Vistry was formed in 2020 from a merger of Bovis Homes and Linden Homes. In November 2022 it completed the acquisition of Countryside Partnerships, merging it with its Linden Partnerships business.
Vistry Group chief executive Greg Fitzgerald said: “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.
The strategy shift was announced as Vistry unveiled half-year results that, boosted by the Countryside acquisition, showed revenue up 33% to £1,575.3m (2022 H1: £1,187.2m) and profit before tax up 3% to £114.2m (2022 H1: £111.3m).
Partnerships’ adjusted revenues increased by 7% to £953.6m and adjusted operating margin improved to 11.5%. Housebuilding’s adjusted revenues were down 28% at £823.5m, with a gross margin of 19.8% (2022 H1: 22.4%).
The new strategy is to transition the Housebuilding land bank totalling 30,200 owned and controlled plots to the Partnerships model of a minimum 50% pre-sold, trending towards an average of 65% pre-sold. Of these plots, 8,000 are already designated affordable by planning consent, 1,000 have been pre-sold to date through existing multi-unit transactions with our key partners, and we are targeting the further pre-sale of c. 8,500 plots over the next two to three years.
Benefits of the change in strategy are expected to include cost-savings through a simplified corporate structure, maximised return on capital from the existing land bank and the release of capital from the balance sheet to maximise flexibility for capital allocation.
“The integration of Countryside has progressed well in the first half, firmly establishing Vistry as the leading provider of affordable mixed tenure housing in the UK,” Greg Fitzgerald said. “The group delivered a robust half year performance despite the challenging macro-economic conditions with Partnerships continuing to see good demand, demonstrating its market resilience.
“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.
“In this context and 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 [return on capital employed] and the distribution of £1bn to shareholder over the next three years.
“Delivering on the acute social need for housing across the country and increasing the availability of affordable, sustainable homes is at the core of the group’s social purpose and vision, and I look forward to delivering upon this exciting and unique opportunity for Vistry.”
The number of regional business units will be cut from 32 to 27 through the removal of overlapping geographies. These 27 business units will sit within six newly defined operating regions, each with a divisional chair. The board expects £25m of cost savings from the integration of the two businesses, in addition to the expected £60m of annualised synergies driven by the group’s increased scale through the acquisition of Countryside. The Group will retain all three of its brands, Bovis Homes, Linden Homes and Countryside Homes for open market sales, while continuing to utilise Countryside Partnerships with its partners.