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Vistry blames ‘poor culture’ as extra £50m hit to profits revealed
The house builder has warned its annual profits will be £165m lower than expected after an extra £50m impact was found from understating build costs, which it blamed on “insufficient management capability”.
The FTSE 100 house builder revealed last month that its bottom line would take a £115m hit after it found costs were understated on nine of its schemes.
In an update today, Vistry said this total would rise by £50m, after an independent review discovered more schemes where cost projections were understated.
“The significant issues have been found to be confined to the south division and can be attributed to insufficient management capability, non-compliant commercial forecasting processes and poor divisional culture,” the firm said.
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The review found 18 sites where there were cost errors of more than £1m, which is double the number of schemes first identified last month. Five large sites account for around 60% of the errors, Vistry said.
The firm said its division was led by a management team from its former housebuilding business and the managing directors of all four regions within its south division were from that business.
The division covers Kent, Sussex, Hampshire and the Thames Valley west of London.
Vistry acquired rival Countryside Partnerships in 2022 in a £1.3bn deal.
The firm said changes and new appointments were “under consideration”, aimed at “improving transparency, enhancing management capability, reducing the length of reporting lines and ensuring closer proximity of the CEO to the business”.
It said the independent review, conducted by an accountancy firm, was expected to be finalised shortly and the board will “consider the outcome of formal HR investigations once completed”.
The understated costs were “symptomatic of general control issues, rather than any one particular cost type”, the update added.
Vistry said its full-year pre-tax profit would now be around £300m, which was also partly due to “reduced activity” across the division.
Last year, Vistry announced it was merging its housebuilding arm with its partnerships business to focus solely on mixed-tenure affordable housing.
Elsewhere in today’s update, Vistry reported that demand for its homes from registered providers (RPs) had been “uneven”.
“London and the South East have been more constrained, with RPs in London focused on longer-term estate reprofiling and regeneration schemes,” the firm said.
“In the Midlands and North, demand has been stronger, with continued interest in high-quality, low-rise, mixed-tenure opportunities.”
Vistry added that it “continues to work closely with our RP partners to secure new opportunities”.
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