Vistry Group PLC (VTY) Earnings Call Transcript & Summary

Good day, and welcome to the Vistry Group conference call. At this time, I would like to turn the conference over to Greg Fitzgerald, Chief Executive. Please go ahead.

Thank you, and welcome all. I'm joined this morning by Earl Sibley and Graham Prothero. So brief introduction from me. So I'm exceptionally proud of all that Vistry has achieved in 2020. This reflects the huge effort and commitment from all of our employees, for which we are very grateful. Despite the obvious challenges of 2020, I believe strongly that we finished the year in a really good place and a much stronger company, and I will briefly cover the key highlights and then open up to Q&A. So starting with integration. Our priority on January 3 was the successful integration of the enlarged business. And we did think a little bit about pausing for a break because it was quite a strenuous acquisition, but thank goodness, we hit the ground. We just didn't take a break. We absolutely got on with the integration straight away. So we hit the ground running, made excellent progress by the end of March, allowing us to deliver a rapid and coordinated response to COVID-19. The GBP 44 million of synergies to be delivered by the end of this year or GBP 9 million ahead of our initial expectations and will be delivered at a GBP 5 million lower cost. We fine-tuned the Housebuilding operating structure through the year, and I'm very happy with where we are now, led by Housebuilding's CEO Keith Carnegie. Bovis and Linden are operating as more housebuilder, whilst leveraging the benefits of having 2 leading and distinct brands. Partnerships has come into its own. It was the -- let's not forget the key rationale for the acquisition, and I'm even more sure of its potential today. Quality. Customer satisfaction remained a key priority throughout 2020. Our HBF score in our inaugural year of Vistry has been consistently above 90%, and we will finish the year at circa 91.5%. That's ahead of last year. And then the reorganization taken -- everything taken into consideration which I think is an excellent performance and therefore be a 5-star housebuilder. Although we've achieved strong sales in the second half and delivered high completions in November and December, the year-end was well controlled and about as calm as I've ever can remember. Worth noting that the new HBF year, which started on the 1st of October 2020, has started well, and we are currently at 94%, which is above the industry for the large housebuilders' benchmark. So we're moving forward as well. In Partnerships, you heard from Stephen Teagle, CEO of Partnerships and his team in November, this business has a very clear and ambitious growth strategy. Its resilient revenue model, both partner delivery and a high proportion of mix and yet forward sales, provided excellent cash flow support to the group through April and May. And the business has made excellent progress against its strategic objectives in 2020 despite the challenges with mixed tenure units up nearly 30% in the year and 70% in half 2, driving a strong improvement in operating margin. And we expect to see an acceleration of this growth in 2021 and beyond and see no issues. We're getting to the 10% margin targets that we said at the time of the acquisition. And it's interesting to note now that those margin targets aren't just me saying that, that's now bottom-up and in the hands of the business units. The business is currently in the final stages, I would say, of negotiation on 2 schemes, which will deliver in excess of 2,000 units, and both have forecast growth margins of more than 20% and return on capital of in excess of 40%. And I would hope that we would be able to bring those 2 schemes to a head over the next 2 months. And if and when we do, that will absolutely underline the strategic importance of the acquisition. On the balance sheet, our gearing has weighed heavily on our share price, we think, during 2020, and I'm very pleased to report a net cash position of GBP 38 million at the year-end, huge progress from the net debt position of GBP 357 million as of the 30th of June, so a near on GBP 400 million swing. Again, I'm not seeing the likes in my career. This result reflects the group's strong second half trading and low cancellations and our firm focus on efficient working capital management. Pleasingly, there were no unusual or individually significant transactions, i.e., selling land, and the deleverage has not come at the cost of investment. We've been active in the land market, maintaining our total controlled land bank in the year, and we have all the land required for 2021, and we're in a great position for 2022. And whilst we've maintained our total controlled land bank, we've reduced our land creditor balance. So our land creditors were around GBP 375 million at the end of June, and the estimate at Christmas is GBP 320 million. So when you take the reduction in land creditors and the movement in debt into cash, overall, I would suggest there's been in excess of GBP 450 million swing. Against that as a background, we move on to dividends. And with this net cash position, our robust balance sheet and the outlook and cash profile for 2021, the Board now intends to resume dividends for the final dividend in respect of full year 2020, which will be payable in May. We intimated that we would bring a dividend into 2020 in November, and we guided the market to a dividend of 10p. That said, the cash position is dramatically better than where we thought it would be in November. So I guess that we will discuss it fully at the February Board meeting. The dividend will be somewhere between 10p and 20p, but to be ratified and agreed by the Board in February. So from an outlook perspective, we start 2021 with a strong record forward sales position with 55% of total Housebuilding and Partnerships mixed tenure units already secured. We saw a sustained step-up in our sales rate in the second half of 2020, and we're encouraged by the levels of demand during the second national lockdown in November. In the last 6 weeks of the year, our sales rate was up by 20%. And in fact, during the weeks of the national lockdown -- second national lockdown in November, sales were up 26% or thereabouts against November 2019. Importantly, since the beginning of November, we have taken over 400 reservations for completions in quarter 2 onwards, and this is despite the changes to Help to Buy and the expected end to the stamp duty holiday. So at least 400, probably near 500 now when you take the sales in the first week of January. The customers have bought in the full knowledge that they will not be getting the benefit of the stamp duty holiday because they've been told the completions will be after the 1st of April. Our strong supplier relationship and good commercial control mean we haven't seen any serious issues from Brexit. We are very alert, of course, with the wider market uncertainty and the potential implications of the current lockdown. Our prospect levels are up year-on-year, and the first week or so trading has been good. In fact, our prospect levels were up on the first week, as are our sales actually near or thereabout, but the prospect levels were up and considerably on the first week of 2020. And let's not forget that the first week of 2020, the conservatives have just been elected with a big majority, and there's a bit of euphoria around that, and COVID was just something that was going on in China. So as I say, reservations are at least in line with where we've hit, but it's January 11 today, so it's very, very early days. So assuming stable market conditions, we expect to deliver significant progress in 2021 and are confident we can step up our completions across the group, increasing our profit before tax to around GBP 310 million. So on that, thank you, and we'll be now happy to take any questions.

[Operator Instructions] And we'll now take our first question. It comes from Aynsley Lammin of Canaccord.

Just 2 questions for me, please. First of all, I wondered if you could give the average net debt for 2020? And then what you expect average net debt to be for '21? And then secondly...

Aynsley, I'll answer the first one because we forget it, otherwise. So the average debt in 2020 was GBP 350 million, and we would expect the average debt in 2021 to be at least GBP 100 million lower than that.

Brilliant. And then just wondered if you could comment on pricing. What did you see in terms of HPI in the second half? Are you expecting to push -- be able to push prices a bit higher this year?

What I can say is, I would say, over the whole year, we saw inflation of just under 1%. And I can say to you that in the first week of January from the reservations we took, prices were just under GBP 350,000 up on our forecast. So we're not expecting to push prices, and we're not really expecting any build inflation as there wasn't much in 2020 for the first time in 5 or 6 years. So just under 1% in '20. And as with the number of reservations we've taken in the first 10 days of the year, pricing levels were just under GBP 350,000 up, which is a good sign, but early, early days.

Our next question comes from Will Jones of Redburn Partners.

I think 3, if I can, please, which basically explore 2020 performance and the 2021 guidance. The first was just looking back on the year, profit-wise. Certainly, when I look at the Housebuilding and Partnerships' revenue metrics you've given, they appear to be better than mine. And I think better than the numbers you'd guided to around the midyear stage. And obviously, the profit guidance is still around the GBP 140 million mark that you talked about in November. So I just wondered, is there anything to note on margins that differed from expectations at all in the second half?

On that, Will, I would say that the margin in Partnerships, so in Partnerships, last full year to June 2019 and Galliford Try's ownership was about 5.6%, and we would expect the margin for full year 2020 in Partnerships despite COVID to be at least 6%, so an improvement. And on the margin on Housebuilding, yes, there will be an improvement in the second half, but Housebuilding was affected more than Partnerships by COVID. And we -- how can I put this, we've been very, very prudent towards the end of 2020 with provisioning, et cetera, et cetera. So we would expect the margin for Housebuilding to bounce back to -- gross margins to bounce back to 22%, and I'm confident of that for 2021 and would expect the embedded land bank margin that we quoted at 24.2% at the half year to be closer to 25% when we come out with those numbers on February 25 with the full year results.

Great. That's helpful. The second one, again, just looking back, was just -- perhaps you could just reflect on that delta in the cash performance from, again, maybe half year results through to the end of the year in terms of what changed, I guess, above and beyond perhaps conservative forecast? And are there any, I guess, timing effects in the -- maybe unwind slightly against you in the year ahead?

Okay. So on that, I would say that, first and foremost, there was some improvement reporting. Well, you're right there. But the cancellation rate is back now to circa 20%, which is the historic norms. Even in the first lockdown, it never really got much above 35%. And we were, at times, forecasting 75% cancellation rate, but we never got anywhere near that. We've absolutely managed our working capital very, very closely. But we have got bill for March, which is our title for what we're trying to do, getting as many units for our customers ready for the stamp, so that they can benefit from the stamp duty holiday, which comes to an end, as currently planned at the end of March. So I would actually say, that it made our cash position worse than it could be because we are investing heavily in that. Part-exchange was managed very, very well through the year, Help to Buy receipts. And we're, again, very well managed. Income from our joint ventures with our housing associations was well-managed and contracting cash in Partnerships put in a great performance. So I would say that the cash position we did no more, no less than what we would normally do at a period end. In fact, overall, we did pay a fair number of land creditors on Christmas Eve. So the cash position, you shouldn't be taking -- it's a prudent cash position. It could have been better.

Great. And then the last one, just maybe looking ahead to the profit guidance for the year ahead, which, again, similar to what you talked about in November. But is there any change in how you feel the moving parts might sit within that? I guess the one metric we can look at the site number guidance of around 150, looks to be about 5 in light of what you talked about a few months ago, but perhaps the order book is better to start the year. Just I guess, any changes on the umbrella there, please.

Yes. The order book is better. So as it stands at the moment, we're -- in Housebuilding, we're about 146 partnerships, 27, so 173 altogether. And we would expect the average in the first half of '21 to go from 173 to 181, and in the second half to go to about 186. Apart from that, no change to how we expect to get to the 310.

We'll now take our next question from Arnaud Lehmann of Bank of America.

I guess if you could comment on your recent reservations, I think you mentioned 400 to 500 reservations, which are beyond April. Have you seen any change of the mix of customers? Like, are secondary buyers still in the market, even though they don't have access to Help to Buy? Have you sold houses above the new price caps, therefore, first-time buyers are still in the market without the support of Help to Buy as well?

Yes. So we haven't -- so from the 1st of November, it's somewhere between 450 and 500 customers have bought with completions after March 31. We've seen no change in the profile of those customers. And also, we've sold getting on towards 100 houses during December on the new Help to Buy scheme for first-time buyers from the 1st of April. So in both instances, we would still like to see the government extend the stamp duty holiday. We would like to see the government, if they were to extend it, to not finish it off. And with a fall off a cliff, we would like to see it tapered, cascaded and coming to an end. But that said, I'm less worried because of those stats. And we've also got 1,900 current regulations, which are for beyond the 31st of March. So that includes the -- getting on towards 500 that we've taken since the 1st of November with all of those customers knowing that they will not get the benefit of stamp duty holiday. So I'm -- we're concerned about everything, and it's worrying times at the present moment in time. But the stamp duty holiday coming to an end, I'm less concerned today than I was in October. And the Help to Buy change from February and then going into April with regards to first-time buyers, again, I'm less concerned than I was because we've been successfully selling on it during December.

Makes sense. Maybe one last one on your -- on the regional differences. I mean the strong demand, the 20% increase in November, December, are there anything to highlight in terms of North, West, East or South of the U.K.?

No. Our 3 Housebuilding businesses, West, East and South, no, it's been relatively good. I would say on the margin, maybe the southeast was a bit slower, but that's just on the margin and relative to Christmas.

Our next question comes from Charlie Campbell of Liberum.

A couple of questions from me. First question is just on incentives. And just wondering whether you think the industry might have to step up the level of incentives to get through the stamp duty hump as it were? Whether kind of you sort of adjust cost prices a bit to get...

Just on that one, please. Just on that, Charlie, we haven't. So the 1,900 that have been taken through the year, that go beyond March 31, we haven't. And we certainly haven't given any discount away in the run-up to Christmas, where in excess of 400 to 500 units have been reserved on the basis of post March 31. And as I said, previously, Charlie, that's one of the questions was the vast majority of over 100 reservations we've taken in the first 10 days of January. I don't know the exact stat, but I would guess the vast majority of those were for completions after March 31. Pricing was just under GBP 350,000 up on our current forecast. We did give some discount on the 1,000 unit Heylo deal. And on that Heylo deal, we could have taken up to 300 of those units and put them because there's a backstop included in the deal. We could have taken up to 300 in our carryforward position of 40%. But again, we've been very prudent. We've only taken 33 of those 300 into our carry forward position. So again, with all of these numbers, they're all pretty prudent. So who knows, Charlie, but there's a pretty good track record at the moment, whereby we're not giving any discount for units after March 31.

Yes. And the second -- yes, of course. And the second question, unrelated, you talked about kind of your supply chain holding up to Brexit and not seeing too much in the way of disruption. I guess timber is something that's grabbing the headlines and maybe the timber issues are not Brexit-related. But could you just kind of talk to us where you are on kind of timber supply? And whether that's something we have to worry about for the year?

I'm not worried about it, but do you want to take that one, Earl?

Yes. Thank you, Greg. So I mean, Charlie, we are not concerned in terms of material supplies across the board. We've been working so closely with them last year as a new group in terms of the deals we've got in place. And already this year, working very, very closely with them. There will be the odd hiccup, but there always is in truth. So we are managing through them. So not concerned at this point.

We'll now take our next question from Chris Millington of Numis.

Just a couple for me. I'm just wondering if you could comment on the land market, what you're seeing in terms of pricing, conditionality of deals, availability? Just some general comments around the land market and how you expect to wind that during the course of '21?

Okay. So on the land market, it remained soft. I don't think there's been -- we're paying -- I don't think it's any cheaper than it was pre the pandemic. But there is some evidence out there that deferment terms are a little bit better than before the pandemic started. So pricing levels about the same. Maybe we can get a little bit better on the deferment and in some parts of the country, subject to planning, which suits us just fine. But the overall market, again, there's enough land to go around. And I would say history and the sector are in the vast, vast majority of cases being, very sensible about how we approach it.

That's great. And just following on from Charlie's question before, I just wonder if you could put a figure on what you saw on cost in '20 and your expectations for '21? I presume there's probably some benefit from the enlarged business in that respect?

Yes. Do you want to take that, Earl?

Yes. So I mean, I just mentioned, obviously, a lot of work with our supply chain last year. We did revise deals across the board. A number of those were for at least 2, in some cases 3-year period in terms of fixed price deals. So I think we are in a good place, and I would take the place relative to some others in that respect. So yes, positive benefits from that going forward.

And wonder if the stat stays low single -- 0 to low single digits...

Yes. Yes. Yes. Very low single-digit is where we're at.

Understood. And final one for me is just your appetite to do more Heylo types of deals in light of where you are on forward sales at the moment?

Yes. So as of right now, probably it would have to be a very, very good one over the next 2 or 3 months for us to do anything else. Chris, we feel pretty comfortable. And it's only 10 days of the third lockdown. But I'm surprised on the upside on pricing levels and reservation levels that we've taken in the first 10 days, but for early days. So if somebody came along knocking now with a large bulk deal with a hefty discount, we would probably not be prepared to do that right now, but we'll see how the next few weeks go.

And we'll now take our next question. It comes from Gavin Jago of Barclays.

I've got a few questions, if I could, please. The first one is just around construction levels. I'm just wondering if you've seen kind of any impact at all from on-site -- from, I guess, higher transmission rates of COVID. Just I know you didn't want to talk about it too much at all, you're kind of back to close to 100%, but any issues at all?

Yes. Just on that Gavin. And so we'll do one at a time. Yes. So when we're on site, which is on all of our sites, as it stands at the present moment in time, we're at or close to 100% efficiency levels whilst following the COVID rules, which have been inspected on numerous occasions over the last 6, 7 months by the health and safety executive. But you're quite right, Gavin, there has been instances where delivery hasn't turned up in the first 10 days, same [indiscernible] and because the supplier hasn't been able to get covered because someone's either got COVID or is self-isolating. And we had in the first 10 days, 1 site, fairly enough in the Southwest, which is the least affected area which we've shut down for 2 or 3 days because of the COVID instance on site. So we should expect, I would -- so the principle of building in COVID is well established, and we're good at it, and it's 100%, but I would have thought over the next -- for the rest of January, February and whatever into March on this third lockdown, we are expecting, and I'm sure we will get more individual, if I'm making sense, instances of holdups because of deliveries and/or people self-isolating and/or actually having COVID. Does that make sense?

Okay. Okay. Then the second one -- yes, that's fine. The second one is around land creds. Just wondering if there's any kind of guidance, I think, Will kind of pointed to earlier on? Just kind of any unwind into and I guess the owned and controlled part in FY '21 where land creds may end up this year? I know it's difficult to forecast land spend in second week of Jan, but just any rough guidance on where the number directionally might be moving?

Earl?

Yes. No problem. So Gavin, I mean, one of the things we've done and we've talked about before is we have been able to secure a few hundred new plots on a conditional basis, and we continue to do that and aim to do that through this year, and that is helping put the land payments closer to when we're actually on site. Look, we are looking to grow in partnerships and replenish that Housebuilding land bank. So land creditors may tick up a little, but there is no significant unwind to follow. And as Greg mentioned, we were settling land creditors at the end of last year.

Sure. Okay. Very clear. And then final one, hopefully an easy one. Just a bit of clarification on the -- I guess, the reservations for Q2, that 450 to 500, Greg. Was that a number that you've taken since the start of November? So in terms of totality for Q2, the number is 1,900, is that level?

Yes. So we currently have 1,900 reservations or exchanges, which won't complete until after March 31, i.e., after the stamp duty holiday. Of that 1,900, 450, 500 have been reserved since the 1st of November. When you said it was an easy one, I was going to pass that one on to Graham, but I answered it now.

You did well, Greg.

Our next question comes from Andrew Murphy of Panmure Gordon.

I have 3 questions, if I may. So the first one was about sustainability. I was wondering if you could just talk a little bit about that and the review that you're talking about, whether that's -- or would it like to result in? Does that mean that you'll be looking at perhaps net gains in biodiversity, for example?

So we'll take that one. And Graham, do you want to take that?

Yes, for sure. I mean, we've actually -- we've reviewed it across the piece, Andrew. I think we're aware that perhaps as an industry we've got -- we've been slower out of the blocks than others. And certainly, I think the predecessor -- our predecessor companies were also -- you could say, we were -- we weren't exactly at the forefront of our own industry. So we set about this with some relish very early draws. And amongst everything else that was going on, we didn't ignore it. So we've spent several months reviewing this in all aspects. So yes, looking at biodiversity, we got some very interesting ideas and things that we can do there. And of course, I'm thinking, scratching our heads around the net 0 issue as well. So could talk for a long time. Don't want to take a lot of time this morning, but we have looked at it, roots and branch. We've got some good ideas, and we intend to talk about that quite extensively in February when we bring out the full year picture.

Brilliant. It's good to hear.

And it's fair to say, Graham, that it's going to be a real step-up in how we've approached it when the annual report comes out in February, as Graham said.

Yes. Okay. Perfect. And secondly, was just on cost, but not speaking more about labor. Can you just talk a little bit about labor inflation and labor availability, given the step-up in the volumes?

Yes. Sure. Okay. So labor availability, we're -- so if you go through the year, we were seeing the usual labor cost inflation in January, February and March. Then there was obviously the first lockdown, and we actually closed our sites for 3 or 4 weeks. We were the first housebuilder to start back up towards the end of April. Between April and July, going into August, we actually were achieving at times 15% discount with our subcontractors because they were desperate to get back on to site. We were the first ones there, and there wasn't that much work going on, and we weren't that efficient in those first months restarting on site. That's not cruising. We just needed to get RM, get everything in place. And all of that 15% has broadly -- it might be a little bit here and there, has broadly been used up, as we've gone through the year, and we're back to kind of where we started at the start of the year. So a little bit of inflation in January, February and March. Then there was deflation for a few months in the middle of 2020. And then that deflation has slowly been eroded away as we get to the end of the year. So overall, as we've said, very little inflation. Availability of labor on site. We're back to where we were. It's never easy. The site manager's job is the toughest in the industry. But we believe we're not having any -- too many issues at the present moment in time. And the overwhelming feedback I get from our subcontractors is that they are very happy to come on to these 3 sites because their men feel particularly safe because of the COVID practices and procedures that we put in place. So start here today, we're not -- there'll be an issue over here or over there, I'm sure. But on a general level, we're coping quite well.

Perfect. And then just finally, just thinking about your expectations for 2021, you've previously given and you've reiterated pretax profit guidance. Can you just talk a little bit about the assumptions behind that and your confidence? Or are you just aiming a bit cautiously given that it's -- you're talking about more than doubling the profits, but it's quite a long way off yet. There's a lot of duration to -- and sales to go. So what gives you the confidence to be that forceful this early?

Well, we felt reasonably confident when we first came out with a number in -- was it September, Earl?

It was, yes, September.

Yes, in September. So in September, we came out with a number. And I absolutely agree there's a lot to do still. But in September, there is no way I expected to finish the year as well as we did in 2020. And I didn't expect to have a 40% carryforward position on private sales in Housebuilding, 53% or thereabouts on private or mixed tenure sales in Partnerships and 80% of the contracting, if you like. Partner delivery order book tied up in our Partnerships business. And on top of that -- and this won't be a normal year, but in a normal year, I'd expect to be not so confident about our land position because we own all the land for 2021. And our planning commission, I would expect to have a few more planning commissions outstanding than we've actually got. So against that, we've also finished 2000. And from September 2020 with an 11-month long lockdown, which we -- from a sales, we took reservations against November 2019, during the lockdown, probably closer to 26% up. So we have proven again that we can sell during a national lockdown. And that's been the case, because I'll keep saying it's early days, the first 10 days of this third lockdown. And we built without any changes really during the second lockdown. And that has definitely been the case. Again, early days in the first 10 days of the third lockdown or start of this year. So we use the word stable market condition. So the carryforward is better in every instance, whether it's mixed tenure, private or contracting partner delivery, it's better than we would have expected. The pricing levels are probably well up on forecast better than we expected. And the year-end was very, very orderly, and then we've been very, very prudent with how we're going to finish 2020 from a profit perspective and coming into 2021. So I agree there's a lot to go, but we would have grabbed with both hands and more position on January 10 or December 31 compared to where we first came out with the number in September.

We'll now take our next question from Glynis Johnson of Jefferies.

I have 3 questions, we'll do them one by one. First one is an easy one for Earl. Just a clarification on the margins, you said bounce back to 22%. I wrote down in my notes, but I didn't get a time period. Is that the guidance for '21?

Yes. That's right, Glynis, yes, in terms of the housing gross margin where we're looking to get it back to in '21.

Okay. Second one, just in terms of Help to Buy proportion. You talked about 450 to 500 customers who have bought since November, and then you say that Help to Buy or a new Help to Buy has been 100. Do you think that sort of 20% is indicative of where Help to Buy usage might be going forward? Or is that just about the timing when Help to Buy was usable given the sign update?

I think the -- I mean we were 30%, 35% of sales. We were one of the lower users of Help to Buy, still critical, but one of the lower users of Help to Buy in the sector. And the fact that it's 70%, 75% of that has always been the first-time buyers, I suppose you've got to expect the Help to Buy percentage to be slightly lower than it was. So I would expect it to be probably nearly 25% to maybe 30% in '21.

Okay. And then last one, just in terms of your build where you talk about build ahead of the March handover that you've got. I wonder if you can kind of put some sort of numbers on it. What are your build equivalent units going into '21, perhaps compared to where you were in 2020?

Cool. That's a good question, Glynis. What I would say is stock -- actual stock units are dramatically less because we pretty much sold everything that we built and completed on it. I don't know if you can answer the second part, Earl, but if you take the stock out of the equation, we have -- I mean, I asked all of the managing directors of our business units and the construction directors to look at -- it was back in September, look at bringing forward as many unit complete -- physical unit completions in April and May into March. And so -- and we can trying to get build for March as it were. So we've been doing it since September. It wasn't something that we decided to do on December '20. So the actual amount that we're bringing forward would be -- I would like to spend in the 100s, but equivalent, Glynis. And unless you can answer that better than I've just done, Earl, maybe we'll come back to you on that, Glynis.

We can do. I mean, Glynis, we are building in line with any program we have in Partnerships. And in Housebuilding, we are building in line with the sales rate. Generally, there's probably a few sites we'd like to build a bit faster on in terms of that way around. And look, we -- the forward sales is helping that stock level be low in terms of the unsold stock. We will still be a second half weighted business to some extent. So that will come through in the working capital cycle through '21.

What we're expecting, 42%, 58%...

Yes, absolutely. Yes, about 42%, 58%, yes, during '21.

It's 42% first half, 58% second half.

Yes.

[Operator Instructions] We'll now take our next question from Clyde Lewis of Peel Hunt.

I've got 2 there as well. Two and I'll do them one at a time, as ever. And Greg, just wondering how you're interacting with government. And what they're asking you to do, if anything different? And I suppose how the dialogue is going clearly around COVID, but also around sort of longer-term sort of volume aspirations for the government? What are they engaging with you on, if anything, at all, in particular at the moment?

Okay. Well, I think I'm having a monthly conversation with Chris Pincher, the Housing Minister, on a one-to-one basis. We're also obviously having discussions through the HBF. And -- so we're talking about things like [indiscernible]. But if I have to answer your question, when we went into the second lockdown, I found the Housing Minister extremely helpful, saying, "What do you need from us to ensure that you can carry on land books at the same level as you are at the present moment in time and if we can help make it quicker, that would be great, too." So we talked about things like making sure builders' merchants are open. We talked about statutory service companies, making sure that there's no point building a house if we can't get it connected. And speak as you find, they were very proactive, very, very helpful and continue to be. On the Partnerships side, there is absolutely no doubt. And Stephen Teagle is having numerous conversations with the government on this and housing associations. They are exceptionally keen to see increases in affordable housing, and they are very much expecting to see affordable housing as part of the infrastructure bill that they've set out, how they're going to spend coming out of the pandemic. So yes, it will be, I'm sure, bridges and roads and wind farms, et cetera, et cetera, but I wouldn't address to make how much spend the government will do in the affordable arena and partnerships arena because from a planning perspective, need perspective, it's relatively easy to get through, and you can pep up these schemes all around the country as opposed to maybe something like I guess 2, you're spending it in 1 particular zone, if you like. So very keen for us to carry on, very keen for us to build more on the private side. But I don't think we've seen nothing yet would be in my opinion of what's to come in the affordable housing arena. And I think it will be seen as the timing, if I may say, of the acquisition of the housing businesses with Galliford Try. And let's not forget that's the #1, by some distance, strategic rationale was to bind the Partnerships business will be seem to be very good timing in the years to come.

Okay. The other one I had was whether you had noticed any particular changes in demand for certain product types, sort of family homes or sort of 2-bed flats, whether there had been any, if you like, sort of regional shifts within moving out, I suppose, from city to suburban area, some people looking for studies and home offices, et cetera?

Yes. Definitely, and we and Linden in Galliford Try's ownership. So Bovis and Linden, 2 or 3 years ago, set out our strategic store that we wanted to build, let's launch 4- and 5-bedroom houses and more 2- and 3-bedroom houses, i.e., bring our square foot and average selling price down. And so that's been the target and strategy, and it's been pretty well implemented with what we've done and bought in the land market between us over the last couple of years. So at Christmas 2019 coming into 2020, the majority of the stock we had was 4- and 5-bedroom houses. We've definitely noticed that we haven't got any, if at all, much stop 4- and 5-bedroom houses. So if we were looking -- and I don't think this is totally normal times, but we would -- if we thought this is the way things are going, we would be relooking our strategy of 2- and 3-bedroom houses and maybe building a few more larger 4 and 5 bedrooms because there's undoubtedly been a shift towards that over -- during the pandemic thus far as people, you're quite rightly say, Clyde, are looking for more space and particularly offices as more homeowners are working from home. Is that it, Clyde?

Yes. That's it. That's great, Greg.

Thanks, Clyde.

It appears we have no further questions at this time. I would like to hand the call back to Greg Fitzgerald for any additional or closing remarks.

Thank you very much for that. Lots of questions there. And I just finish on saying we were delighted, and I'm really thankful to our fantastic staff for everything they did during extremely difficult circumstances in 2020, and they're doing more of the same as we go into 2021. So delighted with how we finished 2020. And as I said to one of the previous questions, the way we finished 2020 and have started 2021, albeit in a national lockdown, a few months ago, I would have grabbed it, as we all would have, with both hands. So on that, thanks very much. And no doubt, see you all virtually in due course. Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.