Vistry committed to partnership model amid divisional restructure

News16.01.2511.00 AM by Stephen Delahunty

House builder Vistry will consolidate its structure into three large divisions, reduced from six, as its chief executive looks to keep a closer eye on the business after three profit warnings over the past few months.

Construction site with a Vistry sign on the fence around it

Picture: Alamy

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House builder Vistry will consolidate its structure into three large divisions, reduced from six, as its chief executive looks to keep a closer eye on the business after three profit warnings over the past few months #UKhousing

The FTSE 250 firm updated the stock market this week that its profit before tax is expected to be in line with the £250m it reported in December.

This figure was down on previous guidance of £300m. Vistry pointed to delays to “expected year-end transactions and completions”. It said agreements with some partners, which were expected to complete in its current financial year, had taken “longer to conclude”.

This profit warning followed a November update in which the house builder revealed its annual profits would be £165m lower than expected. An extra £50m impact was found from understating build costs, which it blamed on “insufficient management capability”.

The reorganisation appears to be an attempt to get a grip on some of the issues identified in recent months. The firm explained it aimed to “reduce reporting lines and enable the chief executive to get closer to the business whilst ensuring the group is well positioned to execute upon its partnerships strategy”.

The reduction from six to three divisions will see each one led by an executive chair that reports directly to the chief executive.

Vistry reviewed all its sites before this restructuring, after it identified that build costs had been understated by £115m across nine projects in its south division in October.

No systemic issues were found outside this division. However, the firm did identify a number of small value adjustments from the detailed site cost value reconciliations carried out across the other five divisions, which resulted in a total £8m reduction to its adjusted profit before tax in 2024.

Vistry told the stock market: “The group implemented a series of control enhancements across the group during Q4 2024, including a tightening of procedures around the monthly site cost reviews, and an investment in increased commercial assurance.

“Whilst these control enhancements have been applied group-wide, the board remains confident that the significant issues identified in the south division have not existed elsewhere in the group.”

Elsewhere in its scheduled trading update for the year that ended on 31 December 2024, ahead of publication of its full-year results on 26 March 2025, the firm reported total completions were up 7%, to 17,200 homes.

That figure included 3,200 delivered through joint ventures. Partner-funded units increased around 18%, to 12,600.

More than 220 new partner deals with over 70 partners were agreed in 2024, with more than 70 of those deals agreed in the last quarter.

It also noted a strong pipeline of attractive new land and development opportunities were secured in the year, totalling 16,500 mixed-tenure units.

Vistry said: “We continue to believe the partnerships market remains very attractive and are committed to our asset-light, high-returns partnerships strategy.

“Increased cash generation together with continued capital discipline is a primary focus for 2025. Working capital levels were higher than expected at the year end, reflecting a slower open market sales rate than forecast and a resulting build-up in stock.

“The group is targeting a significant reduction in stock and work-in-progress levels in 2025 and will adjust build rates in line with changes in market conditions.

“A significant amount of work has been done to understand and address the issues faced in our former south division and with new operational leadership in place, we are confident we will make rapid progress in stabilising the affected regions within this business area in 2025.”

The firm told the stock market it would also like “early clarity on rent settlement and meaningful investment in the funding programme for affordable housing to accelerate the supply of housing, provide certainty to the supply chain and support economic growth”.

It did warn that the open market remains constrained, with a recovery in consumer confidence key to sales growth in this area.

Despite a rocky few months, the firm continues to press ahead with its partnerships and development agreements.

Earlier this week, it revealed a joint venture with housing association Bromford, and built-to-rent provider Sigma Capital Group is set to deliver 688 homes in Birmingham.