Vistry Group (VTY) Trading Update summary

Key issues and business review

• Cost issues in the South Division were due to poor commercial forecasting, management capability, and culture, mainly on legacy housebuilding sites, with build costs wrong by 10–12%.

• Independent and internal reviews found no systemic issues outside the South Division; problems are isolated to a few large sites.

• The review led to a GBP 50 million increase in estimated cost impact, totaling GBP 165 million, with GBP 105 million hitting FY24 profits, GBP 50 million in FY25, and GBP 10 million beyond FY25.

• Additional small items across the business reduced profits by GBP 8 million, and weaker market conditions further impacted forecasts.

• Management changes, enhanced controls, training, and cultural initiatives are being implemented, and no further adjustments are expected after the comprehensive review.

Financial guidance and outlook

• FY24 profit before tax is now expected to be around GBP 300 million, down GBP 50 million from previous guidance.

• Volume guidance for FY24 is circa 17,500 units, with average selling price similar to prior year.

• Net debt at year-end will be lower than GBP 88.8 million reported at end-2023, with FY25 net debt to be impacted by a further GBP 40 million from South Division adjustments; average net debt for the year is expected to be around GBP 500 million.

• Share buyback programme of GBP 130 million to be completed by May 2025 AGM.

• Building safety provisions are under review, but any increase is not expected to have a material cash impact.

Operational performance and strategy

• Partnership sites demonstrate strong cost management and lower risk, with some achieving 12% margins and over 40% return on capital employed.

• Operational metrics such as build quality, safety, customer satisfaction, and employee retention remain strong, with staff engagement in the upper quartile of the sector.

• The partnership model is reinforced as the right strategy, especially with government support for affordable housing.

• No capital constraints are limiting land acquisition or growth; land creditors and capital requirements remain stable.

• Over 12,400 mixed tenure homes secured year-to-date across 47 sites, with more than 85% of FY25 land already secured.