Vistry Group (LON:VTY) reported full-year 2025 profit before tax in line with expectations, supported by what management described as a “very, very strong” second half despite limited assistance from broader market conditions. Executives highlighted a leaner organizational structure following a major reorganization and pointed to reduced year-end net debt of GBP 144 million.
Management also emphasized the company’s scale in affordable housing delivery, saying Vistry built “one in seven” affordable homes constructed in the UK in the year, or roughly 15% of the market. Leadership repeatedly framed the business as differentiated from traditional housebuilders due to its partnerships focus, long-standing relationships with housing associations and Homes England, and vertically integrated manufacturing through Vistry Works.
Financial results and cash flow priorities
Earnings per share increased 6%, outpacing the 2% increase in adjusted profit before tax, with Lawlor attributing the difference primarily to the impact of the company’s share buyback program. While year-end net debt fell, the company’s average daily net debt increased to GBP 734 million from GBP 698 million.
Cash flow improved by about GBP 130 million versus the prior year, with an inflow of GBP 36 million compared with an outflow of GBP 92 million. Lawlor noted higher receivables at year-end, including a GBP 55 million increase in land sale debtors and higher partner-funded receivables linked to year-end activity expected to convert to cash in the first quarter.
Both Lawlor and the CEO stressed that reducing capital employed remains a key objective, with work-in-progress (WIP) identified as the primary area needing improvement. Lawlor said WIP proved “stickier” than expected, particularly in London due to the nature of apartment delivery, as well as timing shifts where anticipated end-of-year deals slipped into 2026. Management said unsold stock outside London fell by more than half, representing a GBP 50 million reduction during 2025.
Margins, incentives, and sales acceleration
Lawlor said gross margin improved by 100 basis points for the year, with better performance in the second half as newer sites came through at higher margin and legacy issues from the South Division in 2024 faded. Overheads rose due to increased assurance activity and the return of variable pay after bonuses were halted in 2024.
For 2026, management expects underlying margin to “tick up” from efficiencies and operating leverage, but also acknowledged margin pressure from a deliberate sales push that includes targeted discounting. Lawlor said the goal is to increase momentum, generate cash, and reduce WIP. He reported a 40% year-on-year improvement in the sales rate year-to-date, with cash benefits expected to show in the second quarter.
Executives declined to give a single percentage for discounting, saying it varies by site and is concentrated in certain locations. In Q&A, management pointed to London and the South East as the biggest “pinch points,” while noting some sites require no additional discounting if sales are already strong. The CEO emphasized the initiative was driven primarily by balance sheet and cash considerations, and also reflected a view that the broader private market remains fragile without a policy catalyst such as Help to Buy.
Build costs, Vistry Works, and building safety
Lawlor said build costs rose about 2.5% year-on-year, consistent with prior guidance, and described material cost expectations for 2026 as “minimal” absent escalation tied to geopolitical events. He noted the company contracts in advance for roughly 90% of materials, labor supply remains good, and in some areas subcontractor costs are declining.
Vistry Works remained a focal point of the presentation. Lawlor said timber frame production rose 60% year-on-year in 2025, and roof trusses reached more than 3,000 units in their first year of production. Management guided to 6,000 timber frame units in 2026 and reiterated capacity of up to 10,000 units annually across three factories without adding new facilities.
On building safety remediation, Lawlor said Vistry worked through 21 buildings and spent GBP 46 million in the year. The company added 11 buildings to its program, increasing the provision by GBP 14 million, while also identifying GBP 17 million of recoveries (GBP 13 million received in cash during the year). He flagged a GBP 11 million non-cash charge related to discounting. For 2026, Lawlor estimated gross building safety spend of about GBP 70 million and net spend of roughly GBP 60 million.
Affordable housing tailwinds and funding mechanics
Executives repeatedly pointed to the government’s GBP 39 billion affordable housing program covering 2026 to 2036 as a major long-term opportunity. Partnerships CEO Stephen Teagle said the company saw a “step change” in partner ambition as policy commitments became clearer, including rent convergence and a 10-year rent settlement. He said Vistry’s grant award from Homes England rose 37% last year and its total grant level reached GBP 252 million, which he described as a threefold increase over the life of the current five-year program.
Teagle described two principal routes to grant funding—either Vistry bids directly or partners obtain funding—with no difference to P&L recognition, but potential differences to cash timing. Under proposals discussed on the call, he said direct grant could provide 40% on site acquisition and 35% at start on site, which management said would be helpful for cash flow.
Teagle also cited changing dynamics within affordable housing customers:
- Traditional registered providers: He referenced the regulator noting “robust investment” recently, including GBP 4 billion raised to invest in new homes.
- Local authorities: Teagle said 2025 saw the highest level of local authority delivery of affordable housing in 40 years, representing 16% of all affordable homes.
- For-profit registered providers: He said the company is in the final stages of confirming a partner to capitalize “Linden First,” which he positioned as additive capacity rather than a replacement for existing registered provider relationships.
While management said it expects volumes in affordable housing to increase, it did not provide a specific forecast for Vistry’s future allocations. In Q&A, the company clarified it is not yet a “strategic plus” partner under the new program, though executives said they are bidding and believe that category could allow a ceiling of around GBP 700 million.
Outlook, land, and leadership transition
Management said the year has started “exceptionally well,” highlighting the 40% improvement in sales rate year-to-date and an order book of GBP 4.5 billion. The CEO said 67% of this year’s units are in hand, compared with 65% at a comparable point the prior year. He also said the company expects increased profit in 2026 despite lower margin due to incentives, and that it is targeting “in excess of GBP 100 million of cash” at year-end based on bottom-up budgets from the 25 business units.
On land, Lawlor said the company secured over 11,000 plots during the period and was opportunistic in acquiring land ahead of the Autumn Statement amid a soft market. He said Vistry expects to reduce its land bank toward about three and a half years of coverage over time. Land sales contributed about GBP 180 million of revenue in 2025 and remain part of the strategy, with Lawlor describing them as planned disposals from larger sites at blended site margins, which he suggested were around 20% gross margin. Management said it expects land sales to remain “three digits” in 2026 but did not forecast a specific figure.
Executives also addressed uncertainty stemming from events in the Middle East, citing potential impacts on fuel-linked costs, supply chain inflation, and consumer confidence, while noting no direct impacts had yet emerged. Lawlor said management had tempered expectations somewhat due to the uncertainty.
Finally, the CEO disclosed his planned retirement, saying he expects to remain CEO until at least March 2027 and to step down as chair at an AGM, with a target of May 2027. He described the process as planned and “business as usual.”
About Vistry Group (LON:VTY)
Vistry Group is a leading homebuilder developing in partnership to deliver sustainable homes, communities, and social value, leaving a lasting legacy of places where people love to live.
Operating across 25 regions, we build homes for those who need them right across the UK. Our partners include Registered Providers, Local Authorities, Homes England and Private Rented Sector providers.
Our timber manufacturing capability, Vistry Works, is at the core of our strategy to deliver more quality homes, faster.
We sell homes on the open market through three respected brands: Bovis Homes, Linden Homes, and Countryside Homes.
