Vistry Group (LON:VTY) outlined a broad restructuring plan following a CEO review that will reduce its operating footprint, reshape its land bank and shift the business toward a more selective mixed-tenure housing model.
Chief Executive Adam Daniels, who took the role in April, said the review found that the company’s partnerships-focused model could generate strong returns when executed with the right land terms, tenure mix and site controls. However, he said the transition to an all-partnerships strategy since 2023 had not been implemented consistently across the group.
Half-Year Performance and Charges
CFO Tim Lawlor said Vistry recorded a first-half loss of £30 million before the impact of CEO review items. The result reflected around £50 million of profit impact from discounting measures intended to reduce stock and generate cash, as well as lower partner volumes while housing partners awaited details of the new grant program.
Housing completions and revenue both declined 8% year over year in the first half, primarily due to lower partnership volumes. Open-market volumes increased as a result of discounting, while average selling prices rose about 3%, which Lawlor attributed to the mix of homes sold.
The company identified £50 million of CEO review-related charges to be recognized in the first half, including actions to close sites not aligned with the revised strategy and costs associated with clearing its part-exchange position.
Vistry also recorded a £475 million non-cash goodwill impairment. Lawlor said the charge followed a reassessment of goodwill associated with the acquisitions of Countryside, Galliford Try Partnerships and Linden Homes, using a discounted cash flow based on the revised strategy.
In addition, the group took a £79 million building-safety charge after an increase in assessments and claims related largely to historical contracting projects. Lawlor said 31 of 40 additional buildings identified were contractor buildings and that the company did not expect a similar surge in future claims.
- First-half units and revenue declined 8% year over year.
- Discounting had an approximately £50 million first-half profit impact.
- Goodwill impairment totaled £475 million.
- Building-safety charge totaled £79 million.
Land Bank, Debt and Southeast Exit
Daniels said Vistry had made progress reducing leverage, including lowering land creditors by more than £100 million in the first half. The company expects a further £70 million reduction by year-end and anticipates a total reduction of about £300 million during 2026.
Unsold private work in progress has also fallen. The group said it had reduced private WIP by £300 million earlier in the year and by a further £80 million since the half-year point. It exited its part-exchange position in the third quarter, generating another £20 million of cash.
The review concluded that certain sites, particularly in Southeast England, carried too much capital exposure and combined high-value open-market homes with mixed-tenure schemes in ways that weakened sales rates and returns. Vistry plans to exit private sales in Southeast England over the next several years and focus the region on fully pre-sold affordable housing and private rented sector schemes.
The company expects to exit about 2,700 private-sale plots in the region through a combination of land sales, open-market discounting and bulk sales to partners. It has taken charges intended to support this transition and expects the actions to generate an additional £200 million of cash over the next two years.
Vistry plans to reduce its owned land bank to 36,000 plots from 51,000 currently. It will also reduce regional operations from 25 regions to 12 operating areas, move land buying into divisional teams, and standardize its product range from roughly 100 house types to 35. The company will retain the Linden brand while retiring the Bovis and Countryside sales brands.
Revised Strategy and Financial Targets
The revised strategy targets annual output of 12,000 homes by fiscal 2031, down from historical volume ambitions. The intended mix will be 60% partnership-backed homes and 40% open-market homes, compared with a roughly 70% partnership and 30% private mix in recent years.
Daniels said a review of active sites found that 59% of the current business was performing well, with an average gross margin of 18.5%. The group intends to replicate the characteristics of those sites, including back-to-back land and partner agreements, standardized housing products and lower upfront capital requirements.
Vistry targets a 12% operating margin, return on capital employed above 30%, operating profit of £450 million and average daily net debt of £300 million in the medium term. It expects average daily debt to fall to £500 million in 2027 and below £400 million in 2028, reaching £300 million by 2029.
For 2027, the group is targeting adjusted profit before tax of £185 million and average daily net debt of £500 million. Lawlor said the outlook assumes stable open-market conditions relative to current levels, while partnership activity is expected to improve as affordable-housing funding begins to flow.
For 2026, Vistry said trading deterioration in the summer reduced its normalized profit expectation to £165 million from the approximately £200 million indicated in July. It said roughly £40 million of expected profit from partnership transactions would be delayed while terms are renegotiated under the new investment criteria.
Funding, Partnerships and Outlook
Vistry received a £350 million direct grant allocation under the Social and Affordable Homes Programme in August, the largest direct allocation announced. Daniels said the wider £9.6 billion program involved 33 partners, 29 of which already work with Vistry.
The group has 150 partners under contract and said it has £3.4 billion of additional value under negotiation across 60 partners. Chief Executive of Partnerships and Regeneration Stephen Teagle said Vistry expects to establish 12 to 15 strategic development agreements with key partners, with the bulk of partnership activity expected to flow through those arrangements.
Lawlor said Vistry had significant covenant headroom at the half year. Its banks waived interest-cover covenant tests for the end of 2026 and the first half of 2027 in recognition of one-off review-related charges. The group expects to begin refinancing discussions in October, while a £100 million U.S. private placement is expected to be repaid from existing cash flows in February.
Daniels said open-market conditions remained subdued over the summer, with reservations slowing to 0.3 per outlet per week. Year-to-date discounting had increased to nearly 8%, while discounts on private rented sector transactions were generally between 10% and 15%, according to the company.
About Vistry Group (LON:VTY)
Vistry Group is a leading homebuilder developing in partnership to deliver sustainable homes, communities, and social value, leaving a lasting legacy of places where people love to live.
Operating across 25 regions, we build homes for those who need them right across the UK. Our partners include Registered Providers, Local Authorities, Homes England and Private Rented Sector providers.
Our timber manufacturing capability, Vistry Works, is at the core of our strategy to deliver more quality homes, faster.
We sell homes on the open market through three respected brands: Bovis Homes, Linden Homes, and Countryside Homes.
