dividend.
Our people: The excellent performance across the Group in
FY22 has been reflected in the remuneration paid to our
employees including:
• Introduction in April 2022 of a temporary cost of living
allowance of up to 3.75%, ensuring that the lowest paid
employees received the most support. From January 2023 the
cost of living allowance became a permanent part of all annual
salaries under £60,000. The year end salary increase for the
workforce was a minimum of 4% for all employees at the start
of 2023.
• The discretionary general employee bonus met the financial
targets resulting in a maximum pay-out of 7.5% for a high
proportion of eligible employees, with deductions made for
those business units not achieving customer satisfaction and/or
local financial targets.
• A review of our benefits package was undertaken in the year
which gave rise to enhancements including increasing life
assurance policy cover, introducing subsidised health screening
and further improving our industry leading maternity, paternity
and adoption policies.
• We achieved certification as a ‘Top Employer’ with the Top
Employer Institute recognising our people strategies and
workplace environment
• Our Vistry Employee Value Proposition ‘Making Vistry’
was rolled out internally and externally during 2022. Our
proposition showcases what Vistry stands for as an employer.
• Our Peakon employee engagement score increased in 2022
to 8.6 (2021:8.1) despite the pressures our build teams faced
from the ongoing supply chain challenges and high levels of
customer demand.
Committee activities
A summary of the Committee’s focus and activities during 2022 are set out in the table below.
Area of focus
Activities
Policy
• Approval of the Group’s Remuneration Policy and the introduction of a Deferred Bonus Plan.
Remuneration
packages
• Approved Executive Directors and ELT salaries for 2022 and new arrangements for COO and CFO
following the Combination.
• Approved 2021 bonus outcomes for Executive Directors and ELT.
• Approved 2022 LTIP award levels for Executive Directors and senior management.
Performance
targets
• Reviewed and set financial targets for 2022 annual bonus and 2022 LTIP, in the context of multiple
internal and external reference points for performance over the relevant period.
Equity incentives
• Confirmed the outcome of 2019 LTIP awards.
• Received updates on performance of in-flight LTIP awards.
Workforce
remuneration
• Received updates on workforce remuneration policies and practices, and how these align with the
Group’s strategy and culture.
Effectiveness
Group.
• Considered external trends and possible implications for senior management remuneration across the
• Received updates on the UK executive remuneration landscape and governance developments.
• Conducted internal evaluation of the Committee’s effectiveness.
Governance
• Approved the Remuneration Report for inclusion in this Annual Report.
• Reviewed the Committee’s terms of reference.
100 |
Remuneration Committee report
continued
2022 remuneration
Taking the context set out above into account, the Committee
made the decisions detailed below in respect of remuneration
in 2022.
Bonus
The 2022 Bonus Scheme set for Executive Directors in respect
of performance in 2022 was based on achievement of stretching
targets against Profit (60%) and Capital Employed (30%),
Customer Satisfaction (5%) and Sustainability (5%).
Performance was assessed based on Vistry performance
excluding the impact of Countryside for a small period at the
end of the year. Results in respect of both financial metrics
exceeded the maximum targets set given the significant step up
in financial performance in the year and the excellent progress
made which exceeded expectations despite the challenging
market condition in the last quarter. The Customer Satisfaction
metric was based on the HBF 9-month survey score with a
maximum achievement of 80%. The score achieved for the
Group was over 79% which was a significant improvement
on the previous year score demonstrating the commitment
to customer service delivery. The three elements of the ESG
scorecard were met due to increased focus on the delivery of
sustainability targets throughout the Group.
The formulaic outcome given the above performance was 100%
of maximum for the Executive Directors.
The Committee considered whether to exercise its discretion and
agreed not to adjust this outcome as it was comfortable that
this outcome is both fair and appropriate given the performance
of the business in the year and the wider stakeholder experience
outlined above.
Long-term incentives
The 2020 LTIP award was subject to total shareholder return1
(TSR) (33%), adjusted EPS (33%) and ROCE (33%) targets
measured over three financial years.
period 2020–22 and on a formulaic basis the vesting against
this element would be nil. The Committee has now considered
performance over the three-year period and decided to base
vesting on EPS performance achieved in 2022. This results in
vesting of 24% for this element and means that performance
is being assessed against the 2022 target set in 2020 ensuring
a quantifiable way for the Committee to determine the vesting
outcome. Further, the Committee is comfortable that this
level of vesting is appropriate in the context of strong financial
performance, significant improvement in EPS over the period
and is aligned with the wider stakeholder experience.
On this basis, the level of vesting for the EPS element is 72%
of maximum and the overall level of vesting for the 2020 award
is 57%.
This is also in line with the approach taken from 2022 such that
EPS targets will be set on a final year basis which the Committee
believes better reflects the Company’s focus on growth.
Full details on the targets set and performance against them can
be found on page 109 in respect of the 2022 Bonus Scheme and
pages 110 and 111 for the 2020 LTIP award.
The Committee will consider the appropriateness of the
performance targets for the 2021 and 2022 LTIPs in the context
of the transaction in due course with full disclosure provided in
the relevant remuneration report.
2023 Remuneration Policy implementation
The Remuneration Policy was approved by a shareholder vote at
the AGM May 2022. Arrangements for 2023 will align with this
Policy as set out in the table on the following page.
I hope you find that this report clearly explains the remuneration
approach we have taken and how we will implement Policy in
2023. I look forward to your support at the AGM in respect of
the resolution relating to this report.
The ROCE element was achieved in full but the threshold for the
TSR element was not met.
Nigel Keen
Chair of the Remuneration Committee
22 March 2023
As noted last year, the outturn of three LTIP awards have been
significantly impaired by the disruption to the business in 2020
as a result of the Covid restrictions. While no adjustment was
made to the vesting out-turn for the 2019 awards, we did
disclose last year that the Committee would actively consider
whether the use of discretion would be appropriate for the EPS
element of the 2020 award.
The original target was expressed as cumulative EPS over the
1. Total shareholder return (TSR) is a measure of the Company’s share price growth and dividends (assumed to be reinvested in
Vistry shares). It is a measure which directly aligns with the value created for the Company’s investors.
Vistry Group PLC | Annual Report 2022 | 101
Strategic pillars
1 Maintaining a strong market position
and capability across all housing
tenures, including being a leading
provider of high demand, high growth
affordable housing.
3 Leveraging our combined Vistry
Housebuilding and Countryside
Partnership assets to maximise overall
returns, particularly on larger multi-
tenure developments.
5 Maintaining a high quality, deliverable
operational land bank and effectively
deploying our leading strategic land capability.
2 Delivering customers high quality
sustainable homes that at least
meet the continually evolving future
homes standards.
4 Utilising our differentiated multiple
brand portfolio to target a broader
range of customers and increase
our competitive positioning in the
land market.
6 Maximising the opportunity from Vistry
Work’s timber frame manufacturing capability
through improved operating efficiency and
establishing the use of its timber frame output
across all business areas.
Further information about our strategy:
See pages 18 to 21.
Pay element
Implementation of Policy
Link to
strategic pillars
Base pay
The salary increase for Greg Fitzgerald was 4%. In assessing this salary adjustment, the
Committee took into account the total salary increase for the workforce for 2023 of between
4% and 7.75% depending on salary along with benchmarking data against sector peers and the
FTSE 250. Salary levels for Earl Sibley and Tim Lawlor in new roles of COO and CFO were set
as £535,000 and £488,800, respectively, taking into account relevant benchmarking data for
sector peers and the FTSE 250.
Pension
Pension contributions for all executive directors will be 7% of salary, in line with contributions
for the wider workforce.
Bonus
Financial performance will be represented in the bonus by Profit and Capital Employed
metrics weighted 50% and 25% respectively. To drive focus on this essential performance
area during integration, 20% will be based on the achievement of synergies from the
Countryside acquisition.
Our focus on ESG measures will be supported with a 5% weighting for this area. This be based
on a scorecard of sustainability measures, including additional affordable housing, people
metrics and a carbon reduction underpin.
Further detail can be found on pages 116 and 117.
LTIP
For the 2023 LTIP, in line with the previous year, the vesting criteria will be based on TSR
(33%), ROCE (33%), and adjusted EPS (33%). The targets for these awards can be found on
page 117. The targets are set by reference to the 2023 Budget and consensus with threshold
and maximum above those used for 2020 and 2021 LTIP awards.
It had been the Committee’s intention that from 2023 the LTIP would include an element
measuring performance in relation to ESG targets (e.g. carbon reduction) aligned with our
sustainability strategy. However, given the Countryside acquisition in late 2022, we are
reconfiguring our verified carbon reduction targets for the enlarged Group with the Science
Based Targets Initiative and so the Committee is not able to set robust targets at this stage.
However, it is anticipated that the baseline will have been set and we will incorporate targets
using SBTi methodology for 2024 awards.
102 |
1
2
3
4
5
6
1
2
3
4
5
6
1
2
3
1
3
6
Directors’ Remuneration report
Remuneration at a glance
This section of the Directors’ Remuneration report provides details of how our Remuneration Policy was implemented during the
financial year ended 31 December 2022, and how it will be implemented during the year ending 31 December 2023. It has been prepared
in accordance with the provisions of the Companies Act 2006 and Schedule 8 of the Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (as amended). It also meets the requirements of the UKLA’s Listing Rules. In accordance with
the Regulations, the following sections of the Remuneration Report are subject to audit: the single total figure of remuneration for
Executive Directors and Non-Executive Directors, and accompanying notes (page 108), awards made during the financial year (page 110),
exit payments made in the year (page 111), payments to past Directors (page 111) and the statement of Directors’ shareholdings (page 112).
The remaining sections of the report are not subject to audit.
2022 Executive Directors total pay
Greg Fitzgerald
Earl Sibley
Tim Lawlor1
£173K
Graham Prothero2
£2,484K
1,449K
£1,550K
0
500
1,000
1,500
2,000
2,500
Value £
Base salary
Benefits and pensions
Annual bonus
LTIP
1. Appointed to the Board on 11 November 2022 2. Stepped down from the Board on 11 November 2022
2022 Annual bonus achievement
Greg Fitzgerald
Earl Sibley
Tim Lawlor1
£100K
Graham Prothero2
£1,089K
£645K
£668K
0
200
400
600
800
1,000
1,200
Value £
1. Appointed to the Board on 11 November 2022 2.Stepped down from the Board on 11 November 2022.
This chart illustrates the total number of shares and value of the LTIP
awards that vested in respect of 2022
Greg Fitzgerald
Earl Sibley
Graham Prothero
£551K
1
£790K
2
£313K
1
£396K
1
0
20,000
40,000
60,000 80,000 100,000 120,000
£1,000K
2
Number of shares
1. Value of shares at vesting.
2. Value of shares at date of award.
2023 Annual bonus
Awards made at 150% of basic salary
subject to the performance metrics below.
£1,393K
2
Original award
Metric
Weighting %
Vesting
Profit before tax
(pre-exceptionals & amortisation)
Period end capital employed
Synergies from Countryside
acquisition
ESG Scorecard
50
25
20
5
This chart illustrates the total number of shares and value of the LTIP
awards that were granted in 2022
Greg Fitzgerald
Graham Prothero
£1,452
1
Grant
£1,030
1
Earl Sibley
£8281
2023 LTIP award
Awards made at 200% of basic salary
subject to the performance metrics
Metric
TSR
ROCE
Adjusted EPS
Weighting %
33.3
33.3
33.3
0
300
600
900
1500
Number of shares
1. Value of shares at date of award.
Vistry Group PLC | Annual Report 2022 | 103
Implementation of Remuneration Policy in 2023
Component
Minimum
On-target
Maximum
Maximum with 50%
share price growth
Base Salary
Pension
Benefits
Annual cash salary for 2023
2023 pension levels
2022 actual benefit figures (forward-looking estimate for Tim Lawlor)
Annual bonus
0% payout
75% payout
150% payout
Long-term incentives
0% vesting
50% vesting of 200% award
100% vesting of 200% award
150% payout, value of 1/3rd
deferred increased by 50%
100% vesting of 200% award,
with value increased by 50%
2023 remuneration scenarios
The charts below include an estimate of the potential 2023 reward opportunities for each Executive Director based on the following
assumptions:
• Minimum performance reflects the most up-to-date base salary figures plus benefits paid in 2022 and pension rates for 2023.
• Target performance reflects the most up-to-date base salary and pension figures, benefits paid in 2022, annual cash bonus at 50% of
maximum and LTIP vesting at 50% of maximum.
• Maximum performance reflects the most up-to-date base salary and pension figures, benefits paid in 2022, annual cash bonus at
100% of maximum and LTIP vesting at maximum of 100%.
• The proposed policy maximum with 50% share price increase assumes the maximum value with a 50% increase in share price for LTIP
awards and annual bonus awards deferred into shares.
Greg Fitzgerald
Maximum growth
with 50% share price
Maximum
19%
24%
30%
33%
51%
£4,426,351
43%
£3,482,333
On-target
47%
32%
21%
£1,783,099
Minimum
100%
£839,080
£0
£1,000,000
£2,000,000
£3,000,000
£4,000,000
£5,000,000
Earl Sibley
Maximum growth
with 50% share price
19%
30%
51%
£3,133,700
Maximum
24%
33%
43%
£2,464,950
On-target
47%
32%
21%
£1,261,200
Minimum
100%
£592,450
£0
£1,000,000
£2,000,000
£3,000,000
£4,000,000
£5,000,000
Tim Lawlor
Maximum growth
with 50% share price
19%
30%
51%
£2,864,816
Maximum
24%
33%
43%
£2,253,816
On-target
47%
32%
21%
£1,154,016
Minimum
100%
£543,016
£0
£1,000,000
£2,000,000
£3,000,000
£4,000,000
£5,000,000
Base, Benefits, Pension
Annual Bonus
Long-Term Incentives
104 |
Directors’ Remuneration report
continued
The Code - Provision 40 Alignment
The table below explains how the Remuneration Committee has addressed the factors set out in Provision 40 of the Code. The Group’s
strategic pillars as detailed on page 18 are designed to leverage the strengths and maximise the opportunities from our combination of
Vistry Housebuilding and Countryside Partnerships assets and generate sustainable value for all stakeholders, including sector-leading
ROCE in the medium term. The Remuneration Policy is designed to ensure a strong link between remuneration, the strategic pillars and
delivery of objectives.
Principle
Alignment to the Code
Clarity
Remuneration arrangements
should be transparent and
promote effective engagement
with shareholders and the
workforce.
Simplicity
Remuneration structures should
avoid complexity and their rationale
and operation should be easy
to understand.
Risk
Remuneration arrangements
should ensure reputational and
other risks from excessive rewards,
and behavioural risks that can
arise from target-based incentive
plans, are identified and mitigated.
Predictability
The range of possible values
of rewards to individual
directors and any other limits
or discretions should be
identified and explained at the
time of approving the policy.
Our Remuneration Policy, plan rules and guidance notes are drafted in a clear and succinct
format. The People Forum and employee roadshows provide the opportunity for our people
to raise questions on the Group’s remuneration practices.
Our Remuneration Policy is available at www.vistrygroup.co.uk/investor-centre/
corporate-governance and a summary of our Remuneration Policy is included in this
Annual Report.
Our remuneration arrangements for ELT and senior leadership are purposefully simple,
comprising of fixed pay (salary, benefits, pension/pension salary supplement), a short-term
incentive plan (Annual Bonus Scheme) and a long-term incentive plan (LTIP). Targets are
reviewed and aligned to strategy.
The 2023 Annual Bonus scheme includes ESG targets based on metrics which are
meaningful and clear for our employees and aligned to the strategic pillars.
Risks are identified by the Committee and mitigated through the application of the
Remuneration Policy including malus and clawback provisions; discretionary powers to amend
outcomes; minimum shareholding requirements. Appropriate discretion can be applied, in the
case of the annual bonus for three years from the date on which the
outcome is determined, and for LTIP awards discretion extends until the fifth anniversary
of the grant date.
The Executive Directors’ annual bonus maximum award quantum is 150% and the LTIP
award quantum is 200% of base salary. Maximum bonus is only payable if stretching targets
are met and excellent Group performance is achieved.
One third of the annual bonus and whole of the LTIP vesting is in shares.
The Executive Directors have shareholding requirements including a two-year post-
cessation shareholding requirement. The value of share awards are less predictable than
cash due to potential fluctuations in the share price. However, it means that Director
remuneration is better aligned to the shareholder experience.
Vistry Group PLC | Annual Report 2022 | 105
Principle
Alignment to the Code
Proportionality
The link between individual
awards, the delivery of strategy
and the long- term performance
of the company should be clear.
Outcomes should not reward
poor performance.
Alignment to culture
Incentive scheme targets are carefully considered by the Committee to ensure they reward
performance and are correctly calibrated. Targets used in the Group’s incentive schemes are
then monitored and progress measured by reference to many of the Group’s reported KPIs.
For the annual bonus, these include adjusted profit before tax, net cash which is reflected in
the capital employed metric and HBF customer satisfaction score which is reflected in the
ESG metric. For the LTIP, these include earnings per share and ROCE.
Annual bonus arrangements link to the Group’s near-term strategic pillars and, for 2022,
the metrics used were adjusted profit before tax, period end capital employed (being total
equity less goodwill, intangible assets and net cash and defined benefit pensions asset/
liability), ESG - customer satisfaction and ESG – affordable housing and people metrics with
a carbon reduction underpin. Period end capital employed motivates a disciplined balance
sheet and supports the management of capital and cash. Monitoring measures are in place
to ensure that nothing beyond the normal period end behaviours and actions occur in
arriving at the outcome.
The LTIP takes a longer-term perspective and for the 2022 awards the metrics were
based on the financial and share price performance measures of relative total shareholder
return, adjusted earnings per share and ROCE, equally weighted at one third of awards.
The inclusion of the ROCE metric ensures that sustainable investment decisions are made.
Information in relation to the 2023 LTIP awards is set on page 117. The Committee’s ability to
apply discretion ensures that outcomes will not reward poor performance.
Our purpose is to develop sustainable new homes and communities across all sectors of
the UK housing market. This is reflected in our ESG metric in the annual bonus, and our
ROCE metric in the LTIP ensures sustainable investment. Incentive targets selected by the
Committee reflect the importance of driving behaviours that underpin the culture of the
business and support the sustainable success of the enlarged Group. A synergy metric has
been included in the 2023 annual bonus to ensure appropriate focus on the key integration
of Vistry and Countryside. For the second year ESG measures have been applied in setting
performance targets for the 2023 annual bonus arrangements. The ESG metric is made up of
a scorecard of ESG measures. Customer satisfaction based on the HBF 8-week survey score
and 9-month survey score remain important KPIs and are agreed areas for consideration of
downward discretion in 2023 annual bonus. Further details about the 2023 Annual Bonus are
set out on pages 116 to 117. It is the Committee’s intention that from 2024 the LTIP will include
an element measuring performance subject to ESG targets (e.g. carbon reduction) aligned
with our sustainability strategy.
The Group values are Integrity, Caring and Quality which are reflected in our incentive
remuneration measures through the inclusion of customer satisfaction and health and safety
as areas for downward discretion in the annual bonus (to drive increased service and build
quality and maintain the safety of our sites) and through the malus and clawback provisions
that apply to all incentive plans. Further information on our culture is included on page 2.
As set out under ‘Proportionality’ annual bonus arrangements link to the Group’s near-term
strategic pillars and the LTIP takes a longer-term perspective, with the metrics and targets set
by reference to the strategic plan.
106 |
Directors’ Remuneration report
continued
Key remuneration decisions during 2022
During 2022, the Committee determined the performance measures and set targets for the 2022 annual bonus and approved 2021
bonus payments. It also determined the performance measures and set targets for and approved LTIP awards made in 2022 and
confirmed the partial vesting of the 2019 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 2022.
The Deferred Bonus Plan (DBP) was used to make share awards to Executive Directors and other senior management equivalent
to the value of one third of their annual bonus over a vesting period of two years. Malus and clawback provisions apply which are
consistent with the terms of the annual bonus plan and LTIP.
Prior to the announcement of the Combination, the Committee approved the salary and incentive arrangements for the COO and
CFO subject to closing of the transaction, which included consideration of benchmarking and base salary increase for 2023 aligned to
those expected to be applied to the workforce.
Towards the end of the year, the Committee considered the structure for the 2023 annual bonus and completed the 2023
remuneration review, which included consideration of the economic environment, alignment with the experience of stakeholders,
the link between executive remuneration and pay, and employment conditions throughout the Group (including oversight of the
general proposals for our people for 2023). The conclusion of the review was that a base salary increase would be made to the CEO
from 1 January 2023 which was at the bottom of the range of 4% and 7.75% depending on salary applied to the workforce. The fees
for the Chair were also reviewed and increased by 4% in line with median fees in the FTSE250.
Vistry Group PLC | Annual Report 2022 | 107
Implementation of remuneration policy for the year ended 31 December 2022
Single figure Executive Directors’ remuneration (audited)
Salary
£000
Benefits1
£000
Pension Salary
Supplement2
£000
Sub-Total
(Fixed Pay)
£000
Greg Fitzgerald
Earl Sibley7
Tim Lawlor8
Graham Prothero9
Notes:
2022
2021
2022
2021
2022
2021
2022
2021
726
696
430
395
67
-
445
500
31
31
20
20
1
-
10
11
87
118
41
51
5
-
31
35
844
866
491
466
73
-
486
546
LTIP
£000
5513
5484
3133
2254
-
-
3963
-
Annual
Bonus5
1,089
1,045
645
593
100
-
668
750
SAYE
£000
Sub-Total
(Variable Pay)
£000
Total
Remuneration
£000
-
-
-
56
-
-
-
-
1,640
1,593
958
823
100
-
1,064
750
2,484
2,459
1,449
1,289
173
-
1,550
1,296
1. Taxable benefits include medical insurance, payment of a car allowance and provision of a leased vehicle.
2. Greg Fitzgerald, Graham Prothero, Tim Lawlor and Earl Sibley receive a non-bonusable and non-pensionable pension salary supplement.
3. LTIP 2020 measured over a three-year period to 31 December 2022 and vested to the extent of 57% on 1 March 2023 at a share price of £7.855. The share price
on grant of this award was £12.79 and at the end of the three-year period was £6.255. Notional dividends accrued up to 31 December 2022 have been applied to
the vested award.
4. This is the actual value derived from the 2019 LTIP calculated using the share price on the vesting date, 4 March 2022 which was £9.296 and includes notional
dividend shares accrued to 31 December 2022. Last year’s report included an estimate based on the average share price over the last quarter of 2021 of £11.539
as the award had not vested at the date of the report. See page 110 for further information.
5. 100% annual bonus was achieved for the year (see page 109). One third of the annual bonus will be deferred into shares in accordance with the Deferred Bonus
Plan 2022 rules.
6. Earl Sibley was granted 2,208 SAYE at an option price of £8.152 (representing a 20% discount to the prevailing market price of £10.19 during 2021), resulting in
an equivalent benefit of £4,500.
7. Earl Sibley assumed the role of COO with effect from 11 November 2022, therefore his 2022 figures are reflective of the change in his remuneration package from
this date. Further details on his new remuneration package can be found on page 104.
8. Tim Lawlor was appointed to the Board on 11 November 2022.
9. Graham Prothero stepped down from the Board on 11 November 2022.
Non-Executive Directors’ remuneration
The following table shows the remuneration for the Non-Executive Directors who served during the 2022 financial year:
Non-Executive Directors
Ralph Findlay1
Rowan Baker2
Chris Browne
Katherine Innes Ker
Nigel Keen
Ashley Steel
Ian Tyler3
Salary / fees £000
Total
2022
169
42
57
57
67
63
73
2021
74
-
54
54
64
31
Total
2021
74
-
54
54
64
31
190
190
2022
169
42
57
57
67
63
73
1. Appointed Chairman on 18 May 2022. 2. Appointed on 18 May 2022. 3. Retired on 18 May 2022.
In addition to their fees, the Non-Executive Directors were entitled to claim non-taxable expenses incurred whilst fulfilling their role.
No taxable expenses were incurred by the Non-Executive Directors whilst fulfilling their role.
Payments to Executive Directors for external directorships (unaudited)
Greg Fitzgerald is non-executive Chairman of Baker Estates Limited. During the year Greg Fitzgerald received a fee of £1.565m in relation
to this appointment, together with loan interest payments of £420,749. He is also non-executive Chairman of Ardent Hire Solutions
Limited, for which he received a fee of £130,000 during the year. Neither Tim Lawlor nor Earl Sibley currently hold any external
directorships.
108 |
Directors’ Remuneration report
continued
Annual bonus payment in respect of 2022 (audited)
The maximum opportunity for the CEO, COO and CFO for the year ended 31 December 2022 was 150% of salary with the last third of any
bonus award being paid in shares, deferred for two years. Provisions that enable the recovery of sums paid (clawback) continue to apply,
as set out in the policy table. All targets were set in January 2022.
A breakdown of the performance against the measurement criteria is shown below.
Measure
Financial measures (90%)
Adjusted profit before tax
(acts as gateway to bonus)
Period end capital employed
Non-financial measures (10%)
ESG - Customer satisfaction
ESG - Affordable housing and people metrics,
with carbon reduction underpin1
Weighting
(as a % of maximum)
Threshold
On target
Stretch and
maximum
Outcome and
award achieved
(% of max)
60
30
5
5
360
405
420
420 (100%)
1,792
1,707
1,673
<1,600 (100%)
75%
n/a
80%
80% (100%)
n/a
n/a
100%
1. The ESG scorecard targets included (i) Additional affordable homes growth in excess of 2021 (excluding partner delivery), (ii) Skills academy learners with a threshold performance of 30 and
a maximum performance of 60, on a straight-line basis; and (iii) Carbon reduction underpin to finalise SBTi targets and set an implementation plan. The sustainability scorecard measures
were achieved in full (i) the number of affordable homes delivered was over 100 in excess of 2021 delivery (ii) the number of learners through skills academies was 233 against a maximum
target of 60 (iii) carbon reduction targets were verified with SBTI and implementation plans put in place.
Executive Director
Greg Fitzgerald
Graham Prothero1
Tim Lawlor2
Earl Sibley
Maximum bonus
% salary
Target bonus
% of salary
Actual bonus
% of salary
Total 2022
bonus £000
150%
150%
150%
150%
50
50
50
50
150
150
150
150
1,089
668
100
645
1. Stepped down from the Board on 11 November 2022. 2. Appointed to the Board on 11 November 2022.
In determining the Executive Directors’ 2022 annual bonus outcome, the Committee maintained a clear and rigorous focus on aligning
pay with performance, coupled with consideration of performance against the metrics. The Committee considered the impact of the
Countryside transaction on the Annual Bonus and determined that as closing occurred on 11 November 2022 that the Countryside
performance for the remainder of 2022 should be excluded and the bonus measured on the standalone performance of Vistry. This
resulted in adding back the additional finance charges of £1.8m. Results in respect of both financial metrics exceeded the maximum
targets set given the excellent progress for the Group in the year which exceeded expectations despite the challenging market conditions
in the last quarter. Demand was high in the first half of the year giving an increased sales rate and higher house prices. Demand in the
fourth quarter reduced significantly reflecting a heightened level of macro uncertainty and step up in mortgage costs following the 23
September 2022 mini-budget. The performance against the target for Capital Employed was due to continued focus on good working
capital management resulting in a year end net cash position significantly ahead of expectations. The maximum target for the Profit
metric was clearly ahead of consensus at the time of approval. The Customer Satisfaction metric was based on the HBF 9-month survey
score with a maximum achievement of 80%. The score achieved was over 79%, which was a significant improvement on the previous
year score demonstrating the commitment to customer service delivery. The three elements of ESG scorecard were met due to increased
focus on the delivery of sustainability targets throughout the Group. The Committee considered whether to exercise its discretion and
agreed not to adjust this outcome as it was comfortable that the awards made were both fair and appropriate given the performance of
the Group in the year and wider stakeholder experience outlined earlier in this report.
Long-term incentive plan (audited)
Long-term incentive awards are made in the form of performance shares or nil-cost options under the Vistry Group LTIP, which was
approved by shareholders at the General Meeting held on 2 December 2019. All awards prior to 2020 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
LTIP rules.
Discretions available to the Committee contained in the LTIP rules are set out in the policy table on pages 120 and 121 and in the exit
payments policy contained within the Remuneration Policy which is available at www.vistrygroup.co.uk/investor-centre/corporate-
governance.
Vistry Group PLC | Annual Report 2022 | 109
Awards granted during 2022 (audited)
The table below shows the awards granted to Executive Directors in 2022 in the form of nil cost options. The awards were based on a
closing share price of £9.444 on 3 March 2022. This has been used to determine the face value of the awards. The award is subject to
a three-year performance period ending on 31 December 2024 and exercisable in 2027, following a two-year holding period.
Executive Director
Greg Fitzgerald
Graham Prothero
Earl Sibley
Type of award
Awards as
% of salary
Performance Share Plan
Performance Share Plan
Performance Share Plan
200
200
200
Number
of shares
awarded
153,784
109,063
87,624
Face value
of award
£000
1,452
1,030
828
The performance measures for all 2022 awards are total shareholder return (TSR) (33.3%), adjusted 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 upper
quartile of the index, using a relative ranking approach.
• Adjusted EPS – threshold performance at absolute EPS of 124 pence and maximum performance at absolute EPS of 152 pence, both
as measured in the third year of the performance period (2024).
• ROCE – threshold performance at 23.2% and maximum performance at 28.1%, both as measured in the third year of the
performance period (2024).
The 2022 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 Partnerships PLC
Crest Nicholson Holdings plc
Persimmon plc
Redrow plc
Taylor Wimpey plc
The Committee had undertaken a review of EPS structures used within LTIPs by FTSE companies. It was determined to change the EPS
measure from cumulative EPS across the measurement period to absolute EPS in the third year of the performance period. It was felt that the
use of an absolute EPS measure would better represent the long term growth of the Group, as the measurement of operational performance
in the period was addressed in the Annual Bonus through the inclusion of a Profit based metric.
Deferred Bonus Award granted in 2022 (audited)
The table below shows the awards granted to Executive Directors under the Deferred Bonus Plan 2022 in the form of conditional awards on
4 March 2022. The awards equate to one third of the bonus payable to Executive Directors in 2021. The awards were based on a share price
of £9.444 being the closing share price on 3 March 2022. The awards are not subject to any additional performance conditions nor are
they subject to continued employment and vest in accordance with the plan rules, two year from the date of grant.
Executive Director
Type of award
Greg Fitzgerald
Deferred Bonus Award
Graham Prothero
Deferred Bonus Award
Earl Sibley
Deferred Bonus Award
Awards vesting in respect of 2022 (audited)
Award as a
% of bonus
Number of
shares awarded
Face value
of award £000
33.33%
33.33%
33.33%
36,878
26,471
20,912
348
250
198
The LTIP awards made in 2020 were measured over a three-year period to 31 December 2022 and vested as to 57% of the maximum award
on 1 March 2023 at a share price of £7.855.
Performance measure
Weighting
Threshold
(25% Vesting)
Adjusted EPS1
33.33%
139p
Maximum
(100% Vesting)
163p
Actual
154p
% Achieved
against weighting
% Vesting
72%
24%
TSR
ROCE
Performance equal
to the annualised
median of the index
Performance equal to
the annualised median
of the index plus 7.5%
Below
median
20.8%
22.6%
>25%
33.33%
33.33%
Straight line vesting occurs between threshold and maximum
0%
100%
Total vesting
0%
33%
57%
1. Adjusted EPS target based on EPS performance achieved in 2022 replacing cumulative EPS over the period 2020 – 22.
110 |
Directors’ Remuneration report
continued
Consistent with the approach taken for the Annual Bonus, the Committee considered the impact of the Countryside transaction on the
2020 LTIP and determined that the Countryside performance for the six weeks from closing should be excluded and the LTIP measured
on the standalone performance of Vistry. The ROCE element was achieved in full but the threshold for the TSR element was not met.
ROCE is monitored to reflect the underlying performance of the Group, with exceptional items and the amortisation of acquired intangible
assets excluded from the calculation. The ROCE performance was in excess of maximum reflecting the strong financial performance of
the business, good cash management including the payment of dividends in 2021 and 2022 and a £35m share buy back programme In
respect of the adjusted EPS element, the original target was expressed as cumulative EPS over the period 2020 to 2022. However, as
described in last year’s report, with effect from 2022 EPS targets have been set such that performance will be measured in the third year
of the performance period as the Committee believes that this approach better reflects the Company’s focus on growth and also aligns
with typical market practice. As the Company’s EPS performance in 2020 was significantly affected by the Covid pandemic, even though
2021’s performance showed a notable rebound and 2022 represented a strong financial outcome, the formulaic outcome of this element
would have been nil vesting. However, the Committee flagged in last year’s report that it would actively consider the exercise of discretion
in order to better reflect both financial performance and stakeholder experience delivered over the performance period. The Committee
carefully considered these factors and determined that it would be appropriate to base the level of vesting for the EPS element on
achievement against the original targets set for 2022. On this basis, the level of vesting for the EPS element is 72% of maximum and the
overall level of vesting for the 2020 award is 57%.
Historical LTIP awards (audited)
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
COO
2017
2018
2019
2020
2021
2022
01/01/2017-31/12/2019
2001
01/01/2018-31/12/2020
2002
01/01/2019-31/12/2021
150
01/01/2020-31/12/2022
200
01/01/2021-31/12/2023
180
01/01/2022-31/12/2024
200
-
-
-
200
180
200
CFO
125
125
125
200
180
200
Customer
Satisfaction
TSR
EPS
ROCE
Percentage of
award vesting
33.3
22.2
22.2
22.2
25
-
-
-
-
25
33.3
33.3
33.3
33.3
25
33.3
33.3
33.3
33.3
81.6
25
45.3
57
25
33.3
33.3
33.3
Ongoing
33.3
Ongoing
1. As explained in the 2017 Directors’ Remuneration Report, this level of award was granted on a exceptional basis.
2. As explained in the 2018 Directors’ Remuneration Report, this level of award was granted on an exceptional basis.
Pensions (audited)
In 2020, the Committee agreed that stepped reductions should be applied to Greg Fitzgerald and Earl Sibley’s pension arrangements
to align them with the workforce level (currently 7% of base salary) by January 2023.
Greg Fitzgerald and Earl Sibley were not members of a pension scheme during the year and received pension salary supplements of
12% and 10% of their respective base salaries. Tim Lawlor was not a member of the pension scheme during the year and received
pension salary supplement of 7% of his base salary. All Executive Directors receive pension salary supplements of 7% of their respective
base salaries from 1 January 2023 in alignment with the workforce.
None of the Executive Directors have a prospective right to defined benefit pensions and 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 at
www.vistrygroup.co.uk/investor-centre/corporate-governance.
Any new appointments include eligibility for membership of the Group’s defined contribution pension arrangements.
Payments for loss of office (audited)
There were no payments for loss of office made in the year.
On 27 April 2022 it was announced that Graham Prothero would step down as Chief Operating Officer and as a Director of the Company
with effect from 31 December 2022, to take up the position of CEO at MJ Gleeson PLC. His resignation as a Director was brought
forward to take effect on closing of the Countryside transaction on 11 November 2022, with him remaining as an employee until 31
December 2022. There were no remuneration payments made to Graham Prothero as part of his departure with him receiving his salary
and contractual benefits during his notice period up to 31 December 2022. Graham will receive an annual bonus in respect of 2022 of
£772,500 which was 100% of his maximum opportunity of 150% of annual salary. £105,000 relates to his period of employment from 11
November 2022 to 31 December 2022, where he remained an employee of the Group but was no longer a Director. Two thirds of the
whole bonus entitlement will be paid in March 2023 as cash and the remaining one third as a share award under the Deferred Bonus
Plan. The share award will be subject to a two year holding period. His share award under the 2020 LTIP will vest in accordance with the
performance achieved of 57% as set out above and on the previous page and also subject to a further two year holding period. He shall
retain his deferred bonus shares with respect to his annual bonus for 2020 which shall be released to him in 2023, and his share award
under the Deferred Bonus Plan with respect to his annual bonus for 2021 shall vest in 2024. He has forfeited the outstanding share
awards under the LTIP granted in 2021 and 2022. These arrangements are set out in a settlement agreement between the Company
and Graham Prothero.
Payments to past directors (audited)
There were no payments to past directors made in the year.
Vistry Group PLC | Annual Report 2022 | 111
Directors’ shareholdings and share interests
Directors’ beneficial share interests (audited)
The Directors’ interests in the share capital of the Company are shown below. All interests are beneficial.
31 Dec 2022
31 Dec 2021
Ordinary
Shares
Deferred
shares
LTIP shares
(vested)
LTIP shares
(subject to
performance
conditions)
SAYE options
(subject to
continuous
employment)
Ordinary
Shares
Deferred
shares
LTIP shares
(vested)
LTIP shares
(subject to
performance
conditions)
SAYE options
(subject to
continuous
employment)
Executive Directors
Greg Fitzgerald
1,639,193
36,878
163,137
397,816
-
710,110
-
122,128
334,561
-
Earl Sibley
35,823
20,912
66,473
226,007
2208
29,424
49,640
175,544
2208
Tim Lawlor1
64,843
-
Graham Prothero2
62,842
26,471
Non-Executive Directors
Ralph Findlay
Rowan Baker3
Chris Browne
Katherine Innes Ker
Nigel Keen
Ian Tyler4
Ashley Steel
2,868
-
9,832
850
-
6,441
3,059
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
78,186
3,849
62,665
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,868
-
9,832
850
-
6,441
1,978
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
175,168
3,849
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. Appointed to the Board on 11 November 2022. 2. Stepped down from the Board on 11 November 2022. 3. Appointed to the Board on 18 May 2022. 4. Stepped down from the Board on 18
May 2022.
There were no changes in the holdings of ordinary shares of any of the Directors between 1 January 2023 and 17 March 2023 (being
the latest practicable date prior to the publication of this Annual Report) other than the normal monthly investment in partnership
shares through the Vistry Group PLC Share Incentive Plan.
The Directors’ interests in share options and awards under the LTIP are detailed on the adjacent page. There were no changes in the
holdings of share options and awards under the LTIP between 1 January 2023 and 17 March 2023 (being the latest practicable date
prior to the publication of this Annual Report).
Shareholding guidelines (audited)
Guidelines have been approved for Executive Directors in respect of ownership of Vistry Group PLC shares. During 2022, the Board
expected each Executive Director to retain 100% of the net value derived from the exercise of LTIP awards as shares, after settling all
costs and income tax due, until such time as they hold shares with an historical cost equal to 200% of basic annual salary.
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
Tim Lawlor
Graham Prothero1
Shareholding
at 31/12/22
Historical
acquisition
cost
Salary at
01/01/23
Shareholding
achieved %
Shareholding
guideline %
1,639,193
£11,800,936
£755,215
1,563
35,823
£299,571
£535,000
64,843
£429,192
£488,800
62,842
£768,949
£515,000
56
88
149
200
200
200
200
1. Graham Prothero stepped down from the Board on 11 November 2022 and his shareholding relates to the same date. His 2022 salary has been used to calculate his shareholding
percentage achieved.
Greg Fitzgerald continued to meet the shareholding guidelines during 2022 and, having made further acquisitions during the year,
now holds shares with a historical cost equal to over 15 times basic annual salary. Earl Sibley continued to increase the number of
shares held during 2022 and has made good progress towards meeting shareholding guidelines. Tim Lawlor acquired 64,843 shares
during 2022 and is making progress towards meeting shareholder guidelines.
112 |
Directors’ Remuneration report
continued
Directors’ interests in LTIP shares1 (audited)
Executive Director
Award date
Vesting date
Interest
as at
31/12/22
Interest
as at
31/12/21
Value of
shares at
date of award
(£000)
Vesting &
exercised in
year
Lapsed in
year
Market
value at
vesting
(£000)
Gain on
exercise
(£000)
Shares
retained
on
exercise
Expiry date
Greg Fitzgerald
08/09/17
08/09/20
91,369
91,369
05/03/18
05/03/21
30,759
30,759
04/03/19
04/03/22
41,009
90,529
02/03/20
02/03/23
108,923
108,923
08/03/21
08/03/24
135,109
135,109
04/03/22
04/03/25
153,784
-
Graham Prothero 02/03/20
02/03/23
78,186
78,186
08/03/21
08/03/24
04/03/22
04/03/25
-
-
96,982
-
Earl Sibley
08/09/17
08/09/20
40,263
40,263
05/03/18
05/03/21
9,377
9,377
04/03/19
04/03/22
16,833
37,161
02/03/20
02/03/23
61,767
61,767
08/03/21
08/03/24
76,616
76,616
04/03/22
04/03/25
87,624
-
1. All awards were granted as nil cost options.
Directors’ interests in share options (audited)
1,300
1,332
1,019
1,393
1,254
1,452
1,000
900
1,030
375
650
418
790
711
828
-
-
-
-
-
-
-
-
-
08/09/27
05/03/28
49,520
04/03/29
-
-
-
-
02/03/30
08/03/31
04/03/32
02/03/30
- 96,982
- 109,063
-
-
-
-
-
-
08/09/27
05/03/28
- 20,328
04/03/29
-
-
-
-
-
-
02/03/30
08/03/31
04/03/32
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Executive Director
Date of
grant
Scheme
Interest as at
31/12/22
Granted
in year
Lapsed
in year
Exercised
in year
Interest as at
31/12/21
Exercise price
per share (£)
Option exercise
period
Greg Fitzgerald
-
-
-
-
Graham Prothero
13/10/2020
SAYE
3,849
Earl Sibley
01/06/2021
SAYE
2,208
-
-
-
-
-
-
-
-
-
3,849
4.676
12/23-05/24
2,208
8.152
06/24-12/24
Tim Lawlor is currently a participant in the Countryside 2022 SAYE with 8,493 Options outstanding. As part of the Scheme of
Arrangement, he has the option to choose a replacement option in Vistry shares, exercise his Countryside options, or request his
savings are returned. If no action is taken his Countryside 2022 SAYE the options will lapse on 10 May 2023. The Vistry 2022 SAYE
options were granted at a 20% discount to the prevailing market price of £10.37 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.
Past performance review
As required by the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as amended), the graph
on the following page shows the TSR on an ordinary share held in Vistry Group PLC (previously named Bovis Homes Group PLC) over
the last ten financial years, compared to the FTSE 250 index and the median of the FTSE 350 housebuilding companies (as listed at
31 December 2012) 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.
The middle market price of the Company’s shares on 30 December 2022 was £6.255 (2021: £11.84). During the year ended
31 December 2022 the share price recorded a middle market low of £5.195 and a high of £12.25.
Vistry Group PLC | Annual Report 2022 | 113
Total Shareholder Return performance graph1
e
c
n
a
m
r
o
f
r
e
P
R
S
T
£600
£500
£400
£300
£200
£100
£0
FTSE 350 Home Construction Companies
Bespoke home construction index (2)
2
Vistry Group PLC
FTSE 250 index
FTSE 250 index
Vistry Group PLC
£300
£199
£390 £174
1. This graph illustrates ten-year TSR performance and
therefore does not represent the period under which
the LTIP is measured.
2. Median TSR growth of the constituents of the
bespoke index. Index consists of FTSE 350 home
construction companies which are considered to
be within our peer group, as at 31 December 2012
(Barratt Developments, Bellway, The Berkeley Group,
Persimmon, Redrow, Taylor Wimpey).
December
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Total CEO remuneration
Single figure total £000
1,315
1,440
1,596
1,505
1,029
1,376
2,180
2,175
1,342
2,356
2,484
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Annual bonus against maximum %
84.2
97.8
88.7
59.8
10
100
LTIP vesting against maximum %
50
Recruitment award vesting against maximum % n/a
50
n/a
66.7
66.7
35.9
0
n/a
n/a
n/a
n/a
100
89
0
100
81.6
n/a
30
25
n/a
100
45.3
n/a
100
57
n/a
Note: Columns for 2012-2016 relate to David Ritchie and those for 2017-2022 related to Greg Fitzgerald.
Annual percentage change of Directors’ remuneration
The following table summarises the annual percentage change of each Director’s remuneration compared to the annual percentage change
of the average remuneration of the Company’s employees (calculated on a full-time equivalent basis).
Executive Directors
Greg Fitzgerald
Earl Sibley
Tim Lawlor 1
Graham Prothero
Non-Executive Directors
Ralph Findlay 2
Rowan Baker 3
Chris Browne
Salary/Fees
Benefits
Annual Bonus
2022
2021
2020
2022
2021
2020
2022
2021
2020
4.25%
0.00%
2.50%
0.00%
0.00% 94.00%
4.21% 400.00% -69.00%
4.75%
0.00% 18.00%
0.00%
0.00%
82.00%
4.72% 402.54% -65.00%
n/a
n/a
3.00% 0.00%
n/a
-
n/a
n/a
n/a
n/a
n/a
-
10.00%
-
3.00% 400.00%
n/a
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
3%
125.7%
0.00%
2.00%
n/a
n/a
n/a
4.66% 0.00%
2.75%
Katherine Innes Ker
4.66% 0.00%
2.75%
Nigel Keen
Ashley Steel 4
Ian Tyler 5
4.72% 0.00%
2.30%
15.67%
n/a
n/a
n/a
0.00%
2.75%
Average pay of employees of the Group
4.22%
2.78%
6.14%
1%
-
-
-
-
-
-
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
1%
-
-
-
-
-
-
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-5%
369%
1. Appointed to the Board on 11 November 2022. 2. Appointed Chair of the Board on 18 May 2022 and percentage increase reflects his change in fee. 3. Appointed to the
Board on 18 May 2022. 4. Ashley Steel took on the role of Senior Independent Director on 18 May 2022 and her percentage salary increase reflects her change in fee. 5.
Stepped down from the Board on 18 May 2022. The 2021 Annual Report and Accounts incorrectly captured the 2022 percentage salary/fees change for Executive and
Non-Executive Directors in the 2021 column which has subsequently been amended.
114 |
Directors’ Remuneration report
continued
CEO pay ratio
Our CEO pay ratio has been calculated using ‘option A’, which uses total full-time equivalent total remuneration for all UK employees
for the relevant financial year to rank the data and identify employees whose remuneration place them at median, 25th and 75th
percentile. The same method was used in 2021. The remuneration figures for the employees at each quartile were determined
with reference to the financial year ended 31 December 2022. The data use to calculate the median, 25th and 75th percentiles was
determined for the year ended 31 December 2022. 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.
The increase in the CEO pay ratio is due to an increased workforce as a result of the Combination and a large proportion of the
CEO’s remuneration being variable. No meaningful trend in CEO pay ratio can be interpreted at this time. The Remuneration
Committee reviews the ratios and considers them to be appropriate and consistent with the relative roles and responsibilities of
the CEO and employees of the Group.
Year
2022
2021
2020
2019
Method
Option A
Option A
Option A
Option B
25th percentile
pay ratio
93.0:1
70.2:1
44.7:1
78:1
Median
pay ratio
54.0:1
44.5:1
30.9:1
56:1
75th percentile
pay ratio
34.0:1
31.6:1
20.5:1
43:1
The table below sets out the salary and total pay and benefits for the three identified quartile point employees:
Salary
CEO
£726,169
Total pay and benefits
£2,484,000
25th percentile
Median
75th percentile
£25,000
£26,743
£39,000
£45,740
£61,000
£72,111
Relative importance of spend on pay
The table 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 adjusted profit
before tax and dividends paid to shareholders. Adjusted profit before tax has been chosen as a metric to compare against as it shows
how spend on pay is linked to the Group’s operating performance and dividends paid represent the annual return on investment to
shareholders. See note 5.14 of the financial statements for full reconciliation.
Total Spend on
Pay £m
Adjusted Profit
before Tax £m
Dividends
Paid £m
2022
2021
283.1
215.9
418.4
346.0
138.9
88.7
Year-on-year increases:
Total spend on pay increase of £67.2m (31.1%)
Adjusted profit before tax increase of £72.4m (20.9%)
Cash dividend increase of £50.2m (56.6%)
Implementation of Remuneration Policy for the year ending 31 December 2023
The remuneration policy was approved at the 2022 AGM which was held on 18 May 2022. The key changes in the way that the
Remuneration Policy is proposed to be implemented in 2023 are:
• Following a 2022 salary review including taking into account the link between executive remuneration and pay, and employment
conditions throughout the Group (including oversight of the general proposals for staff for 2023), it was determined that base
salary increases would be made to the CEO from 1 January 2023, which was no more than the minimum increase of 4% applied to
the workforce. The COO and CFO had salaries set with effect from closing of the Combination and are not eligible to receive a salary
increase until 1 January 2024.
• The fees for the Chair and Non-Executive Director fees were reviewed and were increased. The Chair fees were increased to
£234,000. The fees to Non-Executive Directors and Chairs of Committees were increased to £59,280 and £10,920 respectively, and
the Senior Independent Director fee was increased to £10,400, all in line with the minimum salary increase of 4% applied to the
workforce. The average salary increase of the workforce was 4.22% in 2022.
• The metrics in the annual bonus scheme have been adapted to incorporate a synergies metric in addition to the financial measures of
adjusted profit before tax and period capital employed and the ESG scorecard. The deferral of one third of any bonus payment shall
be satisfied through the grant of conditional awards under the Deferred Bonus Plan with a two year vesting period.
• The 2023 LTIP award vesting criteria shall remain as TSR, adjusted EPS and ROCE.
Vistry Group PLC | Annual Report 2022 | 115
Executive Directors’ base salaries and benefits
The salaries of the Executive Directors with effect from 1 January 2023 are set out below.
Executive Directors
Greg Fitzgerald
Earl Sibley
Tim Lawlor
Position
2023 Base salary
£000
% Increase
from 2022
CEO
COO
CFO
£755,215
4.00%
£535,000
£488,800
n/a1
n/a
1. Earl Sibley received a new salary as a result of his change of role to COO. The percentage increase from his previous salary was 29.2% and took effect from
11 November 2022.
When reviewing base salary, the Committee took account of increases awarded to the workforce, in addition to benchmarking
data for equivalent roles in FTSE250 and sector peers, the individual performance of Executive Directors and the impact on their
total compensation.
The salary increases for the CEO was the same as or less than those received by the wider employee population. Benefits will continue
on the same basis as for 2023.
Approach to annual bonus for 2023
The Committee remains of the view that it is important for the Group’s incentive arrangements to reflect the enlarged Group’s
positioning in the sector and to support the recruitment and retention of the talent required to ensure a successful and sustainable
business, delivering positive outcomes for all stakeholders. The maximum bonus opportunity level for 2023 will be retained at 150% of
basic annual salary, with the last third of any bonus award being paid in shares through awards under the Deferred Bonus Plan with a
vesting period of two years.
The Committee determined that the annual bonus scheme for 2023 should maintain the focus on financial metrics with a profit metric
being the largest component of the bonus with a weighting of 50%.
A synergies metric has been included for 2023 at a weighting of 20% to ensure appropriate focus on the integration of Vistry and
Countryside, and delivery of the expected savings. The Committee considered that successfully achieving these synergies and
integrating Countryside into the wider Group is a key focus for the year so it was appropriate to include this additional metric and
adjust relative weightings of other metrics.
The period end capital employed measure is designed to deliver operating efficiencies and maintain a strong and robust balance
sheet and appropriate level of gearing and will have a weighting of 25%. Period end capital employed will be calculated to remove
the retirement benefit asset from the opening and closing capital employed consistent with the approach applied in 2022 and to the
calculation of the ROCE metric in the 2022 LTIP awards.
ESG metrics continue to be included to support the Group’s evolving sustainability strategy. The ESG scorecard includes a weighting
of 5% attributable to a sustainability scorecard (including affordable housing and people metrics with a carbon reduction underpin).
The ESG scorecard is across (i) year on year increase in delivery of affordable housing above s106 requirements (ii) achievement of set
number of learners through skills academies and trainees (iii) carbon underpin of a requirement to formalise targets through Science
Based Targets Initiative and put in place an implementation plan. Customer satisfaction based on achievement of HBF Customer
Satisfaction 9-month survey scores below 70% and the HBF Customer Satisfaction 8-week survey score less than 5 star for the Group
remain important KPIs for the Group and are agreed areas for consideration of downwards discretion along with health and safety and
phasing of planned delivery.
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.
116 |
Directors’ Remuneration report
continued
The Committee has decided not to disclose the detail of financial performance targets in advance as being closely indicative of the
Group’s strategy they are considered commercially sensitive. Such targets will be disclosed retrospectively in the 2023 Remuneration
Report.
The 2023 performance measures and weightings are described below:
Measure
Financial
Profit before Tax, Exceptionals and Amortisation
Period end capital employed
Synergies delivered
Non-Financial
ESG - Customer satisfaction
ESG - Affordable housing and people metrics, with carbon reduction underpin
1. As explained above the customer satisfaction now acts as an area of potential downwards discretion
Weighting
2023 (as % of max)
Weighting
2022 (as % of max)
50
25
20
-
5
60
30
-
5
5
LTIP approach for 2023
The key features of the long-term incentive arrangements (as outlined on pages 109 to 110) are expected to remain broadly similar as
those for 2022.
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 2023 LTIP awards
The performance measures for all 2023 awards will be TSR (33.3%), adjusted EPS (33.3%) and ROCE (33.3%) and threshold vesting will
be set at 25% for each financial measure. Vesting will be on straight-line basis between threshold and maximum.
• TSR – threshold performance equal to the median of the comparator group and maximum performance equal to the upper quartile
of the comparator group, using a relative ranking approach.
• Adjusted EPS – threshold performance of 94 pence and maximum performance of 123 pence, both as measured in the third year of
the performance period (2025).
• ROCE – threshold performance at 25.6% and maximum performance at 28.3%, both as measured in the third year of the
performance period (2025).
The EPS targets are set based on earnings excluding amortisation and exceptional items, with threshold performance at 94 pence,
recognising earnings growth of each business above consensus. Maximum EPS performance was set at 123 pence, reflecting continued
controlled growth in Housebuiding and a higher rate of growth in Countryside Partnerships both significantly ahead of consensus, all
aligned with strategy. The targets for EPS are set by reference to consensus which reflects that some analysts consider that volumes
in Housebuilding shall reduce and the growth in Countryside Partnerships shall be modest whereas the targets set by the Committee
reflect continued growth across both businesses. The ROCE threshold performance for ROCE at 25.6% reflects the reduction in
Partnerships ROCE over the medium term in line with the strategy to invest more in the mixed tenure element of the business. The
maximum moves forward to 28.3% as the Group targets sector leading returns in the medium term. Consistent with the approach
applied to the calculation of reported ROCE for 2022, the calculation of the ROCE metric in 2023 LTIP awards shall remove the
retirement benefit asset from the opening and closing capital employed. This is considered to be reasonable as the change in the
retirement benefit assets is less in control of management and movements are predominantly subject to valuation fluctuations. The
Committee is satisfied that these targets are suitably stretching.
Vistry Group PLC | Annual Report 2022 | 117
Directors’ Remuneration report
continued
Post-employment shareholding guidelines
Executive Directors are expected to retain the lower of one time’s 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 for 2023
The Chair and Non-Executive Director base fees were last reviewed with effect from 1 January 2023. Following a review which took into
account the economic environment, alignment with the experience of stakeholders, competitive positioning based on benchmarking
data, responsibilities, time commitment for each role and the Group’s size and complexity of the fees for the Chair and Non-Executive
Directors have been increased. The Chair’s base fee has been increased by 4%, the fee of the Non-Executive Directors by 4% and the
Committee Chair fee by 4%. These changes are in line with the minimum total increase of 4% applied to the workforce.
Role
Chair
Senior Independent Director
Non-Executive Director
Audit Committee Chair
Remuneration Committee Chair
1. New Chair fee from AGM.
Fees 2023
Fees 2022
234,000
225,0001
10,400
59,280
10,920
10,920
10,000
57,000
10,500
10,500
Remuneration of senior management and other below Board employees
In addition to responsibility for Executive Directors, the Committee is also involved in considering the remuneration arrangements for
the ELT, 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 ELT and has oversight of payment and employment conditions
throughout the Group and takes these into account when setting executive pay. Engagement with the workforce took place during
the year in connection with the communication of bonus arrangements across the Group and their alignment, through a Peakon staff
engagement survey containing questions on remuneration and People Forum.
Advisers to the Committee
The Committee appointed Willis Towers Watson (WTW) as its adviser in December 2018, following a selection and interview process.
WTW provide independent advice on all aspects of executive remuneration and attend Remuneration Committee meetings when invited
by the Chair of the Committee. The Committee reviews the advice, challenges conclusions and assesses responses from its advisors to
ensure objectivity and independence. WTW also provided actuarial consultancy and administration services to the Trustee of the Bovis
Homes Pension Scheme and Group pensions during 2020. WTW is a founder member of the Remuneration Consultants Group and have
signed the voluntary Code of Conduct for remuneration consultants. The fees paid to WTW for services provided in 2022 were £118,708
on a time-spent basis (2021: £86,088).
Shareholder voting
At the 2022 AGM, shareholder proxy voting on the Directors’ Remuneration Report for the year ended 31 December 2021 and new
Directors’ Remuneration Policy were as follows:
Resolution
For
%
Against
%
Total votes
Withheld 1
Directors' Remuneration Report 2021
170,609,804
Directors' Remuneration Policy 2022
170,428,419
97.69
99.84
4,041,334
281,239
2.31
0.16
174,651,138
41,543
170,709,658
3,983,023
1. A vote withheld is not a vote in law and is not counted in the calculation of votes for and against.
By order of the Board
Nigel Keen
Chair of the Remuneration Committee
22 March 2023
118 |
Remuneration policy
The key elements of the Remuneration Policy approved by shareholders at the 2022 AGM are summarised
below. A large proportion of this remuneration framework is performance related. The full Remuneration
Policy is available at www.vistrygroup.co.uk/investor-centre/corporate-governance.
Base salary To attract and retain high performing talent required to deliver the business strategy, providing core reward for the role.
Operation
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.
Opportunity
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.
Performance metrics Not applicable.
Benefits To provide market competitive benefits consistent with role
Operation
Opportunity
Benefits typically include medical insurance, life assurance,
membership of the Vistry Group 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.
Performance metrics Not applicable.
We do not consider it appropriate to set a maximum benefits value as this
may change periodically.
Pension To attract and retain talent by enabling long term pension saving.
Operation
Opportunity
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.
A pension allowance of up to 20 percent of base salary may be paid for
current incumbents. However, pension rates will be subject to stepped
reductions which will align with the rate applicable to the wider workforce
on or before 1 January 2023. For new incumbents, the contribution rate is
set at 7 % 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 since
2020 are not pensionable for directors who receive pension contributions at a
rate above that applicable to the workforce.
Performance metrics Not applicable.
Annual bonus To incentivise and reward the delivery of near-term business targets and objectives.
Operation
Opportunity
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 one third of any bonus will
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.
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.
Vistry Group PLC | Annual Report 2022 | 119
Opportunity
See above.
Annual bonus continued
Operation
Deferral will now be made under a new Deferred Bonus Plan,
which will also be put for shareholder approval at the upcoming
AGM. 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.
Awards may be granted with the benefit of dividend equivalents.
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
• serious reputational damage to any Group company.
Performance metrics
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 % 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, customer service and ESG performance.
Overall, quantifiable metrics will comprise at least 70 % of the
bonus. Below threshold performance delivers no bonus and
target performance achieves a bonus of 75 % of base salary.
The Committee has discretion to override formulaic outcomes
when determining the level of bonus payout.
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
The maximum annual award, under normal circumstances is 200 % of base
salary for Executive Directors.
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.
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 the value of dividends, the record dates of which fall between
the date of grant and the date of vesting (or in the case of an
option subject to a holding period, between the date of grant and
the first date on which the option becomes exercisable). Dividend
equivalents may be calculated on a reinvestment basis.
Malus provisions can be applied to awards prior to the vesting
date and clawback provisions can be applied for two years
thereafter. Circumstances include:
• a material misstatement, • serious misconduct, • a material
failure of risk management, • restatement of prior year results,
• corporate failure, • serious reputational damage to any Group
company,
Malus can also be applied for any other reason which the
Committee considers appropriate.
120 |
Remuneration policy
continued
Performance metrics
The performance measures applied to LTIP awards are reviewed
annually to ensure they remain relevant to strategic priorities
and aligned to shareholder interests. 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% of the total award,
threshold performance realises 25% and maximum performance
realises 100%. 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.
The Committee has discretion to override formulaic outcomes
when determining the level of vesting of LTIP awards.
Non-Executive Director fees To attract and retain non-executive directors and a chairman of the appropriate calibre.
Operation
Opportunity
Typically reviewed on an annual basis.
Market benchmarking exercises are undertaken periodically and
judgement is used in their application.
Fee increases may be applied in line with the outcome of any review.
A basic fee is paid. Additional fees may be paid for additional
responsibilities such as chairmanship/ membership of a committee. Fees
are set at a level considered appropriate taking account of competitive
positioning, the individual’s responsibilities, the time commitment required
and the size and complexity of the Company.
Performance metrics Not applicable.
The Policy includes the power to deploy the one-person new LTIP exemption from the need for prior shareholder consent in unusual
circumstances permitted under the Listing Rules.
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) 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
(ii) 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.
Committee discretion in relation to future operation of the Policy
In the event of a variation of share capital, demerger, special dividend or similar event, the Committee may adjust or amend awards in
accordance with the rules of the relevant plan.
The Committee retains the discretion to amend performance targets in exceptional business or regulatory circumstances. If discretion is
exercised in this way, the Committee will seek to consult with major shareholders as appropriate.
All awards are subject to Committee discretion and may be adjusted (or reduced to zero) where it determines that the overall level of
the Company or Group performance does not warrant payment of variable remuneration, or it considers that risks (such as financial,
regulatory, compliance or brand risk) have not adequately been reflected in awards.
Vistry Group PLC | Annual Report 2022 | 121
Remuneration policy for Non-Executive Directors
The Board, comprising the Chair and the Executive Directors, sets the remuneration of the Non-Executive Directors, without their
participation. The Committee, with the Chair absenting himself from discussions, sets the remuneration of the Chair who receives an all-
inclusive fee. The level of fees must be within the limit approved by shareholders, contained in the Articles of Association. Non-Executive
Directors and the Chair do not participate in the annual bonus scheme or the LTIP and are not eligible to join the Group’s pension
schemes. All Non-Executive Director and Chair fees are payable in cash and there are no additional fees or other items in the nature of
remuneration. All Non-Executive Directors and the Chair may receive reimbursement for reasonable expenses incurred and the Company
may satisfy any related tax liabilities.
Remuneration policy for new appointments
In agreeing a remuneration package for a new executive director, it would be expected that the structure and quantum of variable pay
elements would reflect those set out in the Policy table above. However, the Committee would retain the discretion to flex the balance
between annual and long-term incentives and the measures used to assess performance for these elements, with the intention that a
significant proportion would be delivered in shares. Salary would reflect the skills and experience of the individual, and may be set at a
level to allow future progression to reflect performance in the role. On recruitment, relocation benefits may be paid as appropriate.
This overall approach would also apply to internal appointments, with the provision that any commitments entered into before
promotion, which are inconsistent with this Policy, can continue to be honoured under the Policy. Similarly, if an Executive Director is
appointed following the Company’s acquisition of or merger with another company, legacy terms and conditions would be honoured.
An Executive Director may initially be hired on a contract requiring 24 months’ notice which then reduces pro rata over the first year
of the contract to requiring 12 months’ notice. The Committee may award compensation for the forfeiture of awards from a previous
employer in such form, as the Committee considers appropriate taking account of all relevant factors including the expected value of the
award, performance achieved or likely to be achieved, the proportion of the performance period remaining and the form of the award.
There is no specific limit on the value of such awards, but the Committee’s intention is that the value awarded would be similar to the
value forfeited.
Maximum variable pay will be in line with the maximum set out in the Policy table above (excluding buy-outs). The Committee retains
discretion to make appropriate remuneration decisions outside the standard remuneration policy to meet the individual circumstances
when:
(i) An interim appointment is made to a fill an Executive Director role on a short-term basis.
(ii) Exceptional circumstances require that the Chair or a Non-Executive Director takes on an executive function on a short-term basis.
For Non-Executive Directors, the Board would consider the appropriate fees for a new appointment taking into account the existing level
of fees paid to the Non-Executive Directors, the experience and ability of the new Non-Executive Director and the time commitment and
responsibility of the role.
Service contracts and exit payments policy
The Executive Directors’ service contracts contain the key elements shown below.
Provision
Length of term
Notice period
Termination payment
Detailed terms
12 months
12 months by either employer or director
Up to 12 months’ salary (excluding bonus or other enhancement)
The Executive Directors’ service contracts do not contain specific provision for compensation in the event of removal at an annual
general meeting. In the event of early termination, some Directors may be eligible for payments in lieu of notice or to place the director
on garden leave for the notice period. Any payment in lieu of notice will be reduced for any time worked post notice being given or
received.
When determining exit payments, the Committee would take account of a variety of factors, including individual and business
performance, the obligation for the director to mitigate loss (for example, by gaining new employment), the Director’s length of service
and any other relevant circumstances, such as ill health. A departing Director may also be entitled to a payment in respect of statutory
rights.
The Committee would distinguish between types of leaver in respect of incentive plans. ‘Good leavers’ (death, ill health, agreed
retirement, redundancy or any other reason at the discretion of the Committee) may be considered for a bonus payment having
completed the full year and part-year bonus payments may be paid and LTIP awards may vest at the usual time taking into account
performance conditions and pro rating for time in employment during the performance period, unless the Committee determines
otherwise.
122 |
Remuneration policy
continued
The LTIP rules include discretion, in exceptional circumstances, for acceleration of the realisation date and upwards adjustment to the
number of shares to be realised for ‘good leavers’ in such a situation. In all other leaver circumstances, the Committee would decide
the approach taken, which would ordinarily mean that leavers would not be entitled to consideration for a bonus and LTIP awards
would lapse. Any vested LTIP award that is subject to a holding period at the time of the executive’s cessation of employment will
not lapse except in the case of the executive’s gross misconduct. The Committee reserves the right to make any other payments in
connection with a director’s cessation of office or employment where the payments are made in good faith in discharge of an existing
legal obligation (or by way of damages for breach of such an obligation) or by way of settlement of any claim arising in connection
with the cessation of a Directors’ office or employment. In addition, the Committee reserves the right, acting in good faith, to pay fees
for outplacement assistance and/or the Director’s legal and/or professional advice fees in connection with his cessation of office or
employment.
In respect of the Deferred Bonus Plan, if a participant leaves employment, their award will normally remain outstanding and vest at the
normal vesting date, unless the Board decides that an award will vest in full on cessation of employment (or some other date specified
by the Board). However, if the participant leaves (or gives or receives notice pursuant to which they will leave) on grounds or as a
result of conduct that the Board determines amounts to misconduct (or at a time when the Board could have terminated employment
on such grounds), any award (including any outstanding vested Option) will immediately lapse in full, unless the Board determines
otherwise. If the participant dies, awards will vest on death in full. Options which do not lapse on leaving can be exercised during a
period of 6 months from the date of leaving or the date of vesting, if later, or 12 months from the date of death.
The appointment of the Chair and each of the Non-Executive Directors is for an initial period of three years, which is renewable for
further terms, and is terminable by the Chair or Non-Executive Director (as applicable) or the Company on 12 or, for more recent
appointments, three months’ notice. New Chair or Non-Executive director appointments are subject to a three-month notice period.
No contractual payments would be due on termination. There are no specific provisions for compensation on early termination for the
Non-Executive Directors, with the exception of entitlement to compensation equivalent to 12 or three months’ fees (as applicable) or, if
less, the balance of appointment, in the event of removal at an annual general meeting.
Change of control
All the Company’s share plans contain provisions relating to change of control. In general, outstanding awards would normally vest
and become exercisable on a change of control, to the extent that any applicable performance conditions have been satisfied at
that time, reflecting the time period to the date of the event. Any deferred bonus shares will be released on change of control. The
LTIP rules include discretion for upwards adjustment to the number of shares to be realised in the event of a takeover, scheme of
arrangement or voluntary winding up.
External directorships
Executive Directors may, if so authorised by the Board, accept appointments as non-executive directors of suitable companies and
organisations outside the Group and retain any associated fees.
Pay and conditions throughout the Group
The pay and conditions of employees throughout the Group are considered by the Committee in setting policy for the executive
Directors and senior management. The Committee is kept regularly informed on the pay and benefits provided to employees and base
salary increase data from the annual salary review for general staff is considered when reviewing executive Directors’ salaries and
those of senior management. The Committee did not consult with employees when setting the remuneration policy for the Executive
Directors.
Difference in the Company’s policy on remuneration of Directors compared to employees
The policy for the executive Directors is designed with pay and conditions throughout the Group in mind. The Committee believes
that some differences are necessary to reflect responsibility and provide appropriate focus and motivation for delivery of the Group’s
strategy.
Executive Directors, therefore, have a higher bonus opportunity than employees generally to motivate them to achieve stretching
annual targets and they participate in the LTIP to provide focus on long-term sustainable performance. This approach is designed to
provide an appropriate emphasis on performance related pay.
Consideration of shareholder views
The Company is committed to ongoing dialogue with shareholders and welcomes feedback on Directors’ remuneration. Feedback
received from meetings during the year and in relation to the annual general meeting is considered, together with guidance from
shareholder representative bodies more generally, and taken into account in the annual review of the policy. The Committee believes
that it has a responsible approach to Directors’ pay and that its policy is appropriate and fit for purpose.
Vistry Group PLC | Annual Report 2022 | 123
Directors’ report
The Board of Directors present their Annual Report and audited financial statements of the
Group for the financial year ended 31 December 2022. The Directors’ report, together with
the Strategic report on pages 1 to 65, form the Management report for the purpose of the
FCA’s DTR 4.1.5R(2) and DTR 4.1.8R.
Statutory or regulatory information
contained elsewhere 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 is incorporated by
reference. Details of where this information can
be found are set out in the table to the right.
Subject
Likely future developments in the business
Important events since the year end
Going concern statement
Financial risk management
Risk management and internal controls
Stakeholder engagement
Employee involvement / employment of disabled persons
Pages
5 and 11
191
64
162
56
28 and 29
78
36 and 38
Greenhouse gas emissions, energy consumption and energy efficiency
47 and 48
Corporate governance report
Subsidiaries and associated undertakings
Key performance indicators (financial and non-financial)
Research and Development
Section 172 statement
Subject
66 to 123
191 to 196
IFC and 65
46
30
Pages
Details of long term incentive schemes
109, 110 and 117
Contracts of significance
Shareholder waivers of dividends
Shareholder waivers of future dividends
Subject
How the Directors engage with employees
How the Group provides employees with information on matters of
concern to them as employees
127
126
126
Pages
78
28
36
How the Group consults with and considers employee feedback
28 and 36
Disclosure of information under Listing
Rule 9.8.4(R)
In accordance with Listing Rule 9.8.4C, the
table to the right sets out the location of the
information required to be disclosed under
Listing Rule 9.8.4(R), where applicable.
There are no other disclosures required under
this Listing Rule.
Information required by Sch 7.11(1) (B)
Companies (Miscellaneous Reporting)
Regulations 2018
The Group has chosen to provide information in
relation to the Statement of Engagement with
Employees elsewhere in this report.
This is cross referenced in the table to the right.
How the Directors have had regard to employee interests
75, 80 and 81
How the Group informs employees of the financial and economic
factors affecting its performance
Subject
How the Directors have regard to the need to foster the Company’s
business relationships with suppliers, customers and others
28
Pages
78
The effect of that regard, including on the principal decisions taken by
the Company during the financial year
31, 80 and
81
Information required by Sch 7.11 (B) (1)
Companies (Miscellaneous Reporting)
Regulations 2018
The Group has chosen to provide information
in relation to the engagement with suppliers,
customers, and other business relationships
elsewhere in this report. This is cross referenced
in the table to the right.
124 |
Remuneration report Disclosure of information required by DTR 7.2.1R
The corporate governance statement as required by DTR 7.2.1R is set out on page 68. The corporate governance report sets out
the Company’s compliance with the Code issued by the Financial Reporting Council available at www.frc.org.uk and also describes
how the governance framework explained in order corporate governance policy guidelines, available on the Company’s website
www.vistrygroup.co.uk/investor-centre, is applied.
Directors
Details of the current Directors and their biographies are shown on pages 70 and 71. Jeff Ubben will join the Board as a Non-Executive
Director with effect from 23 March 2023. Further details of his appointment can be found on page 88. All Directors, with the exception
of Nigel Keen and Katherine Innes Ker who will be stepping down from the Board on 23 March 2023 and 18 May 2023 respectively,
intend to seek election or re-election at the Company’s 2023 AGM in accordance with the recommendations of the Code.
There were a number of Board changes during the year. On 18 May 2022, Ian Tyler stepped down as Chair of the Board and was
succeeded by Ralph Findlay. On the same date, Rowan Baker was appointed as an Independent Non-Executive Director and Chair
of the Audit Committee and Ashley Steel took on the role of Senior Independent Director. On 11 November 2022, Graham Prothero
stepped down as an Executive Director and COO, Earl Sibley assumed the role of COO, and Tim Lawlor was appointed Executive
Director and CFO of the Company. The appointment and removal of the Company’s Directors is governed by its Articles of Association
(Articles), the Code and the Companies Act 2006 (Act).
Directors’ powers
Subject to the Articles, 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.
Directors’ indemnities
During the financial year and as at the date of this report, qualifying third party indemnities, as defined by s.234 of the Act, were in
force under which the Company has agreed to indemnify the Directors, to the extent permitted by law and the Articles, 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.
Directors’ interests
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 98 to 123.
Conflicts of interest
Under the Act, directors are under an obligation to avoid situations in which their interests can or do conflict, or may possibly conflict,
with those of the Company. A policy and procedures are in place for identifying, disclosing, evaluating and managing conflicts to
ensure that Board decisions are not compromised by a conflicted Director. The Articles give the Board power to authorise matters that
give rise to actual or potential conflicts. All conflicts of interest are reviewed bi-annually by the Board.
Articles
Unless expressly specified to the contrary in the Articles, they may only be amended by a special resolution of the Company’s
shareholders at a general meeting.
Share capital
The Company has a premium listing on the London Stock Exchange. As at 31 December 2022 the Company’s share capital comprised
347,211,174 fully paid ordinary share of 50 pence each (including 1,500,000 shares in treasury). As at 17 March 2023 (being the latest
practicable date prior to the publication of this Annual Report), the Company’s share capital comprised 347,213,857 fully paid ordinary
shares of 50 pence each (including 1,500,000 shares in treasury).
At the Company’s 2022 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 £37,031,992.
• Allot shares up to an aggregate nominal amount of £74,027,985 for the purpose of a rights issue.
• Make market purchases up to 22,230,626 shares in the Company (representing approximately 10% of the Company’s issued share
capital at the time).
Shareholders will be asked to renew similar authorities at the 2023 AGM.
Under the authority provided at the 2022 AGM, the Company commenced a share buyback programme on 27 May 2022 to
repurchase £35 million of its own ordinary shares of 50 pence. The programme concluded on 20 July 2022. The Company repurchased
a total of 4,056,968 ordinary shares (1.82% of the issued share capital on 27 May 2022), retaining 1,500,000 shares in treasury (with
no voting or dividend rights) and the remaining 2,556,968 ordinary shares were cancelled (2021: nil).
Vistry Group PLC | Annual Report 2022 | 125
On 11 November 2022, the Company completed its recommended cash and share combination with Countryside which was effected
by means of a scheme of arrangement under Part 26 of the Act. This resulted in the admission of 127,447,399 new Vistry Group PLC
shares to the premium listing on the Official List. Additional authority from shareholders was sought for this allotment at the general
meeting of the Company held on 1 November 2022.
During the year the Company allotted 14,479 shares in connection with the exercise of options under the Company’s employee share
plans. 59,063 shares were transferred from the employee benefit trust up to 31 December 2022 to satisfy the exercise of options
under the Company’s employee share plan.
The share price at 30 December 2022 was 625.5 pence. The highest share price in the year was 1225p and the lowest was 519.5
pence.
Shareholders’ rights
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 Articles.
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. Further details regarding voting, including the deadlines for voting, at
the AGM can be found in the notes to the Notice of AGM that accompanies this Annual Report. 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 Act 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 Vistry Group 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.
Restrictions on the transfer of ordinary shares
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.
(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.
Dividends
The Board recommends a final dividend of 32 pence per ordinary share (2021: 40p). Subject to shareholder approval at the Company’s
2023 AGM, this will become payable on 1 June 2023 to all shareholders on the register of members as the close of business on 21 April
2023. On 18 November 2022, an interim dividend in respect of the financial year ended 31 December 2022 of 23 pence per ordinary
share was paid to shareholders on the register of members on 7 October 2022.
The Company operates a dividend reinvestment plan which gives shareholders the opportunity to reinvest dividends. The employee
benefit trusts, which hold shares for the purpose of satisfying employee share scheme awards, have waived their right to receive
dividend on shares held within the trust now and in the future.
Political donations
No political donations were made during the year ended 31 December 2022 (2021: nil). The Group has a policy of not making
donations to political parties or incurring political expenditure. To avoid an inadvertent breach of the Act, the Company will seek
authority at the AGM for itself and its subsidiaries to make political donations not exceeding £100,000 in total.
126 |
Remuneration report Takeover directive
On a change of control, provisions in the Group’s syndicated banking facility agreements (described in note 4.2 of the financial
statements) would allow lenders to withdraw the facility. There are a number of commercial contracts that could alter in the event of a
change of control. None are considered to be material in terms of their potential impact on the Group in this event.
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.
The Directors are not aware of any agreements between the Company and its Directors or employees which would pay compensation
in the event of a change of control.
Substantial shareholdings
At 31 December 2022, the Company had received notifications in accordance with the DTRs that the following were interested in the
Company’s shares:
Ordinary shares of 50 pence each
Browning West, LP
Inclusive Capital Partners, L.P.
BlackRock, Inc
Abrams Capital Management LP
Royal London Asset Management
Dimensional Fund Advisors
FIL Limited
% direct
holding
% indirect
holding
% financial
instruments
Total number of
shares held
% of voting rights
of the issued
share capital
5.04
4.99
7.70
5.79
4.99
4.98
4.60
26,592,459
20,032,245
0.28
18,297,789
11,200,077
10,895,768
11,069,044
0.01
10,252,341
7.7000
5.7900
5.2700
5.0400
4.9921
4.9804
4.6100
During the period between 31 December 2022 and 17 March 2023, being the latest practicable date prior to the publication of this
Annual Report, the Company received a notification in accordance with the DTRs from David Capital Partners, who have an indirect
holding of 3.10% and FMR LLC, who have an indirect holding of 5.01%.
Branches outside of the UK
The Company has no overseas branches, and a list of the Company’s subsidiaries are detailed in note 5.17 of the financial statements.
Annual General Meeting
Our 2023 AGM will be held at the offices of Numis Securities Limited, 45 Gresham Street, London EC2V 7BF on Thursday 18 May 2023
at 12 noon. Further details about the AGM are provided in the Notice of AGM. 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 AGM 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.
The Directors’ report was approved by the Board and has been signed on its behalf by the General Counsel and Group Company
Secretary.
By Order of the Board
Clare Bates
General Counsel and Group Company Secretary
22 March 2023
Vistry Group PLC | Annual Report 2022 | 127
Directors’ responsibilities statement
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the
Group and the Company financial statements in accordance with UK-adopted international accounting standards.
Under company law, 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 Company and of the profit or loss of the Group for that period. In preparing the financial statements, the
Directors are required to:
• Select suitable accounting policies and then apply them consistently.
• State whether applicable UK-adopted international accounting standards have been followed, subject to any material departures disclosed
and explained in the financial statements.
• Make judgements and accounting estimates that are reasonable and prudent.
• 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 safeguarding the assets of the Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and
Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them
to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the company’s website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from legislation in other jurisdictions.
Directors’ confirmations
Each of the Directors, whose names and functions are listed on pages 70 and 71 confirm that, to the best of their knowledge:
• The Group and Company financial statements, which have been prepared in accordance with UK-adopted international accounting
standards, give a true and fair view of the assets, liabilities and financial position of the Group and Company, and of the profit of the Group.
• The Strategic report includes a fair review of the development and performance of the business and the position of the Group and
Company, together with a description of the principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Directors’ report is approved:
• So far as the Director is aware, there is no relevant audit information of which the Group’s and Company’s auditors are unaware.
• They have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit
information and to establish that the Group’s and 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.
The Directors’ responsibilities statement was approved by the Board and has been signed on its behalf by the CEO and CFO.
By Order of the Board
Greg Fitzgerald
Chief Executive Officer
Tim Lawlor
Chief Financial Officer
22 March 2023
22 March 2023
128 |
128 |
Remuneration report
Financial statements
Contents
130
142
142
143
144
146
Independent auditors’ report
Group income statement
Group statement of comprehensive income
Balance sheets – Group and Company
Statement of changes in equity
– Group and Company
Statement of cash flows
– Group and Company
147
Notes to the financial statements
Beaumont Park, Nuneaton, West Midlands
Vistry Group PLC | Annual Report 2022 | 129
Independent auditors’ report to the
members of Vistry 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 2022 and of the Group’s profit and
the Group’s and Company’s cash flows for the year then ended;
• have been properly prepared in accordance with UK-adopted international accounting standards 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.
We have audited the financial statements, included within the Annual Report (the “Annual Report”), which comprise: the Group and
Company Balance sheets as at 31 December 2022; the Group income statement, the Group statement of comprehensive income, the
Group and Company statements of changes in equity and the Group and Company Statements of cash flows 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.
Other than those disclosed in note 2.1, we have provided no non-audit services to the Company or its controlled undertakings in the
period under audit.
Our audit approach
Context
During the year, the Group completed a significant business combination, acquiring Countryside Partnerships PLC on 11 November 2022.
This led to a significant increase in the value of the Group’s assets and liabilities at 31 December 2022. The timing of the acquisition,
being approximately seven weeks prior to the year end, meant that there was a less significant impact on the profit and cash flows of
the Group for the year.
The acquisition has principally impacted our audit in respect of the accounting for the business combination, including the
determination of the fair value of the acquired assets and liabilities and the resulting goodwill arising, as well as the inclusion of an
additional full scope trading division requiring audit, as set out further below.
130 |
Overview
Audit scope
• Until the date of the business combination, the Group principally operated through two trading divisions, being Housebuilding (made
up of 13 regions) and Partnerships (made up of 14 regions). The business combination led to the creation of a third trading division,
Countryside (made up of 17 regions). We performed a full scope audit of each division, which together account for 100% of the revenue
of the Group.
• Due to the significance of a number of financial statement line items within the Company to the overall Group, such as bank and other
loans and financial expenses, a full scope audit has also been performed over this entity.
• We performed procedures at a Group level, such as the audit of the consolidation and financial statement disclosures, the accounting
for the business combination, taxation, pension scheme balances and asset impairment assessments of goodwill, intangible assets and
investments in subsidiary undertakings. We also performed full scope procedures over 20 joint ventures.
Key audit matters
• Margin forecasting and recognition in private and affordable housing (Group)
• Long-term contract accounting in partner delivery (Group)
• Carrying value of inventory (Group)
• Provision for legacy properties fire safety (Group)
• Accounting for business combination (Group)
• Impairment of investments in subsidiary undertakings (Company)
Materiality
• Overall Group materiality: £20.0 million (2021: £16.0 million) based on 5% of the Group’s profit before tax adjusted to remove the
exceptional expenses relating to legacy properties fire safety and the exceptional expenses relating to the acquisition of Countryside
(2021: 5% of the Group’s profit before tax).
• Overall Company materiality: £29.3 million (2021: £15.9 million) based on 1% of total assets (2021: 1% of total assets).
• Performance materiality: £15.0 million (2021: £12.0 million) (Group) and £22.0 million (2021: £11.9 million) (Company).
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.
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.
Accounting for business combination is a new key audit matter this year. Otherwise, the key audit matters below are consistent with
last year.
Vistry Group PLC | Annual Report 2022 | 131
Key audit matter
How our audit addressed the key audit matter
Margin forecasting and recognition in private and affordable housing (Group)
Refer to page 92 of the Audit Committee report (‘Significant
issues and other accounting judgements’) and notes 1.5
(‘Critical accounting judgements and key sources of estimation
uncertainty’) and 2.0 (‘Result for the year’) of the financial
statements.
The Group’s approach to revenue and cost (margin) forecasting
and recognition is based on a number of key assumptions,
including:
• build costs, land costs and central site costs, including
infrastructure costs;
• sales price, based on an expected or contracted sales price for
the type and size of property.
Periodic surveyor and financial appraisals are performed to
support management’s estimate of the total site costs based
on the stage of completion of each plot, with the accounting
records updated accordingly.
If the overall site is loss making then management consider this
as part of the provisioning process.
We consider that appropriate margin recognition across the life
of a site is a significant financial reporting risk for the Group due
to the high level of estimation involved. There is uncertainty
over future sales prices of private sales and the determination
of future build costs is inherently uncertain and influenced by
changes in external market factors.
We assessed the basis of revenue recognition to ensure it is
in line with applicable accounting standards and supported by
management’s estimates of forecast costs and revenues by site.
At a regional level, we tested the design and operating
effectiveness of management’s key forecasting and monitoring
control. This included observation of a sample of site review
meetings taking place throughout the year (including at year
end) attended by senior management, including those from the
Commercial, Operational and Finance teams. This enabled us to
obtain evidence regarding the consistency of the operation of
this control across the regions and contributed to our evidence
regarding the accuracy and completeness of both forecast costs
and revenues.
We compared the actual revenue and costs for completed sites
against the original forecast for that site and also assessed
movements in forecast margin during the year on open sites.
Where significant differences were identified, we evaluated the
nature of the event that caused this difference to arise, such as
due to a change in the plan for the site. Based on the evidence
obtained, this enabled us to obtain assurance in respect of the
accuracy of management’s estimation methodology.
We tested a sample of actual costs incurred to third party
evidence and tested a sample of forecast costs to either third
party evidence or other appropriate support.
We reviewed the output from a sample of instances of
management’s key forecasting and monitoring control
performed post year end to assess the completeness of site
costs recognised at 31 December 2022.
We tested a sample of forecast sales prices to the actual sales
prices attained post year end, or available market data, for
similar properties, or contracts where applicable, to support the
validity of these sales prices.
Based on the procedures performed, we did not identify any
material misstatements within the revenue and cost of sales,
and therefore margin, recognised. We also assessed the
disclosures in respect of margin forecasting and recognition and
considered these to be appropriate.
Long-term contract accounting in partner delivery (Group)
Refer to page 92 of the Audit Committee report (‘Significant
issues and other accounting judgements’) and notes 1.5
(‘Critical accounting judgements and key sources of estimation
uncertainty’) and 2.0 (‘Result for the year’) of the financial
statements.
The Group has a large number of contracts which span
multiple periods and are accounted for on a percentage of
completion basis, in accordance with IFRS 15.
Long-term contracting accounting requires a number of
judgements and estimates to be made by management,
including to:
• estimate total contract costs;
• estimate the stage of completion of the contract;
We assessed the basis of revenue recognition to ensure it is
in line with applicable accounting standards and supported by
management’s estimates.
We evaluated the design and operating effectiveness of the
key control in place over long-term contracts. This included
observation of a sample of site review meetings taking place
throughout the year (including at year end) attended by
senior management, including those from the Commercial,
Operational and Finance teams. This enabled us to obtain
evidence regarding the consistency of the operation of this
control across the regions and contributed to our evidence
regarding the accuracy and completeness of both forecast costs
and revenues.
We performed risk assessment procedures over the contracts in
place, including reviewing the movements in projected margins
during the year, in order to determine those considered to be
higher risk.
132 |
Key audit matter
How our audit addressed the key audit matter
Long-term contract accounting in partner delivery (Group) (continued)
Independent auditors’ report
continued
• consider contract variations and the outcome of claims to the
extent that it is highly probable that a significant reversal of
revenue will not occur; and
• appropriately provide for loss making contracts, with
judgement required to determine the magnitude of any
provision required.
There is estimation uncertainty within the above assumptions
due to potential changes in market conditions (such as supply
chain inflation) or unforeseen circumstances, in particular
given that these assumptions involve the assessment of future
events, which are inherently uncertain. As a result, the forecast
assumptions could be inaccurate and thus could lead to the
incorrect recognition of revenue or profit on a given contract.
This included those with revenue, margin or losses recognised
above determined thresholds, as well as sites with known
operational issues. We performed the following procedures in
respect of these contracts:
• agreed overall anticipated revenue to a combination of the
underlying contract and agreed variations, with corroborative
evidence obtained to support the fact that any variations were
highly probable to not reverse;
• obtained evidence to corroborate management estimates
and judgements, particularly around forecast costs for
which a sample of such costs (focused on those categories of
cost we considered to be higher risk, due to a combination
of their quantum and the level of judgement required by
management) were agreed to appropriate supporting
evidence; and
• recalculated the revenue recognised and agreed both revenue
and costs to the underlying general ledger.
We also validated a sample of costs incurred during the year to
third party supplier invoices and tested the allocation of these
to the relevant contracts.
For contracts that were completed during the year, we
compared the final contract margin to the margin at the tender
stage to assess the accuracy of management’s forecasts.
For the remaining lower risk contracts, we performed
analytical procedures at a contract level in order to identify
any movements that differed significantly to our expectation.
We also performed testing over a sample of revenue, obtaining
third party evidence for the amounts recognised.
We agreed contract loss provisions recorded based on the
overall outcome anticipated on the contract through a
combination of the procedures above.
Based on the procedures performed, we did not identify any
material misstatements within the revenue and cost of sales,
and therefore margin, recognised. We also assessed the
disclosures in respect of long-term contract accounting and
considered these to be appropriate.
Carrying value of inventory (Group)
Refer to page 92 of the Audit Committee report (‘Significant
issues and other accounting judgements’) and notes 1.5
(‘Critical accounting judgements and key sources of estimation
uncertainty’) and 3.1 (‘Inventories’) of the financial statements.
The inventory balance at 31 December 2022 was £2,838.1
million (31 December 2021: £1,962.2 million). Inventory is
comprised of land held for development, work in progress
(WIP), raw materials and consumables, completed plots and part
exchange properties.
The procedures set out above for the ‘Margin forecasting and
recognition in private and affordable housing’ key audit matter
are also relevant to auditing the carrying value of inventory.
In addition to those procedures outlined above, we have also
examined margins for all major sites to identify those with low
or eroding margins, for example due to specific operational
issues or under performance. We discussed the identified sites
with management, including considering the level of provisions
held against these sites.
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. The balance of
inventory held also includes the fair value adjustments arising
from business combinations.
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 a sample of significant sites, with this
including consideration of site profitability.
Vistry Group PLC | Annual Report 2022 | 133
Key audit matter
How our audit addressed the key audit matter
Carrying value of inventory (Group) (continued)
Inventories are stated at the lower of cost and net realisable
value, where net realisable value is 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
carrying value 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 net realisable value of
the inventory is lower than cost and therefore inventory is held
at the incorrect value.
Provision for legacy properties fire safety (Group)
Refer to page 92 of the Audit Committee report (‘Significant
issues and other accounting judgements’) and notes 1.5
(‘Critical accounting judgements and key sources of estimation
uncertainty’) and 5.9 (‘Provisions’) of the financial statements.
Management have made estimates as to the extent of the
remedial work required in respect of legacy properties
fire safety. This reflects the fact that the Group signed up to
the government’s Developer Pledge for fire safety remedial
work on 7 April 2022 and subsequently the Developer
Remediation Contract on 13 March 2023. This has crystalised
the scope and therefore additional costs of the Group’s
obligation to perform remedial work on properties over
11 metres high.
As a result, the Group held a provision of £309.2 million as at
31 December 2022 (31 December 2021: £25.2m) in relation to
the expected costs to be incurred in performing such remedial
work. During the year, the Group recognised an exceptional
expense of £96.1 million, with an additional provision of £191.8m
arising as a result of the acquisition of Countryside.
The estimation of expected future outflows in relation to
these properties, together with any potential recovery of
costs, is complex and therefore results in significant estimation
uncertainty. This has therefore been an area of additional focus
as part of our audit given the amounts provided by the Group
could be incomplete or not valued accurately for the extent of
remedial work required where there is a legal or constructive
obligation to do so.
Based on the procedures performed we did not identify
any sites where the carrying value of inventory was materially
misstated. We also assessed the disclosures in respect of the
carrying value of inventory and considered these to
be appropriate.
We obtained management’s assessment of the most likely
outcome and performed the following procedures:
• enquired with senior management, including the Group
General Counsel, regarding the level of legal and constructive
obligations as at the balance sheet date;
• assessed the completeness of management’s assessment
through sending confirmation letters to management’s
legal advisors, performing internet searches to determine if
any impacted sites had been excluded from management’s
assessment and consulting the industry experience of our
Forensics experts;
• we also consulted with our Forensics experts to assess the
impact of government guidelines and whether management’s
assumptions and interpretations made in this respect were
appropriate;
• where management is in the process of agreeing remedial
costs we obtained settlement agreements, third party quotes,
and/or internal detailed appraisals where available; and
• assessed management’s forecasting accuracy by comparing
original cost estimates against final settlements, or updated
estimates where more information has become available, and
understood the reasons for any significant differences arising.
As part of our audit of the opening balance sheet of Countryside,
as noted in the key audit matter below, we issued instructions
to a third-party audit firm to perform testing, which included
consideration of the valuation of the provision for legacy
properties fire safety. We reviewed their working papers and
checked that sufficient and appropriate procedures, similar to
the above, had been undertaken in auditing this provision.
We also assessed the impact of the signing of the Developer
Remediation Contract on 13 March 2023, with this being
a detailed articulation of the Developer Pledge signed on 7
April 2022. We agree with management’s conclusion that
this provides further information about the measurement
of the obligation that existed at 31 December 2022. We
therefore agree with management’s conclusion that
additional information arising from the Long Form Contract is
incorporated into the measurement of the provision.
On the basis of the procedures performed, we did not identify
any material misstatements within the provision for legacy
properties fire safety. We also assessed the related disclosures
and considered these to be in line with the requirements of IAS
37 ‘Provisions, contingent liabilities and contingent assets’.
134 |
Key audit matter
How our audit addressed the key audit matter
Independent auditors’ report
continued
Accounting for business combination (Group)
Refer to page 92 of the Audit Committee report (‘Significant
issues and other accounting judgements’) and notes 1.5
(‘Critical accounting judgements and key sources of estimation
uncertainty’) and 5.13 (‘Business combinations’) of the financial
statements.
On 11 November 2022, the Group completed the business
combination of Countryside Partnerships PLC, with the
entire issued ordinary share capital being acquired for total
consideration of £1,137.0 million.
The accounting for acquisitions can be complex with judgement
required in order to both identify and determine the fair value
of the acquired assets (including any intangible assets) and
liabilities in accordance with IFRS 3, ‘Business Combinations’.
The calculation of fair value is subjective due to the inherent
uncertainty involved in performing such a valuation. In
particular, the method of valuation, use of future forecasts
(including cash flow forecasts) and underlying assumptions
may all have a material impact on the valuation of assets
and liabilities, notably the valuation of inventories and
intangible assets, which represent the most significant
assets acquired. This process therefore also requires the use
of valuations specialists.
The acquisition accounting performed by management has given
rise to the recognition of additional goodwill of £257.2 million.
We agreed the total purchase consideration to the ‘Circular to
Vistry Shareholders’ - this consideration was made up of cash
and shares, which have been agreed to the bank statement and
share register respectively.
We issued instructions to a third-party audit firm to perform
testing over the opening balance sheet at 11 November 2022,
including consideration of the alignment of accounting policies
to those of the Group. We reviewed the component auditors’
working papers to ensure the work performed was in line
with our instructions and expectations and that appropriate
conclusions had been reached on areas of higher risk or
involving greater judgement. This particularly included the
valuation of the provision for legacy properties fire safety.
We involved our valuations specialists in our audit of the
provisional valuation of the intangible assets acquired, including
brand name, customer relationships and secured contracts.
This work included assessment of the appropriateness of the
valuation methods and assumptions used, such as the royalty
rate used to value the brand name. We obtained the underlying
cash flow forecasts used and reconciled these to those used
within our testing of areas such as the impairment assessment
of goodwill. Our valuations specialists also assessed the
appropriateness of the discount rate used within management’s
models.
We tested the fair value of other adjustments recognised,
including agreement to relevant supporting documentation,
and challenged the assumptions made by management within
the fair value calculations. This included the valuation of
inventories and the accuracy of the calculation used to value
the inventories using an assumed rate of return expected by a
typical third party market participant.
The procedures performed did not identify any material
misstatements within the accounting for the business
combination. We also assessed the completeness of disclosures
in respect of the business combination against the requirements
of the relevant accounting standards, including clear reference
to the fair values considered provisional, with these considered
to be appropriate.
Impairment of investments in subsidiary undertakings (Company)
Refer to note 5.8 (‘Investments’) of the financial statements.
At 31 December 2022, the Company held investments of
£2,498.3 million (31 December 2021: £1,354.9 million) in its
subsidiary undertakings.
We agreed with management’s conclusion that there was an
impairment trigger and hence the carrying value of investments
needed to be tested for impairment.
We assessed the evidence supporting the recoverable amount
of the investments in subsidiary undertakings, through
reference to the outcome of our testing procedures over the
discounted forecast cash flows supporting the impairment
assessment of goodwill.
Vistry Group PLC | Annual Report 2022 | 135
Key audit matter
How our audit addressed the key audit matter
Impairment of investments in subsidiary undertakings (Company) (continued)
Through our audit of the impairment assessment of goodwill,
we ensured that the costs of meeting the requirements and
commitments arising as a result of the impact of climate change
had been appropriately reflected within the forecast future cash
flows.
We also considered changes to the market capitalisation of the
Group up to 22 March 2023, with this showing an increase post
31 December 2022 meaning that this amount is greater than
the carrying value of investments at year end.
The procedures performed supported the conclusion that no
impairment was required.
On an annual basis, management consider whether any events
or circumstances have occurred that could indicate that the
carrying amount of the investments in subsidiary undertakings
may not be recoverable. If such circumstances are identified,
an impairment review is undertaken to establish whether the
carrying amount of the investments in subsidiary undertakings
exceed their recoverable amount, being the higher of fair value
less costs to sell or value in use.
An impairment assessment of this nature requires judgement
and there is risk that a potential impairment trigger may not be
identified and, in the event that there is an impairment trigger,
there is a risk that the calculation of the recoverable amount
of the investment is incorrect and therefore the value of the
investment may be misstated.
In assessing whether or not there were any impairment
triggers, management considered a number of factors including
the underlying performance of the Group and the market
capitalisation of the Group. The market capitalisation of the
Group at 31 December 2022 was approximately £2,171.8 million,
with this being lower than the carrying value of investments.
Management therefore concluded that there was an
impairment trigger.
The carrying value of investments was compared to the
recoverable amount of the investments in subsidiary
undertakings, determined using discounted forecast
cash flows. Based on this assessment, it was concluded
by management that there was no impairment.
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.
We have determined that the Group is made up of four components, being the Company and the three trading divisions. These include
the Housebuilding division (made up of 13 regions), the Partnerships division (made up of 14 regions) and the Countryside division (made
up of 17 regions). This is consistent with both the determination of operating segments by the Board of Directors and the way in which
the business is managed, monitored and reported upon internally.
The Company is principally a holding company that holds the Group’s investments and also the external borrowings which it lends on to
other entities within the wider Group. Due to the significance of a number of financial statement line items within the Company to the
overall Group, such as bank and other loans and financial expenses, a full scope audit has also been performed over this entity.
The allocated materiality for the Company was lower than the materiality for the stand-alone financial statements of this entity.
In respect of the joint ventures held by the Group, we performed full scope procedures in respect of 20 joint ventures so as to obtain
sufficient and appropriate audit coverage over each such line item disclosed within note 5.8.
These procedures, together with those performed at a Group level, such as the audit of the consolidation and financial statement
disclosures, the accounting for the business combination, taxation, pension scheme balances and asset impairment assessments of
goodwill, intangible assets and investments in subsidiary undertakings, provide us with the evidence required for the purposes of our
opinion on the financial statements as a whole.
136 |
Independent auditors’ report
continued
All of the audit procedures performed were undertaken by the same Group engagement team, with the exception of the testing of the
opening balance sheet of Countryside Partnerships PLC at 11 November 2022, with this having been performed by a third-party audit
firm based on our instructions to them, including over relevant scope and materiality. We performed appropriate oversight procedures,
including review of their audit working papers to ensure we were satisfied with the work performed.
The impact of climate risk on our audit
The risks associated with climate change will impact the housebuilding industry, with changes to Part L and Part F of the Building
Regulations having been implemented during the year. The 2025 Future Homes Standard will also require a reduction in emissions of
75% to 80%, including the banning of gas boilers in all new homes.
As set out in the other information to the Annual Report, the Group is committed to carbon emission targets consistent with
reductions required to keep global warming to 1.5°C, with the Group’s carbon reduction targets having been verified by the Science
Based Targets Initiative during the year. These targets will be reconfigured during 2023 in respect of the enlarged Group, following the
acquisition of Countryside.
In planning and executing our audit we have both understood and evaluated the Group’s risk assessment process in respect of climate
change. Together with discussions with our own sustainability experts, this enabled us to assess the potential impact of climate change
on the financial statements.
In doing so, we have determined that the financial statement estimates which are most likely to be materially impacted by
both physical and transition risks of climate change are those associated with the costs of meeting the above requirements and
commitments and how they have been reflected in forecast future cash flows.
We have understood that management have designed new house types to meet the revised standards. Management’s process is that
land appraisals prepared in respect of sites yet to be acquired reflect the cost of meeting these new regulations, so as to appropriately
assess targeted returns, whilst for existing sites that will need to meet these standards, build costs are included in the reports
underpinning management’s key forecasting and monitoring control. These processes form the basis of the Group’s cash and funding
requirements and are therefore an integral part of preparing forecast future cash flows.
These forecast cash flows have been used as part of the assessments performed over going concern and viability, the impairment
assessments performed over goodwill and the impairment assessment of investments in subsidiary undertakings held by the Company,
as well as the determination of the fair value of the acquired intangible assets. Our key audit matters further explain how we have
evaluated the impact of climate change, where applicable.
We challenged management regarding the extent of disclosures made within the financial statements in respect of climate change,
obtaining comfort over the consistency of the finalised disclosures made in the other information within the Annual Report with both
the financial statements and the knowledge we obtained from our audit.
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:
Financial statements – Group
Financial statements – Company
Overall materiality
£20.0 million (2021: £16.0 million).
£29.3 million (2021: £15.9 million).
How we determined it
Approximately 5% of the Group’s profit
before tax adjusted to remove the
exceptional expenses relating to legacy
properties fire safety and the exceptional
expenses relating to the acquisition of
Countryside (2021: 5% of the Group’s profit
before tax).
Approximately 1% of total assets (2021: 1% of
total assets).
Vistry Group PLC | Annual Report 2022 | 137
Rationale for benchmark
applied
Financial statements – Group
Financial statements – Company
We consider that profit before tax is an
appropriate metric as it is the primary
statutory measure used by the shareholders
in assessing the performance of the Group
and is a generally accepted auditing
benchmark for trading entities.
We consider that total assets is an
appropriate metric as it is the primary
measure used by the shareholders in
assessing the performance of the Company
and is a generally accepted auditing
benchmark for non-trading entities.
In the current year, we have adjusted this
measure to remove the exceptional expenses
relating to legacy properties fire safety and
the exceptional expenses relating to the
acquisition of Countryside given that these
are large one-off items which do not reflect
the underlying profitability of the Group.
The Company is also a full scope component
for the purposes of the Group audit, with the
allocated materiality (of £16.0 million) being
lower than the above materiality for the
stand-alone Company financial statements.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range
of materiality allocated across components was between £16.0 million and £18.0 million.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit
and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample
sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £15.0 million (2021: £12.0 million) for the
Group financial statements and £22.0 million (2021: £11.9 million) for the Company financial statements.
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was
appropriate.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £1.0 million (Group
audit) (2021: £0.8 million) and £1.5 million (Company audit) (2021: £0.9 million) as well as misstatements below those amounts that, in
our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the going concern basis of
accounting included:
• evaluating the reasonableness of the inputs and underlying assumptions within the base case going concern model prepared by
management, including the impact of the business combination;
• performing a comparison of the forecasts within the base case going concern model to Board approved budgets and, where applicable,
the forecasts used elsewhere in the Group, such as asset impairment assessments and those used in the determination of the fair value
of the acquired assets and liabilities;
• comparing the prior year forecasts (for the pre-acquisition Group) against current year actual performance to assess management’s
ability to prepare accurate forecasts;
• assessing the severe but plausible downside scenario which has been used to sensitise the base case model, including consideration of
the underlying assumptions within this forecast (such as reduced demand or a fall in house prices);
• obtaining and reperforming management’s analysis of both liquidity and covenant compliance to ensure there is sufficient liquidity and
no forecast covenant breaches over the course of the going concern period, including within the downside scenario prepared;
• agreeing the committed facilities, including those put in place to fund the business combination, to the underlying agreements and
ensuring that these were appropriately reflected within the liquidity and covenant analysis; and
• reviewing the disclosures relating to going concern, with these considered to be consistent with the assessment prepared by
management and the procedures we performed.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and the Company’s ability to continue as a going concern for a
period of at least twelve months from when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Group’s and the
Company’s ability to continue as a going concern.
138 |
Independent auditors’ report
continued
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to
add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of
this 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, which includes reporting based on the Task Force on Climate-
related Financial Disclosures (TCFD) recommendations. 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 and Directors’ report, we also considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and
matters as described below.
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 2022 is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements.
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.
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.
Corporate governance statement
The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the
corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code
specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are
described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing
material to add or draw attention to in relation to:
• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an
explanation of how these are being managed or mitigated;
• The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of
accounting in preparing them, and their identification of any material uncertainties to the Group’s and Company’s ability to continue
to do so over a period of at least twelve months from the date of approval of the financial statements;
• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this assessment covers and why
the period is appropriate; and
• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any
necessary qualifications or assumptions.
Our review of the directors’ statement regarding the longer-term viability of the Group and Company was substantially less in scope
than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking
that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our knowledge and understanding of the Group and Company and their
environment obtained in the course of the audit.
Vistry Group PLC | Annual Report 2022 | 139
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides
the information necessary for the members to assess the Group’s and Company’s position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit Committee.
We have nothing to report in respect of our responsibility to report when 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.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ responsibilities statement, 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.
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud, is detailed below.
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with laws and
regulations related to NHBC standards and other building regulations (including the Building Safety Act 2022 and other fire and
building safety legislation), UK tax legislation and the Listing Rules, 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 financial
statements such as the Companies Act 2006. 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 and management bias within accounting estimates, in particular the potential
manipulation of the margin to be recognised on a particular site or contract. The Group engagement team shared this risk assessment
with the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit
procedures performed by the Group engagement team and/or component auditors included:
• inquiries with management, internal audit and the Group’s legal team, including in respect of known or suspected instances of non-
compliance with laws and regulation and fraud, and review of board minutes and internal audit reports - in particular, we performed
detailed procedures in respect of the Group’s provisioning for legacy properties fire safety;
• evaluation and testing of the operating effectiveness of management’s key controls around the forecasting of costs and margin
estimation;
• challenging assumptions and judgements made by management in their significant accounting estimates, in particular those that
involve the assessment of future events, which are inherently uncertain – the key estimates determined in this respect are those
relating to the forecasting of costs and margin estimation in private and affordable housing, long-term contract accounting in partner
delivery, the expected outflows in respect of legacy properties fire safety and the determination of the fair value of the assets and
liabilities acquired as part of the business combination;
• identifying and testing journal entries, in particular testing a sample of journal entries posted with unusual account combinations, such
as those with unusual or unexpected journal postings to the income statement; and
• testing a sample of consolidation adjustments to ensure that these were appropriate in both nature and magnitude.
140 |
Independent auditors’ report
continued
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements.
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.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population from which the sample is selected.
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 obtained 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 8
years, covering the years ended 31 December 2015 to 31 December 2022.
Other matter
As required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements form part
of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance
with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial
report has been prepared using the single electronic format specified in the ESEF RTS.
Richard French (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
22 March 2023
Vistry Group PLC | Annual Report 2022 | 141
Group income statement
For the year ended 31 December
Revenue
Cost of sales
Gross profit
Analysed as:
Adjusted gross profit
Other operating income
Exceptional cost of sales
Share of joint ventures’ and associate gross profit
Gross profit
Administrative expenses including exceptional items
Other operating income
Operating profit
Analysed as:
Adjusted operating profit
Exceptional expenses
Amortisation of acquired intangibles
Share of joint ventures’ and associate operating profit
Operating profit
Financial income
Financial expenses including exceptional items
Net financing (expenses) / income
Share of profit of joint ventures and associate
Profit before tax
Analysed as:
Adjusted profit before tax
Exceptional expenses
Amortisation of acquired intangibles
Profit before tax
Income tax expense
Profit for the year attributable to ordinary shareholders
Earnings per share
Basic
Diluted
Basic earnings per share (before exceptional items and amortisation of acquired intangibles)
Diluted earnings per share (before exceptional items and amortisation of acquired intangibles)
Note
2.0
5.14
2.1
2.1
5.8
2.1
2.1
2.1
5.14
2.1
5.6
5.8
2.1
4.3
4.3
4.3
5.8
5.14
2.1
5.6
5.1
2.4
2.4
2.4
2.4
2022
£000
2021*
£000
2,729,432
2,407,158
(2,315,703)
(1,967,886)
413,729
439,272
636,855
542,965
(57,713)
(96,113)
(69,300)
413,729
(258,936)
57,713
212,506
451,090
(152,977)
(17,065)
(68,542)
212,506
14,547
(26,776)
(12,229)
47,207
247,484
418,426
(153,877)
(17,065)
247,484
(43,139)
204,345
(40,659)
(5,744)
(57,290)
439,272
(194,517)
40,659
285,414
368,368
(12,225)
(14,240)
(56,489)
285,414
23,062
(18,931)
4,131
29,991
319,536
346,001
(12,225)
(14,240)
319,536
(65,411)
254,125
2022
2021
86.5p
86.3p
137.5p
137.1p
114.6p
114.1p
125.5p
124.9p
*Reported revenue and cost of sales for 2021 have been restated in relation to trading with our joint ventures (see note 1.6).
Group statement of comprehensive income
For the year ended 31 December
Profit for the year attributable to ordinary shareholders
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) / income
Total comprehensive income for the year attributable to ordinary shareholders
142 |
Note
5.10
5.1
2022
£000
2021
£000
204,345
254,125
(16,374)
2,399
(13,975)
190,370
33,838
(9,148)
24,690
278,815
Balance sheets
As at 31 December
Assets
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Amounts recoverable from joint ventures and associate
Trade and other receivables
Restricted cash
Deferred tax assets
Retirement benefit asset
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Current tax asset
Total current assets
Total assets
Equity
Issued capital
Share premium
Capital redemption reserve
Merger reserve
Retained earnings
Total equity attributable to equity holders of the parent
Liabilities
Bank and other loans
Trade and other payables
Lease liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Bank and other loans
Trade and other payables
Lease liabilities
Provisions
Current tax liabilities
Total current liabilities
Total liabilities
Note
5.7
5.6
5.4
5.5
5.8
5.11
3.2
4.1
5.2
5.10
3.1
3.2
4.1
5.2
4.4
4.4
4.4
4.2
3.3
5.5
5.9
5.2
4.2
3.3
5.5
5.9
5.2
Group
2022
£000
804,742
455,965
20,945
77,217
253,659
391,382
601
382
1,819
34,251
2021
£000
547,509
127,809
4,742
31,069
175,064
308,217
454
778
-
45,318
Vistry Group PLC
Company number 00306718
Company
2022
£000
-
-
-
-
2021
£000
-
-
-
-
2,498,302
1,354,921
-
-
-
775
-
-
-
-
-
-
2,040,963
1,240,960
2,499,077
1,354,921
2,838,140
1,962,155
-
-
421,096
231,359
823,513
1,597,756
1,094,833
2,390,581
237,675
2,371,115
449,440
676,760
10,417
3,974,757
6,015,720
173,605
360,801
1,278
1,597,756
1,116,232
3,249,672
508,657
334,484
71,826
280,764
-
1,195,731
49,938
1,432,711
14,756
72,912
-
241,420
398,714
-
2,602,289
3,843,249
111,154
361,081
-
164,260
211,296
18,836
30,928
38,444
463,764
-
966,127
14,215
8,455
107
344
612
422,052
2,921,129
173,605
360,801
1,278
344
630
232,333
1,587,254
111,154
361,081
-
823,513
141,037
1,436,785
495,809
149,688
780
-
-
-
781
-
-
-
496,589
150,469
49,938
3,487
-
-
-
-
-
-
-
-
-
150,469
1,570,317
988,904
2,766,048
1,452,668
53,425
550,014
Total equity and liabilities
6,015,720
3,843,249
2,921,129
1,587,254
The Company made a profit for the year of £264,426,857 driven by dividend income from subsidiaries partly offset by exceptional costs incurred in relation
to the Combination (2021 loss: £2,686,845 as a result of exceptional costs and the write-off of the capitalised fees from the 2020 financing arrangement).
These financial statements on pages 142 to 196 were approved by the Board of Directors on 22 March 2023 and were signed on its behalf by:
Tim Lawlor, Director.
Vistry Group PLC | Annual Report 2022 | 143
Group statement of changes in equity
For the year ended 31 December
Note
Own
shares
held
£000
Other
retained
earnings
£000
Total
retained
earnings
£000
Issued
capital
£000
Share
premium
£000
Capital
redemption
reserve
£000
Balance at 1 January 2021
(6,956)
906,741
899,785
111,127
360,657
Profit for the year
Total other comprehensive income
Total comprehensive income
Issue of share capital
LTIP shares exercised
Share-based payments
Dividends paid
Deferred and current tax on
share-based payments
Total transactions with owners
recognised directly in equity
-
-
-
-
3,584
-
-
-
4.4
5.3
2.3
5.1
254,125
254,125
24,690
24,690
278,815
278,815
-
(3,584)
4,543
-
-
4,543
(88,709)
(88,709)
399
399
-
-
-
-
-
-
27
424
-
-
-
-
-
-
-
-
3,584
(87,351)
(83,767)
27
424
Balance at 31 December 2021
(3,372)
1,098,205
1,094,833
111,154
361,081
Balance at 1 January 2022
(3,372)
1,098,205
1,094,833
111,154
361,081
Profit for the year
Total other comprehensive expense
Total comprehensive income
Issue of share capital
Purchase of own shares
Cancellation of shares
Shares issued as consideration
LTIP shares exercised
Share-based payments
Dividends paid
Deferred and current tax on
share-based payments
Total transactions with owners
recognised directly in equity
-
-
-
-
(14,484)
-
-
456
-
-
-
4.4
4.4
4.4
5.3
2.3
5.1
204,345
204,345
(13,975)
(13,975)
190,370
190,370
-
-
-
(14,484)
-
-
-
7
-
(22,413)
(22,413)
(1,278)
854
(456)
854
63,722
-
6,337
6,337
(138,858)
(138,858)
(407)
(407)
-
-
-
-
-
-
-
(280)
-
-
-
-
-
-
-
Merger
reserve
£000
Total
£000
823,513
2,195,082
-
-
-
-
-
-
-
-
-
254,125
24,690
278,815
451
-
4,543
(88,709)
399
(83,316)
823,513
2,390,581
823,513
2,390,581
-
-
-
-
-
-
204,345
(13,975)
190,370
(273)
(14,484)
(22,413)
774,243
838,819
-
-
-
-
-
6,337
(138,858)
(407)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,278
-
-
-
-
-
(14,028)
(154,943)
(168,971)
62,451
(280)
1,278
774,243
668,721
Balance at 31 December 2022
(17,400)
1,133,632
1,116,232
173,605
360,801
1,278
1,597,756
3,249,672
144 |
Company statement of changes in equity
Attributable to equity holders of the parent
Own
shares held
£000
Other
retained
earnings
£000
Total
retained
earnings
£000
Issued
capital
£000
Share
premium
£000
Capital
redemption
reserve
£‘000
Balance at 1 January 2021
(6,956)
234,846
227,890
111,127
360,657
Total comprehensive income
Issue of share capital
LTIP shares exercised
Share-based payments
Dividends paid
(2,687)
(2,687)
-
-
-
3,584
(3,584)
-
-
-
-
4,543
4,543
(88,709)
(88,709)
-
27
-
-
-
-
424
-
-
-
Balance at 31 December 2021
(3,372)
144,409
141,037
111,154
361,081
Balance at 1 January 2022
(3,372)
144,409
141,037
111,154
361,081
Total comprehensive income
Issue of share capital
-
-
Purchase of own shares
(14,484)
264,427
264,427
-
-
-
(14,484)
-
7
-
Cancellation of shares
LTIP shares exercised
Shares issued as consideration
Share-based payments
Dividends paid
Deferred and current tax on
share-based payments
-
(22,413)
(22,413)
(1,278)
456
-
-
-
-
(456)
854
-
-
854
63,722
6,337
6,337
(138,858)
(138,858)
775
775
-
-
-
-
(280)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,278
-
-
-
-
-
Merger
reserve
£000
Total
£000
823,513
1,523,187
-
-
-
-
-
(2,687)
451
-
4,543
(88,709)
823,513
1,436,785
823,513
1,436,785
-
-
-
-
-
264,427
(273)
(14,484)
(22,413)
-
774,243
838,819
-
-
-
6,337
(138,858)
775
Balance at 31 December 2022
(17,400)
255,075
237,675
173,605
360,801
1,278
1,597,756
2,371,115
Vistry Group PLC | Annual Report 2022 | 145
Statements of cash flows
For the year ended 31 December
Cash flows from operating activities
Profit / (loss) for the year
Depreciation and amortisation
Impairment losses
Financial income
Financial expense
Loss on disposal of property, plant and equipment
Equity-settled share-based payment expense
Income tax expense / (credit)
Share of profit of joint ventures and associate
Profit released on sale of assets from joint ventures and associate
(Increase) / decrease in trade and other receivables
Increase in inventories
(Decrease) / increase in trade and other payables
Increase / (decrease) in provisions
Cash generated from operations
Interest paid
Interest paid on lease payments^
Income taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Bank interest received
Acquisition of intangible assets
Acquisition of property, plant and equipment
Acquisition of Countryside net of cash acquired
Loans made to and investments in joint ventures and associate
Interest received on loans to joint ventures and associate
Loan repayments from joint ventures and associate
Distributions from joint ventures and associate
Decrease in restricted cash
Net cash generated from / (used in) investing activities
Cash flows from financing activities
Dividends paid
Principal elements of lease payments
Net (spend on) / proceeds from the issue of share capital
Share buyback
Drawdown of bank and other loans
Repayment of bank and other loans
Net cash generated from / (used in) financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Group
Company
Note
2022
£000
2021
£000
2022
£000
2021
£000
5.4, 5.5, 5.6
5.4, 5.5, 5.6
4.3
4.3
5.3
5.1
5.8
5.5
5.6
5.4
5.13
5.8
5.8
204,345
254,125
264,427
(2,687)
35,272
9,505
(14,547)
26,776
3
6,337
43,139
32,524
-
(23,062)
18,931
1
4,543
65,411
-
-
-
-
(9,187)
9,723
(13,527)
16,698
-
-
-
-
(612)
(630)
(47,207)
(29,991)
-
(265)
-
-
-
-
(86,059)
(83,656)
(63,346)
105,589
136,151
(16,570)
(1,408)
(15,308)
(215,222)
88,855
(125,634)
-
143,604
3,486
(1,018)
-
-
-
-
323,861
52,615
88,709
(17,835)
(905)
(65,300)
(39,000)
-
-
-
-
-
-
52,873
266,121
52,615
88,709
477
(43)
(1,586)
(77,667)
12
(1,516)
(1,546)
-
-
-
-
(299,876)
(139,476)
(126,423)
10,602
188,484
38,065
396
19,252
32,730
124,947
16,989
415
45,608
(299,876)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2.3
(138,858)
(88,709)
(138,858)
(88,709)
(16,141)
(273)
(35,245)
(15,745)
451
-
-
(273)
(13,608)
1,390,000
220,000
400,000
(993,562)
(370,000)
-
-
-
-
-
-
205,921
(254,003)
247,261
(88,709)
278,046
398,714
676,760
57,726
340,988
398,714
-
344
344
-
344
344
4.4
4.4
4.2
4.2
4.1
4.1
^Interest paid on lease payments in 2021 has been reclassified from financing activities to be consistent with the current year presentation.
146 |
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 shown in grey boxes.
1.0 Basis of preparation
1.1 General information
Vistry Group PLC (the “Company”) is a public company, limited by shares, domiciled and incorporated in England, United Kingdom. The shares
are listed on the London Stock Exchange. The consolidated financial statements of the Company for the year ended 31 December 2022 comprise
the Company and its subsidiaries (together referred to as the “Group”) and the Group’s interest in joint ventures and associate. The financial
statements were authorised for issue by the Directors on 22 March 2023. The registered office for Vistry Group PLC is 11 Tower View, Kings Hill,
West Malling, Kent, ME19 4UY.
1.2 Basis of accounting
For the year to 31 December 2022, the financial statements of the Company and the consolidated financial statements of the Group have
been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 as
applicable to companies reporting under those standards.
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.
There are no new standards effective for the first time in the year beginning 1 January 2022 which have had a material impact on the Group’s
reported results.
In accordance with section 612 of the Companies Act 2006, advantage is taken of the relief from the requirement to create a share premium
account to record the excess over the nominal value of shares issued in a share for share transaction. Where the relevant requirements of section
612 of the Companies Act 2006 are met, the excess of any nominal value is credited to a merger reserve.
All other accounting policies have been applied consistently to the Company and the Group.
The financial statements are prepared on the historical cost basis unless otherwise stated.
The functional currency of the Group is Pounds Sterling (GBP), and the accounts are presented in the same currency.
1.3 Going concern
The Group has prepared a cash flow forecast to confirm the appropriateness of the going concern assumption in these accounts. The forecast
was prepared using a likely base case and a severe but plausible downside sensitivity scenario. In the downside scenario the Group have assumed
decreased affordability, leading to reduced demand for housing and falling house prices. We continue to see some build cost inflation with higher
energy prices impacting a selected range of materials required. Whilst this has not been factored into our assumptions, we are targeting a
reduction in labour rates as the labour market softens. In both the base case and the downside sensitivity scenario, the forecasts indicated that
there was sufficient headroom and liquidity for the business to continue based on the facilities available to the Group as discussed in note 4.2 to
the financial statements. In each of these scenarios the Group was also forecast to comply with the required covenants on the aforementioned
borrowing facilities, even prior to migrating activities. Consequently, the Directors have not identified any material uncertainties to the Group’s
ability to continue as a going concern over a period of at least twelve months from the date of the approval of the financial statements and have
concluded that using the going concern basis for the preparation of the financial statements is appropriate.
In the downside sensitivity scenario, the following assumptions have been applied (in aggregate):
- A 10% reduction in private sales volumes in 2023 and 20% reduction in 2024, with a corresponding reduction in development spend;
- A 10% reduction in private sales prices;
- A rise in interest cost of 100bps;
- No sensitivity has been applied to either the affordable and PRS or partner delivery revenue streams as it is assumed that these would not
be impacted by a downturn due to the significant proportion of this revenue which is pre-sold.
In a severe but plausible downside, the following mitigating actions have been modelled:
- Cessation of uncommitted land spend;
- Reduction in planned dividend outflows by 50% from H2 2023 onwards.
Vistry Group PLC | Annual Report 2022 | 147
The Group have also assessed the appropriateness of the going concern assumption for the accounts of the Company. The Company’s only expected
cashflows in the twelve months following the date of these financial statements relate to the settlement of expenses incurred in relation to the
Combination, dividend payments to shareholders and interest incurred on its borrowings. In order to fund these cashflows, the Company has
receivables which are repayable on demand and are deemed recoverable. As a result, the Directors have not identified any material uncertainties to
the Group’s ability to continue as a going concern over a period of at least twelve months from the date of the approval of the financial statements
and have concluded that using the going concern basis for the preparation of the Company financial statements is appropriate.
The Board continues to take prudent decisions to best support the business through this period of uncertainty, including measures to protect the
Group’s cash position, liquidity and maintain a robust balance sheet.
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 2022. 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 can 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. 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 its share of the assets and obligations for the liabilities relating to the arrangement.
Where the Group collaborates with other entities on a development or contract, the arrangement is accounted for in accordance with IFRS
11. Where there is joint control, the arrangement is classified as a joint arrangement and accounted for using the equity method (for joint
ventures) or on the basis of the Group’s proportional share of the arrangement’s assets, liabilities, revenues and costs (for joint operations). The
Group’s share of income and expenses of its joint operations are included within the corresponding lines of the income statement, from the
date that joint control commenced.
An associate is an entity over which the Group is in a position to exercise significant influence but does not exercise control or joint control.
Investments in associates are accounted for using the equity method.
When the Group’s share of losses in a joint venture or associate equals or exceeds its interests in the joint venture or associate, the Group does
not recognise further losses unless it has incurred obligations or made payments on behalf of the joint venture or associate.
Parent Company Guarantees for audit exemption are listed in note 5.17.
1.5 Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with UK-adopted International Accounting Standards 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 year in
which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current
and future years.
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
Estimates and underlying assumptions affecting the financial statements are based on historical experience and other relevant factors and are
reviewed on an ongoing basis. This approach forms the basis of making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Changes in accounting estimates may be necessary if there are changes in the circumstances on which the
estimate was based or as a result of new information. Such changes are recognised in the year in which the estimate is revised.
The key sources of estimation uncertainty that have a risk of causing a material adjustment to the carrying value of assets and liabilities within the
next financial year are described below.
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 development work in progress, the Group completes a financial appraisal of the likely revenue which will be generated when
these inventories are converted 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 (based on prevailing and/or contracted
costs), 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 net realisable value.
148 |
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. At this point any previous impairments may also be reversed. A review taking into account
estimated achievable net revenues, actual inventory and costs to complete as at 31 December 2022 has been carried out, and appropriate
adjustments have been made to the carrying value of the Group’s inventory provision.
These estimates were made by local management having regard to actual prevailing 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.
Management have performed a sensitivity analysis to assess the impact of a 5.0ppts decrease in estimated gross margins for all active
developments (private, affordable and PRS) which are expected to generate future revenues as this is considered to be a reasonably possible
change. This movement in margin would result in the need to recognise an additional £3.1m of land and work in progress write down
provision, reducing the value of inventories on the balance sheet and having a corresponding impact to gross profit.
Margin recognition
The gross margin from private housing, affordable and PRS housing and private rental sector 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 forecast gross margins are based on current prevailing pricing or contracted rates and pricing where applicable. The remaining
life gross margin is calculated using forecasts for current selling prices and all land, build, infrastructure and overhead costs associated with
that site. Where the actual contracted costs are available, these are used in the calculation. There is inherent uncertainty and sensitivity to
external forces (predominantly house prices, material and labour costs) in these forecasts, which are reviewed regularly throughout the year by
management and are described on pages 63 to 64.
In order to calculate partner delivery revenue, the Group estimates the total revenue and total costs for the contract and derives the expected
margin. Revenue recognised is then calculated by taking the costs incurred in the year, plus the expected margin, for each contract. The
assessment of total costs to complete the contract requires estimation.
The Group has robust internal controls to review future revenue and cost estimates.
Management have performed a sensitivity analysis to assess the impact of a 5.0ppts decline in forecasted gross margins across all
developments and partner delivery sites; this would have reduced gross profit by £136.5m through increased cost of sales, with a
corresponding reduction to inventories and therefore net assets of the same value. This would equate to a 6.2ppts increase in cost of sales, or
a 5.0ppts decrease in revenue, which is considered reasonably possible in light of recent market conditions.
Fire safety cladding
Management have reviewed all current legal and constructive obligations with regards to remedial work to rectify legacy fire safety issues.
Where known obligations exist, these have been evaluated for the likely cost to complete and an appropriate provision has been created.
Currently proposed legislative and regulatory changes create significant uncertainty around the extent of remediation required for legacy
buildings, the liability for such remediation and the time period to be considered. This implies inherent uncertainty as to the precise future
obligations of the Group in respect of legacy fire safety issues.
The Directors have made estimates as to the extent of the remedial works required and the associated costs, using currently available
information including third-party quotations where possible. The quantification of the cost of these remedial works is inherently complex and
depends on a number of factors including the number of buildings potentially requiring remediation; the extent of remedial works required;
the size of the buildings; the timeframe over which the remediation will take place; the associated costs of investigation, materials and labour;
the potential cost of managing disruption to residents; and the impact of inflation over the next five years. It is also highly likely that there
will be further revisions to these estimates as government legislation and regulation in this area evolves. Management have completed
extensive work to identify properties requiring remediation and considers the buildings identified and the value of works provided to reflect
management’s best view of the expected cost to the Group. See note 5.9 and 5.16 for more detail.
As an illustration the following reasonably possible movements would have the following effect on the provision:
Sensitivity
10% increase in estimated remediation cost
100 bps increase in discount rate
100 bps increase in inflation rate
22.4
(6.6)
4.7
Defined benefit pension scheme
The Group has three defined benefit pension schemes, all closed to future accrual, which are subject to estimation uncertainty. Note 5.10
outlines the way in which these schemes are 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 assets/obligations.
Impairment of goodwill
The Group tests for goodwill impairment on an annual basis, or more regularly where there are indicators of impairment. This requires an
estimation of the value in use of the cash-generating units to which the assets have been allocated. The value in use calculation requires the
Directors to estimate the future cash flows expected to be generated by the cash-generating units, and a suitable discount rate and long-term
growth rate to apply in order to calculate present value. During the period, these estimates resulted in no impairment charge (2021: £Nil)
relating to goodwill. Refer to Note 5.7 for the details of impairment review and the sensitivities applied.
Vistry Group PLC | Annual Report 2022 | 149
Fair valuation of Countryside’s opening balance sheet
In performing the fair valuation of the Countryside opening balance sheet at 11 November 2022, there are two areas which involved significant
estimation and judgement – the valuation of inventories and acquired intangibles.
In order to calculate the fair value of inventories acquired with Countryside, management have assessed what margin a market participant would
expect on the acquired inventories. This requires significant judgement to be made.
The valuation of acquired intangibles involved inputs including useful economic lives of identified intangible assets, discount rate and royalty rate
which all involved significant estimation uncertainty. Management have performed the following sensitivities:
Sensitivity
1 year increase in useful economic lives
1% increase in discount rate
0.5% increase in royalty rate
Sensitivity
1% increase in market participant margin
Increase/(decrease) in intangible assets
11 November 2022
£m
9
(11)
32
Increase/(decrease) in inventories
11 November 2022
£m
(69.4)
1.6 Restatement of Vistry Group PLC 2021 financial statements and notes
Reported revenue and cost of sales have been restated for the year ended 31 December 2021 (increasing partner delivery revenue and cost of
sales by £48.1m). This adjustment was to correct a prior period error in calculating the revenue and associated cost of sales that were recognised
in relation to assets previously sold by the Group to joint ventures that have subsequently been sold by these joint ventures to external parties.
The gross profit element of this error is de minimis, and as a result no adjustment to gross profit has been made in the restatement.
1.7 Impact of standards and interpretations in issue
No new accounting standards and interpretations have been published that are mandatory for the 31 December 2022 reporting year and as a
result have not been adopted by the Group.
1.8 Impact of climate change
The housebuilding sector is a key contributor to the Government’s ambition to reduce carbon emissions and as such the standards for lower
carbon homes are mandated for the sector through the Future Homes Standard which comes into effect in 2025. As a consequence, the
requirements for building standards for the next few years are known and the costs of meeting those requirements are factored into investment
appraisals for new land acquisitions today. Land that was acquired before these new requirements were known will be subject to increased
costs to complete that will impact margins. However, given the rate of house price increases over the last 3 to 4 years, the extra cost of meeting
any new regulations will be more than covered for older sections of the land bank. Land held under options (strategic land) is acquired using a
discount to prevailing market prices and so the impact of any new building standard will be factored into the eventual option price paid. The cost
of meeting climate challenges through regulation changes is also included in the cost to complete estimation for each site that, in turn, is used
for defining both in year margins and in year financial forecasts in the same way that we factor in all other costs to complete for a site. These
site forecasts are also used to generate our first year and multi-year plans which are used in going concern, viability and goodwill impairment
assessments.
There are other areas of potential cost that relate to climate change as shown on page 51 “Pricing for the cost of climate change”. Beyond the
known incremental costs of mitigating either the transitional or physical risks of climate change, these risks are regularly monitored and will be
included in our costs estimation/planning processes as and when they arise. This is most typically seen currently through the increase in material
prices due to energy price inflation, albeit it is hard to distinguish the precise cause of energy price inflation between climate related impacts or
other geo-political events impacting energy security.
150 |
2.0 Result for the year
Revenue
Private housing revenue
Revenue is recognised on the sale of private housing at a point in time on legal completion, as this is when the customer obtains control
of the property and the Group has fulfilled its performance obligations. The exception to this policy is for certain contracts including bulk
private sales which are recognised over time. 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 of part exchange properties 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 in lieu of 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.
Affordable housing and private rental sector (“PRS”) revenue
Contract revenue for affordable housing and PRS contracts is recognised over time, 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. Where there is a disposal of land to the
customer under the contract, revenue for this disposal is recognised in line with the accounting policy for land sales below.
As the build progresses, customer-controlled assets are created, with the design tailored to the specification of the customer. The Group has
an enforceable right to be paid for the work completed to date and invoices are issued and paid over the life of the development. Variations
in contract work and claims are included to the extent that it is highly probable that there will not be a significant reversal when the value of
such payments is finalised.
Where progress towards the satisfaction of performance obligations cannot be reasonably determined, revenue is recognised over time as
the work is performed to the extent that costs have been incurred and are expected to be recoverable, and contract costs are recognised as
expenses in the period in which they are incurred.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised immediately in the income
statement within cost of sales.
The application of the above policies requires estimates 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.
Where the Group provides design, construction, and mobilisation activities on a development across multiple units simultaneously, this is
considered to represent one performance obligation. Where these services are provided across multiple development sites, each site is
typically considered to represent a distinct performance obligation.
Partner delivery revenue
Partner delivery revenue is recognised over time, as the value of the services are transferred to the customer during the year. For all
contracts, costs are expensed in the income statement as incurred.
In fixed price contracts, revenue is recognised based on the costs incurred as a percentage of total estimated costs to complete the contract.
In contracts where revenue is directly related to the costs incurred, revenue is recognised based on the costs incurred to date plus any
agreed fee or mark-up.
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer
and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time
value of money.
Release of deferred revenue from joint ventures
When the Group makes sales to joint ventures in which it owns an interest, it will only recognise revenue and profit in the year 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.
Bare land sales
Revenue is recognised on bare land sales from the point of control passing to the buyer. Where the Group still has significant obligations to
perform under the terms of the contract, revenue is recognised when the obligations are performed.
Other revenue
Revenue is recognised on commercial property sales from the point of control passing to the buyer. Any other revenue is only recognised at
the point that the Group has fulfilled their obligations under the contract.
Government grant income
Government grants are recognised once the Group has reasonable assurance that the related conditions of the grant will be met and that
the grant will be received. Government grant income is recorded within other operating income, as disclosed in Note 2.1.
Vistry Group PLC | Annual Report 2022 | 151
Revenue by type
Private housing
Affordable housing and PRS revenue
Partner delivery revenue*
Bare land sales
Release of deferred revenue from joint ventures
Other
Total
Timing of revenue recognition
At a point in time
Over time*
Total
2022
£000
2021
£000
1,895,566
1,599,616
350,465
470,357
5,654
-
7,390
261,894
516,769
22,727
243
5,909
2,729,432
2,407,158
1,817,594
1,580,383
911,838
826,775
2,729,432
2,407,158
*Revenue and cost of sales for 2021 has been restated in relation to trading with our joint ventures (see note 1.6).
The Group’s total revenue recognised in relation to contract liabilities shown in the table below is included within affordable housing revenue and
partner delivery revenue.
At 31 December 2022 the aggregate amount of the transaction price allocated to unsatisfied performance obligations on contracts was £3,118.0m
(2021: £1,617.0m), of which approximately £1,562.0m (2021: £939.0m) is expected to be recognised as revenue during 2023.
Assets and liabilities related to contracts with customers
The Group has recognised the following amounts recoverable on contracts and payments on account relating to its existing contracts with
customers:
Amounts recoverable on contracts (see note 3.2)
Payments on account (see note 3.3)
2022
£000
261,522
(40,290)
2021
£000
140,822
(52,542)
Contract assets are represented by amounts recoverable on contracts in the above table. Amounts recoverable on contracts arise where the
revenue recognised on a long-term contract exceeds the value of stage payments that have been invoiced on that contract. Contract liabilities are
represented by payments on account where stage payments exceed revenue recognised on long-term contracts. Materially all of the payments
on account as at 31 December 2021 have been recognised as revenue in the current year. Amounts recoverable on contracts are presented within
trade and other receivables on the face of the balance sheet and payments on account are presented with trade and other payables.
Significant changes in contract assets and liabilities
Contract assets increased during 2022 as a result of the Combination with Countryside. Contract liabilities have not moved significantly year on year.
2.1 Operating profit
Operating profit before exceptional expenses is stated after charging:
Depreciation of tangible assets (see note 5.4)
Depreciation of right-of-use assets (see note 5.5)
Amortisation of intangible assets (see note 5.6)
Personnel expenses (not capitalised into work in progress)*
*2021 has been restated to include staff bonus costs as well as salaries, resulting in an increase of £31.7m. .
Other operating income
Joint arrangement management fees income
Release of joint venture deferred income
Government grant income
Total other operating income
2022
£000
2,187
15,622
17,463
143,718
2022
£000
29,949
21,420
6,344
57,713
2021
£000
1,852
15,093
15,579
117,917
2021
£000
27,483
13,176
-
40,659
Joint arrangement management fee income comprises fees that the Group charges into a joint arrangement for management services. The
release of joint venture deferred income relates to the unwind of the Group’s share of profit realised on the formation of the joint venture that is
held as deferred income on the balance sheet.
152 |
Government grant income in 2022 is in relation to Homes England’s 2021-2026 Affordable Homes Programme, secured by the Group in 2021.
The total grant secured of £84.0m will deliver 1,474 new homes over a five-year programme.
Exceptional expenses
Exceptional items are those which, in the opinion of the Board, are material by size and irregular 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.
2022 exceptional expenses related to the Combination with Countryside and an incremental fire safety provision.
2021 exceptional expenses related to one-off integration activities following the 2020 acquisition of Linden and Partnerships from Galliford Try and
an incremental fire safety provision.
Administrative expenses relating to the Combination with Countryside
Administrative expenses relating to the Acquisition of Linden and Partnerships
Cost of sales relating to legacy property fire safety
Interest on fire safety provision
Total exceptional expenses
2022
£000
56,864
-
96,113
900
153,877
2021
£000
-
6,481
5,744
-
12,225
On 11 November 2022, the Group completed the Combination with Countryside Partnerships PLC. The administrative expenses incurred in the
year ended 31 December 2022 in relation to this transaction include legal, financing and accounting advisory service fees, transaction insurance
costs (totalling £29.5m) and costs directly attributable to the integration and restructuring of the Group (totalling £27.4m). Further exceptional
costs are expected to be incurred in 2023 in relation to integration activities and further restructuring. Please refer to note 5.9 for further
discussion of the expected cash outflows relating to the Combination with Countryside.
On 3 January 2020, the Group completed the acquisition of Linden and Partnerships from Galliford Try PLC. In the year ended 31 December 2021,
the exceptional administrative expense solely related to the conclusion of system integration work and residual restructuring related to this
acquisition.
Exceptional expenses relating to legacy property fire safety result from ongoing investigations into properties developed where remediation
works may be required. The amount of the provision reflects our best estimate to carry out these remediation works. For further detail on this
provision and the expected cash outflows, please refer to note 5.9.
Tax on exceptional items in 2022 was £30.7m (2021: £2.3m).
Auditors’ remuneration
Fees payable to the Company’s auditors for the audit of the Company and Group’s annual accounts
Fees payable to the Company’s auditors and its associates for other services:
Audit of the accounts of subsidiaries
Audit-related assurance services
Non-audit fees
Fees charged to operating profit
2022
£000
1,246
759
60
1,096
3,161
2021
£000
408
572
50
1
1,031
Within the 2021 charge of £0.6m relating to the audit of the accounts of subsidiaries is a charge of £0.1m of incremental costs relating to the
financial year ending 31 December 2020.
2.2 Segmental reporting
All revenue and profits disclosed relate to continuing activities of the Group and are derived from activities performed in the United Kingdom.
The Chief Operating Decision Maker (CODM), which is the Board, notes that the Group’s main operation is that of a housebuilder and it operates
entirely within the United Kingdom.
Segmental reporting is presented in respect of the Group’s business segments reflecting the Group’s management and internal reporting structure
and is the basis on which strategic operating decisions are made by the Group’s CODM.
During the year, one development site was transferred from the Housebuilding to the Partnerships operating segment due to its closer alignment
with the Partnerships commercial proposition. The impact of the transfer on the adjusted gross margin for Partnerships was to increase it by 2bps
and the impact on adjusted gross margin for Housebuilding was to increase it by 2bps.
Following the Combination on 11 November 2022, the Board have identified three separate segments for 2022 having taken into consideration IFRS
8: “Operating Segments” criteria, Housebuilding, Partnerships and Countryside, since the CODM has reviewed information relating to the recently
acquired Countryside business separate to the existing Housebuilding and Partnerships businesses.
In 2023, the Countryside business will be integrated into the Housebuilding and Partnerships businesses and the Board will therefore be presented
with discrete financial information relating to only two segments from that point. Consequently, the Group anticipates having two separate segments
under IFRS 8, Housebuilding and Partnerships for reporting in 2023.
Vistry Group PLC | Annual Report 2022 | 153
The Housebuilding segment develops sites across England, providing private and affordable housing on land owned by the Group or the Group’s joint
ventures. Housebuilding offers properties under both the Bovis and Linden brand names.
The Partnerships segment specialises in partnering with housing associations and other public sector businesses across England, including London,
to deliver either the development of private, affordable and PRS housing on land owned by the Group or the Group’s joint ventures, or to provide
contracting services for development. The Partnerships segment currently operates under the Vistry Partnerships and Drew Smith brand names,
though the Drew Smith and Vistry Partnerships brand names will cease to be used once current sites complete and the segment will operate under the
Countryside Partnerships brand going forwards.
The Countryside segment represents the business acquired on 11 November 2022 and is a business which primarily partners with housing associations
and other public sector businesses across England, including London, to deliver the development of private, affordable and PRS housing on land owned
by the Group or the Group’s joint ventures or associate. The Countryside segment operates under the Countryside Partnerships brand name.
Segmental adjusted operating profit and segmental operating profit include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Central head office costs are allocated between the segments where possible, or otherwise reported within the separate
column for Group items together with acquisition related exceptional items and amortisation of acquired intangibles.
Segmental tangible net asset value (TNAV) includes items directly attributable to the segment as well as those that can be allocated on a reasonable
basis, with the exception of net cash or debt, retirement benefit assets / liabilities and tax balances payable / receivable.
Adjusted financial results include share of joint ventures and associate and exclude exceptional items. Adjusted revenue is stated exclusive of revenue
recognised by the Group on transactions with joint ventures and associate, no adjustment is made to adjusted gross margin as the impact is de minimis.
Adjusted gross profit is stated including other operating income. Refer to section 5.14 for the definitions of the financial alternative performance
measures used in this document.
Segmental financial performance
Year ended 31 December 2022
Revenue
Housebuilding
£000
Partnerships
£000
Countryside
£000
Group items
£000
Total
£000
1,737,944
854,504
136,984
Share of joint ventures‘ and associate‘s revenue
244,409
132,715
15,505
Elimination of revenue recognised on transactions with joint ventures
and associate
-
(48,824)
-
Adjusted revenue
1,982,353
938,395
152,489
-
-
-
-
-
-
-
-
-
2,729,432
392,629
(48,824)
3,073,237
413,729
69,300
96,113
57,713
636,855
294,908
108,268
45,461
91,123
19,061
4,990
33,001
23,876
10,553
4,778
-
836
464,493
156,195
16,167
244,343
45,131
91,123
2,757
57,507
18,855
12,932
11,480
(12,814)
(76,530)
212,506
4,556
5,974
2,828
-
68,542
42,948
152,977
-
17,065
383,354
100,774
544
(33,582)
451,090
23.4%
19.3%
28.2%
16.6%
10.7%
77.6%
10.6%
0.4%
0.2%
-
-
-
20.7%
14.7%
28.3%
Gross profit
Share of joint ventures‘ and associate’s gross profit
Exceptional cost of sales
Other operating income
Adjusted gross profit
Operating profit
Share of joint ventures‘ and associate’s operating profit
Exceptional items
Amortisation of acquired intangibles
Adjusted operating profit
Adjusted gross margin
Adjusted operating margin
Return on Capital Employed (see note 5.12)
154 |
Year ended 31 December 2021
Revenue*
Share of joint ventures‘ revenue
Elimination of revenue recognised on transactions with
joint ventures and associate *
Adjusted revenue
Gross profit
Share of joint ventures‘ gross profit
Exceptional cost of sales
Other operating income
Adjusted gross profit
Operating profit
Share of joint ventures‘ operating profit
Exceptional items
Amortisation of acquired intangibles
Adjusted operating profit
Adjusted gross margin
Adjusted operating margin
Return on Capital Employed (see note 5.12)
Housebuilding
£000
Partnerships
£000
Group items
£000
Total
£000
1,621,692
785,466
207,614
126,977
-
(48,116)
1,829,306
864,327
337,449
101,823
39,348
3,174
27,154
17,942
2,570
13,505
407,125
135,840
-
-
-
-
-
-
-
-
-
2,407,158
334,591
(48,116)
2,693,633
439,272
57,290
5,744
40,659
542,965
260,734
38,689
3,174
2,760
47,827
17,800
2,570
11,480
(23,147)
285,414
-
56,489
6,481
-
12,225
14,240
305,357
79,677
(16,666)
368,368
22.3%
16.7%
15.7%
9.2%
21.3%
328.8%
-
-
-
20.2%
13.7%
25.5%
*Revenue and cost of sales for 2021 have been restated in relation to trading with our joint ventures (see note 1.6).
Segmental financial position
As at 31 December 2022
Goodwill and intangibles
Tangible net assets excluding investments
in joint ventures and associate
Housebuilding
£000
Partnerships
£000
Countryside
£000
Group items
£000
Total
£000
275,255
381,923
603,529
-
1,260,707
1,235,675
87,404
130,208
163,854
1,617,141
Investments in joint ventures and associate
133,125
71,683
48,851
-
253,659
Net cash
-
-
314,719
(196,554)
118,165
As at 31 December 2021
Goodwill and intangibles
Tangible net assets excluding investments in joint ventures
Investments in joint ventures
Net cash
2.3 Dividends
The following dividends were paid by the Group:
Prior year final dividend per share of 40p (2021: 20p)
Current year interim dividend per share of 23p (2021: 20p)
Housebuilding
£000
Partnerships
£000
Group items
£000
Total
£000
278,381
396,937
-
675,318
1,222,002
151,080
54,782
23,984
28,786
1,305,570
-
175,064
-
-
234,454
234,454
2022
£000
88,747
50,111
138,858
2021
£000
44,340
44,369
88,709
A final dividend of 32 pence per share (cumulative amount: £162.3m) has been recommended and, subject to shareholder approval at the
AGM, will be paid on 1 June 2023 in respect of 2022.
Vistry Group PLC | Annual Report 2022 | 155
2.4 Earnings per share
Profit attributable to ordinary shareholders
Profit for the year attributable to equity holders of the parent
Profit for the year attributable to equity holders of the parent
(before exceptional items and amortisation of acquired intangibles)
Earnings per share
Basic earnings per share
Diluted earnings per share
Basic earnings per share (before exceptional items and amortisation of acquired intangibles*)
Diluted earnings per share (before exceptional items and amortisation of acquired intangibles*)
2022
£000
2021
£000
204,345
254,125
324,687
278,267
2022
86.5p
86.3p
137.5p
137.1p
2021
114.6p
114.1p
125.5p
124.9p
*Amortisation of acquired intangibles is the amortisation of brand names and customer relationships and contracts. Note 5.6 contains further detail. These metrics are both
calculated by applying the adjusted tax rate, which is defined as the reported tax rate, as adjusted for exceptional items, amortisation of acquired intangibles and significant prior
period adjustments.
Reconciliation from reported to adjusted (basic before exceptional items and amortisation of acquired intangibles) earnings per share
Reported basic
Exceptional items
Amortisation of acquired intangibles
Income tax credit on adjusting items and prior period tax adjustments
Adjusted basic
Adjusted diluted
2022
Earnings per share
(pence)
86.5p
137.5p
137.1p
2022
Earnings
£000
2021
Earnings per share
(pence)
2021
Earnings
£000
204,345
153,877
17,065
(50,600)
324,687
324,687
114.6p
254,125
12,225
14,240
(2,323)
278,267
278,267
125.5p
124.9p
Weighted average number of shares used as the denominator
Weighted average number of ordinary shares for the year ended 31 December
Adjustments for calculation of diluted earnings per share:
Options
Weighted average number of ordinary shares and potential ordinary shares
used as a denominator in calculating diluted earnings per share
2022
2021
236,161,867
221,788,132
586,475
998,999
236,748,342
222,787,131
Basic earnings per share
Basic earnings per ordinary share for the year ended 31 December 2022 is calculated on a profit attributable to shareholders of £204,345,000 (2021:
£254,125,000) over the weighted average of 236,161,867 (2021: 221,788,132) ordinary shares in issue during the year.
Diluted earnings per share
The calculation of diluted earnings per share for the year ended 31 December 2022 was based on the profit attributable to ordinary shareholders
of £204,345,000 (2021: £254,125,000) over the diluted weighted average ordinary shares potentially in issue for the year ended 31 December
2022 of 236,748,342 (2021: 222,787,131).
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.
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.
156 |
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, or recognised acquisition value. An overage is the amount a landowner may be entitled to
receive when completing the sale of a piece of land, provided specific conditions stipulated in the contract are met. 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 expense.
Options in respect of land are held at the lower of their net realisable value and cost and are reviewed for impairment at each reporting
date.
Should planning permission be granted and the option be exercised, the option’s 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.
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.
Group
Work in progress
Part exchange properties
Land held for development (net of provision)
Inventories
2022
£000
944,797
23,665
2021
£000
806,136
15,554
1,869,678
1,140,465
2,838,140
1,962,155
Inventories to the value of £792.3m were acquired with Countryside in November 2022, and £1,772.9m of inventories were recognised as
expenses in the year (2021: £1,440.5m). Part exchange properties of £40.5m (2021: £68.2m) were disposed of during the year for proceeds of
£41.8m (2021: £70.1m).
Movement on inventory provision
Balance at 1 January
- Utilised in the year
- Unutilised and released in the year
New provisions recognised on sites still held
Balance at 31 December
2022
£000
4,606
(3,435)
(1,171)
-
-
-
2021
£000
5,735
(2,132)
-
3,603
1,003
4,606
Land held for development of £1,869.7m (2021: £1,140.5m) includes land costs of £1,869.7m (2021: £1,140.5m) offset by provisions of nil
(2021: £4.6m).
3.2 Trade and other receivables
Trade and other receivables 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 IFRS 9: “Financial Instruments” 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 and other receivables 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.
Vistry Group PLC | Annual Report 2022 | 157
Trade receivables
Amounts recoverable on contracts
Amounts due from subsidiary undertakings
Other debtors
Prepayments
Other accrued income
Group
Company
2022
£000
2021
£000
2022
£000
2021
£000
46,904
41,973
261,522
140,822
-
-
-
-
-
-
421,096
231,359
60,644
18,646
13,995
12,787
66,375
27,192
-
-
-
-
-
-
Total current trade and other receivables
449,440
241,420
421,096
231,359
Trade receivables
Total non-current trade and other receivables
601
601
454
454
-
-
-
-
The above trade and other receivables are shown net of their expected credit loss allowances, which total £2.6m (2021: £1.2m). The Group’s
standard invoice payment terms are 30 days. Amounts due from subsidiary undertakings are repayable on demand.
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 2.0 % per annum unless the interest rate can be derived precisely from a relevant financial instrument. The Directors
consider that any expected credit loss allowance is immaterial on these balances.
Trade receivables which are past due but not impaired are not material in either year.
The Directors consider that the carrying amount of trade receivables approximates to their fair value.
3.3 Trade and other 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.
Non-current liabilities
Trade payables
Other creditors
Total non-current liabilities
Current liabilities
Trade payables
Payments on account
Taxation and social security
Amounts payable to joint ventures and associate
Other creditors
Accruals
Deferred income
Total current liabilities
Total trade and other payables
Group
2022
£000
Company
2021
£000
2022
£000
2021
£000
334,442
211,246
42
50
334,484
211,296
738,360
483,585
40,290
52,542
17,273
139,672
47,074
4,579
46,010
51,898
-
780
780
-
-
-
-
-
333,845
246,514
3,487
116,197
80,999
1,432,711
966,127
1,767,195
1,177,423
-
3,487
4,267
-
781
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.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
158 |
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 comprise 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 flow
Group
Company
2022
£000
2021
£000
676,757
398,673
3
41
676,760
398,714
2022
£000
344
-
344
2021
£000
344
-
344
Restricted cash of £0.4m (2021: £0.8m) on the Group balance sheet primarily relates to amounts that the Group paid into indemnity funds
as part of the NewBuy housing scheme which have not yet been released and is not included in the amounts above. The NewBuy housing
scheme is a mortgage indemnity scheme which launched in March 2012 and operated for 10 years. The scheme ended in 2022 with all monies
expected to be received back by June 2023. The purpose of the arrangement was to stimulate growth in the housing market and home
construction industry by effectively putting in place guarantees of up to 95% of the value of loans insured under the scheme.
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 accruals 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 year in which they arise. The revolving credit
facility, USPP Loan, the Term Loan and the Bilateral Term Loan are all held by the Company, Vistry Group PLC.
Interest rate profile of bank and other loans - Group
At 31 December
Revolving credit facility*
Term Loan**
USPP Loan***
Prepaid facility fee
Bilateral Term Loan****
Homes England development loan
Overdraft facility
Non-current borrowings
Bilateral Term Loan****
Prepaid facility fee
Current borrowings
Total borrowings
Available
facility
£000
Facility
maturity
Carrying
value 2022
£000
Carrying
value 2021
£000
Rate
SONIA +160-250bps
500,000
2026
-
SONIA +190-310bps
400,000
2025
400,000
-
-
403bps
100,000
2027
105,564
106,475
n/a
SONIA +265bps
n/a
n/a
ECRR +120-220bps
10,667
BoE Base +150bps
5,000
n/a
(4,191)
(312)
2023
2029
2025
-
50,000
7,284
8,097
-
-
1,015,667
508,657
164,260
SONIA +265bps
50,000
2023
50,000
n/a
n/a
n/a
(62)
-
-
-
50,000
1,065,667
49,938
558,595
164,260
* This facility commenced on 17 December 2021. This is a sustainability linked finance agreement with a margin ratchet of +/-2.5bps in addition to the rate above, dependent on
performance against sustainability KPIs. The facility includes two options to extend the agreement by one year, the first of which was exercised in November 2022, extending the
facility maturity to 16 December 2026.
** Term Loan agreement entered into on 5 September 2022 in order to finance the Combination with Countryside Partnerships PLC, ending 31 March 2025.
*** Carrying value is quoted including impact from the fair value of future interest payments.
**** This loan commenced on 17 March 2020. The maturity date for this facility was amended on 23 February 2021 from 17 March 2021 to 17 March 2023 and it was therefore
presented within non-current liabilities in 2021 and current liabilities in 2022. The available facility is displayed within the current borrowings row of the above table. This balance
has been repaid post year end, as disclosed in Note 5.16.
Vistry Group PLC | Annual Report 2022 | 159
The £500 million four-year revolving credit facility syndicate comprises eight banks, six of which form the syndicate for the £400m term loan.
The revolving credit facility, Term Loan, USPP Loan and Bilateral Term Loan all include a covenant package, covering interest cover, gearing and
tangible net worth requirements, which are tested semi-annually.
Interest rate profile of bank and other loans - Company
At 31 December
Revolving credit facility
Term Loan
USPP Loan*
Prepaid facility fee
Bilateral Term Loan
Overdraft facility
Available
facility
£000
Facility
maturity
Carrying
value 2022
£000
Carrying
value 2021
£000
Rate
SONIA +160-250bps
500,000
2026
-
SONIA +190-310bps
400,000
2025
400,000
-
-
403bps
100,000
2027
100,000
100,000
n/a
SONIA +265bps
n/a
n/a
BoE Base +150bps
5,000
n/a
(4,191)
(312)
2023
2025
-
-
50,000
-
Non-current borrowings
1,005,000
495,809
149,688
Bilateral Term Loan
Prepaid facility fee
Current borrowings
Total borrowings
*Carrying value held at cost in Company balance sheet.
Net cash is calculated as follows:
Cash and cash equivalents
Non-current bank and other loans
Current bank and other loans
Net cash
SONIA +265bps
50,000
2023
50,000
n/a
n/a
n/a
(62)
50,000
1,055,000
-
-
-
49,938
545,747
149,688
2022
£000
2021
£000
676,760
398,714
(508,657)
(164,260)
(49,938)
-
118,165
234,454
Net cash is stated exclusive of lease liabilities. Refer to note 5.5 for further information on lease liabilities.
The movement in net cash during the year was as follows:
Net cash at 1 January
Cash flow per cash flow statement
Repayment of bank and other loans
Drawdown of bank and other loans
Imputed interest on USPP loan
Prepaid facility fees capitalised
Prepaid facility fees amortised
Capitalised interest
Debt acquired with Countryside
Reclassification of Homes England development loan*
Cash & cash
equivalents
2022
£’000
Borrowings
2022
£’000
Cash & cash
equivalents
2021
£’000
Borrowings
2021
£000
398,714
(164,260)
340,988
(303,103)
278,046
-
57,726
-
-
-
-
-
-
-
-
-
993,562
(1,390,000)
911
4,831
(889)
(257)
(2,493)
-
-
-
-
-
-
-
-
-
370,000
(220,000)
884
500
(4,444)
-
-
(8,097)
Net cash at 31 December
676,760
(558,595)
398,714
(164,260)
*The Homes England development loan was reclassified from non-current trade and other payables in 2021.
Prepaid facility fees capitalised in the period relate to transaction costs incurred on the extension of the Group’s revolving credit facility and the
arrangement of the Term loan in accordance with IFRS 9 Financial Instruments.
160 |
4.3 Net financing (expenses) / income
Finance income relates to interest income earned on loans made to joint ventures and associate and pension finance credit.
Finance costs are included in the measurement of borrowings at their amortised cost to the extent that they are not settled in the year in
which they arise.
Finance expenses predominantly relate to interest charges on external borrowings, lease liabilities and deferred land creditors. The finance
costs and income associated with the time value of money on discounted payables and receivables are recognised within finance costs
and income as the discount unwinds over the life of the relevant item.
Exceptional finance costs relate to the unwinding of the discount on the Group’s long term fire safety provision.
The Group is required to capitalise borrowing costs directly attributable to business acquisitions and the construction and production of
qualifying assets, 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.
Net financing (expenses) / income recognised in the Group income statement
Interest income
Net pension finance credit
Finance income
Imputed interest on deferred term land creditors
Interest on lease liabilities
Exceptional interest on fire safety provision
Bank, commitment fees and other interest
Finance expenses
Net financing (expenses) / income
4.4 Capital and reserves
Equity instruments
Note
5.10
5.5
2.1
2022
£000
13,693
854
14,547
(7,085)
(1,408)
(900)
(17,383)
(26,776)
(12,229)
2021
£000
22,930
132
23,062
(5,118)
(905)
-
(12,908)
(18,931)
4,131
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. Where there is a bonus share
issue the nominal value of the shares are deducted from reserves and recognised within share capital.
Own shares held by ESOP trust
Transactions of the Group-sponsored employee stock ownership plan (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
2022
Number of
shares
2022
Issued capital
£000
2022
Share premium
£000
2021
Number of
shares
2021
Issued capital
£000
2021
Share premium
£000
222,306,264
111,154
361,081
222,253,123
111,127
360,657
Cancellation of shares
(2,556,968)
(1,278)
Shares issued as consideration
127,447,399
63,722
14,479
7
Costs of issuing equity
-
-
(365)
85
-
-
53,141
-
-
-
27
-
-
-
424
-
-
-
In issue at 31 December - fully paid
347,211,174
173,605
360,801
222,306,264
111,154
361,081
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 share premium account is added to when any authorised shares are issued above nominal value.
Vistry Group PLC | Annual Report 2022 | 161
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.
The opening balance of £3.4m on the own shares held reserve represented a holding of 437,133 shares. During 2022 the Group did a share buy
back and repurchased 4,056,968 shares at a cost of £35.2m, of which 2,556,968 shares at a total cost of £22.4m were subsequently cancelled
(2021: nil). In addition to this 59,063 shares were awarded for exercises under the Group’s long- term incentive (2021: 464,800 shares). As part
of the Combination, a further trust was acquired holding a total of 251,184 Vistry shares. The closing balance of £17.4m on the own shares held
reserve represents a holding of 2,129,254 shares.
Merger reserve
The opening balance of £823.5m on the merger reserve related to the 2020 acquisition of Linden and Partnerships. During 2022 the merger
reserve has increased by £774.3m in relation to the shares issued as consideration for the Countryside business, bringing the closing merger
reserve at 31 December 2022 to £1,597.8m.
Share buy back
During the year ended 31 December 2022, the Group repurchased 4,056,968 shares at a cost of £35.2m of which 2,556,968 shares at a total cost
of £22.4m were cancelled. £1.3m relates to capital redemption, which is held in the capital redemption reserve.
4.5 Financial risk management
Group
The Group seeks to manage its capital in such a manner that it safeguards its ability to continue as a going concern and to fund its future
development. In continuing as a going concern, the Group 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 197.
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. For the majority of the year, the Group operated at gearing levels similar to or better than
those in 2021, which in turn were significantly improved on 2020 as strong cash generation was used to pay down the debt taken on as part of
the acquisition of Linden and Partnerships made at the beginning of 2020. New debt has been taken on in order to finance the Combination with
Countryside Partnerships PLC resulting in a lower net cash position at December 2022 compared to December 2021.
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 receivables or payables 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 and all financial
assets and liabilities are denominated in Pounds sterling, there is no material currency risk.
a. Interest rate risk
Exposure to interest rate risk arises in the normal course of the Group’s business. 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 instruments 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 2022, a general increase of one percentage point in interest rates applying for the full year would
equate to £2.5m (2021:£1.6m) of additional interest expense in 2022.
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 or land. There are certain categories of revenue where this is not the case: for instance, affordable housing and partner delivery
revenues. The Group also makes loans to its joint ventures and associate, exposing the Group to some credit risk.
For affordable housing and partner delivery revenues, the Group collects cash at regular intervals in line with build progress in order to minimise
its credit risk. The total amount outstanding on affordable and partner delivery revenues was £308.4m at the year-end (2021: £182.8m). The
Group retains these outstanding balances as trade and other receivables.
162 |
The Group’s trade and other receivables are secured against the following:
Second charge against property
Unsecured
2022
£000
454
2021
£000
454
449,587
240,259
450,041
240,713
The Group also has credit exposure through amounts recoverable from joint ventures and associate. These amounts relate to the funding
mechanism in place for any particular joint venture or associate to enable it to invest in land or work in progress. The Group’s credit risk is
limited by the fact that through our joint venture and associate equity ownership we retain title to our proportionate share of any assets held
by the joint venture and associate. There are limited occasions where debt advanced to joint ventures and associates is not proportionate to
the equity holding but this increased risk would be for the joint venture and associate partner as the Group limits its own proportion of debt
to a maximum of its percentage equity holding. Additionally, the Group performs regular credit assessments of our joint venture and associate
partners. The total amount outstanding from joint ventures and associate was £391.4m at the year end (2021: £308.2m).
In managing risk, the Group assesses the credit risk of its counterparties before entering into a transaction. This assessment is based upon
management knowledge, experience, and where possible independent assurance. 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.
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 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 56.
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 significant
estimates applied by management in these financial statements, including the valuation of land and work in progress.
Maturities of financial instruments - Group
31 December 2022
Non-derivative financial assets
Restricted cash
Trade and other receivables *
Cash and cash equivalents
Non-derivative financial liabilities
Bank and other loans
Long-term loans
Less than 6
months
£’000
6-12 months
£’000
Between 1-2
years
£’000
Between 2-5
years
£’000
Over 5 years
£’000
Total
contractual
cash flows
£’000
Carrying
amount
£’000
382
435,445
676,760
(51,725)
-
-
-
-
-
-
-
-
-
-
-
-
-
382
382
601
436,046
436,046
-
-
676,760
676,760
(51,725)
(49,938)
(15,175)
(15,175)
(30,350)
(524,035)
(7,710)
(592,445)
(508,657)
Trade and other payables **
(796,471)
(546,974)
(179,448)
(120,448)
(19,121)
(1,662,462)
(1,650,998)
Lease liabilities
(10,202)
(10,202)
(16,465)
(35,158)
(42,315)
(114,342)
(86,582)
Total net financial liabilities
239,014
(572,351)
(226,263)
(679,641)
(68,545)
(1,307,786)
(1,182,987)
*Trade and other receivables excluding prepayments which are not financial instruments
** Trade and other payables excluding deferred income which is not a financial instrument
Of the above financial assets and liabilities at 31 December 2022, £0.5m is linked to the UK housing market, and £1,182.5m is not linked to the
UK housing market. Land creditors, recognised within trade and other payables, and a USPP loan, recognised within long term loans, are held
at fair value. For all other financial instruments, there is no material difference between fair value and carrying value.
Vistry Group PLC | Annual Report 2022 | 163
31 December 2021
Non-derivative financial assets
Restricted cash
Trade and other receivables
Cash and cash equivalents
Non-derivative financial liabilities
Bank and other loans
Long-term loans
Less than 6
months
£’000
6-12 months
£’000
Between 1-2
years
£’000
Between 2-5
years
£’000
Over 5 years
£’000
Total
contractual
cash flows
£’000
Carrying
amount
£’000
217
217
241,420
398,714
-
-
-
-
-
(725)
(725)
(50,725)
-
-
-
-
344
454
-
-
778
778
241,874
241,874
398,714
398,714
(52,175)
(50,000)
(2,015)
(2,015)
(4,030)
(114,105)
(8,097)
(130,262)
(114,260)
Trade and other payables*
(799,492)
(89,674)
(149,647)
(53,222)
(12,691)
(1,104,726)
(1,096,424)
Lease liabilities
(7,936)
(6,958)
(6,165)
(10,105)
(3,631)
(34,795)
(33,051)
Total net financial liabilities
(169,817)
(99,155)
(210,567)
(177,432)
(23,621)
(680,592)
(652,369)
*Trade and other payables excluding deferred income which is not a financial instrument. This has been restated to exclude deferred income as it was included in error in the
2021 financial statements. This has reduced the trade and other payables balance within this disclosure by £81.0m.
Of the above financial assets and liabilities at 31 December 2021, £0.5m is linked to the UK housing market, and £651.9m is not linked to the UK
housing market.
Maturities of financial instruments - Company
31 December 2022
Non-derivative financial assets
Trade and other receivables
Cash and cash equivalents
Non-derivative financial liabilities
Bank and other loans
Long-term loans
Less than 6
months
£’000
6-12 months
£’000
Between 1-2
years
£’000
Between 2-5
years
£’000
Over 5 years
£’000
421,096
344
(51,725)
-
-
-
-
-
-
-
-
-
(15,015)
(15,015)
(30,030)
(523,075)
-
-
-
-
Total
contractual
cash flows
£’000
Carrying
amount
£’000
421,096
421,096
344
344
(51,725)
(49,938)
(583,135)
(495,809)
Trade and other payables
(3,487)
-
-
-
(780)
(4,267)
(4,267)
Total net financial liabilities
351,213
(15,015)
(30,030)
(523,075)
(780)
(217,687)
(128,574)
None of the above financial assets and liabilities at 31 December 2022 are linked to the UK housing market. The USPP loan is recognised within
long term loans, are held at fair value. For all other Company financial instruments, there is no material difference between fair value and carrying
value.
31 December 2021
Non-derivative financial assets
Trade and other receivables
Cash and cash equivalents
Non-derivative financial liabilities
Bank and other loans
Long-term loans
Less than 6
months
£’000
6-12 months
£’000
Between 1-2
years
£’000
Between 2-5
years
£’000
Over 5 years
£’000
Total
contractual
cash flows
£’000
Carrying
amount
£’000
231,359
344
-
-
-
-
(725)
(725)
(50,725)
-
-
-
(2,015)
(2,015)
(4,030)
(114,105)
-
-
-
-
231,359
231,359
344
344
(52,175)
(50,000)
(122,165)
(99,688)
(781)
(781)
(781)
(781)
56,582
81,234
Trade and other payables
-
-
-
-
Total net financial liabilities
228,963
(2,740)
(54,755)
(114,105)
None of the above financial assets and liabilities at 31 December 2021 are linked to the UK housing market.
164 |
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’ 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)
2022
2021
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
Between
3-4 years
£000
Between
4-5 years
£000
Due beyond
5 years
£000
667,357
678,823
359,848
179,448
37,605
53,182
29,661
19,079
414,254
422,555
205,546
149,490
25,335
18,926
9,945
13,313
Bank and other loans
Fair value is calculated by comparing the current contracted rates of interest to currently available market rates for a similar term debt and
credit risk. See note 4.2 for further details of loan facilities.
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 UK-adopted International Accounting Standards 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 excluding Residential Property Developer Tax
Residential Property Developer Tax
Adjustments for prior years
Deferred tax
Origination and reversal of temporary differences
Adjustments for prior years
Total income tax in income statement
Note
2022
£000
2021
£000
64,136
10,043
(19,558)
54,621
(17,903)
6,421
43,139
48,794
-
4,881
53,675
17,526
(5,790)
65,411
5.2
5.2
Vistry Group PLC | Annual Report 2022 | 165
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/deductible expenses
Other
Change in tax rate
Adjustments to the tax charge in respect to prior years
Residential Property Developer Tax
Total tax expense
2022
%
2022
£000
2021
%
2021
£000
247,484
47,022
5,284
19.0
2.1
(2.7)
(6,722)
0.1
0.2
275
374
(5.3)
(13,137)
4.1
17.4
10,043
43,139
319,536
60,712
(900)
-
-
6,508
(909)
-
19.0
(0.2)
-
-
2.0
(0.3)
-
20.5
65,411
The Group’s effective tax rate of 17.4% (2021: 20.5%) is lower than (2021: higher than) the current rate of 19.0% (2021: 19.0%) as a result of the
restatement of some deferred tax at the balance sheet date to 29.0% netted against prior year adjustments to the corporation tax computations
for earlier years. The Group does not have any open corporation tax enquiries with the tax authorities.
The Government made a number of budget announcements on 3 March 2021. These included confirming that the rate of corporation tax will
increase to 25.0% from 1 April 2023. This new law was substantively enacted on 24 May 2021. Deferred taxes at the balance sheet date have been
measured using these enacted tax rates and reflected in these financial statements.
For the financial year ended 31 December 2021, a tax deductible provision of £71.4m was recorded in total in the statutory financial statements of
Vistry Homes Limited and Vistry Partnerships Limited. This provision was recorded after the financial statements for the Group had been signed.
The Group financial statements for the year ended 31 December 2022 reflect this provision. There is no net impact on the total tax amount in
the Income Statement for both periods; however, the prior period adjustment and reversal in the current year is reflected in the current tax and
deferred tax amounts disclosed above.
Recognised directly in Group statement of changes in equity or in the Group statement of comprehensive income
Deferred tax relating to actuarial movements on pension schemes (Group statement of comprehensive income)
Deferred tax 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
Current tax relating to share-based payments (Group statement of changes in equity)
Deferred and current 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
2022
£000
2021
£000
2,399
(9,148)
(411)
77
1,988
(9,071)
4
322
1,992
(8,749)
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.
166 |
Current tax assets and liabilities
The current tax asset of £10.4m (2021: liability of £0.1m) arose as a result of the timing of when tax payments became due for that financial year.
Recognised deferred tax assets and liabilities are attributable to the following:
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*
Intangible assets*
Profit on sale of assets to joint ventures
Losses
Corporate Interest Restriction
Short Term Temporary differences
Tax assets / (liabilities)
Assets
Liabilities
Net
2022
£000
92
-
-
-
775
-
2021
£000
111
-
-
-
2022
£000
-
(12)
2021
£000
-
(15)
2022
£000
92
(12)
2021
£000
111
(15)
(305)
(394)
(305)
(394)
(9,590)
(11,330)
(9,590)
(11,330)
2,483
-
-
775
2,483
-
(291)
(11,658)
(291)
(11,658)
112,359
13,986
(27)
(23)
112,332
13,963
-
-
24,957
5,441
351
-
1
-
-
-
(131,931)
(31,605)
(131,931)
(31,605)
-
-
-
-
-
-
-
-
-
24,957
5,441
351
1
-
-
-
143,975
16,581
(142,156)
(55,025)
1,819
(38,444)
*2021 comparatives have been represented to disaggregate deferred tax balances held in relation to intangible assets.
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
Intangible assets
Profit on sale of assets to joint ventures
Losses
CIR
Short Term Temporary differences
Movement in temporary differences
Recognised
from
Combination
£000
Recognised
in income
£000
Recognised
in equity
and other
income
£000
Balance
1 Jan 2022
£000
111
(15)
(394)
(11,330)
2,483
35
-
-
349
158
(11,658)
1,605
13,963
99,884
(31,605)
(101,240)
1
-
-
-
-
24,940
730
332
(1,008)
2,399
(9,590)
(54)
3
89
-
-
-
(1,455)
9,762
(1,515)
914
(1)
17
4,711
19
(411)
-
-
-
-
-
-
-
Balance
31 Dec 2022
£000
92
(12)
(305)
775
(291)
112,332
(131,931)
-
24,957
5,441
351
1,819
(38,444)
26,793
11,482
1,988
Vistry Group PLC | Annual Report 2022 | 167
Group
Property, plant and equipment
Trade payables
Available for sale financial assets
Employee benefits - pensions
Employee benefits - share-based payments
Provisions
Inventories*
Intangible assets*
Profit on sale of assets to joint ventures
Movement in temporary differences
Balance
1 Jan 2021
£000
(17)
(15)
(399)
(1,724)
841
(7,059)
17,459
(26,725)
2
Recognised
in income
£000
Recognised
in equity and
other income
£000
Balance
31 Dec 2021
£000
128
-
5
(458)
1,565
(4,599)
(3,496)
(4,880)
(1)
-
-
-
111
(15)
(394)
(9,148)
(11,330)
77
2,483
-
-
-
(11,658)
13,963
(31,605)
1
(17,637)
(11,736)
(9,071)
(38,444)
*2021 comparatives have been represented to disaggregate deferred tax balances held in relation to intangible assets.
Unrecognised deferred tax assets and liabilities
For the period ended 31 December 2022, the Group has £8.0m (2021: £nil) of temporary differences upon which no deferred tax has been
recognised.
Factors affecting future tax charge
The UK corporation tax rate is 19% and the rate increase to 25% from 1 April 2023 was substantively enacted on 24 May 2021. The deferred tax at
31 December 2021 was calculated based on the rate of 25% however the deferred tax at 31 December 2022 has been calculated at the rate that it
is expected to unwind.
In the Spring Budget 2022, the UK Government announced a consultation on the introduction of the Residential Property Developer Tax (RPDT)
from 1 April 2022, at a rate of 4% on profits. This new tax was substantively enacted on 2 February 2022.
Employee benefits
The Group recognises the deficit or surplus on its defined benefits pension scheme under the requirements of IAS 19 (Revised): “Employee benefits”.
This has generated a surplus of £34.3m (2021: surplus of £45.3m). As at 31 December 2022, a deferred tax liability of £9.6m (2021 tax liability:
£11.3m) was recognised.
5.3 Directors and employees
The monthly 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:
Average staff numbers - Group
Average staff numbers
The Company had no employees during 2022 (2021: nil).
A breakdown of staff numbers split by type of role is included on page 38.
Personnel expenses - Group
Wages and salaries
Social security costs
Contributions to defined contribution plans
Expenses related to defined benefit plans
Equity-settled share-based payments
Personnel expenses
2022
3,544
2021
3,143
2022
£000
2021
£000
235,870
180,574
29,285
10,168
1,432
6,337
20,861
8,435
1,494
4,543
283,092
215,907
The aggregate remuneration for the Group’s Directors during 2022 was £6.2m (2021: £5.5m), which is shown in further detail on pages 98 to 123
of the remuneration report. The Company had no personnel expenses during 2022 (2021: nil).
The highest paid Director is the Chief Executive Officer, details of whose remuneration is provided on page 114 in the Directors’ remuneration report.
168 |
Share-based payments
The Group has applied the requirements of IFRS 2: “Share-based payments”.
The Group issues equity-settled share-based payments to certain employees in the form of share options over shares in the 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
2022
2021*
Average
exercise price
in £ per share
option
-
-
-
-
-
Share
options
000
2,361
1,185
(416)
(59)
3,071
Average
exercise price
in £ per share
option
-
-
-
-
-
*2021 has been restated to correctly reflect the opening position, movements in the period, and closing position on LTIPs.
Executive and other share options
At 1 January
Lapsed
Exercised
At 31 December
Deferred Bonus Scheme
At 1 January
Granted
Lapsed
Exercised
At 31 December
Save As You Earn
At 1 January
Granted
Acquired during the Combination
Lapsed
Cancelled
Exercised
At 31 December
2022
2021
Average
exercise price
in £ per share
option
Share
options
000
Average
exercise price
in £ per share
option
-
-
-
-
-
-
-
-
8.53
8.53
8.53
-
2022
2021
Average
exercise price
in £ per share
option
Share
options
000
Average
exercise price
in £ per share
option
-
-
-
-
-
-
139
-
-
139
-
-
-
-
-
2022
2021
Average
exercise price
in £ per share
option
5.47
8.30
6.24
5.96
6.56
6.36
5.89
Share
options
000
1,790
344
562
(61)
(265)
(14)
2,356
Average
exercise price
in £ per share
option
5.03
8.15
-
5.56
7.52
8.46
5.47
Share
options
000
1,945
1,089
(400)
(273)
2,361
Share
options
000
20
(9)
(11)
-
Share
options
000
-
-
-
-
-
Share
options
000
1,664
364
-
(143)
(52)
(43)
1,790
Out of the 5,566,000 outstanding options (2021: 4,151,000), 513,000 options (2021: 940,000) were exercisable. Save As You Earn options
exercised in 2022 resulted in 14,000 shares (2021: 43,000) being issued at a weighted average share price of £6.36 each (2021: £8.46 each).
Vistry Group PLC | Annual Report 2022 | 169
Expiry date and exercise price of share options outstanding at the end of the year
Long Term Incentive Plan
Expiry date
28/02/2022
26/02/2023
20/08/2023
25/02/2024
16/08/2026
02/05/2027
08/09/2027
05/03/2028
04/03/2029
02/03/2030
08/03/2031
09/09/2031
04/03/2032
Exercise price in
£ per share
option
2022
Share options
000
2021*
Share options
000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
4
-
245
44
73
133
654
837
27
1,050
3,071
-
-
4
4
-
289
44
73
308
662
950
27
-
2,361
Expiry date
04/04/2024
Exercise price in
£ per share
option
2022
Share options
000
2021
Share options
000
-
-
139
139
-
-
Expiry date
24/09/2021
23/09/2021
23/09/2023
01/12/2022
01/12/2024
01/06/2024
01/06/2026
01/12/2024
01/12/2026
01/02/2024
01/02/2026
01/12/2025
01/12/2027
Exercise price in
£ per share
option
2022
Share options
000
2021
Share options
000
6.12
9.06
9.06
9.30
9.30
4.68
4.68
8.15
8.15
6.97
6.03
8.30
8.30
3
-
7
-
6
946
293
199
54
123
428
242
55
14
-
9
45
6
1,068
326
260
62
-
-
-
-
2,356
1,790
Grant vest
2012-15
2013-16
2013-16
2014-17
2016-19
2017-20
2017-21
2018-21
2019-22
2020-23
2021-24
2021-24
2022-25
*2021 has been restated to correctly reflect the opening position.
2022 Deferred Bonus Scheme
Grant vest
2022-24
Save As You Earn
Grant vest
2017-22
2018-21
2018-23
2019-22
2019-24
2020-23
2020-25
2021-24
2021-25
2022-23
2022-25
2022-25
2022-27
170 |
The weighted average fair value of the options granted during the year determined using the Monte Carlo model was £5.40 per option
(2021: £7.10). The significant inputs into the model were a weighted average share price of £9.56 (2021: £10.19) at the grant date, the
exercise price shown in the table on the previous page, volatility of 46% (2021: 43%), an expected option life of 5 years (2021: 5 years) and
an annual risk-free rate of 1.32% (2021: 0.36%). 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
Save As You Earn share options
Total expense recognised as personnel expenses
2022
£000
4,953
1,384
6,337
2021
£000
3,430
1,113
4,543
Information relating to the remuneration of Directors appears in the Directors’ remuneration report on pages 98 to 123.
The non-executive Directors and the executive leadership team as shown on pages 6 and 70 are considered to be the only key management
personnel.
A summary of key management remuneration is as follows:
Short term employee benefits
Compulsory social security contributions
Contributions to defined contribution plans
Share-based payment expenses
Key management remuneration
2022
£000
6,074
972
10
2,187
9,243
2021
£000
4,354
1,052
17
1,873
7,296
*The remuneration of key management personnel has also been restated for the year ended 31 December 2021 to reflect all elements of remuneration required under IAS 24 and to only reflect the
executive leadership team and executive directors. This has resulted in a correction to increase short term employee benefits by £1.4m, increase compulsory social security contributions by £0.1m and
reduce share-based payment expenses by £1.5m.
The above table reflects remuneration only for the period in which the individuals were key management personnel during the year.
Details of the equity settled share-based schemes are set out below.
Long Term Incentive Plan
A long-term incentive plan for executive Directors and senior executives was approved by shareholders at a General Meeting in December
2019. The first grant of awards under this plan was made in 2020. Details of the vesting conditions of these awards are laid out in the Directors’
remuneration report on pages 98 to 123.
Save As You Earn share options
The Vistry Group PLC Save As You Earn Option Scheme was established in 2007 and renewed in 2017. As part of the Combination the Group
offered replacement options for two SAYE schemes which were granted by Countryside in 2020 and 2022.
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.
Deferred Bonus Plan
The Deferred Bonus Plan was approved and implemented in 2022, with one third of the Executive Leadership Team 2022 bonus award
deferred into shares under the terms of the plan.
5.4 Property, plant and equipment
Plant, property, and equipment (PPE) is recorded at cost less accumulated depreciation. The sub-categories of PPE are depreciated as
follows:
• Freehold buildings on a 2% straight line basis;
• Leasehold improvements on a 10% straight line basis;
• Plant, machinery, and vehicles on a 33.3% reducing balance basis; and
• Furniture, fittings and equipment on a 25% reducing balance basis, other than computer equipment which is depreciated on a
straight-line basis over 3 years.
Vistry Group PLC | Annual Report 2022 | 171
Freehold
buildings
£000
Leasehold
improvements
£000
Furniture,
fittings and
equipment
£000
Plant,
machinery
and vehicles
£000
1,663
-
-
-
-
8
10,405
(1,052)
(139)
-
6,833
900
1,792
-
(17)
1,647
678
5,904
-
(121)
Total
£000
10,143
1,586
18,101
(1,052)
(277)
1,524
9,361
9,508
8,108
28,501
7
220
-
-
31
-
77
4,227
1,520
(13)
(67)
1,167
416
(19)
(10)
5,401
2,187
(32)
-
227
108
5,667
1,554
7,556
1,297
9,253
3,841
6,554
20,945
Freehold
buildings
£000
Furniture,
fittings and
equipment
£000
Plant,
machinery
and vehicles
£000
680
983
-
-
6,565
1,653
488
(266)
46
75
(35)
(46)
Total
£000
8,898
1,546
(301)
-
1,663
6,833
1,647
10,143
7
-
-
-
7
3,013
1,561
(233)
(114)
787
291
(25)
114
3,807
1,852
(258)
-
4,227
1,167
5,401
1,656
2,606
480
4,742
Cost
Year ended 31 December 2022
Opening balance
Additions
Additions acquired as a result of the Combination
Impairment
Disposals
Closing
Accumulated depreciation
Opening balance
Charge for the year
Disposals
Reclassifications
Closing
Net book value at 31 December
2022
Cost
Year ended 31 December 2021
Opening balance
Additions
Disposals
Reclassifications
Closing
Accumulated depreciation
Opening
Charge for the year
Disposals
Reclassifications
Closing
Net book value at 31 December
2021
172 |
5.5 Leases
The Group leases various offices, factories, 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.
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 the Group’s incremental borrowing rate, being the rate that the Group 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 the
income statement. 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.
The amounts recognised in the Group Balance Sheet were:
Additions acquired as a result of the Combination
23,304
32,487
Right-of-use assets cost
Year ended 31 December 2022
Opening balance
Additions
Impairment
Modifications
Disposals
Closing
Accumulated depreciation
Opening balance
Charge for the year
Disposals
Closing
Net book value at 31 December
Factories
£000
Office
properties
£000
Show home
properties
£000
Site cabins
£000
Office
equipment
£000
25,274
8,068
16,437
-
-
-
-
-
1,356
(4,933)
1,181
735
243
-
582
(2,175)
(3,963)
497
1
194
-
-
-
-
-
-
-
-
Motor
vehicles
£000
8,915
3,721
Total
£000
59,191
5,813
4,621
60,849
-
-
(4,933)
1,763
(2,791)
(8,929)
23,304
53,190
5,665
16,437
692
14,466
113,754
-
8,564
3,063
11,428
239
4,257
2,918
5,017
243
113
4,824
3,078
28,122
15,622
-
(1,332)
(3,019)
-
-
(2,856)
(7,207)
239
11,489
2,962
16,445
356
5,046
36,537
2022
23,065
41,701
2,703
(8)
336
9,420
77,217
Vistry Group PLC | Annual Report 2022 | 173
Year ended 31 December 2021
Opening balance
Additions
Modifications
Disposals
Closing
Accumulated depreciation
Opening balance
Charge for the year
Disposals
Closing
Net book value at 31 December
2021
Lease liabilities
Current
Non-current
Total lease liabilities
Reconciliation of movement in lease liabilities
Year ended 31 December 2022
Opening balance
Interest recognised
Payments made
Additions
Modifications
Disposals
Closing
Year ended 31 December 2021
Opening balance
Interest recognised
Payments made
Additions
Modifications
Disposals
Closing
Office
properties
£000
25,708
1,019
623
Show home
properties
£000
4,278
4,244
1,384
(2,076)
(1,838)
Site cabins
£000
17,129
-
(692)
-
25,274
8,068
16,437
5,599
4,384
(1,419)
8,564
1,902
2,724
(1,563)
6,646
4,782
-
3,063
11,428
Office
equipment
£000
533
-
(21)
(15)
497
259
(1)
(15)
243
Motor
vehicles
£000
8,743
1,894
132
(1,854)
8,915
3,474
3,204
(1,854)
4,824
Total
£000
56,391
7,157
1,426
(5,783)
59,191
17,880
15,093
(4,851)
28,122
16,710
5,005
5,009
254
4,091
31,069
2022
£000
2021
£000
14,756
71,826
86,582
Motor
vehicles
£000
4,165
176
14,215
18,836
33,051
Total
£000
33,051
1,408
(3,058)
(17,549)
3,955
4,389
-
6,902
64,230
117
(377)
(1,577)
Factories
£000
Office
properties
£000
Show home
properties
£000
Site cabins
£000
Office
equipment
£000
-
17,685
5,482
5,330
296
(818)
-
736
(4,716)
2,194
815
-
-
(856)
97
94
(3,490)
(5,296)
752
226
(698)
(344)
-
-
-
-
389
9
(171)
1
187
-
-
29,106
45,658
2,025
128
415
9,250
86,582
-
-
-
-
-
-
-
22,519
496
3,449
10,375
92
189
(5,564)
(3,191)
(5,234)
1,019
(129)
(656)
4,061
1,347
(276)
-
-
-
546
11
(168)
-
-
-
5,263
42,152
117
905
(2,493)
(16,650)
2,077
(799)
-
7,157
419
(932)
17,685
5,482
5,330
389
4,165
33,051
Additions as a result of the acquisition
28,813
30,615
Leasing arrangements
Minimum lease payments payable on the Group’s leases are as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Between 3 and 4 years
Between 4 and 5 years
Later than 5 years
2022
£000
2021
£000
20,404
16,465
13,625
11,778
9,755
42,315
14,915
6,165
4,380
3,178
2,547
3,631
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. In determining the lease term, Management considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only
included in the lease term if the lease is reasonably certain to be extended (or not terminated).
174 |
The amounts recognised in the Group Income Statement were:
Depreciation of right-of-use assets
Interest expense
Expense relating to short-term leases*
* Includes lease expenses related to plant and machinery.
2022
£000
15,622
1,408
22
2021
£000
15,093
905
12
The total cash outflow for leases including plant and machinery in 2022 was £18.9m (2021: £17.1m).
5.6 Intangible Fixed Assets
Intangible assets are recorded at cost or acquisition fair value, less accumulated amortisation.
Separately acquired IT software is initially capitalised at cost. Costs associated with maintaining software are recognised as an expense as
incurred.
Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the
Group are recognised as intangible assets where IAS 38: “Intangible Assets” criteria are satisfied. Capitalised development costs are initially
recorded within assets under construction and are then transferred to IT software and amortised from the point at which the asset is
ready for use. IT software is amortised on a straight-line basis over a period of 3 – 5 years.
Brand names and customer relationships and contracts acquired in a business combination are recognised at fair value at the acquisition
date. Brand names are amortised on a straight-line basis over a 25-year period. Customer relationships and contracts are amortised on a
straight-line basis over a period of 4 - 15 years.
All amortisation is recorded within the administrative expenses line of the income statement.
Cost
Year ended 31 December 2022
Opening balance
Additions
Additions acquired as a result of the Combination
Impairment
Disposals
Closing
Accumulated amortisation
Opening balance
Charge for the year
Closing
Net book value at 31 December
2022
Assets under
construction
£000
10
-
-
-
(6)
4
-
-
-
4
Site-related
licenses
£000
Brand
names*
£000
Customer
relationships
and contracts*
£000
Total
£000
767
21
-
-
-
37,300
117,299
157,213
-
-
43
103,264
245,838
349,102
(3,520)
-
-
-
(3,520)
(6)
IT Software
£000
1,837
22
-
-
-
1,859
788
137,044
363,137
502,832
897
370
1,267
27
28
55
3,000
1,938
4,938
25,480
15,127
40,607
29,404
17,463
46,867
592
733
132,106
322,530
455,965
The impairment of brand names in the year relates to the Drew Smith brand name as a result of its discontinuation following the Combination.
The impairment is recorded as an expectional expense in the income statement.
Cost
Year ended 31 December 2021
Opening balance
Additions
Disposals
Closing
Accumulated amortisation
Opening balance
Charge for the year
Disposals
Closing
Net book value at 31 December
2021
Assets under
construction
£000
IT Software
£000
Site-related
licenses
£000
67
749
(806)
10
-
-
-
-
4,494
-
(2,657)
1,837
1,760
1,312
(2,175)
897
-
767
-
767
-
27
-
27
Brand
names*
£000
Customer
relationships
and contracts*
£000
Total
£000
37,600
117,424
159,585
-
(300)
-
1,516
(125)
(3,888)
37,300
117,299
157,213
1,500
1,500
-
12,740
12,740
16,000
15,579
-
(2,175)
3,000
25,480
29,404
10
940
740
34,300
91,819
127,809
*Brand names and customer relationships and contracts are acquired intangibles, with their amortisation being treated as an adjusted performance measure.
Vistry Group PLC | Annual Report 2022 | 175
5.7 Goodwill
The Group’s goodwill relates to the Combination with Countryside Partnerships PLC in 2022, and the acquisition of the Linden and
Partnerships businesses from Galliford Try PLC in 2020.
Goodwill represents the excess of the consideration paid for the acquired businesses over the fair value of the assets and liabilities acquired,
including intangible assets recognised on acquisition. Goodwill has been allocated to the Group’s Cash Generating Units (CGUs) at the time of
the respective acquisitions based on the proportionate consideration and fair valued assets and liabilities.
The goodwill for each CGU is reviewed annually for impairment, or more regularly where there is a triggering event. If the carrying value of
the allocated goodwill was found to exceed the value in use calculated for any CGU, an impairment would be required. In the event of an
impairment, the goodwill of the appropriate CGU would be impaired first and then to the other assets proportionately. Any impairment loss
is recognised in the income statement and is not subsequently reversed.
Goodwill is monitored by Management at the level of the three operating segments identified in note 2.2.
A segment-level summary of the goodwill allocation is presented below:
As at 31 December 2022 (Group)
Housebuilding
£’000
Partnerships
£’000
Goodwill recognised on acquisition of Linden and Partnerships
228,328
319,181
Goodwill recognised on acquisition of Countryside
-
-
Total goodwill recognised on acquisitions
228,328
319,181
Countryside
£‘000
-
257,233
257,233
Total
£’000
547,509
257,233
804,742
Key assumptions used for value-in-use calculations
The Group tests whether goodwill has suffered any impairment on an annual basis, or more regularly where there are indicators of impairment.
For the 2022 reporting year, the recoverable amount for Housebuilding, Partnerships and Countryside CGUs were determined based on value-
in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial forecasts approved by
Management covering a five-year period from 31 December 2022.
The first year of cash flows in the value in use calculations were determined using the Group’s 2023 approved budget and the cash flows for the
second to fifth years were determined by using management’s best estimate. These cash flows have included estimated costs of meeting climate
change challenges as regulated by the Future Homes Standard. This is discussed further in the ‘Pricing for the cost of climate change’ section of
the annual report on page 51. Beyond this five-year period, the costs of meeting climate change challenges have been assumed to be absorbed in
either sales price increases or land acquisition discounts. Cash flows beyond the five-year period are extrapolated using a terminal growth rate of
1%. These growth rates are consistent with the UK long-term industry growth rate.
Management has determined the key assumptions as follows:
Assumption
Approach used in determining values
Sales volume
Sales price
Gross margin
Reflecting historical experience of economic downturns and expected volume growth for the respective CGUs based
on business strategy and expected market demand
Reflecting management’s expectation for property pricing based on local market conditions, demand and
product mix
Based on historical experience and expected gross margin of the respective CGUs, partly driven by the embedded
land bank margin
Land and inventory
investment
Expected cash investment in land and inventories to fund the future growth of the CGUs. This is based on the
historical experience of management and committed future land spend in addition to the planned strategy and
growth of the businesses
Pre-tax discount rates
Reflect specific risks relating to the relevant CGUs and nature of their income streams based on an estimated
weighted average cost of capital for each segment. The real pre-tax rate reflects the market participant levels of
gearing as well as current market assessments of the time value of money. A rate of 14.7% for Housebuilding, 14.1%
for Partnerships and 20.3% for Countryside is considered appropriate by the Directors
Recoverable amounts and impairment charges
The recoverable value of all three CGUs exceeds the carrying value of each CGU’s respective net asset base and therefore no impairment charge
was necessary in the period. At 31 December 2022 the value in use of the Housebuilding CGU exceeds net assets by £833.3m (2021: £636.4m),
the Partnerships CGU value in use exceeds net assets by £125.7m (2021: £344.4m) and for Countryside the CGU value in use exceeds net assets by
£233.0m.
176 |
Impact of possible changes in key assumptions
Management have considered the impact of a reasonably possible downside on each CGU’s goodwill impairment assessment. A reasonably
possible downside, as discussed within note 1.5 for margin recognition, is a 5.0% reduction in gross margin. If this reasonable possible
downside were to materialise, headroom for each CGU would be reduced as follows: Housebuilding by £88.3m, leaving headroom of £745.0m,
Partnerships by £68.8m, leaving headroom of £56.9m and Countryside by £127.6m, leaving headroom of £105.4m.
5.8 Investments
Fixed asset investments
The Group’s share of joint venture and associate results shown in the income statement reflect the share of joint venture and associate
results shown below which are then adjusted for fair value releases, unrealised losses and other accounting entries required to equity
account.
Investments in subsidiaries are carried at cost less impairment. The 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
and future profit generation. Joint ventures are those arrangements in which the Group has rights to the net assets of the arrangements
and are treated on an equity accounted basis in the Group’s financial statements.
The Group’s and Company‘s investments are set out in the table below:
Group
Company
2022
£000
2021
£000
2022
£000
2021
£000
Subsidiary undertakings
Interest in subsidiary undertakings’ shares at cost (100% ownership of ordinary shares)
-
-
2,498,302
1,354,921
Investments accounted for using the equity method
Interest in joint ventures and associate – equity
Interest in joint ventures and associate – loan
Other investments
Total investments
196,748
118,207
56,889
56,835
-
-
-
-
253,637
175,042
2,498,302
1,354,921
22
22
-
-
253,659
175,064
2,498,302
1,354,921
The Company’s investments relate primarily to those acquired with Countryside Partnerships PLC, as discussed in note 5.13, and the acquisition
of Linden and Vistry Partnerships in 2020.
The movement in investments during the year is as follows:
Beginning of the year
Acquired with Countryside Partnerships PLC
Investments in subsidiaries
Investments in joint ventures and associate
Profit for the year
Distributions paid
End of the year
Group
Company
2022
£000
2021
£000
2022
£000
2021
£000
175,064
145,153
1,354,921
1,350,378
61,617
-
2,642
47,207
-
-
16,909
29,991
(32,871)
(16,989)
-
-
1,143,381
4,543
-
-
-
-
-
-
253,659
175,064
2,498,302
1,354,921
Vistry Group PLC | Annual Report 2022 | 177
Share of joint ventures’ profit shown in the Group income statement is as follows:
Share of joint ventures‘ and associate gross profit
Share of joint ventures‘ and associate operating profit
Share of profit of joint ventures‘ and associate
2022
£000
69,300
68,542
47,207
2021
£000
57,290
56,489
29,991
At 31 December 2022 the Group held interests in joint ventures and an associate, all of which are incorporated in the United Kingdom, as set out
in note 5.17. Details of related party transactions with joint ventures are given in note 5.11.
In relation to the Group’s interest in joint ventures and associate, the assets, liabilities, income, and expenses are shown below:
Current assets excluding cash and cash equivalents
Cash and cash equivalents
Current liabilities
Non-current liabilities
Net assets of joint ventures and associate
Group share of net assets
Revenue
Gross profit
Operating profit
Finance costs
Income tax expense
Profit for the year
Total comprehensive income
Group share of results for the year for joint ventures and associate in a net asset position
Group share of results for the year for joint ventures and associate in a net liability position
Details of material joint ventures are as follows:
2022
£000
2021
£000
1,789,710
1,549,509
85,996
42,140
(1,238,623)
(743,361)
(155,488)
(619,471)
481,595
240,798
228,817
114,408
788,558
126,124
124,665
(41,640)
(4,730)
78,295
78,295
44,762
(5,123)
678,015
116,232
114,548
(42,761)
(2,188)
69,599
69,599
31,528
2,960
At 31 December 2022
Countryside Zest
(Beaulieu Park) LLP
Greenwich Millennium
Village Ltd
Acton Gardens LLP
Stanton Cross
Developments LLP
Linden (Basingstoke) Ltd
Carrying value of Group’s investment
£000
2,693
£000
27,203
£000
1,066
£000
38,750
£000
2,746
The Group’s material joint ventures have been updated in 2022 following the Combination with Countryside. Material joint ventures have been
identified based on their financial position and performance.
Countryside Zest (Beaulieu Park) LLP is a joint venture between Countryside Properties (Housebuilding) Limited and L&Q New Homes Limited to
develop and sell residential properties at Beaulieu Park, Chelmsford, Essex.
Greenwich Millennium Village Ltd is a joint venture between Countryside Properties (Housebuilding) Limited and Taylor Wimpey Developments
Limited to develop and sell residential properties at Greenwich Millennium Village in London.
Acton Gardens LLP is a joint venture between Countryside Properties (UK) Limited and L&Q New Homes Limited for acquisition and re-
development of land for building new homes together with associated infrastructure and community facilities.
Stanton Cross Developments LLP is a joint venture between Vistry Homes Limited and Riverside Regeneration Limited and develops and sells
residential property at Stanton Cross, Wellingborough.
Linden (Basingstoke) Ltd is a joint venture, ultimately owned between Vistry Linden Limited and Wates Group Limited and develops and sells
residential property in Basingstoke.
178 |
At 31 December 2021
Stanton Cross
Developments LLP
Opal (Silvertown)
LLP
Bovis Latimer
(Sherford) LLP
Vistry Latimer
Collingtree LLP
Carrying value of Group’s investment
£000
43,708
£000
10,296
£000
21,222
£000
20,981
Pembers LLP
£000
1,938
Opal (Silvertown) LLP is a joint venture between Vistry Linden Limited and Thames Valley Housing Association Limited which develops and sells
apartments at Brunel Street Works which is a large development site in Canning Town, London. The development also includes the construction
of a hotel and commercial units.
Bovis Latimer (Sherford) LLP is a joint venture between Vistry Homes Limited and Latimer Developments Limited which develops and sells
residential property at Sherford, Plymouth.
Vistry Latimer Collingtree LLP is a joint venture between Vistry Homes Limited and Latimer Developments Limited which develops and sells
residential property at Collingtree, Northampton.
Pembers LLP is a joint venture between Vistry Linden Limited and Aspect (Eastleigh) Limited which develops and sells residential property at
Pembers Hill Park at Fair Oak, Hampshire.
All of the Group’s material joint ventures are strategic investments which utilise the Group’s knowledge and expertise in the development of
residential property but also limit the Group’s exposure on large sites through a reduced equity holding.
Income statements – continuing operations
Countryside Zest
(Beaulieu Park) LLP
£000
Greenwich Millennium
Village Ltd
£000
Acton Gardens
LLP
£000
Stanton Cross
Developments LLP
£000
Linden
(Basingstoke) Ltd
£000
Revenue
Gross profit
Overheads
Operating profit
Interest income / (expense)
Profit before tax
Total comprehensive income
Joint venture result
Group’s share of profit / (loss) and
total comprehensive profit / (loss)
Distributions received by the Group
during the year
Balance sheets
Cash and cash equivalents
Inventories
Other current assets
Current assets
Current external borrowings
Other current liabilities
Current liabilities
Non-current external borrowings
Other non-current liabilities
Non-current liabilities
Net assets
Group share of net assets
16,456
4,982
(13)
4,969
33
5,002
5,002
5,002
2,501
6,657
2,911
(225)
2,686
23
2,709
2,709
2,709
1,355
6,158
1,536
(21)
1,515
-
1,515
1,515
1,515
758
25,294
-
15,383
1,267
68,030
31,590
100,887
-
(95,501)
(95,501)
-
-
-
5,386
2,693
16,158
54,306
-
70,464
-
(16,053)
(16,053)
-
-
-
54,411
27,206
780
48,342
2,938
52,060
-
(49,929)
(49,929)
-
-
-
2,131
1,066
*Stanton Cross Developments LLP’s external borrowings reflects amounts due to Homes England.
28,347
5,719
(14)
5,705
-
5,705
5,705
5,705
2,853
7,810
153
162,238
7,693
170,084
-
(46,597)
(46,597)
(39,587)*
-
(39,587)
83,900
41,950
62,032
12,612
(39)
12,573
(3,154)
9,419
9,419
9,419
4,710
-
586
46,217
3,601
50,404
-
(44,942)
(44,942)
-
-
-
5,462
2,731
Vistry Group PLC | Annual Report 2022 | 179
For the year ended 31 December 2021: Income statements – continuing operations
Stanton Cross
Developments LLP
£000
Opal (Silvertown) LLP
£000
Bovis Latimer
(Sherford) LLP
£000
Vistry Latimer
Collingtree LLP
£000
Pembers LLP
£000
Revenue
Gross profit
Overheads
Operating profit
Interest expense
Profit before tax
Total comprehensive income
Joint venture result
Group’s share of profit / (loss) and
total comprehensive profit / (loss)
28,270
7,027
(50)
6,977
-
6,977
6,977
6,977
3,489
120,159
11,144
(31)
11,113
(2,733)
8,380
8,380
8,380
4,190
Distributions received by the Group during
the year Group share of net assets/(liabilities)
-
-
Balance sheets
Cash and cash equivalents
Inventories
Other current assets
Current assets
Current external borrowings
Other current liabilities
Current liabilities
Non-current external borrowings
Other non-current liabilities
Non-current liabilities
Net assets / (liabilities)
Group share of net assets/(liabilities)
52
145,680
13,389
159,121
-
(25,693)
(25,693)
(39,614)*
-
(39,614)
93,814
46,907
447
81,489
2,869
84,805
-
(50,042)
(50,042)
-
(14,245)
(14,245)
20,518
10,259
13,598
3,347
(348)
2,999
(2,166)
833
833
833
417
-
2,429
64,818
-
67,247
(1,062)*
(58,961)
(60,023)
(7,035)
-
(7,035)
189
95
15,417
3,145
-
3,145
(2,594)
551
551
551
276
-
7,088
59,597
853
67,538
-
(69,136)
(69,136)
-
-
-
(1,598)
(799)
23,042
3,082
2
3,084
-
3,084
3,084
3,084
1,542
-
2,658
18,966
561
22,185
-
(17,470)
(17,470)
-
-
-
4,715
2,357
* Bovis Latimer (Sherford) LLP and Stanton Cross Developments LLP’s external borrowings reflect amounts due to Homes England.
Other than exposure related to fire safety remedial works on joint venture and associate properties, which are included within the Group’s
provision at 31 December 2022, to the extent that the Group’s share of cash outflows are probable and can be reliably estimated, the Group’s
joint ventures and associate have no significant contingent liabilities or commitments to which the Group is exposed. The Group has no significant
contingent liabilities in relation to its interest in the joint ventures and associate.
In addition to the interests in joint ventures disclosed above, the Group also has interests in a number of individually immaterial joint ventures and
an associate that are accounted for using the equity method.
Aggregate carrying value of individually immaterial joint ventures and associate
Aggregate amounts of the Group’s share of:
Profit from continuing operations
Total comprehensive income
2022
£000
2021
£000
181,201
76,897
-
35,030
19,812
35,030
19,812
180 |
5.9 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 2022
Additions acquired as a result of the Combination
Additional provisions made
Amounts utilised
Discount unwind
Unused provisions released
As at 31 December 2022
Legacy properties
fire safety
£000
Site-related
costs
£000
Restructuring
Provision
£000
Other
£000
Total
£000
25,212
191,826
96,113
(4,836)
900
-
7,162
8,143
1,486
(768)
-
(3,141)
-
-
7,009
39,383
8,737
208,706
17,030
2,659
117,288
-
-
-
(3,526)
(9,130)
-
900
(330)
(3,471)
309,215
12,882
17,030
14,549
353,676
Of the total provisions detailed above £72,912,000 is expected to be utilised within the next year (2021: £8,455,000).
As at 1 January 2021
Additional provisions made
Amounts utilised
Unused provisions released
As at 31 December 2021
Legacy properties
fire safety
£000
Site-related
costs
£000
20,885
13,437
5,744
380
Other
£000
6,079
1,837
Total
£000
40,401
7,961
(1,417)
(6,080)
-
(7,497)
-
(575)
(907)
(1,482)
25,212
7,162
7,009
39,383
On 10 January 2022 the Secretary of State at the Department for Levelling Up, Housing and Communities (“DLUHC”) wrote to residential
property developers describing its approach to the safety of multi-occupancy residential buildings of 11 metres or more. Since that time, the
Group has engaged with DLUHC and on 7 and 6 April 2022, respectively, Vistry Group and Countryside Partnerships signed the Government’s
proposed Fire Safety Pledge (“the Pledge”), entailing the following voluntary commitments, beyond their legal obligations, subject to
shareholder approval if required:
• Developers will meet the cost of remediating buildings currently proposed to be remediated via the Building Safety Fund (“BSF”) or the
Aluminium Composite Material (“ACM”) Remediation Fund; and
• Developers will take responsibility for performing or funding self-remediation works relating to life-critical fire safety issues on all buildings of
11 metres or more, built in the last 30 years, which the Group developed.
Subsequent to the Pledge, the updated Building Safety Bill obtained Royal Assent on 28 April 2022. This has extended the limitation period to
bring a claim under the Defective Premises Act from 6 years to 15 years prospectively and 30 years retrospectively. This extension may result in
additional liabilities for the Group, in excess of the provision recognised to date, that cannot currently be reliably estimated.
Further to this, during the period the British Standards Institution has issued Publicly Available Specification (“PAS”) 9980:2022, which replaces
previous guidance with the intention of encouraging a more proportionate response to dealing with critical fire safety issues. The Directors
note that it is not yet possible to anticipate how this new guidance will work in practice and what impact it will have on the scope and cost of
the remediation works, and therefore its effect on the provision recognised. The estimation of the provision for remediation costs for multi-
occupancy buildings is a key area of estimation uncertainty, as explained in Note 1.5).
On 13 March 2023 the Group became a signatory to the Developer Remediation Contract which they were committed to signing at the year
end, and as such this has been treated a post-balance sheet adjusting event. This contract clarifies the extent of the obligations of the Group
regarding fire safety remedial works.
During the year, the Group increased the value of the provision held to cover project management costs and expected remediation costs for
multi-occupancy buildings by £96.1m. This incremental provision reflects liabilities resulting from the Group becoming a signatory to Building
Pledge Safety Letter in April 2022 and the Group being committed to signing the Developer Remediation Contract at the year end date. The
Group further acquired a provision value of £191.8m following the combination with Countryside in November, which included the fair value of
the obligations relating to the Developer Remediation Contract at the acquisition date.
Vistry Group PLC | Annual Report 2022 | 181
At 31 December 2022 the Group now holds a net £309.2m provision for future obligations on remedial works pertaining to 304 buildings. The
provision has been calculated in line with IAS 37 – Provisions, Contingent Liabilities and Contingent Assets and management expects the majority
of this provision to be utilised over the next 6-8 years.
The provision has been recorded net of VAT. Any VAT chargeable on remedial sums where correctly charged is expected to be recoverable. Whilst
HMRC have not formally issued their guidance on the VAT treatment of remedial works, it has been indicated that such costs would either be
considered zero-rated, or overhead costs for VAT purposes, which would result in whole or substantial recovery. Should this change, the Group
will need to review recorded liabilities appropriately. Formal guidance from HMRC is expected after the Spring Statement.
The majority of contributions to the Building Safety Fund (“BSF”) are expected to be incurred in the next financial year, and this accounts for
£20.2m of the current provision at 31 December 2022. Other than BSF contributions, remediation spend is expected to be c.£35m in the next
financial year.
Site related cost provisions include estimated costs in relation to specific site related items including litigation.
Restructuring cost provisions include estimated costs relating to the restructure of the Group following the Combination with Countryside, such
as redundancy costs and costs relating to the closure of selected offices. This provision is expected to be utilised in full during 2023, resulting in a
£17.0m cash outflow.
Other provisions primarily relate to property related costs, such as dilapidation provisions, and expected legal and insurance claim obligations.
5.10 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 or surplus is calculated by estimating the amount of future benefit that employees have earned in return for their service in the
current and prior years (such benefits are 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 Credit 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 years 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.
The Schemes operate under trust law and are managed and administered by the Trustees on behalf of the members in accordance with the
terms of the Trust Deed and Rules and relevant legislation.
Pension cost
The Group is accountable for three UK registered trust-based pensions schemes, through the Group’s principal subsidiary company Vistry Homes
Limited. No additional defined benefit pension schemes were acquired with the Combination.
The Bovis Homes Pension Scheme is a 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). This scheme is closed to new members and future accrual.
The Galliford Try Final Salary Pension Scheme and The Kendall Cross (Holdings) Limited Pension & Life Assurance Scheme, both provide defined
benefits and both are closed to new members and future accrual.
The Trustees of each scheme are responsible for running their scheme in accordance with their scheme’s Trust Deed and Rules, which sets out
their powers. The Trustees of each scheme are required to act in the best interests of the beneficiaries of their scheme.
There are two categories of pension scheme members:
• Deferred members: former active members of the Scheme, not yet in receipt of a pension
• Pensioner members: in receipt of a pension
The Group is ultimately responsible for making up any shortfall in the scheme over a period of time agreed with the Trustee of each scheme. To
the extent that actual experience is different to that assumed, the Group’s contribution could vary in the future. The defined benefit obligation has
been calculated by approximately adjusting the results of the most recent triennial valuation performed by the Scheme Actuaries.
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 Credit Method.
The Trustee board for each Scheme is made up of member appointed, Group appointed and independent trustees.
The weighted average duration of the Schemes’ defined benefit obligation as at 31 December 2022 was 13 years.
182 |
Risks
Through the Schemes, the Group is exposed to a number of risks:
• Asset volatility: the Bovis Homes Schemes defined benefit obligation is calculated using a discount rate set with reference to corporate bond
yields, however each 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 Schemes’ defined benefit obligation, however this would be
partially offset by an increase in the value of the Schemes’ bond, insured annuity and liability driven instruments (LDI) holdings.
• Inflation risk: a significant proportion of the Schemes‘ 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). Through LDI and annuities a proportion of the assets are linked to
inflation, therefore an increase in inflation would also increase the assets.
• Life expectancy: if Scheme members live longer than expected, the Schemes benefits will need to be paid for longer, increasing the Scheme’s
defined benefit obligations. This would be offset to some extent by the annuity policies held.
• Liquidity: the majority of the Schemes‘ assets are liquid.
The Trustees and Group manage risks in the Schemes 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 Schemes invest in LDI assets, whose investment returns are expected to partially hedge interest rates and inflation movements.
The Group is recognising a surplus as the rules of each scheme state that it will be entitled to any surplus remaining if the Schemes are run
on until the last members exit the Schemes. It is anticipated that any surplus remaining would be either received as a refund or used as a
contribution to the Company’s Defined Contribution schemes.
Retirement benefit obligations
Fair value of plan scheme assets
Present value of funded obligations
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
(Losses) / gains recognised in the statement of comprehensive income
Net asset for defined benefit obligations at 31 December
Reconciliation to statement of comprehensive income
Actuarial gains: changes in financial assumptions
Actuarial gains: changes in demographic assumptions
Actuarial (losses) / gains: experience different from assumed
Total actuarial (loss) / return
Actual return on assets, less interest
2022
£000
2021
£000
266,991
428,331
(232,740)
(383,013)
34,251
45,318
2022
£000
45,318
4,733
574
(16,374)
34,251
2022
£000
144,410
7,910
(9,485)
142,835
(159,209)
2021
£000
9,077
3,765
(1,362)
33,838
45,318
2021
£000
15,755
1,162
13,414
30,331
3,507
Amount recognised in other comprehensive (expense) / income
(16,374)
33,838
The cumulative loss recognised in equity to date is £15.2m (2021 gain: £1.2m).
Vistry Group PLC | Annual Report 2022 | 183
Change in defined benefit obligation over the year
Defined benefit obligation at 1 January
Net interest cost
Past service credit
Actual benefit payments by the Schemes
Gain / (loss) on change of assumptions:
Actuarial (loss) / gain : experience differing from that assumed
Actuarial gain: changes in demographic assumptions
Actuarial gain: changes in financial assumptions
Defined benefit obligation at 31 December
Change in scheme assets over the year
Fair value of scheme assets at 1 January
Interest income
Actual benefit payments by the scheme
Actual Group contributions
Return on assets
Administration costs
2022
£000
2021
£000
(383,013)
(420,108)
(6,785)
1,152
13,071
(9,485)
7,910
144,410
(5,383)
-
12,147
13,414
1,162
15,755
(232,740)
(383,013)
2022
£000
2021
£000
428,331
429,185
7,639
(13,071)
4,733
(159,209)
(1,432)
5,515
(12,147)
3,765
3,507
(1,494)
Fair value of scheme assets at 31 December
266,991
428,331
The major categories of scheme assets are as follows:
Return seeking
Equities
Other
Bonds
Cash
Insured annuities
Liability driven instruments
Total market value of assets
2022
£000
2021
£000
46,414
134,321
46,948
10,005
56,828
106,796
266,991
67,647
24,911
81,037
120,415
428,331
Equities, bonds and liability driven investments (LDI) are held in pooled investment vehicles (PIVs), which are unquoted. The majority of the assets
held by these PIVs have a quoted price in an active market. Cash and insured annuities are unquoted assets.
The Schemes’ assets were invested in cash, bonds, equities, insured annuities and LDIs. The value of liabilities of a defined benefit pension scheme
is 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). The Schemes hold matching assets (bonds, insured
annuities and LDIs) which aim to hedge changes in the value of the Schemes’ liabilities. Changes in the discount rate and inflation would therefore
be partially offset by a change in the value of assets.
Expense recognised in the income statement
Administration costs
Past service credit
Net interest credit
(Income) / expense recognised in the income statement
184 |
2022
£000
1,432
(1,152)
(854)
(574)
2021
£000
1,494
-
(132)
1,362
Assumptions
Principal actuarial assumptions (for all defined benefit schemes) at the balance sheet date (expressed as weighted averages):
Group
Discount rate at 31 December
Inflation – RPI
– CPI
Remaining years of life expectancies
Men
Women
Sensitivity analysis
2022
%
4.8
3.2
2.8
2021
%
1.8
3.4
3.0
2020
%
1.3
3.0
2.5
Current age
at 43
Current age
at 63
25.5
28.2
24.2
26.8
The sensitivity analysis is illustrative only and is provided to demonstrate the degree of sensitivity of results to key assumptions. Generally,
estimates are made by re-performing calculations with one assumption modified and all others held constant.
Assumption
Discount rate
RPI and CPI inflation
Assumed life expectancy
Change in
assumption
Change in defined
benefit obligation
+0.5%pa / -0.5%pa
+0.5%pa / -0.5%pa
+1 year
-6% / +7%
+4% / -4%
+3%
Limitations of the sensitivity analysis
The Trustees of each scheme are required to carry out triennial actuarial valuations.
The most recent actuarial valuation for the Bovis Homes Pension Scheme was carried out as at 30 June 2022 by the Scheme Actuary. The
results have highlighted a technical funding surplus of £7.5m.
The most recent actuarial valuation for the Galliford Try Final Salary Pension Scheme (“GT scheme”) was at 30 June 2022 and was carried out
by the Scheme Actuary. The valuation highlighted a technical funding surplus of £7.3m.
The most recent actuarial valuation for the Kendall Cross (Holdings) Limited Pension & Life Assurance Scheme (“KC scheme”) was as at 30 June
2022 and was carried out by the Scheme Actuary. The valuation highlighted a technical funding deficit of £0.1m. Due to the quantum of the
deficit, it has been agreed that no additional contributions will be made.
All three Schemes are closed to accrual and therefore no further contributions are required to cover the cost of future service accrual.
Alongside the latest valuation the Group has also agreed the principles of a longer-term plan to bring the schemes to buy out status. At the
valuation date (30 June 2022), the Scheme Actuary estimated a buy-out shortfall (i.e. an estimate of the cash injection needed to secure
benefits with an insurer) of £12.8m for the GT Scheme, £0.9m for the Bovis Scheme and £0.5m for the KC Scheme. The shortfalls are expected
to be removed through investment returns only, although the Group has committed to making a payment of up to £2m to the Bovis Scheme
in the event of a transactable buy-out quotation being available.
Expected contributions to post-employment benefit plans for the year ending 31 December 2023 are £0.2m.
5.11 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 2022 were limited to those
relating to remuneration, which are disclosed on page 171 within the ‘Directors and employees’ note.
Mr. Greg Fitzgerald, Group Chief Executive, is non-executive Chairman of Ardent Hire Solutions Limited (“Ardent”). The Group hires forklift
trucks from Ardent.
Mr. Graham Prothero, former Chief Operating Officer who ceased to be a Director of the Group from 11 November 2022 but remained as an
employee until 31 December 2022, 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.
Ms. Katherine Innes Ker, Non-Executive Director, is Non-Executive Director of Forterra PLC. The Group incurred costs with Forterra PLC in
relation to the supply of bricks.
Mr. Ian Tyler, former non-executive Chairman who resigned in 2022, was also the Chairman of Affinity Water Limited and a non-executive
Director of BAE Systems PLC. The Group received water services and incurred car parking charges with these companies, respectively, during
the prior year.
Mr Stephen Teagle, Chief Executive of Vistry Partnerships, is the Chair of The Housing Forum. The Group paid for a subscription to The Housing
Forum during the year.
Mr Greg Fitzgerald is a shareholder and Director of Baker Estates Limited. Baker Estates Limited purchased 893,348 shares in the Group in
October 2022 at a price of £5.57 each on the open market.
Vistry Group PLC | Annual Report 2022 | 185
The total net value of transactions with related parties excluding joint ventures and associate have been made at arms length and were as follows:
Trading transactions
Ardent
Marshalls PLC
Forterra PLC
Affinity Water Limited
BAE Systems PLC
The Housing Forum
Expenses paid to related parties
Amounts payable to related parties
Amounts owed by related parties
31 Dec 2022
£000
31 Dec 2021
£000
31 Dec 2022
£000
31 Dec 2021
£000
31 Dec 2022
£000
31 Dec 2021
£000
5,319
5,598
1
67
4
-
13
16
579
31
1
-
774
91
48
2
-
-
426
-
115
-
-
-
-
-
-
-
-
-
-
-
-
1
-
-
Transactions between the Group and its joint ventures and associate are disclosed as follows:
Trading transactions*
Non-trading transactions
Sales to related parties
Interest income and dividend
distributions from related parties
31 Dec 2022
£000
31 Dec 2021
£000
31 Dec 2022
£000
31 Dec 2021
£000
134,817
142,606
-
-
-
-
46,564
40,183
* Trading transactions with joint ventures in the year ended 31 December 2021 has been restated within this note to include £100.6m of sales to Gallions LLP, Opal Silvertown LLP and Enfield
LLP.
Amounts owed by related parties
Amounts owed to related parties
31 Dec 2022
£000
31 Dec 2021
£000
31 Dec 2022
£000
31 Dec 2021
£000
Balances with joint ventures and associate
391,382
308,217
139,672
46,010
Sales to related parties including joint ventures and associate are based on normal commercial payment terms available to unrelated third parties,
without security. The loans made to joint ventures bear interest at rates of between 0.0% and 6.1% and are all repayable at the end of the
contract term; all balances with related parties will be settled in cash.
As at the reporting date, 3 (2021: 3) of the Group’s employees have a close family member on the Executive Committee. These individuals were
recruited through the normal interview process and are employed at salaries commensurate with their experience and roles. The combined
annual salary and benefits of these individuals is less than £0.4m (2021: £0.3m).
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.
186 |
5.12 Reconciliation of Return on Capital Employed performance measure
Return on Capital Employed (ROCE) is monitored to reflect the underlying performance, of the Group and, to better assess this performance,
exceptional items and the amortisation of acquired intangible assets in the adjusted operating profit measure are excluded.
Cash and retirement benefit assets and liabilities are all held within the reported Group items in Note 2.2 and are therefore excluded from the
ROCE calculations for the Housebuilding, Partnerships and Countryside operating segments.
The ROCE calculation for the Group is detailed below:
Adjusted operating profit (see note 2.2)
Opening total equity
Deduct: goodwill
Deduct: intangible assets
Deduct: net cash
Deduct: retirement benefit asset
Opening capital employed
Closing total equity
Deduct: goodwill
Deduct: intangible assets
Deduct: net cash
Deduct: retirement benefit asset
Closing capital employed
Average capital employed*
Group ROCE including share of joint ventures and associate
2022
£000
2021
£000
451,090
368,368
2,390,581
2,195,082
547,509
127,809
234,454
45,318
547,509
143,585
37,885
9,077
1,435,491
1,457,026
3,249,672
2,390,581
804,742
455,965
118,165
34,251
547,509
127,809
234,454
45,318
1,836,549
1,435,491
1,593,106
1,446,259
28.3%
25.5%
*Average of opening and closing capital employed for the year, adjusted for the pro-rated average capital employed by Countryside during the post-acquisition period.
The ROCE calculation for the Housebuilding segment is detailed below:
Adjusted operating profit (see note 2.2)
Opening total equity
Deduct: goodwill
Deduct: intangible assets
Deduct: net cash
Deduct: retirement benefit asset
Deduct: transfer of development**
Opening capital employed
Closing total equity
Deduct: goodwill
Deduct: intangible assets
Deduct: net cash
Deduct: retirement benefit asset
Closing capital employed
Average capital employed*
Housebuilding ROCE including share of joint ventures and associate
2022
£000
2021
£000
383,354
305,357
1,651,463
1,774,040
228,328
50,053
228,328
55,100
-
-
22,019
1,351,063
1,644,055
228,328
46,927
-
-
-
-
-
1,490,612
1,651,463
228,328
50,053
-
-
1,368,800
1,373,082
1,359,931
1,431,847
28.2%
21.3%
* Average of opening and closing capital employed for the year.
**During the year, one development site was transferred from the Housebuilding to the Partnerships operating segment due to its closer alignment with the Partnerships
commercial proposition. Opening capital employed has therefore been adjusted for FY22 in order that ROCE is not inappropriately skewed for either segment.
Vistry Group PLC | Annual Report 2022 | 187
The ROCE calculation for the Partnerships segment is detailed below:
Adjusted operating profit (see note 2.2)
Opening total equity
Deduct: goodwill
Deduct: intangible assets
Deduct: net cash
Deduct: retirement benefit asset
Add: transfer of development**
Opening capital employed
Closing total equity
Deduct: goodwill
Deduct: intangible assets
Deduct: net cash
Deduct: retirement benefit asset
Closing capital employed
Average capital employed*
Partnerships ROCE including share of joint ventures and associate
2022
£000
100,774
475,703
319,181
77,756
-
-
22,019
100,785
541,010
319,181
62,742
-
-
159,087
129,936
77.6%
2021
£000
79,677
377,367
319,181
88,485
-
-
-
(30,299)
475,703
319,181
77,756
-
-
78,766
24,234
328.8%
* Average of opening and closing capital employed for the year.
**During the year, one development site was transferred from the Housebuilding to the Partnerships operating segment due to its closer alignment with the Partnerships
commercial proposition. Opening capital employed has therefore been adjusted for FY22 in order that ROCE is not inappropriately skewed for either segment.
The ROCE calculation for the Countryside segment is detailed below:
Adjusted operating profit (see note 2.2)
Opening total equity at 11 November 2022 (see note 5.13)
Deduct: goodwill
Deduct: intangible assets
Deduct: net cash
Deduct: retirement benefit asset
Opening capital employed at 11 November 2022
Closing total equity
Deduct: goodwill
Deduct: intangible assets
Deduct: net cash
Deduct: retirement benefit asset
Closing capital employed
Average capital employed*
Countryside ROCE including share of joint ventures and associate
*Average of opening and closing capital employed for the period since acquisition.
2022
£000
544
1,137,044
257,233
349,102
222,209
-
308,500
1,097,307
257,233
346,296
314,719
-
179,059
243,780
0.2%
5.13 Business combinations
The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary,
is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at
the acquisition date. Acquisition costs are expensed as incurred as required by IFRS 3 “Business combinations”.
188 |
On 11 November 2022, the Group completed the Combination with Countryside Partnerships (“Countryside”) for a consideration of £1,137.0m.
The Combination has positioned the Group as the largest national housebuilder by volume, expanded the Group’s presence across the UK and
established the Group as the industry leader in the highly attractive, high-growth partnerships business. The acquisition was of 100% of the
share capital and control of Countryside Partnerships PLC and all of its subsidiaries, which are included in note 5.17. Details of the purchase
consideration, the net assets acquired and goodwill at 11 November 2022 are as follows:
Purchase consideration
Cash consideration
Shares in Vistry Group PLC issued
Replacement of SAYE schemes
Less: shares issued to acquired employee benefit trust
Total purchase consideration
£000
299,876
837,967
852
(1,651)
1,137,044
The share consideration included 127,447,399 Vistry Group PLC shares with nominal value of £0.50 per share and a fair value of £6.58, being the
opening share price on 14 November 2022, the first time the consideration shares could have been traded. £774.2m was recognised within the
merger reserve in relation to these consideration shares issued, being the excess of the share price on the date of issue over nominal value of
the shares.
The consideration related to the replacement of SAYE schemes is calculated based on the fair value of the various options granted to former
Countryside employees multiplied by the number of options and the estimated likelihood of vesting.
The provisional fair values of the assets and liabilities recognised as a result of the Combination are as follows:
Cash and cash equivalents
Property, plant and equipment
Right-of-use assets
Intangible assets
Investments
Inventories
Amounts owed by joint ventures and associate
Trade and other receivables
Trade and other payables
Borrowings
Lease liabilities
Provisions
Net deferred tax asset
Net identifiable assets acquired
Goodwill
Total net assets acquired
Provisional Fair value
11 November 2022
£000
224,702
18,101
60,849
349,102
61,617
792,329
108,380
122,108
(608,741)
(2,493)
(64,230)
(208,706)
26,793
879,811
257,233
1,137,044
In line with IFRS 3 Business Combinations the Group has the later of 12 months from the date of acquisition, or when all information is
available, to finalise the fair valuation of the acquired assets and liabilities. As such, the fair values presented within these financial statements
are provisional. Key balances where management continue to assess the fair value at acquisition date include intangible assets, inventories,
provisions, trade and other receivables, trade and other payables and the deferred tax thereon, however there are no individually significant
estimates remaining to be made. The acquisition accounting for these balances is incomplete at the date of these financial statements as
management continues to collate and review the related information.
Prior to performing the fair valuation exercise, the accounting policies of Countryside first had to be aligned to those of the Group. The policies
differ in the treatment of the capitalisation of certain personnel and pre-development costs, which has resulted in an £86m write down, net of
deferred tax, to Countryside’s assets at acquisition date. Simply put, on an assumption the level of activity remained the same as prior years,
the reduction in future cost of sales arising from the write-down of these assets is expected to be broadly offset by the increase in period costs
arising from the non-capitalisation of such costs going forward.
The provisional fair value exercise has allocated the purchase price of Countryside of £1,137.0m as follows: inventories of £792m, investments,
right of use assets and PP&E of £140m, intangibles such as brands and relationships of £349m and goodwill of £257m, less £209m of provisions
and £184m of net working capital and other items, including cash and deferred tax. The total fair value adjustments which will unwind to
underlying earnings is a credit of £107m and this will unwind predominantly in cost of sales over the next 6 to 8 years. One of the key fair value
adjustments included is in relation to inventories, where fair valuation resulted in a reduction to the opening balance of £192.6m.
The acquired intangibles include the Countryside Partnerships brand name, the customer relationships and the secured contracts of the
acquired business. The acquired intangible assets have estimated useful lives of between 5 and 25 years. Management were supported by an
external professional services organisation in the fair valuation of the acquired intangible assets and preparation of the purchase price allocation.
Vistry Group PLC | Annual Report 2022 | 189
The goodwill for the acquired business reflects intangible assets which do not qualify for separate recognition including the strong position in the
market and future prospects, as well as the assembled workforce and synergies that will be achieved as an enlarged business.
None of the goodwill is expected to be deductible for tax purposes.
There have been no further business combinations in 2022.
Other impacts of the Combination on the current period
(i) Acquisition-related costs
Acquisition-related costs of £56.9m are included within exceptional administrative expenses in the Group income statement.
(ii) Acquired receivables
The fair value of trade and other receivables in Countryside is £122,108k. The gross contractual amount for trade receivables due is £122,108k, this
full balance is expected to be collectible.
(iii) Revenue and profit contribution
The 100% owned development sites acquired with the Countryside business contributed reported revenues of £135.2m and reported an operating
loss of £11.9m to the Group for the period from 11 November 2022 to 31 December 2022. If the Combination had occurred on 1 January 2022, the
Group’s revenue would have been £1,386.5m higher for the year and operating profit would have been £202m lower for the year.
(iv) Consideration
Consideration was fully paid at 31 December 2022.
5.14 Alternative performance measures
The Group uses alternative performance measures which are not defined within UK-adopted International Accounting Standards. The Directors
use these alternative performance measures, along with UK-adopted International Accounting Standards measures, to assess the operational
performance of the Group. The Group includes the proportional contribution of profit and loss from joint ventures and associate in adjusted
measures to better reflect the trading performance of the Group. The Group also excludes the amortisation of intangibles generated through the
acquisition of Linden and Partnerships from Galliford Try PLC in 2020 and of Countryside in 2022 (refer to note 5.13) because these are non-cash
fixed costs set at the time of acquisition which, in the view of the Directors, are not indicative of the underlying trading performance of the business
in the period.
The inclusion of associate share of results within the below alternative performance measures reflects the acquisition of an investment in associate
as a result of the Combination with Countryside. The Group did not have any associates in 2021 and therefore the 2021 comparative is unchanged.
The definition and reconciliation of financial alternative performance measures used to UK-adopted International Accounting Standards measures is
shown below:
Adjusted revenue
Adjusted revenue is defined as revenue including share of joint ventures’ and associate revenue:
Revenue per Group income statement*
Share of joint ventures‘ and associate revenue
Elimination of revenue recognised on transactions with joint ventures and associate
Adjusted revenue
*Revenue for 2021 has been restated in relation to trading with our joint ventures (see note 1.6).
Adjusted gross profit
2022
£000
2021
£000
2,729,432
2,407,158
392,629
(48,824)
334,591
(48,116)
3,073,237
2,693,633
Adjusted gross profit is defined as gross profit including share of joint ventures’ and associate gross profit, plus other operating income and before
exceptional cost of sales:
Gross profit per Group income statement
Share of joint ventures’ and associate gross profit
Exceptional cost of sales
Other operating income
Adjusted gross profit
190 |
2022
£000
413,729
69,300
96,113
57,713
636,855
2021
£000
439,272
57,290
5,744
40,659
542,965
Adjusted operating profit
Adjusted operating profit is defined as operating profit including share of joint ventures’ operating profit, before exceptional expenses and
amortisation of acquired intangibles:
Operating profit per Group income statement
Share of joint ventures’ and associate operating profit
Exceptional expenses
Amortisation of acquired intangibles
Adjusted operating profit
Adjusted profit before tax
2022
£000
212,506
68,542
152,977
17,065
451,090
Adjusted profit before tax is defined as profit before tax before exceptional expenses and amortisation of acquired intangibles:
Profit before tax per Group income statement
Exceptional expenses
Amortisation of acquired intangibles
Adjusted profit before tax
2022
£000
247,484
153,877
17,065
418,426
2021
£000
285,414
56,489
12,225
14,240
368,368
2021
£000
319,536
12,225
14,240
346,001
5.15 Contingent liabilities
The Group is subject to various claims, audits and investigations that have arisen in the ordinary course of business. These matters include
but are not limited to employment and commercial matters. The outcome of all these matters is subject to future resolution, including the
uncertainties of litigation. Based on information currently known to the Group and after consultation with external lawyers, the Directors
believe that the ultimate resolution of these matters, individually and in aggregate, will not have a material adverse impact on the Group’s
financial condition. Where necessary, applicable costs are included within the cost to complete estimates for individual developments or are
otherwise accrued in the statement of financial position.
The Directors note that as Government legislation, regulation and guidance further evolves in relation to fire safety and required remediation
works, this may result in additional liabilities for the Group that cannot currently be reliably estimated. There may also be changes concerning
the use of materials currently undergoing fire safety tests instructed by product manufacturers. If such materials are no longer considered
safe, this could result in an increase in the number of buildings requiring remediation works as well as an increase in the estimated cost to
remediate the buildings currently provided for. We may however expect further Government intervention if such circumstances arise.
In respect of the remediation costs noted above, the Directors believe that the Group may be able to recover some of these costs through
insurance claims or, in the case of defective workmanship, from subcontractors or other third parties. However, any such recoveries are not
deemed to be virtually certain and therefore these contingent assets have not been recognised during the year.
No formal claims have been received by the Group relating to the Defective Premises Act (DPA). The Group cannot reliably estimate the
expected liabilities stemming from the DPA and as such no provision has been recognised at the balance sheet date. The Group maintains a
register of buildings constructed over the last 30 years; if the Group is formally notified of potentially defective works through communications
from building owners, leaseholders or managing agents on these buildings and the unfit for habitation test has been established, an
appropriate provision would be recognised.
5.16 Post balance sheet events
Since the year ended 31 December 2022 there have been several significant post balance sheet events, the first being the integration of the
acquired Countryside business into the Housebuilding and Partnerships operating segments. As a result, Vistry have identified two operating
segments for 2023, with no continuing Countryside segment. 2022 will be restated on this basis in future reports.
On 13 March 2023 the Group became a signatory to the Developer Remediation Contract which they were committed to signing at the year
end, and as such this has been treated an adjusting post-balance sheet event. This contract clarifies the extent of the obligations of the Group
regarding fire safety remedial works. Management assessed the quantum of the commitments and a further £24.7m has been provided in
relation to the Developer Remediation Contract.
The second significant post balance sheet event was the scheduled repayment of the £50m bilateral loan on 17 March 2023.
A final dividend of 32p per share has been recommended and, subject to shareholder approval at the AGM, will be paid on 1 June 2023 in respect of
2022.
5.17 Group undertakings
The subsidiaries, joint ventures and associate in which the Group has interests are all incorporated in the United Kingdom. In each case for
the majority of companies their principal activity is related to housebuilding and estate development but there are a small number of entities
whose role is to support housebuilding and estate development through corporate ownership. As at 31 December 2022, the Group had 205
wholly owned subsidiaries, plus two majority owned, which are listed on the following pages (with the company names as at 22 March 2023).
A number of subsidiaries in the Group have taken the exemption from the requirements of the Companies Act 2006 in relation to the audit
of accounts under section 479A of the Companies Act 2006 for the year ended 31 December 2022. These subsidiaries are marked with an
asterisk in the table below.
The Company will guarantee the debts and liabilities of the companies marked with an asterisk in accordance with section 479C of the
Companies Act 2006. The Company has assessed the probability of loss under the guarantee as remote.
Vistry Group PLC | Annual Report 2022 | 191
Registered
office
Country of
incorporation
Ownership interest in
ordinary shares
2022 %
2021 %
Registered
office
Country of
incorporation
Ownership interest in
ordinary shares
2022 %
2021 %
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
Northwick Park Developments LLP
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
-
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Vistry Linden Limited*
Vistry Partnerships (Wolverhampton) Limited*
Vistry Partnerships Investments Limited
Vistry Partnerships JV NO17 LLP
Vistry Partnerships Limited
Vistry Partnerships North Limited†
Vistry Partnerships Yorkshire Holdings Limited*
Vistry Partnerships Yorkshire Limited*
Vistry Pension Trustee Ltd†
Vistry Secretary Limited†
Vistry Ventures Limited
Westcountry Land (Perranporth) Ltd*
Bovis Homes Scotland Limited
Rissington Management Company Limited
Knights Mount Management Company Limited†
Vistry (Jersey) Limited
Alma Estate (Enfield) Management Company Limited
Beechgrove (Sunninghill) Management Company Limited
Berrywood Estates Ltd
Breedon Place Management Company Limited
Brenthall Park (One) Limited
Copthorn Holdings Limited
Countryside (UK) Limited
Countryside 26 Limited
Countryside 28 Limited
Countryside Cambridge One Limited
Countryside Cambridge Two Limited
Countryside Developments Limited
Countryside Four Limited
Countryside Partnerships Limited (formerly Countryside
Partnerships PLC)
Countryside Properties (Commercial) Limited
Countryside Properties (Housebuilding) Limited†
Countryside Properties (In Partnership) Limited
Countryside Properties (Joint Ventures) Limited
Countryside Properties
(London & Thames Gateway) Limited
Countryside Properties (Northern) Limited
Countryside Properties (Salford Quays) Limited
Countryside Properties (Southern) Limited
Countryside Properties (Special Projects) Limited
Countryside Properties (Springhead) Limited
Countryside Properties (Strategic Land) Limited
Countryside Properties (Uberior) Limited
Countryside Properties (UK) Limited
Countryside Properties (WGL) Limited
Countryside Properties (WHL) Limited
Countryside Properties (WPL) Limited
Countryside Properties Land (One) Limited
Countryside Properties Land (Two) Limited
Countryside Residential (South Thames) Limited
Countryside Residential (South West) Limited
Countryside Residential Limited
Countryside Seven Limited
Countryside Sigma Limited
Countryside Thirteen Limited
Countryside Timber Frame Limited
1
1
1
1
1
1
1
1
1
1
1
1
1
2
3
9
10
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
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
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
100
100
100
100
100
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Arlesey East LLP
Blythe Park LLP
Bovis Country Homes Limited
Bovis Homes (Broadbridge Heath) Limited*
Bovis Homes (Quest) Company Limited
Bovis Homes BVC Limited
Bovis Homes Cornwall Limited
Bovis Homes Eastern Limited
Bovis Homes Freeholds Limited
Bovis Homes Insulation Limited
Bovis Homes Limited
Bovis Homes Midlands & 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
Brunel Street Works Energy Services Limited*
Chartdale Limited*
Countryside Partnerships Southern No.1
Limited (formerly Drew Smith Homes Limited)*
Countryside Partnerships Southern Limited
(formerly Drew Smith Limited)*
Elite Homes (North West) Limited*
Elite Homes (Yorkshire) Limited*
Elite Homes Group Limited*
Emerald (Ealing) LLP†*
Enhance Interiors Limited†
Fairfield Redevelopments Limited*
Gigg Lane Limited
Graylingwell Energy Services Limited*
Greyhound Regeneration LLP
H.Newbury & Son (Builders) Limited
Hall Green JV LLP†
Hill Place Farm Developments Limited
Ink Homes Limited
Kendall Cross Limited†
Kenilworth Woodside Conference Centre
JV LLP
Kilbride Tavistock Limited*
Linden (Ashlar Court) Limited†
Linden (Beverley 2) LLP
Linden (Beverley 3) LLP
Linden (Beverley 4) LLP
Linden (Beverley 5) LLP
Linden (Beverley) LLP
Linden (Cawston) LLP
Linden (Highfields Caldecote) LLP
Linden (Houghton) LLP
Linden (St Bernard‘s) Limited†
Linden (Summerstown) LLP
Linden (Thurston) LLP
Linden Barnet LLP
Linden Cornwall Limited†
Linden Devon Limited†
Linden First Limited
Linden Guildford 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
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
192 |
Registered
office
Country of
incorporation
Ownership interest in
ordinary shares
2022 %
2021 %
Registered
office
Country of
incorporation
Ownership interest in
ordinary shares
2022 %
2021 %
Linden Holdings Limited†*
Linden Homes (Bath Road) LLP
Linden Homes (Blackberry Hill) LLP†
Linden Homes (Marksbury) LLP
Linden Homes (Sherford) LLP*
Linden Homes Chiltern Limited†
Linden Homes Eastern LLP†
Linden Homes South-East Limited†
Linden Homes Southern Limited†
Linden Homes Western Limited†
Linden JV No12 LLP
Linden JV No17 LLP
Linden JV No18 LLP
Linden JV No19 LLP
Linden JV No20 LLP†
Linden JVCo No8 Limited
Linden JVCo No9 Limited
Linden Limited*
Linden London (Hammersmith) Limited†
Linden London Developments Limited†*
Linden London LLP*
Linden Midlands Limited†
Linden North Limited†
Linden Partnerships Limited†
Linden Properties Western Limited
Linden South West Limited†
Linden St Albans LLP
Linden Wates (Hungerford) Limited†
Mountsorrel JV LLP
Nether Hall Park Open Space Management
Company Limited
Olive Farm LLP
Orchard Homes (Pitt Manor) Limited
Oxford Land Limited†
Page Johnson Properties Limited
Peel Hall JV LLP
R.T.Warren (Builders, St.Albans) Limited
Rasen Estates Limited†
Redplay Limited†
Redplay Partnerships Limited
Rosemullion Homes Limited
The Ricardo Community Foundation†‡
Unitpage Limited
Vista Portsmouth Limited*
Vistry Affordable Homes Limited*
Vistry Developments Limited
Vistry Homes Central Limited†*
Vistry Homes Limited
Vistry Limited
Vistry Linden Homes 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
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
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
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
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
†Denotes entities where the accounting reference date is not 31 December.
*Unaudited subsidiaries
‡ Company Limited by Guarantee
Dunton Garden Suburb Limited
Fresh Wharf Residents Management Company Limited
Harold Wood Management Limited
Hilborn Management Company Limited
Knight Strategic Land Limited
Mandeville Place (Radwinter) Management Limited
Marlowe Road Management Company Limited
Millgate (UK) Holdings Limited
Millgate Developments Limited
Mulberry Green Management Company Limited
New Avenue (Cockfosters) Management Company Limited
Newhall Land Limited
Newhall Resident Management Company Limited
Parklands Manor Management Company Limited
Skyline 120 Management Limited
Skyline 120 Nexus Management Limited
Springhead Resident Management Company Limited
Urban Hive Hackney Management Limited
Watersplash Lane Management Company Limited
Westleigh Construction Limited
Westleigh Homes Limited
Westleigh LNT Limited
York Road (Maidenhead) Management Limited
Allium Park Management Company Limited
Ashmere Resident (2) Management Company Limited
Ashmere Resident Management Company Limited
Barnwood Place (Smarden) Management
Company Limited
Beaulieu Park E (Chelmsford) Management Limited
Beaulieu Park M&N (Chelmsford) Management Company
Beaulieu Park O&P (Chelmsford) Management
Company Limited
Charlton Gardens Residents Management
Company Limited
Chatham Maritime Sector 15 Residential Man Co Ltd
Countryside Places for People (Cowley Hill) LLP
Countryside Properties Residential (ABC) Limited
Countryside Properties Residential (Chelmsford) Ltd
Countryside Properties Residential (Dartford) Limited
Dracan Village Residents Management Company Limited
Houghton Regis Parcel 8 Residents Management
Company Limited
Millfields (Hall Green) Management Company Limited
Moat Farm Management Company Limited
North West Quartet Estate Management
Company Limited
Oakhurst Residents Management Company Limited
Regency Grange Residents Management Company Limited
Rosewood (Maidstone) Management Company Limited
Saint Cloud Way Management Company Limited
Tattenhoe Park Residents Management Company Limited
The Burrows (Paddock Wood) Management Limited
The Paddocks Tye Green Management Company Limited
C.C.B.(Stevenage) Limited
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
6
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
67
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33
Vistry Group PLC | Annual Report 2022 | 193
Within the table on the previous page, the companies exempt from Audit are:
Registered
Office
Company
registration number
Country of
incorporation
2022 %
2021 %
Ownership interest in
ordinary shares
Bovis Homes (Broadbridge Heath) Limited
Bovis Homes North Whiteley LLP
Brunel Street Works Energy Services Limited
Chartdale Limited
Countryside Partnerships Southern No.1 Limited (formerly Drew Smith Homes Limited)
Countryside Partnerships Southern Limited (formerly Drew Smith Limited)
Elite Homes (North West) Limited
Elite Homes (Yorkshire) Limited
Elite Homes Group Limited
Emerald (Ealing) LLP
Fairfield Redevelopments Limited
Graylingwell Energy Services Limited
Kilbride Tavistock Limited
Linden Guildford Limited
Linden Holdings Limited
Linden Homes (Sherford) LLP
Linden Limited
Linden London Developments Limited
Linden London LLP
Vista Portsmouth Limited
Vistry Affordable Homes Limited
Vistry Homes Central Limited
Vistry Linden Homes Limited
Vistry Linden Limited
Vistry Partnerships (Wolverhampton) Limited
Vistry Partnerships Yorkshire Holdings Limited
Vistry Partnerships Yorkshire Limited
Westcountry Land (Perranporth) Ltd
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
08112950
OC424405
11923831
01792431
02969951
02433962
02297984
01530215
02781237
OC420245
04459094
07142726
07380791
06552658
04040970
OC384496
01108676
06270271
OC333207
11196519
06594096
02281005
02606856
03158857
08476225
06437711
03901222
09653572
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
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
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
At 31 December 2022 the Group held an interest in the following 117 joint ventures which have been equity accounted to 31 December 2022 and are
registered and operate in England and Wales.
The Directors have concluded that the group jointly controlled IIH Oak Investors LLP, Shoo 22 Limited and Gateshead Regeneration LLP during 2021,
despite holding only 26%, 38% and 25% of the voting rights, respectively. For IIH Oak Investors LLP this is because the Group is one of two partners in
the entity and a unanimous vote is required in respect of all key matters relating to the entity and to change this agreement. For Shoo 22 Limited and
Gateshead Regeneration LLP this is because the shareholding agreements in place provide joint control and rights to the net assets of the entities. All three
companies are equity accounted for and IIH Oak investors LLP and Shoo 22 Limited have immaterial net assets.
194 |
Registered
office
Country of
incorporation
Ownership interest
in ordinary shares
2022 %
2021 %
Registered
office
Country of
incorporation
Ownership interest
in ordinary shares
2022 %
2021 %
Belmont Street JV LLP
Beverley South Developments Limited†
Bishops Park Limited
Boorley Green LLP†
Bovis Homes Cambourne West LLP†
Bovis Latimer (Sherford) LLP
Crewe Lane Kenilworth JV LLP†
D R 4 Developments LLP†
Europa Way JV LLP†
Evolution (Saffron Walden) LLP†
Evolution (Shinfield) LLP†
Evolution Gateshead Developments LLP†
Evolution Morpeth LLP†
Evolution Newhall LLP†
Gateshead Regeneration LLP†
Glen Parva JV LLP†
Grange Walk LLP†
Heath Farm Lane LLP†
Kilnwood Vale LLP†
Lea Castle JV LLP†
Linden (Avery Hill) LLP†
Linden (Basingstoke) Limited
Linden (Battersea Bridge Road) LLP
Linden (Biddenham) LLP†
Linden (Brampton) LLP†
Linden (Enfield) LLP†
Linden (Hartfield Road) LLP†
Linden (Manse Farm) LLP†
Linden (Mowbray View 2) LLP†
Linden (Northstowe) LLP†
Linden (Rainham) LLP†
Linden (Sayers Common) LLP†
Linden (Vencourt) LLP†
Linden (York Road) LLP†
Linden and Dorchester Limited†
Linden and Dorchester Portsmouth Limited†
Linden Wates (Barrow Gurney) Limited
Linden Wates (Bricket Wood) Limited
Linden Wates (Cranleigh) Limited
Linden Wates (Dorking) Limited
Linden Wates (Horsham) LLP
Linden (Wates) Kempshott Limited
Linden Wates (Lovedean) Limited
Linden Wates (Ravenscourt Park) Limited
Linden Wates (Ridgewood) Limited
Linden Wates (Ringwood) LLP
Linden Wates (Royston) LLP
Linden Wates (Salisbury) LLP
Linden Wates (The Frythe) Limited
Linden Wates (Walberton) LLP
Vistry Wates (Walshes) LLP
Linden Wates (West Hampstead) Limited
Linden Wates (Westbury) Limited
Linden Wates Developments (Chichester)
Limited
Linden Wates Developments
(Folders Meadow) Limited
Linden/Downland Graylingwell LLP†
Littleport Developments LLP†
One Lockleaze LLP†
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
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
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
50
50
50
50
50
50
50
50
50
50
50
50
50
50
25
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
-
50
50
50
50
50
50
50
50
50
50
50
50
50
25
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
Opal (Earlsfield) LLP†
Opal (Silvertown) LLP†
Opal (St Bernard’s) LLP†
Opal Land LLP†
Pembers LLP†
Ramsden Regeneration LLP†
Sandymoor JV LLP†
Stanton Cross Developments LLP
Vistry Latimer Collingtree LLP†
Vistry Wates (Buckingham) LLP†
Vistry Wates (Leybourne) LLP†
Vistry Wates Finance LLP
Vistry Wates Holdings LLP
Vistry Wates Nominee Limited
West Bridgford JV LLP†
White Rock Land LLP†
Wilmington Regeneration LLP†
The Piper Building Limited†
IIH Oak Investors LLP
Gallions 2A Developments LLP†
Shoo 22 Limited†
Cedar House Securities Limited
Crest/Vistry (Epsom) LLP†
Linden Homes Westinghouse LLP†
Acton Gardens LLP
Bracknell Forest Cambium Partnership LLP
Brenthall Park (Commercial) Limited
Brenthall Park (Infrastructure) Limited
Brenthall Park (Three) Limited
Brenthall Park Limited
Bromley Regeneration (Calverley Close) LLP
Bromley Regeneration (Pike Close) LLP
Cambridge Road (RBK) LLP
Camden Development Partnership LLP
Countryside 27 Limited
Countryside Annington (Mill Hill) Limited
Countryside Clarion (Eastern Quarry) LLP
Countryside L&Q (North East Chelmsford) LLP
Countryside L&Q (Oaks Village) LLP
Countryside Maritime Limited
Countryside Neptune LLP
Countryside Places for People (Lower Herne) LLP
Countryside Properties (Accordia) Limited
Countryside Properties (Booth Street 2) Limited
Countryside Properties (Merton Abbey Mills) Limited
Countryside Zest (Beaulieu Park) LLP
Greenwich Millennium Village Limited
Mann Island Estate Limited
Marrco 25 Limited
Oaklands Hamlet Resident Management Limited
Peartree Village Management Limited
Westleigh Cherry Bank LLP
Linden Sovereign Brockworth LLP
Clapham Park (Metropolitan Countryside) LLP
Countryside Sigma Limited
Countryside Sovereign Swindon LLP
Kingsmere Estate Management Limited
Develop Warwickshire (Nominee) Limited
Develop Warwickshire LLP
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
3
4
11
12
13
14
15
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
16
1
16
16
16
16
16
16
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
26
50
38
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
39
50
50
50
50
50
50
50
50
50
50
75
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
26
50
38
50
50
50
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50
-
-
-
-
-
-
† Denotes entities where the accounting reference date is not 31 December.
Vistry Group PLC | Annual Report 2022 | 195
Notes to the financial statements continued
The Group holds 28.5% of the ordinary share capital with pro-rata voting rights in Countryside Properties (Bicester) Limited (the associate entity
referred throughout the document) , a company incorporated and domiciled in the UK, whose principal activity is the sale of serviced parcels of
land, and for segmental purposes is disclosed within Countryside. It is accounted for using the equity method. Countryside Properties (Bicester)
Limited has one wholly owned subsidiary, Kingsmere Estate Management Limited.
Significant holdings in undertakings other than subsidiary, joint venture and associate undertakings
Berkshire Land Limited
Bishop's Stortford North Consortium Limited†
Haydon Development Company Limited†
Oxfordshire Land Limited
† Denotes entities where the accounting reference date is not 31 December.
Registered office
Registered office
Country of incorporation
Ownership interest in ordinary shares
2022 %
2021 %
1
5
7
8
United Kingdom
United Kingdom
United Kingdom
United Kingdom
33
33
39
25
33
33
39
25
1
11 Tower View, Kings Hill, West Malling, Kent, ME19 4UY
9 Gateway House, 10 Coopers Way, Southend-on-Sea, Essex, SS2 5TE
2 C/o Gilliespie MacAndrew LLP, 5 Atholl Crescent, Edinburgh, EH3 8EJ
10 47 Esplanade, St Helier, Jersey, JE1 0BD
3 Cowley Business Park, High Street, Cowley, Uxbridge, Middlesex, UB8 2PL
11 Bruce Kenrick House, 2 Kellick Street, London, N1 9FL
4 1148 Mountview Court High Rd, London, N20 0RA
12 Duncan House Clipston Rd, Sibbertoft, Market Harborough,
5 Bath House, 6-8 Bath Street, Bristol, BS1 6HL
Leicestershire, LE16 9UB
6 Croudace House, Tupwood Lane, Caterham, Surrey, CR3 6XQ
7 6 Drakes Meadow, Penny Lane, Swindon, Wiltshire, SN3 3LL
8 Persimmon House, Fulford, York, Yorkshire, YO19 4FE
13 8 Gleneagles Court, Brighton Rd, Crawley, West Sussex, RH10 6AD
14 Crest House, Pyrcroft Rd, Chertsey, Surrey, KT16 9GN
15 Sovereign House, Basing View, Basingstoke, Hampshire, RG21 4FA
16 Countryside House, The Drive, Brentwood, Essex CM13 3AT
196 |
Five year record - unaudited
Years ended 31 December
Reported results
Revenue and profit
Revenue*
Operating profit
Net financing income / (costs)
Share of result of joint ventures and associate
Profit before tax
Tax
Profit after tax
Adjusted results
Revenue and profit
Adjusted revenue
Adjusted operating profit
Adjusted profit before tax
Balance sheet
Equity shareholders’ funds
Net cash
Capital employed
Returns
Adjusted operating margin before exceptional items and
amortisation of intangibles (note 1)
Reported operating margin (note 2)
Return on shareholders’ funds (note 3)
Return on capital employed (note 4)
Homes (including units sold on third party owned land)
Number of Housebuilding unit completions (note 5)
Number of Partnership unit completions (note 5)
Number of partner delivery equivalent units
Number of Countryside unit completions
Housebuilding average sales price (£’000)
Mixed tenure average sales price (£’000)
Adjusted EPS
Earnings per share (p) before exceptional items
Earnings per share (p) after exceptional items
Dividends per share
Paid (p)
Interim paid and final proposed (p) (note 6)
2022
£m
2021
£m
2020
£m
2019
£m
2018
£m
2,729.4
2,407.2
1,834.4
1,130.8
1,061.4
212.5
(12.2)
47.2
247.5
(43.1)
204.3
285.4
4.1
30.0
319.5
(65.4)
254.1
91.7
(7.9)
14.9
98.7
(21.9)
76.8
179.7
174.2
(6.8)
1.8
174.7
(36.4)
138.4
(6.1)
-
168.1
(31.5)
136.6
3,073.2
2,693.6
2,040.1
1,139.3
1,061.4
451.1
418.4
368.4
346.0
171.0
143.9
194.4
188.2
174.2
168.1
3,249.7
2,390.6
2,195.1
1,272.0
1,061.1
118.2
234.5
(37.9)
(362.0)
(126.8)
3,367.9
2,625.1
2,157.2
910.0
934.3
15%
8%
9%
29%
6,774
2,455
2,073
649
324
256
14%
12%
12%
26%
6,551
2,088
2,441
-
305
237
8%
5%
6%
14%
4,652
1,479
2,823
-
303
204
17%
16%
11%
21%
16%
16%
13%
19%
3,867
3,759
-
-
-
280
-
-
-
-
273
-
137.5
86.5
125.5
114.6
57.9
34.8
104.3
94.6
101.6
101.6
63.0
55.0
40.0
60.0
-
20.0
58.5
61.5
96.5
57.0
*Revenue and cost of sales for 2021 and 2020 have been restated in relation to trading with our joint ventures (see note 1.6).
Note 1: Adjusted operating margin has been calculated as adjusted operating profit over adjusted revenue.
Note 2: Reported operating margin has been calculated as operating profit over revenue.
Note 3: Return on shareholders’ funds has been calculated as profit after tax over opening shareholders’ funds.
Note 4: Return on capital employed has been calculated as adjusted operating profit over the average of opening and closing shareholders’ funds plus net debt or less net
cash, less goodwill and intangibles and retirement benefit asset. 2022 has been adjusted for the pro-rated average capital employed by Countryside during the
post-acquisition period. 2018 and 2019 ROCE has been restated on this basis.
Note 5: Completions are shown including 100% of joint venture and associate completions.
Note 6: In 2019 a second interim dividend was declared, not a final dividend. 61.5p includes this second interim dividend.
Vistry Group PLC | Annual Report 2022 | 197
Shareholder information
Financial Calendar
Date
11 April 2023
21 April 2023
18 May 2023
1 June 2023
11 July 2023
7 September 2023
9 November 2023
Event
Mailing of 2022 Annual Report
Dividend record date – Final 2022
Annual General Meeting
Dividend payment date – Final 2022
Trading update
Announcement of interim 2023 financial results
Trading update
Annual General Meeting
The 2023 AGM will be held at Numis Securities Limited, 45 Gresham
Electronic communications
Instead of receiving printed documents through the post many
Street, London EC2V 7BF on 18 May 2023 at 12.00 noon. The notice
shareholders now receive their annual report and other shareholder
convening the AGM and form of proxy accompanies this Annual Report
and explains the resolutions to be put to the meeting. The Notice of AGM
is also available at www.vistrygroup.co.uk/investor-centre. The Articles,
service contracts of the Executive Directors and the letters of appointment
of the Chair and the Non-Executive Directors are available for inspection
at the Company’s registered office.
Shareholder enquires
The Company’s share register is maintained by Computershare.
Shareholders with queries relating to their shareholdings can contact
Computershare by:
Post: Computershare Investor Services PLC, The Pavilions, Bridgewater
Road, Bristol BS99 6ZZ.
Telephone: Vistry Group Shareholder Helpline: 0370 889 3236.
Online: www.computershare.com/uk/investor-centre is the easy way to
manage your shareholdings online.
documents electronically, as soon as they are published. Shareholders that
would like to sign up for electronic communications should go to www.
investorcentre.co.uk where they can register.
Corporate website
The Group’s corporate website is www.vistrygroup.co.uk. It contains
useful information for the Company’s investors and shareholders.
For example, it includes press releases, details of forthcoming events,
essential shareholder information, a dividend history, a financial calendar,
and details of the Company’s AGM. You can also subscribe to email news
alerts.
Share fraud
Shareholders should be wary of fraudulent approaches from third parties
with respect to their shareholding in the Company.
In some cases, these are ‘cold calls’ and in others correspondence. They
generally purport to be from a firm of solicitors or an investment company
Investor Centre is Computershare’s secure website. With Investor Centre
and offer, or hold out the prospect of, large gains on shares or other
you can view shares balances, history and update your details.
investments you may hold. Shareholders are advised to deal with firms
Share dealing
If you wish to sell or purchase shares in the Company you may do
so through a bank or a stockbroker. Alternatively, please go to
www.computershare.com/dealing/uk for a range of dealing services
made available by Computershare.
authorised by the UK Financial Conduct Authority (FCA). You can check
whether a firm is properly authorised by the FCA by visiting fca.org.uk/
register. For more detail on how to protect yourself from an investment
scan, or to report a scam go to www.fca.org.uk/ consumers/ or call
0800 111 6768.
Note: The provision of these services is not a recommendation to buy, sell
or hold shares in Vistry Group PLC.
Company contact details
Registered office
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.
Vistry Group PLC, 11 Tower View, Kings Hill, West Malling ME19 4UY
Registered in England with registration number 00306718.
Company Secretariat
Clare Bates - General Counsel and Group Company Secretary
Company.Secretary@vistrygroup.co.uk
198 |
Company Advisors
Principal bankers
Stockbrokers
Auditors
Bank of China Limited
Numis Securities Limited
PricewaterhouseCoopers LLP
Barclays Bank PLC
Handelsbanken plc
HSBC UK Bank plc
Peel Hunt LLP
HSBC Bank plc
Lloyds Bank plc
Insurance Brokers
National Westminster Bank plc
Arthur J Gallagher
Solicitors
Linklaters LLP
First Commercial Bank
Santander UK plc
Registrars
Computershare Investor Services PLC
The Pavilions, Bridgewater Road
Bristol BS99 6ZZ
Vistry Group PLC | Annual Report 2022 | 199
Top left: Hounsome Fields, Basingstoke, Hampshire.
Top right: Vistry Works manufacturing facility, Warrington.
Bottom: Judith Gardens, Sawtry, Cambridgeshire.
200 |
Designed and produced by the Vistry Group Design Studio.
Printed by Tewkesbury Printing Company Limited accredited with FSC® Certification.
Printed using vegan based inks formulated from sustainable raw materials.
Printed on Revive 100 Offset, an FSC® certified recycled paper containing 100% post-
consumer waste and manufactured at a mill certified with the ISO 14001 environmental
management standard. Revive 100 Offset is carbon balanced through the World Land Trust.
Produced using
100%
RECYCLED
When you have finished with
this pack please recycle it.
Vistry Group PLC | Annual Report 2022 | 201
Vistry Group PLC, 11 Tower View
Kings Hill, West Malling, Kent ME19 4UY
©2023 Vistry Group PLC.
vistrygroup.co.uk
Vistry Group PLC | Annual Report 2022 | 202