Vistry changes strategy to focus fully on partnerships housing

Vistry is to focus its entire business on partnerships housing following a review of the group’s strategy in the wake of its £1.1bn merger with Countryside late last year.

The listed housebuilding giant is to merge its 8,700-home traditional housebuilding business in with the newly bolstered partnerships housing business, until now known as Countryside Partnerships, under plans to take advantage of the dire need for affordable mixed-tenure housing in the UK.

Shares in the firm surged as much as 16% on the news, which was accompanied by a commitment to return £1bn to shareholders in the next three years, alongside its half year results.

Under the initiative, Vistry said it will bring its housebuilding and partnerships operations together “with a simplified operating structure under a single business”, re-purposing land held by housebuilding for partnerships housing.

It said this will involve pre-selling at least 50% of the homes on a site to partners – typically housing associations, build-to-rent investors, local authorities or later living providers – with the firm targeting an average of 65% of plots on each site pre-sold.

Vistry said the re-organisation would drive a further £25m in cost savings, over and above the £60m in efficiencies it said had already been derived from the Countryside purchase, and would result in the number of business units reducing from 32 to 27.

Chief executive Greg Fitzgerald said: “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, [and] provides greater benefits to our partners, while maximising value”.

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He said the group was targeting 40% Return on Capital Employed in the restructured business and the distribution of £1bn to shareholders over the next three years.

Vistry reported pre-tax profit of £114m for the half year to June 30, in line with expectations, up 2.6%. This came on revenue of £1.58bn, up 33%, consequent of the Countryside takeover.

Last year’s net cash position of £115m has been reduced to net debt of £32m in the interim report.