Vistry Group has issued a further profit warning amid a ‘forensic’ investigation into understated development build costs within its South Division.
Last month, the housebuilder revised its profit projections for 2024 after discovering it had undervalued the total cost to build nine schemes in the Southern region by 10 per cent.
Vistry since discovered more problems across 18 sites within its South Division following an in-depth review of the business, impacting profits over three years.
In an update this morning, Vistry said it now expects to generate pre-tax profit of £300 million for this financial year and not the £350 million projected in October.
The issues, which Vistry said are “confined to the South Division”, principally relate to sites from the former Housebuilding business, and include:
- insufficient management capability
- non-compliant commercial forecasting processes
- poor divisional culture
“The scope of the review has primarily focused on the cost reporting process, culture and management in the South Division, and also includes a wider review across the group to ascertain if similar issues to those identified in the South Division existed in other parts of the business,” said Vistry.
“The South Division was led by a management team from the former Housebuilding business and the managing directors of all four regions within the South Division were from the group’s former Housebuilding business.
“None of the group’s other divisions are managed exclusively by former Housebuilding management.
“The independent review has highlighted the pressure being felt from organisational change as a fundamental driver underlying the issues in the South Division.”
As a result, personnel changes are expected, and new appointments are under consideration.
“South Division management and certain regional management have stepped away from the business pending completion of formal processes,” said Vistry.
The housebuilder is also instituting new standardised processes and controls, enhanced training and support, and reviewing ‘attitudes towards whistleblowing’.
Vistry has reduced its total completions in 2024 from more than 18,000 units to 17,500.
It said it is still committed to the £130 million share buyback programme announced on 5 September.
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