Chief executive Greg Fitzgerald revealed the new strategy this morning and pledged to return £1bn to shareholders over three years as assets are released from the traditional house building division.

The decision to ‘merge out’ the housing business will lead to a sweeping reorganisation, cutting regional business units from 32 to 27.

The rationalised group structure under six new operating regions, each led by divisional chair will deliver £25m in cost savings, said Fitzgerald.

This is on top of the ongoing £60m of forecast savings from the acquisition of Countryside last year.

Fizgerald said: “We expect this strategy to create a business capable of delivering a 40% return on capital employed, 5 to 8% revenue growth, £800m of operating profit and 12%+ operating margin in the medium term.

He said that in future all new developments across Vistry will require a minimum of 50% units to be pre-sold.

“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 house building 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 and the distribution of £1bn to shareholder over the next three years.”

“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.”

The announcement of the change in business direction came as the firm reported first-half pre-tax profits ahead 3% to £114m off revenue up a third at £1.57bn.

Partnerships saw good levels of demand with adjusted revenues increasing by 7.1% to £953.6m compared to pro forma H1 22 (£890.4m) and adjusted operating margin increasing to 11.5% (H1 22: 10.2%)

House building delivered adjusted revenues of £823m, down 28% on pro forma H1 22 (£1,149.2m) and gross margin of 19.8% (H1 22: 22.4%)