Vistry Group (LSE: VTY) reported an operating loss of £36.2 million for the first half of 2026, a sharp reversal from a £124.4 million profit in the prior-year period, as the UK homebuilder continues a root-and-branch strategic overhaul launched in May.
The company recorded £578.3 million in exceptional charges, including a £475 million goodwill impairment that carried zero cash impact and no effect on banking covenants. Revenue declined 8.9% to £1,703.3 million from £1,869.1 million, while adjusted loss before tax came in at £83.3 million compared to an £80.6 million profit a year earlier.
Gross margin compressed dramatically to 4.0% from 12.4%, driven by persistent build-cost inflation of roughly 7% annually since 2019 and interest rates that peaked above 5% in 2023. Total completions fell 8% to 6,304 units. Partner-funded volumes dropped 14% to 4,351, while open-market completions rose 6% to 1,953. Average selling prices increased 3% to £292,000.
Net debt rose to £468.8 million from £293.1 million a year earlier. Building safety provisions totalled £73.2 million in the period, bringing the overall balance to £352.8 million covering 255 buildings. Land creditors were reduced by £100 million since June, with a further £70 million reduction expected by year-end.
Shares fell 5.45% to 253.40 pence following the results, trading well below a 52-week high of 746 but above an early-year low of 220.
CEO Adam Daniels outlined a five-year transformation plan beginning October 2026, implementing an operational footprint reduction from 25 regions to 12 larger areas and cutting standard house types from around 100 to 35. Open-market brands will consolidate under a single Linden Homes banner, phasing out separate Bovis Homes and Countryside Homes identities in those markets.
A significant shift involves exiting open-market exposure in South East England, affecting approximately 2,700 private plots. The move is expected to cost around £200 million in FY26 but generate £200 million in incremental cash over the next two years, transitioning the region to a fully pre-sold, partner-funded model.
The owned land bank will be reduced from roughly 51,000 plots to 36,000 by FY30, representing a three-year supply. Vistry Works timber-frame output will be maintained at approximately 6,000 units annually, down from 10,000. Overhead savings are targeted at £50 million for 2027 with further gains by 2029.
Of roughly 300 active sites, about 60% are forecast to deliver gross margins above 12%, currently averaging 18.5%. Around 40% of sites, representing some 30% of outstanding plots, are projected to yield margins below 12%, with roughly 20% expected to generate margins below 5%.
On the partnerships side, Vistry has 150 partners under contract, including 106 registered providers, 18 private rented sector partners and 26 local authorities, with £3.4 billion in further value under negotiation across 60 partners. Five strategic development agreements have been executed and ten more are at advanced stages, committing approximately 20,000 homes over five years. The company holds key-partner status in the government’s £9.6 billion Social and Affordable Housing Programme, with a maximum award of £350 million.
Debt reduction is a central pillar. Average daily net debt is projected at approximately £775 million in FY26, falling to £500 million in FY27 and targeting roughly £300 million by FY29. The company stated there are "no expectations for equity raise." Medium-term capital structure targets limit average daily net debt to no more than 1x normalized rolling 12-month EBITDA or 33% of tangible net assets, with peak debt maintaining at least 20% headroom against total committed facilities.
At H1, gearing stood at 66% against a covenant limit below 75%, tangible net worth was £2.0 billion versus a >£1.2 billion covenant, and interest cover was 25x against a >3x requirement. A covenant waiver was provided by the banking group for FY26 and HY27 interest cover.
Refinancing discussions are scheduled to begin in October 2026.
For full-year guidance, excluding South East exit items carrying around £470 million impact and a £40 million downward revision for partner deals moved out of the year, adjusted profit before tax is expected at roughly £165 million. FY27 guidance, subject to broadly stable market conditions, calls for adjusted profit before tax of around £185 million with average daily net debt reduced to approximately £500 million.
Five-year targets for FY31 include 12,000 annual units delivered in a 60:40 partnership-to-open-market mix, operating margin of 12%, return on capital employed above 30%, operating profit of approximately £450 million, and gross margin progression toward 17%.
