Vistry Group now admits to further costing errors, compounding previous disclosures.
- Last month’s £115m cost adjustment is now revealed to be underestimated by £50m.
- Additional losses are projected at £105m for this financial year alone.
- South division identified as experiencing significant management and cultural issues.
- Projected completions reduced, impacting overall profit expectations for 2024.
Vistry Group has recently confirmed additional complications arising from costing errors initially acknowledged last month. These issues, previously estimated to impact profits by £115m, now reveal a discrepancy of an additional £50m, bringing the total to £165m over a three-year period. The immediate financial consequences will be seen as £105m in losses for the current year, followed by £50m in 2025, and £10m thereafter.
The organisation has undertaken a comprehensive assessment involving both internal and external reviews to ascertain the true scope and implications of these financial discrepancies. While initially focusing on the South division, known for its management challenges, this review also extends to the rest of the organisation to ensure no other areas are similarly affected. Fortunately, initial findings suggest these problems are largely contained within the South division, attributed to insufficient management, non-compliant forecasting processes, and a challenging divisional culture.
Significant restructuring within the company has been noted as a potential catalyst for these issues. The problems in the South division are traced back to its leadership, predominantly composed of individuals from the former Housebuilding division, which appears to be a central point of failure. Unlike other divisions, these teams have not transitioned leadership effectively within the new corporate structure.
A detailed investigation has pinpointed various cost types contributing to the miscalculations, rather than any singular category. Out of 18 scrutinised sites in the South division, adjustments exceeding £1m were necessary, particularly within five major multi-phase projects, which collectively account for the bulk of the cost revisions. This has also led to an adjustment in the anticipated number of housing completions, which has been reduced from 18,000 to 17,500 for 2024.
Consequently, the adjustment in completion targets and the fiscal impact of the noted errors will reflect in Vistry’s adjusted profit before tax for 2024. This is now expected to reach £300m, a significant reduction from the previously anticipated £350m, further indicating the severity of the issues the company faces.
Vistry Group’s latest admissions underscore the critical need for robust management and accurate forecasting processes.
