Vistry Group (LSE:VTY) Q4 2025 Earnings Call

0:00 Am I on? Morning, everyone. So welcome to our full year results presentations for 2025. Delighted to be joined today by our finance director, Tim Lawler, and our chief executive of partnerships, Stephen Teagle. So the agenda, I will do a very quick introduction. Tim will follow up with the financial review. Stephen will talk about the markets. And then I will go into quite a few slides on strategy and operational update, finishing off with an outlook. And then, of course, we'll have the Q&A, which we all can't wait for. so the 2025 headlines and so 2025 profit before tax in line with expectations which included a very very strong 2025 and just on that you know thank you to our team because there were a lot a lot of skeptics around following the issues we had at the end of 2024 that didn't think we would get to the numbers particularly when we said it would be dramatically second half weighted but we did and And the important thing there is, show you the resilience of the business and the model, is we had absolutely no help whatsoever from the market. So, you know, I've been around for 45 years and quite often you see a house builder get into trouble and the following year it's boom time and they get out of jail because the market's been quite good.

1:22 We had no help whatsoever last year from markets. And we're all very proud of the fact that we are producing one in seven, that's 15% of the total affordable homes being constructed in the country. The group following massive reorganisation is lean, efficient and incredibly stable. We were probably along with Persimmon I would suggest the only active house builders in the land market last year which was incredibly soft and we bought some great land last year taking advantage of those soft markets which will help the company dramatically over the next few years. Net debt reduced down to £144 million at the end of 2025. And Stephen Teagle and I would both say, you know, we're very delighted that during the year, and it was not coming through at the end of this year, the £39 billion affordable housing programme, 26 to 36, Stephen and I have been around for, as I say, a long time, have never seen an injection of capital in affordable housing of that nature ever.

2:25 So we're positioned for growth. So just going off script slightly, there were two announcements this morning. The first, obviously, about our results. The second, announcing my retirement. I'm told by Tim that some of the feedback is people were surprised. I'm not sure why people are surprised. It's all planned. The board have been expecting it. I've done 45 years. I'm 62 in June. My wife is older than me. and she's very lucky of course but she is older than me and I just want to enjoy myself and as some of you will know I've got one or two spare sets of clothes so I'm in a pretty good place and there's nothing more to it than absolutely that.

3:11 but I will be around, so it's very much business as usual. That's the message within the group for quite some time to come. So no issues, no second guessing. It's just me. It's coming up to that sort of time. The business is in good shape. There's a new social housing programme coming forward. It's the right time for all concerned. So as I say, where are we? The business is stabilised. The new organisation structure with the executive chairs that we've got is working exceptionally well. we are differentiated from our house building peer group and we're completely aligned with the government and we'll keep coming back to that Stephen and I during the presentation we've got some great long-term relationships with the largest housing associations and Homes England and these relationships aren't over the last two or three years these are relationships that you know kind of Stephen and I have had since you know before 2000 you know years and years and years of doing affordable housing and don't forget your average housing association is generally wary about your average house builder because they know they only really want to deal with them when the markets are poor when the markets are good they drop them like a stone were positioned, ideally, to capture the social grant program that's coming up now, 2026 to 36, and we've started the bidding process.

4:29 And this last point, not to be underestimated, and I'll come back to this time and time again, we are very vertically integrated with our Vistri Works operation, which has got three factories, incredibly good. The product that they're producing is excellent. And what I would say is, timber frame is generally you know net more expensive and well not generally it is more expensive and building traditionally where you gain is speed reduction in premiums I'm not sure timber frame works for pure house builders it does when they're going hell for leather and they're building quickly but when they're not building quickly as is the case at the moment you're not getting that speed because what's the point of building when you can't sell as quick as you want so timber frame works very very well for a partnership business where you've got the visibility not so well for a house builder and just a little quip on that Carla Holmes private equity are pulling out of timber frame because it's more expensive because they're not selling quick enough and they're fed up with the prelim overruns without that coming through so just something to bear in mind it is vital with a partnerships business and the government and housing associations also like the MMC.

5:42 So it really, really works well for us. So looking ahead, we're absolutely set to benefit from the partner-funded growth. Now, rent convergence and rent settlement have both now been announced, which is great. And I'll just remind some of you that at least one housing association in London has said that rent convergence is as important to their balance sheet and building going forward as the 2026, 36, 39 billion pounds. So rent convergence for housing associations, it repairs their balance sheet, is huge. And also don't underestimate the 10-year rent settlement. We're 15% of the market. You just need to look and do the numbers. We'll obviously be looking to increase our market share, but even maintaining our market share at 15% shows that we've got a fantastic opportunity ahead of us.

6:30 And that opportunity is now coming at the end of this year. Are we disappointed with the delays since it's been announced? Yes, but the process is happening. It'll all be announced in September. We'll have visibility before that. It's coming. Open market growth in the end is inevitable. It's highly cyclical. I just don't see it anytime soon. And what's going on at the present moment in time in Iran is making that even more uncertain because not only will we potentially see prices going up, which we've made a little line in our forward projections which we're talking to analysts about but early days and it could all end tomorrow the longer it goes on the more those prices will start to come through but don't underestimate consumer confidence also being hit by what's going over there as well so we're reducing our inventory and that will give us more options with capital allocation And we absolutely, with our 25 business units and our Vestryworks operation, which is capable of doing 10,000 units a year just from the three factories, we are very, very able and willing to respond to the opportunities that are ahead of us.

7:39 So on that, I'll hand over to Tim. And I'm just dying to see what Tim's joke is going to be with this. Oh, he's changed it. Oh, I'm looking at my screen. Sorry. Something's gone wrong there, hasn't it? It's probably me. Oh, here we go. There we are, yeah. So I'm very much looking forward to the joke that inevitably has got to come from that photo. Every dog has his day. So what we've got here, we've got a picture of our site in Tottenham, the Meridian site, and in the foreground there we've got members of the fishery management team watering the green shoots of recovery.

8:35 There we go. Pretty poor, isn't it? Let's move on from that. So the UN numbers are old news. We went through most of these numbers with you back at the trading update in the middle of January, so no surprises really within here. As Greg said, profit before tax came in line with our guidance. We had a strong second half of the year where we saw a tick up in op margin and a strong proportion of the full year growth in 2025. Revenue-wise, we were down 4% despite being down 9% on completions, so we had a slight increase on ASP, which I'll come to in a second. and it's worth noting that EPS growth is greater than the APBT growth because we're starting to see some of the benefits of the share buyback program coming through there. So that's the principal reason why EPS grew at 6% rather than PBT at 2%.

9:29 In terms of net debt, we reduced it during the course of the year. We did see a tick up in average net debt, so we went from 698 of average daily net debt, and it's important that it's daily net debt rather than what most people talk about, which is month-end net debt. Average daily debt of 698 to 734 during the course of the year. and Rokey is obviously still some way away from where we want it to be. We want to be a high Rokey business and hence some of the actions that we're taking this year to try and release capital from the balance sheet. Okay, on to revenue. As we've talked about, the total units were down 9% year on year, hit by a couple of market forces. In the first half of the year, there was a fair degree of uncertainty in the partner markets, particularly in anticipation of the uncertainty around what was going to get announced in June with the £39 billion programme that was eventually announced. So we saw some pick-up in the second half of the year, particularly around affordable, albeit the PRS market remained pretty moribund during the course of the year. A lot of the PRS providers were going out for funding or reaching the end of their funding allocations.

10:42 There's some signs that that might pick up this year, but we still expect more growth to come from the affordable side of partner-funded rather than the PRS side. And then open market completions. This is largely driven by having fewer sales outlets as we've migrated away from the former hospital sites, so fewer sales outlets. There are some self-help measures that will help us improve the sales rate, but it would be nice to have a market tailwind as well to push up open market completions. There's no really underlying theme, I think, around average selling prices. I think most of our movements are related to mixed factors. So in the partner world, we sold more in London and the southeast, where the average cost of a unit is higher than in the north.

11:31 And in open market, we had more large products being sold during the course of the year, which again is a higher ASP. But the underlying theme was that generally house prices were pretty flat during the course of the year. We did have higher land sales in the year, as we mentioned back in January. So our land sales were about £180 million of revenue. We'll continue to have land sales as a core part of our strategy. So when we buy a site, we will identify parcels of land, particularly for large sites, where part of our capital strategy is to sell those parcels. And that's, in the main, what happened last year. The margin that we take on those is not exceptional margin. We just take the blended site margins of the rest of the sites. So you can assume that it's around sort of 20% gross margin on those land sales.

12:20 So it's not the exceptional driver that some thought it might be of the profit growth in the year. Not a lot to say on Tenumix year on year. Pretty similar to 24 and we saw a mix within affordable as I mentioned before from POS to additionality. I think during FY26 we'll probably see a similar overall mix between partner funded and open market. and there are two forces there. One is the push that we'll talk about during the course of the presentation on open market, which will push up open market volumes, and then the arrival of the affordable housing program will push up on the partner-funded side. and at the moment we're expecting they'll be roughly equal.

13:11 Obviously the timing of both how long the market push goes for and when the affordable housing finds its way through will impact the mix. But at this stage we'd say it's probably about the same for 26 as it was for 25. Okay, so operating profit. So the margin went up in the second half of the year. We had overall for the year 100 basis point increment in gross margin. What we're seeing is the new sites are coming on at a higher margin. We're buying sites on a higher margin and a higher ROKI. And as we've had the tail off, particularly the south division issues from 24, we're seeing some margin improvement coming from that. Overheads up a little bit year on year.

13:56 in light of the South Division issues of 24 we invested more money in assurance activities so that contributes to additional overhead and there's also more return to some variable pay again with all bonuses ceased in 24 in light of the issues we experienced so what about 26 margin well the underlying margin of the business will continue to tick up as we get efficiencies and we get economies of scale and operating leverage there will be some reduction as a result of the sales push activity. So, covering that briefly, at the start of the year, straight after the trading statements, we gathered together to say, look, the sales at the end of last year weren't good enough.

14:44 Also, the capital in the monetary is proving to be too sticky. And we recognise that we need to give some push into sales in advance of the spring selling season. And there was a feeling that there was some constraints on our selling within the business because people don't want to, they love the value, they love the houses, they think there's intrinsic value there, and it's quite hard for a salesperson to offer the discount if they think they're going to sell it later at a higher price. And the other thing is that there was some constraints in people's minds about not touching the margin. And so what we've done is say, look, We need to get the sales going. We recognise that that may have some margin implications but it will give us good momentum and crucially it will generate cash and reduce our WIP. So that was the driver behind the change and so far so good.

15:32 We've seen this 40% year on year improvement in sales rates in the year to date. So that's really encouraging. We'll start to see the cash come through from that in the second quarter. What it does mean is that there's going to be some margin tightening particularly in the first half of the year as we see the impacts of that on those sites. I think the other thing we'd say in terms of margin for the year is we keep being hit, as we all are, by international surprises, international events. We don't know exactly how they'll play out. I think this time last week we might have been slightly more bullish and perhaps slightly more cautious this week given what's happened in the last week in the Middle East. We don't yet know what impact that's going to have, if any. Is it going to impact our build costs? Is it going to impact cost inflation?

16:18 Is it going to impact customer confidence? It's too early to call it, but we're probably slightly tempering our expectations for 26 in light of the uncertainty that that brings. Let's operate in profits. In terms of build costs, so continue to get the benefit of the scale of operations and the fact that we keep building. So our bill costs came in at 25, about 2.5% up year-on-year, which is pretty much as we guided throughout last year. We have framework arrangements with all of our material suppliers, or 90% of our material suppliers, and we contract in advance, which gives us some protection against short-term volatility in pricing. And subject to whatever happens coming out of the Middle East, then we're expecting minimal material cost increases during the course of the year. And just in terms of what the impacts of the higher fuel costs are and the higher gas costs are, in terms of the direct impact, it's not that significant.

17:17 But it's obviously what happens with our suppliers in the supply chain and what they do, particularly those suppliers that are heavily reliant on gas. I'm sure there will be some discussions at some point if this price increase is sustained about our material costs. The labour supply is good, the fact that others aren't building helps us, puts us in a stronger negotiating position, and our subcontractors continue to like the certainty that our business model offers to them. So that enables us to hold prices pretty flat. In some places, in some parts of the country, we are seeing some reductions in subcontractor costs during 26. So overall, minimally impaired to build costs, subject to whatever happens as we go through the year.

18:03 On Vistri Works, Greg mentioned this before, really good progress in terms of production. So up 60% year-on-year in terms of timber frame units. And the roof trusses, it was the first year of production, and we did over 3,000 units in 2025. We're expecting further growth in 2026. So as we see on the slide here, 6,000 timber frame units in 2026. and we've still got capacity for more. We can probably find a way to deliver up to 10,000 units without having to buy or take a new factory on. And so we've got a couple of years to see how things develop before we expand our factory footprint. Working through the rest of the P&L. So overall net finance costs were down by 9.7 a year. In terms of bank interest, although the average debt went up, the impact on interest costs of the increase in average debt was offset by better daily management of cash balances.

19:05 So we've got these new mid-month facilities which are slightly cheaper and enable us to be, give us more levers to pull in terms of making drawings. So that's offset the daily debt increase and then the average cost of debt reduction from 7% to 6.3% is the driver of the reduction in net bank interest. The land creditor discount unwind was flat year on year, but you may have spotted that land creditors has gone up during the course of the year, and that was largely due to land being bought towards the end of 2025. As a result of that, there will be higher land creditor discount unwind in 26. So we expect finance costs overall will go up slightly with the land creditor impact probably slightly higher than the benefits we've got from the reduction in average net debt.

19:57 And net JV interest is down there. There's lower average cost of debt and lower average cost of borrowing as well. Finally, it's way through to us as well. tax our effective tax rates was 27.9 compared to 28.3 percent last year just find some more benefits coming through in terms of claims and reliefs so 27.9 is probably the number to put in the models going forward and then in terms of the exceptionals we talked before about the 12.8 settlement with CMA unfortunately there are also some iWatering fees, legal fees, and IT fees that went alongside that as we had to stop deleting everything, sort everything off-site, and spend a lot of time with lawyers.

20:42 So that contributed a bit to the restructuring costs as well. But exceptions were down significantly year on year. because last year we had £100 million hit on the building safety provision that went through the exceptionals. So that's why the reported profit for the year has jumped significantly. So we haven't got that big exceptional. So turning to building safety then. So we're making good progress. We've worked our way through 21 buildings, spent £46 million on those buildings in the year. I think it's better to say progress still isn't quite at the pace we would like it to be. We know that building safety regulators are taking steps to improve the sign-off process and get us out on site faster.

21:27 So we are expecting to pick up in 26, albeit it's still not at the full sort of rate of efficiency that we would like. We identified a few more buildings, or better to say, we had a few more buildings identified to us, principally sites that we worked as the contractor on years ago that came up through claims that we weren't aware of. We're expecting, so that's 11 buildings, we added 14 million to the provision for those 11. We expect that those will tail off. I think it's with each year that goes by, less likely that buildings come out of the woodwork to add to the provision. So then against that, we've had recoveries. So recoveries are ahead of where we expected it to be.

22:13 We've got 17 million pounds of recoveries identified, 13 million of which we've got the cash for in a year. And the other movement on here is discounting, where we have to discount our provision and unwind that discount each year and move the discount rate each year. So that was an £11 million charge, non-cash really, to the exceptionals during the course of the year. So in terms of next year, to say at the bottom there, ramp up in spending. I have said in the past, it's one that I've got consistently wrong and overestimated how much money we're going to spend on building safety. I think we're always expecting that it's going to speed up. So I'd say now it's going to be roughly £70 million of gross spend next year, probably around £60 million of net spend in 26 on building safety.

23:08 In terms of land activity, so we scored over 11,000 plots in the period. A lot were towards the end of the year. We were opportunistic in a build-up to the autumn statement when there were a few nervy landowners who wanted to sell quickly and we had some good deals that we could take there. So that's good. The overall size of the land bank coming down, we probably expect a similar sort of level next year, so we'll continue to wind down to have a land bank of somewhere around three and a half years of coverage in the land bank. in terms of strategic land, that continues to be a good source. It's probably not provided as much into the business over the last couple of years as we'd like. Planning is, getting planning is still slow. From the time of planning application to actually getting full planning is still 18 to 24 months, which is longer than we would like.

23:58 But that still feels like the right source, a good source of 25% of our land, particularly with some of the NPPF announcements that are going to make it easier to free up that strategic land. Right, so in terms of the cash flow, so overall during the course of the year our cash flow was about 130 million better than the previous year. So an inflow this year of 36 compared to an outflow last year of 92. Walking through this bridge from left to right from the opening to the closing, obviously we made 270 million pounds of profit. There was a net decrease in inventories. This has got some constituent parts which I'll come to on the balance sheet in a second.

24:43 Net outflow on payables and receivables. So the big bit was probably in receivables where the receivables balance was picked up during the course of the year. We've got land sale debtors has gone up by 55 million year-on-year. Again, land sales were towards the end of the year. And we've also had to pick up in partner-funded receivables, again, really from year-end activity, not coming in. And most of that cash will be received in the first quarter. The other side is on payables. At the end of 24, we had a higher deferred income balance. In other words, we'd have cash in advance, which we've not yet recognized in the P&L at the end of 24, which has unwound slightly and reduced that balance down during 2025. Not much to say on net investment in JVs. Building safety we've covered.

25:29 restructuring and others were those the costs of the reorganization some of that cost was taken in 24 the reorganization following the south division issues we've also got in there some capex particularly around fishery works where we've added some more machinery into their factories during the course of the year so in terms of capital employed this is not where we wanted to be yet we we've said a couple of years ago you know our Rough target is to get to Captain Floyd around £2 billion and we're significantly above that. And the principal area is WIP. So we know that, we knew this time last year that WIP was higher than we wanted. We set an expectation that we'd try and reduce WIP by £200 million. But for some of the reasons I mentioned earlier, it's proved to be stickier.

26:16 Particularly in London. So London has had a very poor sales year. I think that's widely known. and WIP can be lumpier in London because we're building apartment blocks so you can't sort of stop halfway through and start selling flats you've got to build a whole lot if you're going to sell anything so you end up with lumpier WIP there we've also had WIP impacted by the end of year deals so there was some build out which we expected to sell at the end of the year and the deal slipped into 26 so we'll get the money for that in 26 There are probably a few sites where the infrastructure is higher than we would like it to be. Some of the build programs would have been from quite a while ago, and we've had to, even before the partnership strategy change, so you end up building out some infrastructures.

27:05 We've got a build program that relies on putting infrastructure in place for the private and the partner funded at the same time. So while the partner funded is selling, we've got infrastructure embedded that will only recover when the private houses are sold. And finally, on a more positive note, it wasn't that the action we took last year didn't reap some benefits, so our heavy focus on unsold stock did reduce the unsold stock balance by more than half outside London, so £50 million of unsold stock reduction during the course of 2025. On the JV side, so the JV overall hasn't moved particularly much year on year. but within that there is just like on our own fully owned balance sheet there's more WIP than we would like and we're working closely with our joint venture partners to try and find ways to accelerate some of the slow moving stock in our joint venture sites to release capital for both us and our partners.

28:01 And finally I think I've covered the other asset movement which is around the rising partner receivables and the land debtors. and finally for me in terms of capital allocation so we've got 30 million to go on our share buyback program that we announced back in September 24 we'll continue to plug away at that and we'll complete that in the year I think previously we said we'd complete it by the AGM it may now be slightly slower than that And then come the half year, we will, as a board, look at where we are, the progress we've made on sales, the progress we've made on debt reduction, and determine if there will be an interim distribution announcement. And if there isn't, then we'll continue to consider that during the second half of the year.

28:47 So I think that does it for me. Over to you, Stephen. Thanks Tim. Good morning everyone. Good to see everyone. That's a great picture there of our scheme at Ledbury. That's some section 106 plots with a small rural housing association or local regional housing association called Connexus so just exemplifying our diversity of partners that we that we work with so we've just been looking back over 2025 what I'm going to do is look at how we drive value going forward through the market conditions that we've got and we leverage our strategic assets of our long-term relationships with our partners and our vertical integration, as Greg mentioned, and importantly, our ability to work closely with government on applying grant.

29:45 So let's just look at the opportunity at the moment. It is very much undoubtedly a strengthening opportunity. So we see our position within the market and our long-term engagement with partners, really encouraging partners to engage with us as they build their programs and as we go forward with delivery. The government has done what the government is going to do on the demand side for affordable housing. So we now have visibility of all those changes, and we'll touch on those in a moment, feeding through. So those government commitments are now writ large. We can see all of them. And that's resulted in a step change in partners' ambitions. And in a moment, I'll refer to that as an inflection in the market. It is undoubtedly a time that we have not seen before.

30:30 As Greg mentioned, this is a moment when we can really start to work with our partners and deliver on the homes that they're trying to invest in. and we've seen early part of the spring season, although it's rained a lot, we've actually seen some very positive movement in the open market in terms of what's happening at our outlets. So we'll touch on that. First, though, our alignment with the government strategy, which we've mentioned before, is both strengthening us and also very profound. So Greg said 15% of affordable housing market last year, 15% of the delivery, of new build homes was via Vistri. The total expenditure annually is around the 15 billion mark in terms of investment in new affordable homes and that covers section 106 and grant funded. and we've been very successful in moving up our section 106 homes partly because we engage with partners early so we haven't had the problems that others have had but also partly because we're able to align that with our grant funded delivery what we call additionality which has allowed us to work with our partners on delivering that so that has not been a problem for us We've been able to therefore deliver an increase in the grant award over the last year. So we saw a 37% increase in our grant award from Homes England last year.

31:58 That's not just because of one year's delivery. That's because we've delivered consistently across the five years. And that delivery performance is one of the things that gives us confidence in our bidding under the SAHP. We've been able to also do additional schemes where we've captured funding from partners who have needed to finish off their program commitments or where there's been slippage so that's allowed us to deliver more and our total grant level has risen to 252 million now the reason that's important is is we'll be talking about a new program in a moment so over the life of that five years of this program we've seen a three-fold increase in our allocation to 252 again that demonstrates our ability to deliver with partners and the fact that we've deployed those funds very quickly and it comes no surprise that we anticipate the national housing strategy therefore to focus on mixed tenure and the partnerships model as one of the ways that the industry should be evolving towards delivering the government ambition.

33:05 So what do we see in our customer and partner markets at the moment? So on the open market we've had a mixture of external and internal factors. Externally we've seen an increase in the availability of higher loan to value mortgages and we've seen rate reductions and some more positive customer sentiment before the events of last week. that's resulted through our contact centre we've been able to see higher levels of enquiries and interestingly higher levels of appointments than any week in 2025 so not only are people digitally looking at what we've got offering they're prepared to come and meet with us in our sales outlets as well and that's resulted in a very positive start to the spring selling season so we have sales are 40% up year-to-date on where we were in 2025 so that's a stat that's extremely important now we've been focused on targeted discounting and also using tactical use of enablers in order to get people into our marketing but that is really giving us momentum On the PRS side, and Tim described it as moribund, I think there's a structural weakness in the PRS side. So we've certainly seen a transition to more single-family homes for multifamily. That's an interesting occurrence over the last 12 months.

34:29 But there remain a paucity of players who have got the ability to commit volume consistently and engage with us, where they've got both the funding and the operational platforms aligned. and the people that we've worked with most frequently over the last two or three years have been refinancing. So that's caused a pause in that market last year and it is a market that needs to mature before it will really deliver on what the government's ambitions are for it. But of course, working with Vistri is a great opportunity because we give standardised products, we can optimise yields by giving forward visibility to partners. and affordable housing where partners now cited on that improved financial capacity, now cited on the ability to bid for funds, a really important moment for affordable housing. So just to remind you of our three sub-markets that we operate in. So those traditional registered providers are the ones that had a lot of the headwinds and have had stock liabilities.

35:28 Interestingly, the regulator described them receiving robust investment for new homes over the last quarter. So £4 billion raised by traditional registered providers to go into investing in new homes. Local authorities. This is an interesting fact. In 24-25, there was the highest level of local authority delivery of affordable housing for 40 years. 16% of all affordable homes was local authorities. and it's interesting today to think back 40 years ago in a field somewhere in a place called Newton Abbot somebody did a deal with the town council about delivering on some public land there some affordable housing so there you go 40 years ago and for-profit registered providers who we refer to increasingly as institutionally backed registered providers and we have one of those within our group called Linden First and we're at the final stages of confirming who we're going to work with as a partner to capitalise Linden First and we see entering a framework with Linden First as a way of routes to market amplifying, not displacing, but amplifying the work that we already do with registered providers and bringing capacity into the sector.

36:45 Those three markets, the wheels are turning. It's beginning to come true, which is great. Now, we've added this slide because we thought it would be helpful at this point in time to give you some idea of how Grant enters the ecosystem. So three things here. Firstly, you can see on the left hand side there, Grant Accessing Grant funding from the government. We are able to bid for that directly as Vistri or our partners obtain the funding. either way we'll be delivering homes whether we get the grant direct or whether our partners get it that allows us to both bid for grant from Homes England and that bidding has now opened on the right hand side on one level we can be agnostic who gets the grant whether it's our partners or whether it's Vistri because the P&L effect is the same.

37:37 The P&L takes valuations and we take that through on regular, hopefully monthly, or section completion valuations throughout the life of the scheme. So there's no difference in the P&L. Where there is a difference is in terms of the cash. so when we get the grant directly under the new SAHP the proposals are that you would receive 40% of the grant when you buy the site and 35% when you start on site so on the basis that we obtain the grant for schemes that we've already got you can see how that would benefit our cash flow in terms of accessing that grant at that stage The third thing which isn't on this slide but is really important for our business as a mixed tenure platform but also extremely important for the government is the leverage that grant provides across the whole market.

38:30 If you've got a pre-sold model and you're pre-selling and you're using grant funding to deliver affordable housing, you're more likely to open that site and deliver on the PRS. You're more likely to open that site and deliver on the open market. So one of the things, and I don't think the government measures this and captures it, the leverage from that grant funding across all tenures is really significant. I think you'll see that flowing through as the grant funding dynamics in the future. So I said it's an inflection from funding policy to delivery and that's what we've seen the government I think very quickly has stepped up and delivered on its came out with its policy translating that to funding has taken a bit longer than we would have liked but the reality is now the SAHP is open bids need to be in by April Homes England has already received bids through an alternative route for funding so the wheels are turning people are beginning to receive funds and get sighting on allocation I suspect allocations announcements will be in the late summer but we'll have an indication of how successful we are with our bidding then really importantly though partners are not waiting to receive allocations they're talking to us now so they're pricing schemes for us at the moment. They're wanting to talk to us about having frameworks in place that give them visibility of forward delivery.

40:02 They're looking for what land opportunities they can come in with us on. So people are building their programmes and I expect that to really be a consistent theme over the next six months. So what does the net effect of those reinforced demand side elements have? It's improved capacity. I think there will be an absolute focus on early delivery so we know that grant awards measure they will be weighted towards early delivery so I expect an uptick in the first three years in that and obviously that will be one of the things that informs our bid and if you take together collectively Those policy changes by government, the rent settlement, rent convergence, £39 billion, and a Section 106 environment which is encouraging higher levels of affordable housing, Even with an increase in social rent, I would expect to see the average long-term affordable housing move from around 55,000 new build, this is new build per year, to around 70,000.

41:10 So that's a 30% increase in volumes. So we've already got 15% of a market increase. That market is growing and we have a platform and an operation that allows us to respond to the opportunity. So what are we doing with that opportunity? We're bringing together two elements. That mixed tenure platform is what we think will drive value for the business and also in terms of the growth so we're taking those elements on partnering the ability to have frameworks that give visibility to us and our partners bidding for direct grant awards we know how beneficial that is we've been receiving direct grant in different forms since 2008 we were a very early player in that particular space Doing more work with local authorities.

42:05 We've got precedence to work with local authorities both in joint venture and directly commissioning and we are focusing on being best in class as a partner. Really important elements when you're looking at long-term relationships with partners. and then fusing that with that developer ethos of being able to offer successful open market sales. Self-help there around our branding and our use of the contact centre which has definitely driven a more successful engagement with prospective purchasers earlier. focused on sales excellence and I'm really pleased to see that's been reflected in some improvement in our Trustpilot scores. So bringing that mixed tenure offering of open market sales along with pre-sales is really important.

42:51 Put that together in that delivery Venn diagram, that allows us to increase our platform of work in joint ventures with local authorities and RPs. Really pleased to see us off and running with PlacePoint, our joint venture with Homes England, The BID and Linden First, and our position in terms of public sector land, which is extremely strong and we intend to focus on more of that in our engagement with local authorities and combined authorities. Right, I'm going to pass over to somebody who was in the field in Newton Abbott. Thanks, Theo. Thanks so much, Steven. Great presentation and a good presentation from Tim as well. Good to see him talking about roof trusses.

43:36 If you close your eyes, as I did, you can nearly believe that he actually knows what one is. But great to see. So, our strategy and our competitive advantage. So, strategy on land and planning, a three and a half year or thereabouts land bank, and we've got more than that at the present moment in time. We are exceptionally competitive in the land market with our strategy, particularly on larger sites. As far as I'm concerned, if we're bidding for a large site, we would be favourites to win it with our strategy. End of. From an actual competitive advantage perspective, we have a great relationship with our partners our partners have land the government have land we are very very good on bidding for public land where it's not just price and that counts so land three and a half years in a strong place on public land and our model makes us very very competitive on build Frankly, nobody is building cheaper than Fistry.

44:37 I would put my reputation on the line on that. By some distance, just look at over the last two to three years what the others have been talking about with regards to building inflation and what we've been talking about. Subcontractors absolutely love our model. They treat us as paying the mortgage. They work for the other house builders on the back of that might pay for a holiday. But they need the visibility. They do not want to get the phone calls as they're getting at the present moment in time on a Friday afternoon. I only need two guys next week Fred because we're slowing right down because we're just not building quick enough The vertical integration that Vistri Works gives us is absolutely essential to the model. If you have visibility, you know you're going to build two, three, four, 500 units on a site. That's when Vistri Works comes into itself.

45:22 If you've got a timber frame manufacturing facility and you've got lots of sites, but you don't know how quickly you're going to build, that whole benefit goes out of the window. So Vistri Works works incredibly well from a build perspective as a partnerships business. When, if you look at sales, When we start on site, we basically market test up to 75% of what we're going to do. Because as you've seen from the stats that Tim put up there, 75% of our model is either section 106 or pre-sold. So it's only 25 or thereabouts percent that we're actually taking a risk on, which is the private sales within the market. So our relationships with our competitive advantage, if, as I'm sure they are, and we know they're all looking into it, it's not straightforward to get in with Homes England. As Stephen's touched on a number of times there, to get into and get a really strong position in the 26-36 programme, you've got to have a track record.

46:18 and we're the only house builder to sim into a little bit and maybe McCarthy and Stone but that's a different model that has got a track record for the last 20 years on dealing with a programme and if you look at the 21-26 programme the best performing strategic partner within Homes England and there's 32 of them is Vistri hence we're very confident with the outturn of what we'll get from the 26-36 programme Housing associations have been around for a long time. They know how cyclical house building is. They know house builders come a-calling sometimes and then they drop them for dead. I was recently at a big meeting with the government, Chancellor Exchequer, Housing Secretary, Housing Minister, Chief Secretary to the Treasury, in a room with some contractors and some large house builders. and the Chief Exec of the National Federation of Housing, which is the body that deals with housing associations, rather embarrassingly just came out in the room and said, the problem, sir, talking to the Secretary of State of Housing, is there's only one company that treats housing associations as they want to be tracked with, and that's with respect, ongoing relationships. And she said, and that's history.

47:30 I got over it quite quickly. I was sat next to David Thomas, and he didn't enjoy that so much as I did. But these things are built on years and years and years of experience. It's a real barrier to entry. So we've talked about three case studies. So last year in November, we bought a very large site, 2,200 units in Worcester. we took massive advantage of the fact that we completed the day before the government's budget as Tim talked about last year and did very very well out of it I have to say so we were about to enter into a JV with a top five Housing Association because the Housing Associations they're not just waiting for the grant to come through they know the grants come in they've got the rent settlement they've got the convergence they are now active as I'll come on to in two or three slides time so Housing Associations are now talking to us again with vigour about entering into JVs and what opportunities have we got but this particular housing association in the next six weeks will enter into a JV on part of this site but also to enable us to get the return on capital plus 40% and in fact it's way over 40% on this site we've also built in some land sales so these are planned land sales that we will do during the course of this year going into next year so land sales are a part of the everyday operation not a fire sale to get to a half or full year position 45% will be

49:03 partner funded. And the brand, I'm not sure whether we'll use two brands, Bovis and Linden. We might even use a third brand on that. But a great example of what we've done last year and a great example of one being competitive in the land market. That is a prime site, by the way. That is a prime, prime, prime house building site. And we're the ones who have bought it. It's not a site that no house builder would want. That's prime. strategy case number two innovation so on top of history works timber frame and all the rest of it we've got the Mauer brick cladding system so this is 3D computer generated builds a lot quicker now again would we be doing that at the present moment in time on a new build house that we're going to sell to Mr and Mrs Smith probably not that's a bit of a risk for the minute we'll work with our housing association Places for People.

49:51 This is a site we've got with Places for People. One of, again, top five housing association up in Bradford. What do you think about this? Yeah, we'll work with you and we're doing it on their site. It'll be their risk. I don't think there is any risk with regards to selling the units. But the housing associations and Homes England love this kind of stuff. So that is going to, we're going to roll that out to 10 sites during the course of this year. And if the government want to build 300,000 homes a year, Guys, this is how things are going to have to be done because there just ain't enough tradesmen out there in the industry. And the average age of a bricklayer is 54. So we'll do well to replace the number of bricklayers, let alone get more into the game. Our timber frame apprentice programme is going incredibly well. And standardisation, again, we've now got 50 standard homes, future homes, house types, which have been designed specifically with timber frame in mind to reduce that cost time and time again. And that's a great photograph there.

50:54 Some comedian in the business has put down a bit of career development for me. I didn't fix all of the panels there. I just fixed that one and I have to own up immediately I fixed it it was taken off and put into the skip and as a as a very very poor job strategy case number three so partner journey this was introduced in the summer of 2025 would you believe we're the only house builder that goes out to our housing associations and asks how are we doing on a proper standard format and the housing associations love it. We all do it through the HBF, so we're a five-star house builder on the HBF and we're also a five-star house builder with regards to, and this was done independently, a five-star house building with our housing association local authority customers. We have a simple framework of 16 steps to ensure the highest level of service.

51:48 21 of our 25 businesses are five-star, the other four are four-star. And 97.5% of our partners responding indicated that they would like to work with Vistri again. So again, long, long-term relationships, we're always trying to improve, and it's bizarre that we're the only people out there that actually canvass and get their opinion on how we're doing. We do get some comments as well about how we can improve, which we obviously take on board. so current trading and outlook well headline here is we have started the year exceptionally well so Tim talked about what we're doing with regards to sales so we announced you know the snapshot of our results I think it was on January the 14th a week or so later I'm about to start doing business unit reviews where I sit down with all the individual business unit boards and go through state of the nation on a quarterly basis and what we're looking for and yeah as you get older you use a large yard of pace but I know where the ball's going and I actually in all of those meetings and this is from week five onwards and we're in week 10 now I didn't ask I demanded that each business unit go forth and double their sales rate because I am concerned about what might happen to the private market during the course of this year with regards to house builders just not building enough units and that will start hitting them at some point so like to get one step ahead The business units, I've said to them, you tell me on your individual prices, you're going to double.

53:17 You tell me what you need to do to get those sales through. And that initiative has gone exceptionally well. So the fact that we're 40% ahead and hides the fact that after week four, we were nine units ahead of 2025. That 40% has come from five weeks, basically over a 10-week period, if I'm making sorts of sense. So that is really, really, really worked well. And with what's going on in Iran at the moment, which I obviously didn't know was going to happen, we're very, very pleased with what we're doing. So the current order book stands at 4.5 billion pounds. And Again, at the end of a programme, that is when you're going to have the lowest order book. At the start of the new programme is when you have the highest. So it's great to see that our order book is 4.5 billion.

54:02 That is up on 4.4 three weeks earlier than when we announced our results last year. And 67% of this year's units are in hand against 65% in 2026. Again, three weeks earlier. So we're in a great place on that. So reflecting the phasing of sales in early 2026, as I've said, we've introduced this tactical. On some sites, there's no discount. We're doing very, very well. But I just wanted to make sure on every site, we absolutely get the desired sales rate. So if you look now at our sales rate, overall sales rate, 1.42%. last year, 0.59. So this is private sales and deals we're doing with housing associations and the like. So housing associations have woken up.

54:51 They woke up towards the end of last year. They know what's coming. They love the rent convergence. They love the 10-year rent settlement and they want to get ahead of the game. The other thing that we're benefiting from in the first 10 weeks and will continue for the next few weeks is a lot of housing associations also want to go into the bidding round for the 26-36 programme with a good record on the 21-26 programme. So there's a lot of running around at the present moment in time and we're getting lots of calls from housing associations over the last four weeks. Actually, what we thought was going to happen by the end of March, their year end and the end of the 21-26 programme hasn't happened. Can we do a quick deal with you, Vistri? and a lot of that is happening. Hence, we've got a 1.42 sales rate, which we've not seen since announcing the strategy back in 2023 in September. And that includes a 40%, as I say, increase in the private sales rate. So we expect to deliver... Even with all of the discounting, we expect to deliver an increased profit on 2026.

55:53 The margin will be lowered because of the sales incentives, as we said. But the big news is we're now targeting and confident on our bottom-up budgets from the 25 business units. We're targeting in excess of 100 million of cash at the end of the year. And those initiatives that we've put in place are working exceptionally well. So our priorities then. So first one, cash generation. So we're absolutely 100% laser focused on that. And can I say that since asking the business units to double their sales rate, on average, I'm doing five calls a week with a managing director and a sales director of a business unit who hasn't done what I've asked them to do. And it's a very, very uncomfortable meeting for the managing director and sales director. They don't want to do it two or three times.

56:38 So we're absolutely laser focused, very hands on on making sure that happens. We're positioned for growth. We've got 25 business units that are capable of doing with their same geography in excess of 20,000 units and Vistri Works with the three factories that we've got is capable of doing up to 10,000 units and probably in excess of 5,000 units for roof trusses and I do know what a roof truss is. and maintaining our operational excellence. Again, when I joined BOVIS in 2017, which was a two-year gig, they had some financial issues. But what happens normally when you have financial issues is everything else goes, excuse my French, to ratchets. So at the time I joined, their star rating was zero.

57:24 The NHPC were about to kick them off because their build quality was absolutely hopeless. Everything followed on. The business last year has maintained all of our KPIs. We're a very good builder, customer satisfaction five star, everything is good. We're in a great position to actually move this business forward with this wave of affordable housing grant that is coming through. So we're on track to get to our margin progression targets of 12% and return on capital of 40%. And in summary then, I would have loved to have come up with this quote, but I have to put this one down to Stephen. Vistri, a partnerships business aligned to the scale of the opportunity. And you'll all have your own idea of what the opportunity scale is. We would say it's huge and it's about to come through in the latter half of this year as that programme gets announced and housing associations get busy with spending.

58:18 So on that, we will take any questions. Go on, Jake, wherever you want to go. Hi, I'm Rebecca Parker from Goldman Sachs. Hi, Rebecca. Just wondering on your guidance for year-on-year improvement in volumes and revenue, are you still expecting that 17,000 units that we talked to at the trading update? Yeah. And then also in terms of the incentive levels that you're offering, can you provide us some quantum on what those are and also what types of incentives that you're offering in the market? There's been no real change to the incentives with regards to carpets, turfing, bit of landscaping in a garden. We were doing that anyway.

59:04 So the incentives that I'm talking about over and above that which we announced or which we asked the business units to get into on week four would be to do pretty much with pricing. I can't give you a number because as I say it is on some sites it's nothing on some sites it's more so what I can tell you is the numbers that we are guiding include for that level of discount whichever it is and it's different on each individual business unit as well and that guidance has come from the individual business units absolutely knowing that they better double their sales rate and they're absolutely put into their forecast the price they need to do that at but there isn't a simple, I'd love to say it's X percent, it's just not as simple as that I'm afraid. Yeah, and last one as well. I think I saw in the presentation that you've become a strategic plus partner as you talked to in the training update.

59:54 Can you just remind us of how much increase that allows you to apply for direct funding? We haven't, I don't know where that's come from. We haven't become, we're bidding and we'd like to become a strategic plus partner, but we're not yet. We're hopeful. From what I understand, a strategic plus partner would get around 700 million. And if you go back to what Stephen said, our first bid for the 2126 programme was about 85 and we ended up over 250. If we are successful with being a strategic plus partner, the initial bid would be, Stephen, I've got this right, about 700 million. has become available. And Greg's quite right.

1:00:54 The bids are in for April. It would be pre-emptive to think that we're a strategic plus partner. But we are the top partner on the 21-26 programme, if that's helpful. Thank you. I'm just letting Jade put it wherever you want. Good morning Greg. Three questions from my side if I may. So first, because you mentioned several times on the Middle East, so can I ask if there's going to be an impact, what kind of impact should we be expecting? Is it labour, raw material or energy price? Yeah, I mean if you take our ground workers, I mean they are heavily into diesel. So there will be, you know, every time there is increases in fuel prices, ground workers will come knocking and look for increases.

1:01:44 You know, plastic comes directly from it. So if this was to continue, and that's an if, none of us actually know. So we've got a line within the forecast or the guidance that we put out this morning. We think there will be an impact. But that impact will have to be seen as we go forward. But you could easily, you know, these sorts of things could be a 5% increase on your bill costs. Now, you've already spent some money, you're in fixed price contracts, but these sorts of things can come through. So we will just have to wait and see. But at the moment, we are confident in what we're saying, but we will watch with interest, I'm sure everyone will, how long this goes on for and what other fits out there. But, you know, what I can be confident of is, you know, I think we're building cheaper.

1:02:30 I think if there's an increase, we'll still be building cheaper, but we might be building at a greater cost than we are at the moment. Maybe I could just add one thing to that. So that's the supply side. Yeah, there's also consumer confidence as well. We haven't had, just to be clear, nothing's come up yet. This is just a recognition that things are changing fast, so we need to put something in there and be cautious. On the demand side, we've been encouraged that there's been probably greater customer confidence. So much of our open market demand comes down to customer confidence. It does feel like that's moving in the right direction. Of course, it's fragile, and there could be a knock-on impact just on customer confidence, whether it's cost of living, people having to pay more for their fuel at the pump, or whether it's potentially mortgage rates or rates not coming down as fast as we expect.

1:03:18 We don't know really, but it could be a demand side as well as a supply side impact. And the flip side to all of that as well, which would be a positive to us, if those sorts of things happened, that means that house builders will be building less. We're already in contract, so we would expect to get some benefits from that as well, because a lot of what we're doing is already in contract. So we should benefit from that to an extent. Thank you. Second question is on the land cells, because I think Tim just mentioned what remains to be a core part of cells. So what kind of level should we be expecting this year versus last year? It's going to be higher, lower? We're not entirely sure whether it's going to be higher or lower. I think we'd expect it to be three digits again this year.

1:04:03 But whether it's as much as 180, we don't know yet. It'll partly depend on where we are with planning processes and how quickly sites go through the planning process. But I don't expect the land market to be anything other than soft, and that will come into it as well. Last one from me is, I think you also mentioned on this inventory reduction effort, you will be working together with the JV. So I wonder, does that mean your JV partners is also happy with the strategy that probably the margin will be lower? Yeah, because we discussed it with them, and they were a valued partner, and we're saying we need to sell quicker than we currently are, and they absolutely get that. so yeah they're on board and we would obviously have to get approval to do that where we're on a JV and I don't think we've had any pushback from any of our housing association partners Thanks. Ainsley Lohmann from Investec. Just two from me, please.

1:05:02 Maybe just coming back to the question on the kind of average hit to, or reduction in prices, average hit to margin, or however you want to look at it. If you look at the full year and your guidance, kind of what's acceptable in terms of the margin hit in terms of your discounting on pricing, and what do you expect the margin to be versus that 8.5% as we kind of saw today? So what's acceptable is... whatever the answer is. And the answer is from the 25 business units is a profit greater than 2025. So we want to sell units and we want to sell units at pace and get a step ahead of what I believe the how the house builders will follow. And there is some instances if you can see that already around about the place if you study the website. So we want to get ahead of the game and that's what we're doing in the second part of that. But the actual discount level, again, it's how long is a piece of string. In some places and in some businesses it's very little, in other places it's more.

1:06:02 and then I guess so the motivation for that because the other hospitals are talking about kind of improving sales rates you yourself seem to also be saying that the private open market's actually been quite good it's the motivation for that increase or discounting is it more kind of balance sheeting cash or is it because you believe the market's about to fall over and the other hospitals will be chasing sales not quite clear on that it's balance sheeting cash but I also believe that um on the basis of no help to buy coming in during the course of this year. I've been around for a long time. If you're a public house builder and you're selling at 0.5, 0.6, that doesn't really work. You know, your prelims, stop, start. So I think there will be pressure on the house builders. And again, if you look at the house builders, their balance sheets have been like, you know, it wasn't that long ago, they were all operating, or a lot of them with a billion pounds in the bank. Those days have gone. Most of them are borrowing money now from banks at various times of year, maybe not at the period ends.

1:07:00 So at some point, I think they will have to look at things and go, you know, how do we, we're hanging around for help to buy. Is it going to come in? Yes, no, maybe it will in due course, but I don't think it's anytime soon. And I think that will drive pressure for them to actually sell units quicker. That's what I'm paid to do. That's what I think. Rightly or wrongly, that might turn out to be the case. So it's twofold, what's going to happen and balance sheet. Morning, Emily Biddle from Barclays. I've got two, please. Firstly, you talked about margins on newer sites coming through being stronger. Can we just understand the price assumptions you have built into those margins?

1:07:46 Do they assume that the current discounting you're doing is the ongoing spot price for the duration of projects, or that you're assuming that current pricing is a sort of short period of discounting that unwinds to support the margins? It's the latter. We're assuming we've been very prudent with the prices that we put in. So we generally start a site at a higher price than what we allowed at the time of the land acquisition. So that's the first thing I would say. But yes, we are assuming that over a period of time, we will push prices back up but that will be sometime during the course of this year and certainly not in the next two or three months I think it's also worth pointing out that the incentive impact is more likely to be on more mature sites so sites that are nearing the end rather than sites that we've just started that tends to be where we've got the slower moving stock that we particularly want to focus on so that's where the more margin that will come Okay, so just to be clear, the discounting is mostly focused on particular sites with slower moving stock. Oh, definitely.

1:08:45 Where they're selling quickly, there's no need to... There's no concern. And then secondly, if the outlook for this year is worse and the market is weaker here, what other levers are there you can pull on cash? Is there more that you can do on WIP? Because if you're doing that already, can you go lower on WIP? or is there anything else that can come out and if affordable funding does start to flow will the business consume working capital so does the current debt position constrain growth into a slightly better affordable market no because the affordable housing market is forward funded so it would affect growth if we were a pure house builder because obviously that's where you put your money but with housing associations we would like to think we are paid when we buy the land and we're paid more than we've actually done during the course of the month which helps then offset some of the private stuff on the same site wherever that's an investment and as Stephen just said earlier we would expect to do well on the 2636 affordable housing program and I think Stephen's just said when we buy the site we would get 40% of the grant up front and then 35% when we actually start on site so that is cash helpful So those sites you talked about where you currently have infrastructure that's sort of tied up where you've had to sort of fund a private infrastructure.

1:10:14 Yeah, I mean, during the course of last year, I wanted to bring, Tim's made the point, and I'm very happy to say we wanted to bring WIP down last year, but it didn't dramatically go up, but we certainly didn't bring it down because the private selling market just was not that good. for anybody, including Vistri. And of course, we didn't have, we were hoping to get a much more injection from housing associations. We thought there was going to be some really good numbers on the 26-36 programme, which there has been. But the delay in announcing it and the delay in it coming through has been slightly disappointed. So yes, they did bring forward £2 billion of the £39 million as a bridge to add to the 21-26 programme.

1:11:02 and we've got some money due but they're not giving any of that £2 billion out until April so we will get and be able to draw down a decent sum of money in April from stuff we've already spent because that bridge funding is there and it's going to be paid for us, we've got that acknowledged, but we would have liked to have had that during the course of last year. We'll actually get it April and May onwards. Thanks, guys. Sorry, just one more thing. Addressing your point, Emily, about cash levers in the downturn, obviously we can choose how long we go with the discounting side of things, but one of the levers that we've got that hospitals don't have is that we can flip from private selling into more affordable selling. And that's actually cash advantageous because they give us the cash up front. There may be a profit impact, but I think it's more likely we're putting more emphasis on the impact being on profit rather than on cash because we've got those numbers on cash that we can pull in either scenario.

1:12:01 The other thing I can say to everyone about being practical about this, when I said I want to increase the sales rate, and the actual words I use to the individual business units is if you go back to 2024 and 2025 week one we didn't sell as many units on the private side as we wanted to not because they're not very good because of the market week two we didn't sell as many week three we didn't sell as many week it's a bit too late we still haven't sold as many I know what we'll do let's do a bulk sale and we'll sell a bulk sale to a PRS provider or to a housing association What I can assure you is what we're doing at the present moment in time, whatever the discount we're giving away will be a lot less than we would have inevitably got to by doing a bulk sale at some point down the year with all the pressure that comes from that to half and full year.

1:12:48 So this is using experience, let's crack on and deal with it. now rather than kidding ourselves, kicking the can down the road as other house builders are. Be in no doubt, we're getting calls all the time from our partners saying, oh, I've just said so-and-so on. They're doing a Vistri. What do you mean? Well, I've never heard from them. They just want to do a bulk sale. They want to sell their show homes. They want to do this. So everyone's at it. I'm just trying to beat that. Whatever we sell to Mr. and Mrs. Smith will be advantageous to doing a deal with a long-term partner or a PRS provider. 3FMA the first one just in terms of land your controlled, oh sorry, your owned land percentage of your land bank has actually gone up slightly and you've obviously referenced some of these bigger sites can you maybe just talk us through, you gave us an example of the big sites, when does the return on capital start getting to the 40% you talked about being very confident getting above so it's a 10-15 year site so we haven't put a time to it, Glynis, but it'll be, you know, if you're asking me, I would say 29.30.

1:13:58 Okay. The second one is in terms of oversight on the incentives. You've talked a lot about wanting to double, you know, the sales rate, but what is the oversight on the discount? When does it come across your desk, across Tim's desk? Does it get tied into the bar? It doesn't come across my desk. It will come across the, we've got three executive chairs and they will sign off everything. I guess what I'm looking for is some reassurance that it's not going to impact the site margins and therefore previously accounted profits. No, and we've just gone through an audit accordingly. So just be clear, the site margins will be impacted if the expectation of the overall revenues from that site are going to drop. Now that's all reflected prospectively and that's how our accounting works.

1:14:45 So you don't go back and review what's happened before, you're constantly changing the site margin up or down depending on your expectations of revenues and costs. and this is why there will be a slight reduction in the margin this year because the absolute revenues on those sites will drop as a result of the discounting. But have you, for example, taken land sales on those sites previously at a margin which is not going to match the revised view of site margin? I would suggest 95% no. The land sales were predominantly on-plan new sites as we bought them. And then the last one, 50 standard housing types seems like quite a lot, but you have a whole range of brands. Can you maybe just give us a little bit of context about why 50 is the right number, why that works from an efficiency standpoint when you've kind of got a Ford Model T? in a factory of just repeatability.

1:15:44 You're right, Linus, it is more than I would have liked, but you've got different housing associations, so we've discussed it with housing associations, they have different requirements amongst themselves. We've got two brands, Bovis, Linden and Countryside, which adds to it, and then on top of that you've also got future home standards coming through and you've got different local authorities from a planning perspective interpreting that in different ways, so It's 50. I would very much hope that, and I'm looking over there, I'd like to think that less than 20 will make up 80% of everything we do going forward. So that would be our assumption, that 50 is there. Will? Thanks, Will Jones at Rothschild & Co, Redburn.

1:16:30 First, just to return to the flexibility around price and margin, is this just limited to open market, or are you being flexible? No, it's limited to open market. I'm sorry, partly linked to that, but when we think about the difference in gross margin between PRS and additional affordable, as you shift your mix, how would you frame that to us? I would say that PRS providers... are buying a product that they will eventually, and in not too distant future, sell. And they are very commercial people. A housing association or local authority is buying a product that they will never sell. So I'm pretty happy with being diplomatic, doing more with housing associations than PRS providers.

1:17:18 But we'll continue to work with both, obviously. Second, just around cash flow and the moving parts for this year whether you'd call out anything Tim to us on that front I know from the back I think there's 250 million more land credits for obligations this year than last so that's obviously one negative start but presumably WIP and others Yeah, not necessarily a negative start because on the land creditors it's our strategy to defer payments so we will continue to defer payments this year so we'll pay for last year's land but we won't pay for this year's land So, but I think probably the land credit balance will come down slightly during the years. There will be a slight headwind in terms of cash generation from land creditors, maybe £100 million, something to that sort of level.

1:18:04 Then obviously in cash register board bridge, we've got the profit coming in, we've got the WIP reduction coming down, and then we've got against that, we've got the tax, we've got the share buybacks, we've got the fire safety, and we've got that land creditor. Overall, to get to a gross target of £100 million, that's a £250 million reduction in WIP and lands to deliver that. And just to check as we think about the modest shift in strategy maybe today against the balance sheet, is there any signal here that your comfort levels around the balance sheet and what you want average net debt to be have changed at all? And are you happy that the operational focus and the lack of distributions can get you there? So I think no change. We've said before that we want to bring down average net debt steadily over time. I think what these actions signal that we're not satisfied that we're making enough progress. So the end game is still the same.

1:19:01 We just want to get there quicker and cognizant we didn't make as much progress last year as we wanted to. Chris? Good morning, Chris Meneeson at Deutsche. Firstly, just got to ask really about succession planning and kind of what's in tow at the moment, what's the expectation of timetable for both the chair and the CEO role? Okay, well, the CEO role, you know, I'm, will be definitely here till March next year. If it goes on a bit longer than that, I would, of course, be flexible on that. But the process has started. We've been discussing it for quite some time. This is not a shock to the board. This has been on the cards for some time.

1:19:47 So that process is well on, started and moving in the right direction. And we're very confident we'll be able to do it in those timescales. And I've said I'd like to, you know, I like to do things orderly and a chairman should stand down at an AGM. the AGM is in May the next AGM will obviously be in May 2027 which by then I will be a special advisor as opposed to being on board full time that's the expectation and on the chairman succession we have a number of options and we just wanted to give ourselves another week or two to get that right but again it's all in hand nothing to see here got you very clear Next one's just about affordable housing funding.

1:20:33 It slips like a lot of things with this government. Do you think there's much of a danger it doesn't land in Q3? I mean, what could happen to kind of slow the progress there? So the... Bidding opened at the end of February and there are two routes that people can bid for funding. You can bid to be a strategic partner and a strategic partner plus a second category that's just been introduced this year. The outcome of that will be a process of discussion, all bids having to be in by the second week of April. This is where you're going for this sort of 700 million total would be the maximum anybody would be awarded.

1:21:18 That will then prompt some discussions with those bidders and I would expect in June and July you will get some sighting and there'll be an announcement in late summer. But we move forward with confidence, I think it's fair to say. The second aspect of looking for funds is you're not a strategic partner. You go for individual, what's called continuous market engagement grant awards. So that's essentially, you can knock on the door and say, I'd like you to fund this scheme, please. That process takes six to eight weeks. homes England have already received bids under continuous market engagement at the end of April so you can work out the chronology of that so people will be getting funds at the end of February people will be getting funds during March and April under that continuous market engagement route and looking to commit them so My view is it will all wash through over the next four or five months and everybody will be able to share the visibility of what they've been awarded and that that will start to be implemented.

1:22:32 But the interesting thing for me is, and my point with the slide of inflection, we are past the point of that dampening progress. So whilst The visibility of what everybody is going to be awarded as funds is not yet there. Housing associations have reworked their business plans, putting into effect and introducing the assumptions following the government's policy decisions. So they're already now out there looking to trade, looking to commission. So that process is underway. Thanks, Stephen. And the last one's really just about, I suppose it relates to previous questions and I may get a similar answer, but what's the right capital employed and what do you think the right weight balance is?

1:23:18 Last year you were talking about a 200 release. It went up a bit. Where do you think you could get to there? Well, over time, our direction is to get to 40% rookie. So really to get to that in the time period that we're talking about, the next five years or so, we need to get capital employed down to 2 billion. so how are we going to get there we're going to keep acquiring new sites with that 40% being a minimum hurdle rate for new acquisitions and others will work their way out and we'll start to leverage some of these economies of scale as the volume builds up so that's the sort of level and it's the areas we've got to try and take it out of is WIP, land and joint venture investment Clyde Thanks Clyde Lewis I think I've got three if I may Stephen you put up the sort of I think maybe Greg did the sort of mix for affordable homes obviously you share one up with PRS going down what happened within local authorities within that part as opposed to housing associations are you working now with more local authorities and is that start Local authorities, we are engaging with more, we are doing more work.

1:24:38 We have sustained a pretty good platform over the years, particularly our footprint in London has been nearly all with local authorities as hugely beneficial long-term relationships for delivery with local authorities in London. And outside of London, we're working with local authorities in Cornwall, we're working with local authorities in Manchester, we're working with local authorities in Gateshead. So the geographic distribution is good. Those local authorities, of course, benefit from the policy changes the government has made. So rent convergence. 10-year rent settlement, ability to bid for grant, those are all benefits that local authorities will have within their business plans for their own stock and their own commissioning. So I do expect local authorities to pay an increasing role going forward because they've got the additional capacity within their business plans to do that.

1:25:31 Okay, thank you. Greg, the 40% uplift that you're talking about for the sales rate, How is that built? Has that still very much got more momentum in it? So is that 40% going to continue to increase? No, I think 40% is about what we are looking for. So there or thereabouts. Yeah, it was 35% two weeks ago. So it's building momentum because obviously marketing and everything takes a little bit of time. But 40% will be about the level that I'm happy with and the level I would expect to go forward. It doesn't need to get to 50% or 45%. 40% is absolutely fine. So we're selling at, and we don't give private sales rates, and we're not. So we've said it's up, but we're selling at sales rates.

1:26:19 I've not seen in the nine years I've been at Bovis Visery. Are you expecting to see a competitive response that might dull about 40%? I'm expecting to see it and we've allowed for that. Because if we're, you know, Vistri East Anglia and we're doing what we're doing, you know, that might affect a few sites in East Anglia, but we are Vistri and we're everywhere. So, yes, I would expect to see some increase in competition. so it's no different than GT back in 2008-9 were selling the recipe others weren't in the end they did Adrian Kiersey, Daniel Ibram a few if I may in terms of the £39 billion affordable homes grant Getting clarity for September, what proportion of that 39 billion will it be allocated?

1:27:15 Will there be presumably a proportion left floating for later allocation? Continuous engagement, yeah. We don't know, put simply. That's a conversation that Huntington will be having with the Treasury in terms of the rate at which that is deployed. Certainly, they will be making allocations across the 10-year programme. how that's then structured and how that's pulled down and how that's annualised is a conversation that each of the bidders will have with Homes England and then Homes England have a corresponding conversation with Treasury so we're not aware of that yet but we do know that the weighting in the bids So there are several things weighted. Are you using MMC?

1:28:05 Are you able to deliver quickly? Are you supported by local authorities? There's a range of things that contribute to non-financial appraisal of your bid. And one of them is the ability to deliver within the lifetime of this Parliament, i.e. over the first three years of the programme. that is given a positive weighting. With Vistri, with our land bank, with our relationship with RPs, with our frameworks and that forward visibility, as you'd expect, we will score highly on that. So I would expect a significant amount of what we bid for and receive will be deployed within three years. And to link to that ability to deliver, when you look in terms of the number of your average sites, it could be...

1:28:56 building on this year next? Can you perhaps give some guidance in terms of the number of individual sites? I'm thinking of triangulating it back to that 1.42 unit sales rate that you've currently got. Well, in terms of outlets, we're about 180 outlets at the moment. In terms of building units, we're about 300. 300, yeah. Over 300, yeah. Oh, okay. So it's a building that's significantly above the sales outlets, obviously, because we are building after we've finished selling and building before we've started selling, and there are also sites where we don't sell because they're fully partner-funded. Okay.

1:29:46 Sorry, I can't hear that. Sorry, Amigala from Citi, a few follow-ups from me. The first one was on the discounts. Can you give us some colour regionally, if that is concentrated in a few locations, or is it across most of the sites across the country? It's concentrated, I would suggest, in a few places. And can you talk regionally about where should we look at in terms of the sort of points? London. Southeast would be the biggest areas. Okay, that's helpful. The second one was on the land bank margin. Can you comment a bit about where does the current land bank gross margin sit and how has that shifted over the last year? Tim, you got that? Yeah, so the land bank margin is slightly above the overall group margin, still lower than we would like it to be because we've still got the impacts of some of the legacy sites working its way through sort of mid-teens.

1:30:46 And maybe just a technical one on the forward sales position. Assuming that step up that you're seeing from December is largely driven by the open market sales. No, no, it's not. It's helped by open market sales, but it's also housing association entering into the market again for two reasons. One, three reasons actually. Rent convergence, rent settlements is reason one. Reason two is housing associations can see and they're talking to Homes England, the GLA and they know what kind of money they're going to be getting and the government are putting huge pressure on them to actually start building. and three shortfalls in their programs so they've actually now gone you know March is their year end and that happens every year obviously but this isn't not only a year end it's the end of the 21-26 program and Homes England have been specific saying the people that will do the best in the 26-36 program are those that deliver well in the 21-26 program and a number of housing associations out there are a little bit short and that's caused a huge amount of activity for us over the last six or seven weeks.

1:32:01 So three areas, but it's not just private. And is that, and maybe in terms of the technicality, is that largely tiered for 2026 or is that, is there a tail into 2026? No, that's mainly targeted for 2026, yeah. Thank you. Yeah. I'm getting told to do that by Kate, unless it's just me. Okay, thank you very much. Have a good day and thanks for coming. Cheers.