Vistry Group will become a ‘partnerships-only’ business under a dramatic restructure.
Merging its Housebuilding and Partnerships operations is the best scenario for sustained growth in housebuilding and to meet its aim for returning £1 billion to shareholders over three years, said chief executive, Greg Fitzgerald.
The Group also intends to reduce its regional business units from 32 to 27 as part of the reorganisation.
This new approach, under six new operating regions, will deliver £25 million in cost savings.
“Following our annual review of the Group’s strategy, the Board has concluded that focusing the Group’s operations fully on partnerships by merging our Housebuilding operations with our Partnerships business, best enables sustained growth in housing output, provides greater benefits to our partners, while maximising value and long term returns for shareholders with the Group targeting a 40% ROCE and the distribution of £1bn to shareholder over the next three years,” said Fitzgerald.
Adding: “The scale of the social need for affordable mixed-tenure housing across the country continues to increase and it is clear that Vistry is uniquely positioned as the leader in partnerships housing.”
Vistry expects this strategy to create a business capable of delivering a 40% return on capital employed, 5 to 8% revenue growth, £800 million of operating profit and a 12% increase in operating margin in the medium term.
News of the restructure came amid financial results for the six months to June, declaring a 2.6% rise in pre-tax profits to £114.2 million and revenue of £1.57 billion, up 32.7%.
Partnerships saw good levels of demand, with adjusted revenues increasing by 7.1% to £953.6 million compared to H1 2022 (£890.4 million) and its adjusted operating margin increasing to 11.5% (H1 2022: 10.2%).
House building delivered adjusted revenues of £823.5 million, down 28.3% on H1 2022 (£1.149 billion) and gross margin of 19.8% (H1 2022: 22.4%).
All new developments across the Group will going forward require a minimum of 50% of units to be pre-sold, said Fitzgerald.
The acquisition of Countryside last year is also expected to deliver savings of £60 million by the end of FY2024.
The Group will retain all three of its leading brands – Bovis, Linden, and Countryside (Homes) – for open market sales, while continuing to utilise Countryside Partnerships with its partners.
Its timber frame arm, Vistry Works, will support its strategy.
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