REG - Barratt Redrow PLC - Barratt Redrow FY25 Trading Update
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RNS Number : 0142R Barratt Redrow PLC 15 July 2025
15 July 2025
Solid performance in a challenging market & integration progressing well
Barratt Redrow plc (the 'Group') is today issuing a trading update for the 52
weeks ended 29 June 2025 (the 'year' and 'FY25') ahead of publication of its
annual results on 17 September 2025. Comparatives are to the year ended 30
June 2024 ('FY24') unless otherwise stated.
David Thomas, Chief Executive, commented:
"Against a challenging market backdrop, we have delivered a solid performance
this year. Our adjusted profits are in line with market expectations, despite
home completions being slightly below our guided range, mainly due to the
impact of fewer international and investor completions than expected in our
London businesses. We are already seeing tangible benefits from the Redrow
acquisition, with cost synergies being delivered ahead of schedule, a new
divisional structure in place and revenue synergies progressing well.
Although demand during the year has been impacted by consumer caution and
mortgage rates not falling as quickly as hoped, there remains a long-term
structural under-supply of housing in this country. Our increased scale, three
market-leading brands and strong land pipeline put us in a unique position to
rapidly accelerate volume delivery as consumer confidence strengthens and the
benefits of planning reform materialise at a local level. We remain confident
in our medium-term ambition to deliver 22,000 high-quality homes a year, and
in the long-term demand for our high-quality homes."
Highlights
· Net private reservations per active sales outlet((1)) per week of 0.64 (FY24:
0.58(R) and 0.55(A)) including 0.08 (FY24: 0.08(R) and 0.06(A)) from the
private rental sector and other multi-unit sales.
· Total home completions for FY25 were 16,565 (FY24: 14,004(R) and 17,972(A))
including 538 from JVs (FY24: 536(R&A)).
· Adjusted profit before tax and before Redrow purchase price allocation ('PPA')
adjustments, expected to be in line with market expectations((2)), reflecting
some margin improvement and initial cost synergies.
· Performance also underpinned by our strong balance sheet position with
year-end net cash, ahead of our expectations at c.£772m (30 June 2024:
£868.5m(R) and £1,164.5m(A)).
· Estimated adjusted item charges are expected to be c.£229m (FY24:
£214.5m(R), £222.5m(A)). Estimated second half charges consist of legacy
property charges of c. £98m, acquisition related reorganisation and
restructuring costs of c. £52m and CMA commitments costs of c. £29m.
· Adjustment to the Redrow opening balance sheet fair value to reflect £150m of
legacy property liabilities in relation to reinforced concrete frame. Net of
deferred tax, goodwill has increased by c. £106m.
· Integration is continuing at pace with our new divisional structure in place.
We have confirmed £69m of cost synergies against our target of at least
£100m. Approximately £15m of cost synergies are included in FY25 profits
with a further benefit of £45m expected in FY26.
· 115 Pride in the Job awards received, more than any other housebuilder for the
21(st) consecutive year.
· In FY26, reflecting current market conditions and a revised expectation of
broadly flat average sales outlets, we anticipate total home completions in a
range of 17,200 to 17,800, including c. 600 completions from our JVs.
Our long-term growth strategy
Following the acquisition of Redrow, and the strong progress we have made on
integration, we have a clear strategy to leverage our position as an
exceptional UK homebuilder to deliver growth and maximise shareholder returns.
With our unrivalled record on quality, service and sustainability, in addition
to our robust financial position and long-standing partnerships, we are
well-placed to significantly increase volumes, with a clear target to deliver
around 22,000 homes per year in the medium term. We are confident that the
strength of our three leading and differentiated brands, our nationwide
footprint, our strong land pipeline and our deep operational experience and
expertise, position us strongly to deliver against this ambition.
Trading
Reservation rates
Our net private reservation rate per active outlet per week in FY25 increased
by 16.4% to 0.64 when compared with the aggregated performance of 0.55A for
Barratt and Redrow in the comparable period (FY24: 0.58R). This included a
contribution of 0.08 (FY24: 0.08R and 0.06A) from reservations into the
private rental sector ('PRS') and other multi-unit sales (Appendix 1).
In addition to our ongoing strategic partnership with Lloyds Living,
reservation activity was complemented by sales to a growing portfolio of PRS
partners. Overall, we successfully secured 1,693 (FY24: 1,452R) private
reservations through PRS-related activity and the strength of our
relationships with Registered Providers ('RPs) and other multi-unit investors,
which supported total private completions in FY25 and our forward order book.
We have seen some improvement in mortgage market competition and availability
but underlying private sales activity has remained sensitive to consumer
caution, driven by the economic backdrop and the ongoing affordability
challenges faced by homebuyers. The London housing market has been
particularly challenging with weak demand from both domestic and international
homebuyers. Across the Group, the improved reservation rate during the first
half was broadly maintained through the second half of the year while pricing
and incentive levels across the two periods remained similar.
Sales outlets
As expected, we operated from an average of 405 (FY24: 346R, 443A) active
sales outlets during FY25 (including 10 JVs (FY24: 9R&A)). At 29 June 2025
we were operating from 407 (30 June 2024: 326R and 446A) active sales outlets
(including 10 JVs (30 June 2024: 10R&A)).
We remain positive about the medium-term planning outlook, however the recent
planning reforms are taking time to be fully embedded at a local planning
authority level and continuing adverse planning decisions and delays mean that
we now anticipate average sales outlets, including JVs, will be broadly flat
in FY26.
Home completions and ASPs
Total home completions (including JVs) reduced by 7.8% to 16,565 from the
aggregated comparable of 17,972 in FY24 (FY24: 14,004R), (Appendix 2). While
home completions declined 12% in the first half, the stronger order book
entering the second half and solid reservation rates helped limit the overall
reduction in the second half to 4.7%. In Q4, we saw lower than expected
completions at several of our sites in London, primarily driven by
international customers and PRS investors. This resulted in total home
completions being slightly below our guided range for the year.
The total average selling price ('ASP') for the year was c. £344k (FY24:
£306.8kR and £323.4kA), with the private ASP increasing by c. 2.8%3 to c.
£380k (FY23: £343.9kR and £369.5kA). The affordable ASP was c. £179k
(FY24: £165.3kR and £176.0kA).
Order book
Our forward sales position has continued to improve during FY25, with total
forward sales (including JVs) of £2,921.6m at 29 June 2025 (30 June 2024:
£1,912.3mR and £2,642.8mA), equating to 9,835 homes (30 June 2024: 7,239R
and 9,426A). At 29 June 2025, 67% of these homes (30 June 2024: 73%R and 71%A)
were contractually exchanged (Appendices 3 and 4).
Build cost inflation
We experienced broadly flat build cost inflation in FY25, in line with our
guidance at the start of the year and we currently estimate build cost
inflation of between 1% and 2% in FY26, including the benefit of procurement
synergy savings. We will continue to work collaboratively with our supply
chain partners to secure both sustainable and competitive pricing, whilst
realising the synergy benefits of the combined Barratt Redrow business.
Redrow integration progress
In line with our plans, the closure of the nine divisional offices across both
business is largely complete, with operational leadership aligned from 30 June
2025. During FY26, Barratt Redrow will operate from 32 housebuilding divisions
across the country with the capacity to deliver 22,000 homes per annum in the
medium-term.
The integration and synergy activities across our head office functions are
progressing well. The transition of the Redrow business onto Barratt systems
is also now underway and anticipated to be completed during FY26. Finally, our
procurement programme continues to gain momentum as we seek to both harmonise
buying terms and ensure the purchasing scale of Barratt Redrow is optimised,
unlocking the targeted synergies.
We have confirmed c. £69m of cost synergies and we are well on the way to
achieving our previously upgraded cost synergy target of at least £100m. We
estimate the cost synergies crystallised within FY25 performance totalled c.
£15m, ahead of our October 2024 target of c. £10m. We anticipate c. £45m of
incremental cost synergies will be crystallised in our FY26 performance. We
now expect Redrow reorganisation and restructuring costs will be around £90m.
With respect to revenue synergies, we have now submitted 16 planning
applications for incremental sales outlets from the combined Barratt Redrow
land bank, and we are pleased to have already secured planning approval on 5
of these. With progress to date, we remain confident in delivering 45
incremental sales outlet openings by the end of FY28.
Continuing leadership in quality and sustainability
Our commitment to industry-leading build quality and customer service is more
important than ever given the challenging market. The high standard of build
quality across our sites has been recognised again through the NHBC Pride in
the Job Awards for build quality and site management with our site managers
across the enlarged Group achieving 115 awards in June 2025, more than any
other housebuilder for the 21st consecutive year.
These awards complemented the recognition of our focus on quality and customer
service by our customers who awarded us the maximum 5 Star rating in the HBF
customer satisfaction survey for the 16th successive year, a unique record
amongst the major housebuilders.
Our industry-leading sustainability performance also continues to be
recognised, with the Group maintaining its position as the only UK
housebuilder in the CDP's Global Climate Change Corporate A List for
Leadership and recently being named one of the World's Most Sustainable
Companies of 2025 by TIME, one of only nine construction companies globally,
and the only UK housebuilder, to be included.
Land
While we have maintained our disciplined approach to land approvals throughout
FY25, a greater choice of development sites coming to market and the potential
of the positive planning reforms introduced has seen our land approval
activity increase, with net approval of 108 sites in the year (FY24: 58R).
Overall, this land activity created 22,530 approved plots in the year (FY24:
12,439R plots) (Appendix 5). Our cash spend on land increased to c. £860m
(FY24: £674.3mR).
Balance sheet, liquidity and shareholder returns
The Group remains in a strong position with substantial cash and additional
liquidity. At 29 June 2025, the Group held net cash of c. £772m (30 June
2024: £868.5mR and £1,164.5mA) and an undrawn committed revolving credit
facility of £700m, extended during the year to mature in November 2029.
Land creditors at the end of the financial year totalled c. £810m (30 June
2024: £472.8mR and £633.8mA) and equated to c. 16% (30 June 2024: 14.6%R and
13.3%A) of the owned land bank.
The Board intends to declare an ordinary dividend, in line with stated policy,
with dividend cover of 1.75 times adjusted FY25 earnings per share before PPA
fair value adjustments. Our share buyback approach remains unchanged, with
£50m completed in H2 FY25 as planned and the next £50m tranche of the
programme due to begin shortly as part of our commitment to a minimum level of
£100m per annum.
UK Competition and Markets Authority ('CMA') investigation
As we announced on 9 July 2025, Barratt Redrow along with six other UK
housebuilders have proposed voluntary binding commitments as part of the CMA's
ongoing investigation in the housebuilding sector. The proposed commitments
include making a collective payment of £100m to be disbursed to the
affordable housing programmes in England, Scotland, Wales and Northern
Ireland. Barratt Redrow's share of this payment is expected to be c. £29m and
is recognised as an adjusting item in FY25.
The offer of voluntary commitments does not constitute an admission of any
wrongdoing by Barratt Redrow and nothing in the commitments may be construed
as implying that Barratt Redrow agrees with any concerns expressed by the CMA
in the investigation, but we welcome the CMA's consultation on the voluntary
commitments and will continue to work constructively with the CMA throughout
the process.
Building Safety
We continue to maintain our industry-leading approach when it comes to
investigating historic building safety issues, and funding or undertaking any
necessary remediation, ensuring full transparency about the progress and
expected costs.
There has been no change to the regulatory framework in Scotland, and the
external wall provision for Scottish developments is recorded on the same
basis as England and Wales. This will be determined when the final contract
with the Scottish Government is signed.
Adjusted items
Estimated adjusted items recognised in the year totalled c. £229m (FY24:
£214.5mR and £222.5mA). The annual charge included first half charges of
£49.9m, relating to Redrow transaction costs (£35.5m) and initial
restructuring and integration charges (£14.4m). Adjusting item charges for
FY25 consisted of:
· Costs and fees incurred in respect of the acquisition of Redrow plc of c.
£36m (FY24: £22.4m(R) and £30.4m(A));
· Estimated reorganisation and restructuring costs related to unlocking cost
synergies from the acquisition of c. £66m (FY24: £nil(R&A));
· CMA commitments cost of c. £29m (FY24: £nil(R&A)); and,
· Additional charges of c. £98m (FY24: £192.1m(R&A)) in respect of legacy
property related costs which are detailed below.
Legacy property related costs
Additional legacy property liabilities totalling c. £248m have been
recognised as adjusting items and a revision to the Redrow opening balance
sheet at the acquisition date reflecting new issues arising in the second half
of the year.
Cost estimates for the EWS portfolio remained broadly stable during the second
half, with an increase in costs of c. £16m which was offset by an equivalent
amount of cost recoveries. However, estimated costs of c. £98m have been
recognised in the second half in relation to two specific developments:
· In our Southern region we identified fire safety related issues at a
development involving four buildings which were completed in 2002. The
remediation and associated costs with respect to these four buildings are
estimated to be c.£80m.
· Additional costs of c. £18m have been recognised relating to a number of
newly identified issues at a large development in London which was already
part of our EWS provision including both fire safety and reinforced concrete
frame design remediation costs.
As we highlighted at the half year, a review of Redrow's portfolio of
reinforced concrete frame buildings was in progress, leveraging our experience
of these issues over recent years. As a result of these investigations, we
expect to have to complete remediation works at up to five Redrow developments
in London. Based on our initial estimates, we have revised the fair values of
inventories and provisions, as appropriate, at the acquisition date by c.
£150m which results in a net adjustment to goodwill of c. £106m net of
deferred tax.
We continue to actively seek to recover costs from third parties in respect of
issues around fire safety and reinforced concrete frames. On 21 May 2025, the
Group won a landmark Supreme Court case which clarified the responsibility of
companies in the supply chain for remediating defects in developments they
were involved in. This ruling made it clear that all parts of the industry
need to take responsibility and that developers shouldn't be penalised for
proactively taking action to support leaseholders and residents in advance of
litigation.
Outlook
We have delivered a solid operational performance in what has been another
challenging year and, as a result, we expect to deliver FY25 adjusted profit
before tax and before PPA adjustments in line with market expectations(2). We
are executing the integration of Redrow at pace, we have a strong balance
sheet and a solid forward sales position, and we believe we are well
positioned as we enter FY26.
Homebuyer confidence remains fragile and mortgage rates remain high compared
to recent years but there remains a long-term under-supply of new homes and we
have seen some increases in mortgage market competition and availability.
Reflecting current market conditions and the broadly flat expected position
with respect to average sales outlets, we anticipate total home completions,
including JVs, will be in a range of 17,200 to 17,800 in FY26, including c.
600 completions from our JVs.
We remain encouraged by the Government's focus on housebuilding and in
particular its reforms of the planning system which, in time, should have a
significant positive effect. However, to see housebuilding volumes accelerate
and reach the numbers needed to tackle our housing crisis, Government needs to
also address demand-side constraints on private home buyers. We welcome the
recent announcements in the Spending Review which should support affordable
housing demand from Registered Providers.
As planning policy reforms are implemented at a local, practical level, we are
confident that we are in a uniquely strong position to accelerate volume
delivery through our three leading brands, and we remain confident in our
medium-term ambition to deliver 22,000 high-quality homes a year.
This trading update contains certain forward-looking statements about the
future outlook for the Group. Although the Directors believe that these
statements are based upon reasonable assumptions, any such statements should
be treated with caution as future outlook may be influenced by factors that
could cause actual outcomes and results to be materially different.
Notes:
R. Reported and denotes a Barratt Developments PLC Group ("Barratt Group")
reported metric based on the standalone performance of the Barratt Group in
the comparable reporting period.
A. Aggregated and denotes an aggregated metric based on the reported
performance of the Barratt Group in the comparable reporting period 1 July
2023 to 30 June 2024 and includes the performance of the legacy Redrow plc
group ("Redrow Group") from 23 August 2023 to 30 June 2024, to provide
comparability on operational and financial performance. Redrow Group data is
based on Redrow plc's standalone accounting policies and therefore excludes
any impact of policy alignments made since the acquisition. Aggregated
adjusted measures are also presented, prepared on the same basis. The
aggregated value comparatives have not been audited or reviewed by Barratt
Redrow plc's auditors.
1. Unless otherwise stated, all figures quoted exclude joint ventures
(JVs).
2. Based on Barratt Redrow plc collated consensus of 15 analysts'
forecasts of adjusted profit before tax and PPA charges of £582.6m.
3. Percentage change compared with aggregated comparator.
Conference call for analysts and investors
David Thomas, Chief Executive Officer and Mike Scott, Chief Financial Officer,
will be hosting a conference call at 08:30am today, Tuesday 15 July 2025, to
discuss this Trading Update.
To access the conference call please register through the following link: here
(https://event.loopup.com/SelfRegistration/registration.aspx?booking=ToWvTB6OZziNN6XOwSJpXwWrrNfUYgUm1UxCRAd45Lg=&b=2389e96d-457b-46a8-bebb-fec356d5b031)
A recording of the conference call and question and answer session will be
available on our website later today.
For further information, please contact:
Barratt Redrow plc
Mike Scott, Group Chief Financial 01530 278 278
Officer
John Messenger, Group Investor Relations Director
07867 201 763
For media enquiries:
Tim Collins, Group Corporate Affairs Director 01530 278 278
Brunswick
Rosie Oddy / Peter Hesse 020 7404 5959
www,barrattredrow.co.uk (http://www.barrattdevelopments.co.uk)
Barratt Redrow plc LEI: 2138006R85VEOF5YNK29
Financial reporting calendar
The Group's next scheduled announcement of financial information is the FY25
full year results announcement on Wednesday 17 September 2025.
Appendices:
FY25 Barratt Redrow(A) FY24 Barratt
1. Net Private Reservation Rate 1 July 2024 - 1 July 2023 - Variance (%) 1 July 2023 -
29 June 2025
30 June 2024 30 June 2024
0.64 0.55 16.4% 0.58
- of which PRS and other MUS 0.08 0.06 33.3% 0.08
- excluding PRS and other MUS 0.56 0.49 14.3% 0.50
Average active sales outlets 395 434 (9.0%) 337
2. Completions (homes) FY25 Barratt Redrow(A) Variance Barratt(R)
FY24 FY24
Total private completions 13,129 13,285 (1.2%) 10,666
Of which private exc. PRS and other MUS 11,824 11,421 3.5% 8,851
PRS 878 1,048 (16.2%) 1,048
Other MUS 427 816 (47.7%) 767
Affordable 2,898 4,151 (30.2%) 2,802
Wholly Owned 16,027 17,436 (8.1%) 13,468
JV 538 536 0.4% 536
Total 16,565 17,972 (7.8%) 14,004
3. Forward sales 29 June 2025 30 June 2024(A) Variance (%)
£m Homes £m Homes £m Homes
Private 1,897.3 4,781 1,736.4 4,505 9.3% 6.1%
Affordable 825.1 4,499 758.7 4,530 8.8% (0.7%)
Wholly Owned 2,722.4 9,280 2,495.1 9,035 9.1% 2.7%
JV 199.2 555 147.7 391 34.9% 41.9%
Total 2,921.6 9,835 2,642.8 9,426 10.5% 4.3%
4. Forward sales roll Barratt Redrow Barratt Redrow
Private Total Private Total Private Total
30 June 2024 3,386 7,239 1,119 2,187
Reservations 1,152 1,260 435 436
Completions (568) (668) (196) (261)
21 August 2024 3,970 7,831 1,358 2,362 5,328 10,193
Reservations 9,396 12,318 2,618 3,221 12,014 15,539
Completions (9,681) (12,377) (2,880) (3,520) (12,561) (15,897)
29 June 2025 3,685 7,772 1,096 2,063 4,781 9,835
Number of sites Number of plots
5. Barratt Redrow - Land approval movements HY1 FY25 HY2 FY25 FY25 HY1 FY25 HY2 FY25 FY25
Approved or amended 45 67 112 7,727 15,316 23,043
Cancelled - (4) (4) - (513) (513)
Net approvals /(cancellations) 45 63 108 7,727 14,803 22,530
(cancellations)(cancellations|)(ca(Cancellations)
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