12 February 2025

 

 

BARRATT REDROW plc

 

Half year results for the period ended 29 December 2024

 

  Solid customer demand; strongly positioned for future growth

Commenting on the interim results David Thomas, Chief Executive of Barratt Redrow plc said:

I am pleased with the performance we have achieved in the first half of the year, continuing to deliver outstanding homes to customers across the country and further building on our unrivalled reputation for quality, service and sustainability. The integration of Redrow is progressing well and we are on track to deliver at least £100m of cost synergies, £10m ahead of the original target.

 

As the economic, political and lending environments have stabilised, there has been some recovery in customer demand and we have seen solid reservation activity since the start of January, building a strong forward sales position. As a result, we now expect our full year adjusted profit before tax will be towards the upper end of market expectations.

 

Whilst the housing market remains sensitive to the wider economy and mortgage rates and availability, there remains a significant shortage of homes in the UK. With our scale and track record of delivery, Barratt Redrow is uniquely well-positioned to meet this underlying demand and drive continued growth for the benefit of all stakeholders.

 

£m unless otherwise stated 1, 2	Half year ended 29 December 2024	Impact of purchase price allocation ('PPA')	Half year ended 29 December 2024 before PPA	Half year ended 31 December 2023R	Variance vs HY24
Total home completions 3	6,846	-	6,846	6,171	10.9%
Revenue	2,280.8	-	2,280.8	1,850.8	23.2%
Alternative performance measures:4
Adjusted gross profit	338.7	47.9	386.6	295.9	14.5%
Adjusted profit before tax	167.1	50.4	217.5	157.1	6.4%
Adjusted gross margin	14.9%	210 bps	17.0%	16.0%	(110 bps)
Adjusted operating margin	7.2%	210 bps	9.3%	8.4%	(120 bps)
Adjusted basic earnings per share	9.3p	2.7p	12.0p	11.8p	(21.2%)
Statutory performance measures:
Gross profit	338.7			238.5	42.0%
Profit before tax	117.2			95.2	23.1%
Gross margin	14.9%			12.9%	200 bps
Operating margin	5.0%			5.3%	(30 bps)
Basic earnings per share	5.8p			7.1p	(18.3%)
ROCE	8.1%			12.8%	(470 bps)
Net cash	458.9			753.4	(39.1%)
Interim dividend per share	5.5p			4.4p	25.0%
Tangible net asset value per share	438p			451p	(2.9%)

Notes:

1 Refer to Glossary for definition of key financial metrics.

R = Reported and denotes a Barratt Developments PLC group ("Barratt Group") reported metric based on the reported 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 31 December 2023 and includes the performance of the legacy Redrow plc group ("Redrow Group") from 24 August 2023 to 31 December 2023, the equivalent period of ownership, 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.

2 Unless otherwise stated, all numbers quoted exclude JVs.                                                                                                                                  

3 Including JVs in which the Group has an interest.

4 In addition to the Group using a variety of statutory performance measures, alternative performance measures (APMs) are also used. Definitions of APMs and reconciliations to the equivalent statutory measures are detailed in the Glossary and Definitions. In this period, new APMs have been introduced to allow for the assessment of the performance of the combined Group, before the impact of PPA adjustments. Net cash definition is included in Note 13.

5 Bloomberg consensus for FY25 adjusted profit before tax on 11 February 2025 was £542m with a range of £506m to £588m, excluding the impact of purchase price adjustments.

 

 

Financial highlights

·	Good operational performance, delivering 6,846 total home completions3 (HY24: 6,171R and 7,777A), with adjusted profit before tax at £167.1m (HY24: £157.1mR and £248.8mA) after purchase price allocation ("PPA") adjustments of £50.4m.
·	Net private weekly reservation rate up 33% to 0.60 compared to 0.45A aggregated performance for Barratt and Redrow in the comparable period (HY24: 0.48R).
·	Redrow integration progressing well with nine divisional office closures completed or announced across both businesses and wider integration programme now on track to deliver £100m of cost synergies.
·	Adjusted items relating to Redrow transaction and integration costs totalled £49.9m (HY24: £nilR) with no incremental building safety remediation costs charged in the half (HY24: £61.9mR), resulting in reported profit before tax of £117.2m (HY24: £95.2mR).
·	Balance sheet remains strong with net cash of £458.9m (31 December 2023: £753.4mR and £874.4mA), after payment of the FY24 final dividend of £170.5m across the combined shareholder base in November (FY23 final dividend: £228.0mR) and incremental investment in land and work in progress of £332m.
·	Interim ordinary dividend increased by 25% to 5.5p (HY24: 4.4pR) reflecting planned FY25 1.75 times adjusted earnings cover, before the impact of PPA adjustments. This includes four months' contribution of Redrow profits.
·	Full year adjusted profit before tax, before the impact of PPA adjustments, is now expected to be at the upper end of market expectations5.

Operational highlights

·	Redrow integration progressing well with key functions such as Safety, Health and Environment and IT already under single leadership.
·	Continued industry leadership on quality, customer satisfaction and sustainability:
	-	111 NHBC Pride in the Job Awards across the combined Group, consistently ahead of any other housebuilder for 20 years;
	-	Rated '5 Stars' by our customers in the HBF customer satisfaction survey - Barratt & David Wilson for 15 years in a row and Redrow for the last 6 years consecutively; and
	-	Barratt recognised as the leading national sustainable housebuilder by NextGeneration for the eleventh consecutive year and Redrow the highest ranked non-member in 2024.
·	Important new joint ventures established with the launch of:
	-	The MADE Partnership with Homes England and Lloyds Banking Group; and
	-	The West London Partnership with Places for London, the property arm of Transport for London, encompassing the development of more than 4,000 homes in the coming decade in West London.

Strategic update

·	Following the acquisition of Redrow, we are updating our medium term guidance and targets for the combined group.
·	We expect to deliver c. 22,000 homes per annum in the medium term, with operating margin recovering to c. 15% and return on capital employed (including land creditors) to c. 20%.
·	As previously announced, our land acquisition hurdle requirements will be gross margin of 23% (and 24% following delivery of procurement synergies) and return on capital employed of 25%.
·	As the growth of the business generates significant free cash flow in the medium term, we are refining our approach to capital allocation, in particular, returns to our shareholders:
	-	Initiating an ongoing share buyback programme which will return £100m per annum and will begin with a £50m buyback in the second half of this financial year.
	-	Refining our dividend cover from 1.75x to 2.0x adjusted earnings (before the impact of PPA adjustments) from FY26.

Current trading and outlook

·	Our net private weekly reservation rate from 30 December 2024 to 2 February 2025 was 0.60 (2024: 0.60A), with no private rental sector or other multi-unit sales (2024: 0.03A).
·	Forward sales3 as at 2 February 2025 were 10,903 homes (4 February 2024: 11,460A) at a value of £3,350.3m (4 February 2024: £3,135.2mA) with 7,702 homes of these total forward sales either exchanged or contracted (4 February 2024: 8,524A).
·	Whilst our full year out-turn remains dependent on how the market evolves through the Spring selling season, based on solid reservation activity since the start of January, we expect to deliver total home completions of between 16,800 and 17,200 in FY25 (including c. 600 JV completions).

 

Note on forward looking statements

 

Certain statements in this announcement may be forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Accordingly undue reliance should not be placed on forward looking statements. Unless otherwise required by applicable law, regulation or accounting standards, the Group does not undertake to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.

 

There will be a results meeting at UBS, 5 Broadgate, London, EC2M 2AT at 8.30am today followed by a Capital Markets Update commencing at 10.00am.

The results presentation will also be webcast live with the Q&A. Please register and access the webcast using the following link: 

Barratt Redrow plc FY25 Interim Results: Broadcaster Audience

The Capital Markets Update will also be webcast live with the Q&A. Please register and access the webcast using the following link: 

Barratt Redrow plc Capital Markets Update: Broadcaster Audience

An archived version of the results webcast as well as the Capital Markets Update will also be available on our website later this afternoon and further copies of this announcement can be downloaded from the Barratt Redrow plc corporate website at www.barrattredrow.co.uk or by request from the Company Secretary's office at: Barratt Redrow plc, Barratt Redrow House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire, LE67 1UF.

For further information, please contact:

Analyst / investor enquiries
Mike Scott, Chief Financial Officer	01530 278 278
John Messenger, Group Investor Relations Director	07867 201 763
Media enquiries
Tim Collins, Group Corporate Affairs Director	01530 278 278
Brunswick
Jonathan Glass / Rosie Oddy	020 7404 5959

 

 

Barratt Redrow plc LEI: 2138006R85VEOF5YNK29

 

The Group's next scheduled announcement will be a trading update on Wednesday 16 April 2025.

Chief Executive's Statement

Overview

We have delivered a good operating performance for the six months to 29 December 2024, supported by the commitment and efforts of our employees, sub-contractors and supply chain partners across the enlarged business.

The economic and political backdrop was more stable during the first half with a less volatile mortgage lending environment resulting in a recovery in customer demand, however affordability challenges remain an issue for many home buyers and are particularly notable for first time buyers.

·	Total home completions were 6,846 (HY24: 6,171R and 7,777A).
·	We delivered adjusted gross profit of £338.7m (HY24: £295.9mR and £423.1mA) and an adjusted gross margin of 14.9% (HY24: 16.0%R and 17.0%A). The reduced gross margin profitability partly reflected the underlying reduction in homes completed and the operational gearing impact of lower completion volumes. It also included an adverse purchase price allocation ('PPA') impact of £47.9m, as fair value adjustments to Redrow's land and work in progress began to unwind through the income statement.
·	Adjusted gross profit before the impact of PPA adjustments was £386.6m (HY24: £295.9mR and £423.1mA) and adjusted gross margin before the impact of PPA was 17.0% (HY24: 16.0%R and 17.0%A).
·	Adjusted gross profit is also reported after the impact of accounting policy alignment which reduced gross profit by £14.3m (HY24: £nil).
·	We delivered an adjusted operating profit of £163.9m (HY24: £155.2mR and £248.4mA) and an adjusted operating margin of 7.2% (HY24: 8.4%R and 10.0%A). Adjusted operating profit decreased due to PPA adjustments of £47.9m.
·	We generated an adjusted profit before tax of £167.1m (HY24: £157.1mR and £248.8mA). This included a decrease in profit due to PPA adjustments of £50.4m.
·	Reported profit before tax was £117.2m (HY24: £95.2mR and £186.9mA).
·	Our balance sheet strength has been maintained with half year end net cash of £458.9m (HY24: £753.4mR and £874.4mA after dividend payments of £170.5m (HY24: £228.0mR), £46.2m incremental land investment (HY24: £23.6mR net reduction) and the typical seasonal investment in work in progress.
·	ROCE reduced by 470 bps to 8.1% (HY24: 12.8%R), primarily due to reduced profitability.

 

Redrow integration

Since receiving Competition and Markets Authority ("CMA") clearance on 4 October 2024, our joint integration team has made good progress in bringing the two businesses together.

Certain functions such as Safety, Health and Environment and IT have been brought under single leadership and our plans for full integration of the remaining functions are well developed, and all business functions and divisions will soon have a unified management structure.

Having reviewed the appropriate organisational structure for the Group over the medium term, we have already closed five divisional offices across both businesses with plans to close a further four divisional offices, which, if confirmed, will result in Barratt Redrow operating from 32 divisions across the country with the capacity to deliver 22,000 homes per annum in the medium term.

Integration and synergy planning across our procurement and head office functions is also progressing well and the initial phase of each of these programmes is currently being implemented, including the opening of a new Finance Shared Service Centre.

Given the progress made to date across the programme and our visibility of the pipeline of future opportunities, we now expect to be able to deliver transaction synergies of at least £100m over the three years from CMA clearance, an increase of £10m on the £90m expected when the transaction was announced in February 2024.

Keeping people safe

As always, we are committed to achieving the highest industry health and safety standards to provide a safe working environment for all of our employees and subcontractors.

In the 12 months to 29 December 2024, reflecting concerted campaigns to highlight health and safety issues and drive improved behaviours, the Barratt operations' IIR reduced to 292 (2023: 305) per 100,000 workers. Barratt operations SHE audit compliance also remained strong at 97% (2023: 97%). In the 12 months to 31 December 2024 Redrow's operations delivered a significantly reduced IIR at 326 (2023: 370).

Looking forward as an enlarged group, with the added capability to share experience and best practice with Redrow, we are focussed on further improving our site-based processes and procedures, challenging unsafe behaviours across our sites and production facilities and looking at ways we can minimise injuries and accidents.

 

Building sustainably

Following the combination with Redrow, we will maintain our position as the leading national sustainable housebuilder. In October 2024, the SBTi validated our refreshed net zero targets, demonstrating our ongoing commitment to achieving net zero greenhouse gas emissions by 2040. Redrow also has validated targets, and we have started the work to set new targets for the combined Group.

In the housebuilding industry's NextGeneration awards, Barratt maintained its position as the 'Leading National Sustainable Housebuilder', receiving the "Gold Award" for the eleventh consecutive year, as well as the "Crystal Award" for transparency.

 

The eHome2, within the Energy House 2.0 chamber at Salford University, continues to provide important data on the real-world performance of the construction methods and technologies which may be incorporated in our homes of the future. This research is providing invaluable performance data not only for our teams but also for our suppliers helping them to drive improvements and new product development. Further information on the most recent heating system test results from eHome2 can be found here:

 

https://www.barrattdevelopments.co.uk/~/media/Files/B/Barratt-Developments/documents/Barratt%20Redrow_eHome2_Heating%20Systems%20Report.pdf

 

Our customers

Our industry leadership in quality and customer service is fundamental to our success with both Barratt and Redrow being consistently awarded the maximum 5 Star rating by our customers in the HBF customer satisfaction survey - with Barratt and Redrow achieving this for the last 15 and 6 consecutive years respectively. Our site and sales teams are committed to delivering for our customers throughout their journey and benefit from ongoing training programmes delivered throughout the year.

We constantly strive to improve the design and space of our homes to meet customers' desires and expectations. In addition, we are continually looking at ways to increase the water and energy efficiency of our homes to help unlock lower lifetime housing costs for our customers. In FY24 99% of our home completions were EPC rated 'B' or above, a level of energy efficiency shared by just 3.4%⁶ of the existing housing stock. 

Given the ongoing affordability challenges, we continue to help our customers to access attractive mortgage products and work with mortgage lenders to ensure that the products they offer newbuild home buyers are attractive and suitable. We continue to work with lenders to encourage more "green mortgages" which reflect the lower running costs and resilience of newbuild homes.

 

Our people

Our second 2024 Barratt standalone employee engagement pulse survey was completed in October 2024. This pulse survey delivered a good engagement score of 80.2% which was a 130 basis point improvement from April 2024's pulse survey and 530 basis points ahead of the survey in September 2023. At a time of significant change and uncertainty, this is a particularly positive result.

We continue to operate as an accredited real Living Wage Employer and we promote the payment of the real Living Wage within our UK supply chain through our standard sub-contractor terms and conditions.

 

With the industry facing a longstanding skills shortage it remains important to attract and retain the best people. We continue to run numerous award-winning schemes including those for graduates, apprentices and former Armed Forces personnel. Our partnership with The School Outreach Company recently won the Personnel Today 'Innovation in Recruitment' award which recognises "initiatives and strategies that boost the talent pipeline and strengthen retention and candidate experience".

 

We have four Degree Apprenticeships delivered in partnership with Sheffield Hallam University, encompassing Construction, Quantity Surveying, Technical Design, and Real Estate. During the half, 25 of our degree apprentices completed their academic qualifications and, since inception, our degree apprenticeship programme has seen 84 employees graduate with BSc (Honours). We had 558 employees on our development programmes at 29 December 2024 across the enlarged group (31 December 2023: 414^R).

 

Our land position

During the half, we approved new land acquisitions totalling 7,727 plots (HY24: net cancellation of 254^R plots). Our land teams have also had notable planning successes which have included:

·	1,000 homes securing outline planning consent at Darwin Green in Cambridgeshire, following a decision from the Secretary of State for Housing, Communities and Local Government; and,
·	Planning approval secured on six strategic land developments, securing outline consents for more than 2,000 new homes.

In addition, Barratt London launched the West London Partnership with Places for London, the property arm of Transport for London. The West London Partnership is Places for London's largest partnership to date and will operate across West London, including in the London Boroughs of Barnet and Ealing, unlocking 60 acres of underutilised land, all with excellent transport connections and with the aim of delivering more than 4,000 homes over the next decade.

 

We also announced the creation of the MADE Partnership, a joint venture with Homes England and Lloyds Banking Group. The MADE Partnership will act as master developer for multiple large-scale, residential-led developments consisting of 1,000 to more than 10,000 homes and a variety of community facilities and employment uses. Since it launched, MADE Partnership has already secured its first master development with Tameside Council to deliver Godley Green Garden Village which will include more than 2,000 homes. MADE Partnership and Tameside Council are now working to prepare a comprehensive master development strategy for the development with the aim of starting on site in early 2026.

Our build performance

Throughout calendar year 2024, Barratt once again maintained its industry leadership position amongst the major housebuilders, with the Group registering the lowest Reportable Items (RIs) per NHBC inspection⁷ at 0.12 (2023: 0.14^R). Over the comparable period Redrow's operations registered 0.24 RIs per inspection, a considerable improvement on the previous year's 0.31 RIs per inspection. The Group will also look to ensure best practices are adopted across all build activity within the enlarged Group.

Our build quality also continues to be recognised through the NHBC Pride in the Job Awards for site management. Our site teams' success in the most recent judging period was recognised in June 2024, where site managers across the Barratt operations secured 89 awards, more than any other housebuilder for the 20^th consecutive year, while Redrow's site managers, judged across fewer sites, secured 22 awards. Over the past two decades no other housebuilder has experienced this level of recognition for site standards and build quality which reflects our uncompromising approach to build quality.

We continue to grow the number of homes we build using Modern Methods of Construction (MMC). The adoption of MMC, most notably timber frame construction, increases efficiency, reduces both embodied carbon and waste and helps to mitigate the long-term challenges posed by the shortage of skilled workers across the industry. Across the Barratt operations, we completed 38.9% of our homes (HY24: 35.2%^R) using MMC in the first half.

 

Our site teams across the country successfully managed construction activity during the half with increased build activity across our ongoing sites more than offsetting the reduction in sales outlets. During the first half, Barratt operations delivered 252 build equivalent homes per week, in line with the 251 equivalent homes built each week in HY24 and Redrow's operations delivered 71 build equivalent homes per week, slightly lower than the 75 equivalent homes built each week in HY24.

 

We anticipate that construction activity will increase during the second half of FY25 due to both the normal seasonal uplift in activity, reflecting the typically stronger reservation activity and longer site working hours available, as well as the increased investment in sales outlet openings planned across the Barratt Redrow operations over the coming months.

 

Responsible development

 

Fire safety and external wall systems

During the half, no issues were identified which required an increase in the fire safety and external wall provision with the total expected cost of remediation remaining within the Group's estimates, with a provision of £798.1m as at 29 December 2024 (30 June 2024: £628.1m^R).

Within the Group's provision, as part of the acquisition fair value exercise, Redrow's fire safety provision was increased by £39.3m to £184.3m, reflecting the recognition of certain contingent liabilities which would not have met the threshold for provision on a standalone basis. 

We continue to make progress through the portfolio of buildings covered under the Building Safety Self Remediation Terms across both the Barratt and Redrow legacy property portfolios. During the half year, through inspections and testing, or contact from building owners regarding potential issues, we identified a net further 14 buildings potentially requiring remedial works, including one in the Redrow portfolio, (HY24: 18^R buildings) and 12 buildings were completed or assessed as needing no remediation (HY24: 4^R buildings).

Around 64% of the Barratt portfolio have been assessed under the Fire Risk Assessment of External Walls and have an appropriate PAS 9980 assessment in place, and 27 of the 28 buildings in Redrow's active portfolio have been assessed under the Fire Risk Assessment of External Walls and have an appropriate PAS 9980 assessment in place.

Across the combined portfolio of 291 buildings under review, 193 buildings where at tender or site mobilisation, or were in the process of being remediated (30 June 2024: 262^R buildings, of which 137^R buildings were at tender or site mobilisation, or were in the process of being remediated).

In November 2024, an investigation by the Institution of Fire Engineers concluded that one of its members had failed to maintain professional standards and terminated his membership. The firm at which the individual worked has provided fire risk assessments on a number of buildings which the Group has developed. We are currently evaluating whether this matter has any impact on the assessment of those buildings.

The Group signed the Scottish Government's Safer Building Accord, on 31 May 2023 and the industry continues to work with the Scottish Government to finalise the required standard of remediation in Scotland.

Reinforced concrete frames

Our remediation activities with respect to reinforced concrete frame design and construction continued during the half year with legacy developments proceeding in line with remediation plans, and no additional provision was required. The provision in respect of reinforced concrete frame design and construction of £87.1m as at 29 December 2024 (30 June 2024: £102.2m^R) reflects our current best estimate of the extent and future costs in respect of remediation work required.  

Further details on our approach to building safety can be viewed on our website at:

https://www.barrattdevelopments.co.uk/about-us/our-approach-to-building-safety.

Charitable giving

In FY24, we donated £6.4m (FY23 £6.3m) to charitable causes through the Barratt Foundation and employee fundraising.

During the first half of FY25, the Barratt Foundation pledged more than £2m in grants to new and existing Charity Partners. Notable in the half, the Foundation:

 

·	Donated £100,000 to the "A place to call home" campaign, with Comic Relief and The Evening Standard, targeting support for children and families facing food insecurity and homelessness.
·	Donated £48,000 in December to more than thirty deserving charities, through the Winter Support Fund, helping them navigate the most challenging winter period.
·	Renewed its partnership with the Outward Bound Trust, committing funding of £1m over three years;
·	Launched a new partnership with OnSide, a national youth charity with a growing a state-of-the-art network of youth centres (called Youth Zones) across the country, with a donation of £300,000;
·	Renewed its partnership with Cleanup UK, committing funding of £75,000 over three years. This follows the hugely successful first national volunteering campaign in 2024 and will support the delivery and growth of the Barratt Redrow Cleanup in 2025, 2026 and 2027.

 

The Barratt Foundation's charitable giving programmes will be rolled out to Redrow colleagues with the Foundation excited to share a broader range of volunteering and fundraising activities to colleagues across the group's enlarged operations.

Board changes

On 4 October 2024, we were delighted to welcome, as planned, three members of the Redrow plc Board to the Barratt Redrow plc Board. Matthew Pratt was appointed to the position of Chief Executive Officer, Redrow and Group Executive Director, and Geeta Nanda and Nicky Dulieu, were both appointed as Non-Executive Directors of Barratt Redrow plc.

The Board will continue to assess its own composition and that of its Committees. It will also consider the requirements of the Hampton Alexander and the Parker and McGregor-Smith reviews throughout this process.

Reporting dates

The Group has, following the acquisition of Redrow plc moved to a 52-week reporting cycle. As a result of this change in reporting cycle we are reporting interim results for the 26 weeks to 29 December 2024. Our FY25 full year results will be reported to 29 June 2025.

 

Our financial performance

Reservation performance

Our net private weekly reservation rate was up 33% to 0.60 compared to 0.45^A like for like aggregated performance for Barratt and Redrow in the comparable period. This improvement reflected a more stable economic and political backdrop during the first half, as well as a less volatile mortgage lending environment. Customer demand, whilst remaining highly sensitive to mortgage rates, benefited from relative mortgage rate stability, in sharp contrast to the more challenging interest rate movements during the first quarter of FY24.

 

	Half year ended 29 December 2024	Barratt and Redrow aggregatedA (1) Half year ended 31 December 2023	Change %	Half year ended 31 December 2023R (2)
Average net private reservations per active outlet per week
Wholly owned	0.60	0.45	33.3%	0.48
- Of which PRS and other MUS	0.06	0.05	20.0%	0.06
JV	0.80	0.78	2.6%	0.78
Total	0.61	0.46	32.6%	0.49
Average active sales outlets
Wholly owned	387	440	(12.0%)	358
JV	10	9	11.1%	9
Total	397	449	(11.6%)	367
Private forward sales roll (homes)
30-June	3,386	3,884	(12.8%)	3,884
Reservations	1,152	1,139	1.1%	1,139
Completions	(568)	(572)	(0.7%)	(572)
21/23 August	3,970	4,451	(10.8%)	4,451
Redrow acquired order book	1,358	1,384	(1.9%)
Reservations	4,909	4,145	18.4%	3,363
Completions	(4,941)	(5,303)	(6.8%)	(4,208)
29/31 December	5,296	4,677	13.2%	3,606

(1)       Barratt and Redrow included from 24 August 2023

(2)       Barratt as reported in prior period, HY24, from 1 July 2023 through 31 December 2023

 

In the half year, we operated from an average of 397 active sales outlets, including JVs, a decrease of 11.6% on the 449 aggregate prior half year average outlets but in line with our guidance at the start of the year. We launched 42 new sales outlets in the half, including JVs, and we continue to anticipate average sales outlets will begin to recover in the fourth quarter of FY25 and throughout FY26. At 29 December 2024, we were operating from 426 active sales outlets. We continue to expect that average active sales outlets, including JVs, for the full year will be c. 9% lower than the 443 aggregate average outlets in FY24 for the combined group.

 

Forward order book	29 December 2024		Barratt and Redrow aggregatedA 31 December 2023		Change %
	£m	Homes	£m	Homes	£m	Homes
Private	2,131.3	5,296	1,764.6	4,677	20.8%	13.2%
Affordable	735.9	4,384	942.0	5,648	(21.9%)	(22.4%)
Wholly owned	2,867.2	9,680	2,706.6	10,325	5.9%	(6.2%)
JV	151.2	396	160.0	453	(5.5%)	(12.6%)
Total	3,018.4	10,076	2,866.6	10,778	5.3%	(6.5%)

 

Reflecting the reduction in average sales outlets, notwithstanding the stronger reservation rate experienced in the half, total forward sales (including JVs) as at 29 December 2024 reduced by 6.5% to 10,076 homes. The total value of the order book (including JVs) as of 29 December 2024 has increased by 5.3% to £3,018.4m reflecting a recovery in the private order book up 13% from 4,677 homes to 5,296 homes at 29 December 2024, with the private order book value, at £2.1bn, up almost 21% on the prior year's £1.8bn.

Meanwhile, in the affordable housing market, reflecting both challenging market conditions for affordable housing providers, as well as the slowdown in affordable housing tenders with the decline in average sales outlets, the enlarged group's affordable order book reduced by around 22% on the prior year to 4,384 homes with a value of £735.9m.

 

Home completions

The Group's completion mix by both volume and average sales price (ASP), are detailed in the following table comparing completions and ASPs in HY25 to the aggregated results in HY24. Barratt's performance as reported for HY24 is also included for reference.

	Half year ended 29 December 2024	Barratt and Redrow aggregatedA (1) Half year ended 31 December 2023	Change (%)	Half year ended 31 December 2023R (2)
Home completions (units)
Underlying Private	5,090	5,103	(0.3%)	4,008
PRS	272	481	(43.5%)	481
Other MUS	147	291	(49.5%)	291
Total private	5,509	5,875	(6.2%)	4,780
Affordable	1,065	1,712	(37.8%)	1,201
Wholly owned	6,574	7,587	(13.4%)	5,981
% Affordable	16.2%	22.6%	(640 bps)	20.1%
JV	272	190	43.2%	190
Total	6,846	7,777	(12.0%)	6,171
ASP (£'000)
Underlying Private	378.3	383.9	(1.5%)	357.8
PRS	282.4	273.2	3.4%	273.2
Other MUS	286.9	278.1	3.2%	278.1
Total private	371.1	369.6	0.4%	344.4
Affordable	178.4	179.0	(0.3%)	160.8
Wholly owned	339.9	326.6	4.1%	307.6
JV	353.9	353.9	-	353.9

(1)       Barratt and Redrow included from 24 August 2023 based on the individual accounting policies of Barratt and Redrow.

(2)       Barratt as reported in prior HY24 from 1 July 2023 to 31 December 2023

 

The combined Group delivered 6,846 total home completions (including JVs of 272 (HY24: 190^R), a decline of 12% on the aggregated 7,777 home completions in HY24. The decline in total home completions in the period reflected a relatively limited, 6.2%, decline in private home completions but a more significant 37.8% decline in affordable home completions.

 

The modest decline in private home completions mainly reflected the size of the opening forward order book and lower sales outlets in the half, partially offset by improved reservation rates. The decline in affordable completions was in line with our expectations given the reduced affordable order book entering the new financial year, reflecting both challenging market conditions for affordable housing providers as well as the slowdown in affordable housing tenders with the decline in average sales outlets.   

 

Our underlying private ASP decreased by 1.5% to £378.3k (HY24: £383.9k^A and £357.8k^R). We saw broadly flat pricing across the combined Group as a whole (HY24: 2.7%^R underlying price decline) with site mix changes and a lower proportion of delivery from London impacting the overall ASP movement.

 

The total private ASP including PRS and multi-unit sales increased by 0.4% to £371.1k (HY24: £369.6k^A and £344.4k^R). The affordable ASP reduced by 0.3% to £178.4k (HY24: £179.0k^A and £160.8k^R), a function of lower proportional delivery from London and modest changes in site mix.

 

Reflecting all of the mix movements, the Group's total wholly owned ASP was 4.1% higher on an aggregated comparable basis at £339.9k and 10.5% ahead of the Barratt reported ASP in HY24 (HY24: £326.6k^A and £307.6k^R).

 

 

Acquisition of Redrow plc

 

The Group completed the acquisition of Redrow plc on 21 August 2024. The fair value of the consideration paid of £2,528.9m included a premium of £469.1m to the book value of the net assets of the Redrow Group at the date of completion. As required by IFRS 3 Business Combinations, the identifiable assets and liabilities of Redrow have been recognised on the Group Balance Sheet at their fair value at the acquisition date. The values are provisional as at the half year. The £259.0m excess of the consideration over the net assets acquired is recorded as goodwill.

 

The fair value adjustments to the Redrow book value of assets and liabilities, after reclassification of balances to align with their presentation in the Barratt Group financial statements, are shown below:

 

Redrow plc - fair value adjustments £m	Explanatory note	Fair value adjustment £m
Inventories
- Land options	1(a)	71.8
- Land not in development	1(b)	(60.5)
- Land and work in progress in development	1(c)	93.0
Inventories - total		104.3
Provisions
Building safety provisions	2(a)	(39.3)
Completed development provisions	2(b)	(7.2)
Intangible assets
Brand	3(a)	231.8
Customer order book	3(b)	4.1
Other adjustments		5.5
Deferred tax on adjustments above	4	(89.1)
Goodwill	5	259.0
Total premium allocated		469.1

 

Explanatory notes

 

1.	The market value of land options on which planning has progressed; land not in development; and, land and work in progress in development have been adjusted to fair value.
	(a)	In relation to land options held by Redrow, progress on planning has resulted in an increase in their carrying value of £71.8m.
	(b)	Land not yet under development has been adjusted to reflect recent market conditions, resulting in a reduction in carrying value of £60.5m.
	(c)	Land and work in progress in development has been valued to reflect its current stage of development. This resulted in an increase in carrying value of £93.0m.
2.	Redrow's provisions have been adjusted to fair value.
	(a)	Redrow legacy property provisions have been increased, largely reflecting the requirement under IFRS 3 to bring contingent liabilities onto the balance sheet. After the impact of discounting was also reflected, there was a net £39.3m increase in the provision.
	(b)	The re-appraisal of the Redrow completed development provision resulted in a £7.2m increase in the provision.
3.	In relation to intangible asset recognition.
	(a)	The fair value of the Redrow brand is £231.8m and based on the assumption that the brand will be maintained into the future, the brand will not be amortised.
	(b)	The Redrow order book had a fair value uplift of £4.1m reflecting the embedded margin at the date of acquisition.
4.	All adjustments are anticipated to be subject to the Group's effective tax rate at 29% and a deferred tax liability of £89.1m has been recognised in the balance sheet at acquisition and will be released as these various PPA adjustments impact the income statement over the coming years.
5.	The remaining balance of the premium to net asset value of £259.0m has been recognised as goodwill.

 

We expect these fair value adjustments to largely unwind through the income statement over a period of up to 24 months from the balance sheet date. The reduction in reported operating profit is estimated to be between £80m and £90m in FY25 and £10m and £20m in FY26 with no further material impacts on operating profit expected in subsequent years. In HY25, the reduction in reported profit before tax was £50.4m.

In addition to the fair value adjustments above, the Redrow results for the period have been consolidated under Barratt Group accounting policies, in particular the recognition of development-wide costs to complete. This increased cost of sales in HY25 by £14.3m when compared to Redrow's previous accounting policies. In FY25, the total impact of the application of Group policies for Redrow is expected to be in the range of £25m to £30m.

 

Financial results

 

The enlarged group delivered adjusted gross profit of £338.7m compared to £295.9m from Barratt on a reported basis in HY24. We experienced a 110 basis point decline in adjusted gross margin in the half year. This reflected the impact of home completion volume gearing, with house prices and build costs broadly stable at a combined Group level, as well as the purchase price allocation and accounting policy alignment impacts on Redrow's adjusted gross profitability.

 

The purchase price allocation impact in the half year reduced adjusted gross profit by £47.9m with a further reduction of £14.3m in relation to the alignment of accounting policies. These adjustments along with the operational gearing impact of lower home completions in the half, resulted in an adjusted gross margin of 14.9% (HY24: 16.0%^R and 17.0%^A). There were no additional building safety remediation charges in the half through cost of sales (HY24: £57.4m^R charge), resulting in reported gross profit of £338.7m and a reported gross margin of 14.9% (HY24: 12.9%^R and 14.7%^A).

 

Our forward sales at the start of the second half incorporated an estimated 1.1% underlying increase in sales prices, excluding multi-unit sales, on the position a year ago. During the first half, total build cost inflation recognised through the income statement was broadly flat as anticipated. As we continue to see limited movements in total build cost inflation, with current materials purchases and labour costs broadly stable on a year-on-year basis, our full year guidance remains unchanged, with total build cost inflation anticipated to be broadly flat in the income statement.

During the second half of FY25 we anticipate a proportionally higher share of home completions will improve fixed cost absorption supporting adjusted gross profitability. However, there will also continue to be an impact on the Group's reported performance from the unwind from purchase price adjustments. These are expected to reduce profit before tax by £35m to £45m in the second half.

Adjusted administrative costs in the half year increased to £175.7m (HY24: £140.9m^R and £174.9m^A) reflecting the impact of the Redrow combination, as well as annual payroll inflation but reduced headcount through our continuing recruitment freeze and lower IT development spend. We expect adjusted administrative expenses for FY25 will be c. £400m including intangible amortisation costs of c. £10m and cost synergies of c. £10m. Part exchange net income was £0.9m (HY24: £0.2m^R income).

 

Adjusted operating profit increased to £163.9m (HY24: £155.2m^R and £248.4m^A) reflecting the inclusion of Redrow's activities but also reduced volume delivery given the lower order book at the start of FY25. Our adjusted operating profit margin reduced by 120 bps to 7.2% (HY24: 8.4%^R and 10.0%^A).  The adjusted operating profit before the impact of PPA adjustments of £47.9m, was £211.8m and the operating profit margin before the impact of PPA adjustments was 9.3%.

 

To help the understanding of performance across the period in which Redrow was acquired, the following reconciliation is provided:

The Barratt standalone adjusted operating margin increased by 140 bps to 9.8% (HY24: 8.4%^R). The change in the adjusted operating margin in the year reflected several impacts:

 

·	Completion volumes: the decline in wholly owned completions of 11.8%, or 706 homes, created a 150 bps negative impact;
·	Net inflation: modest sales price improvements, combined with stability of build cost inflation produced a 30 bps positive impact;
·	Completed developments provision: after reflecting the increasingly extended time periods being experienced in relation to the adoption of roads and public space by local authorities on completed developments into FY24, modest changes to this provision in the year created a 60 bps positive margin impact;
·	Gladman: the start of recovery in the land buying market drove increased activity and, as a result, a positive impact of 60 bps on the adjusted operating margin;
·	Mix and other items: changes in sales mix, improved profitability on part exchange properties and a policy amendment in relation to land options drove the remaining 140 bps positive impact on the Barratt standalone adjusted operating margin.

The Redrow standalone adjusted operating margin, for the period post-acquisition, decreased by 660 bps in total to 7.9%, compared to 14.5% for the same period during HY24. However, within this movement, 250 bps relates to alignment of accounting policies post-acquisition. The remaining change of 410 bps was driven by the following impacts:

 

·	Completion volumes: the decline in wholly owned completions of 19.1%, or 307 homes, created a 180 bps negative impact, broadly in line with Barratt standalone;
·	Net inflation: whilst Redrow have also seen stability in build costs, sales prices saw deflation of c. 1.2% in the half equating to 100 bps negative margin impact;
·	Mix and other items: changes in sales mix, and other movements drove the remaining 130 bps impact.

The combined Barratt Redrow adjusted operating margin was also affected by PPA adjustments of £47.9m, which impacted the combined adjusted operating profit margin by 210 bps.

 

We incurred adjusted item charges of £49.9m (HY24: £57.4m^R) within reported operating profits, with no adjusted item charges in our joint ventures (HY24: £4.5m^R adjusted charge). Adjusted items in the period included the remaining transaction costs, incurred by both Barratt and Redrow, including the associated Stamp Duty costs in relation to the acquisition of Redrow plc (£35.5m), and the initial restructuring costs to realise synergies of (£14.4m).

 

After adjusted items, the reported operating profit was £114.0m (HY24: £97.8m^R and £191.0m^A) and the operating margin for the half year was 5.0% (HY24: 5.3%^R and 7.7%^A).

 

Barratt Redrow received final CMA clearance for the combination on 4 October 2024. Given the time required to deliver on our commitments to consult with employees as part of any restructuring, there were no cost synergies delivered in the half year. Looking forward we expect to deliver c. £10m of cost synergies through our income statement in the second half and achieve an annual run-rate of savings of c. £26m at the end of FY25. We anticipate the run rate of savings will now total c.£65m at the end of FY26, with the full run rate achieved by the end of HY28.

 

Net finance charges were above the prior period at £5.2m (HY24: £2.6m^R). This reflected a continuing but lower benefit from interest received on cash on deposit, with finance income at £22.7m (HY24: £24.0m^R). The cash related finance income in the half was £17.4m (HY24: £19.0m^R income), with non-cash charges of £22.6m (HY24: £21.6m^R).

 

The non-cash finance charges reflected the increase in legacy property provisions at the start of the financial year, the additional provisions inherited through the Redrow acquisition and, as a result, an increased charge with respect to the unwinding of the discount attached to legacy property provisions, as well as a modest offset through a £2.1m reduction in imputed land creditor finance charges.

This increase in non-cash finance charges also included a £2.5m impact of discounting the Redrow proportion of the Group's legacy property provision.

 

We now anticipate FY25 net finance costs will be around £20m, ‎comprising c. £25m of cash finance income and c. £45m of non-cash finance charges including the estimated £5m interest charge with respect to Redrow legacy property provision discounting unwind.

 

In the half year, the Group's reported share of JV profit was £8.4m (HY24: £nil^R). The adjusted share of JV profit was £8.4m (HY24: £4.5m^R) with no adjusting charges associated with legacy properties (HY24: £4.5m^R charge).

 

Adjusted profit before tax was £167.1m (HY24: £157.1m^R and £248.8m^A) and, after adjusted items, profit before tax was £117.2m (HY24: £95.2m^R and £186.9m^A). The adjusted profit before tax, before the impact of PPA adjustments totalling £50.4m, was £217.5m.

 

The Group recognised £41.9m of total tax charges (HY24: £26.4m^R) at an effective rate of 35.8% (HY24: 27.7%^R), with the tax rate impacted by the absence of tax deductibility with respect to Redrow transaction costs reported in adjusted items. The expected tax rate for the enlarged Group in FY25 is 29% on adjusted profit before tax, reflecting both the rates of corporation tax (25%) and RPDT (4%).

 

Adjusted basic earnings per share reduced to 9.3 pence per share (HY24: 11.8 pence^R per share). The step-up in adjusted pre-tax profitability was offset by the increase in average shares in issue, following the acquisition of Redrow, and created the 21.2% reduction in adjusted earnings per share.

 

Basic earnings per share reduced by 18.3% to 5.8 pence per share (HY24: 7.1 pence^R per share).

 

Maintaining a strong balance sheet

 

We continue to maintain an appropriate capital structure reflecting our disciplined operating framework to ensure our balance sheet strength and resilience are maintained through the cycle.

 

The net cash balance of £458.9m (31 December 2023: £753.4m^R), including cash and cash equivalents of £655.3m (31 December 2023: £949.9m^R) reflects the resilience of underlying operating cash generation, notwithstanding:

·	A £484.4m increase in working capital in the period (HY24: £145.1mR increase) which included:
	o	A £285.9m underlying increase in inventories on the balance sheet, after adjusting for the Redrow acquisition impact, which included:
		§	A decrease in land investment carried of £1.2m; and
		§	An increase in construction work in progress of £285.6m.
	o	An underlying reduction in land creditors of £47.4m;
	o	An underlying reduction in trade and other payables, excluding land creditors, of £179.7m;
	o	An underlying decrease in receivables of £70.5m (HY24: £60.5mR decrease); and
	o	Legacy property building safety remediation spend of £46.5m (HY24: £38.1mR).

In addition, during the half, net cash was impacted by:

·	The payment of the final FY24 dividend of £170.5m (HY24: £228.0mR FY23 final dividend); and
·	Tax payments of £75.6m (HY24: 24.1mR).

 

 

The acquisition of Redrow completed on 21 August 2024 and resulted in the consolidation of net cash of £194.3m held by Redrow on that date.

 

We anticipate year end net cash of between £0.5bn and £0.6bn with increased build activity in the second half, offset by a greater proportion of completions. Our construction activity will continue to be carefully managed to align with reservation activity, but we will see an impact from up-front construction work in progress invested to bring through the incremental growth in sales outlets planned in the fourth quarter of FY25 and through FY26.

 

The increased pace of land buying activity has seen land creditors move modestly higher although land creditor funding remains below our operating framework range. As at 29 December 2024 land creditors totalled £594.6m (31 December 2023: £367.2m^R and £548.2m^A) and equated to 12.2% (31 December 2023: 12.3%^R) of the owned land bank. Land creditors falling due within the next 12 months, augmented by land creditors within Redrow's balance sheet, totalled £401.0m at 29 December 2024 (31 December 2023: £228.9m^R).

 

After deducting land creditor obligations from our net cash balance, we recorded a total net indebtedness of £135.7m at 29 December 2024 (31 December 2023: net cash surplus of £386.2m^R and £326.2m^A).

 

During the half, we once again extended our £700m revolving credit facility by one additional year to November 2029. This completes the full extension period of this facility.

 

CMA investigation

On 26 February 2024, the CMA launched an investigation into suspected breaches of competition law, relating to the exchange of competitively sensitive information by eight housebuilders, including Barratt and Redrow. On 10 January 2025 the CMA announced that its investigation would be extended by five months through to May 2025, to allow further investigation including additional evidence gathering and CMA analysis and review. We continue to co-operate with the CMA in their investigation and evidence gathering process.

 

Capital structure and operating framework

 

Our revised operating framework and progress over the last 12-month period is shown below:

 

	Operating framework	Barratt Redrow Position at 29 December 2024	Barratt reported Position at 31 December 2023
Land bankA	c. 3.5 years owned and c. 1.0 year controlled	5.0 years owned and 0.6 years controlled	3.9 years owned and 0.6 years controlled
Land creditors	Target 20 - 25% of the land bank over medium term	12.2%	12.3%
Net cash	Modest average net cash over the financial year	£605.9m over six months ending 29 December 2024	£784.7m over six months ending 31 December 2023
	Period end net cash	£458.9m net cash	£753.4m net cash
Total indebtedness (net cash and land creditors)	Minimal year end total indebtedness in the medium term	Total net indebtedness of £135.7m	Total net surplus of £386.2m
Treasury	Appropriate financing facilities	£700m RCF expiring November 2029 £200m USPP maturing 2027	£700m RCF expiring November 2028 £200m USPP maturing 2027
Shareholder returns	Ordinary dividend cover of 1.75x moving to 2.0x from FY26	FY25 proposed interim dividend of 5.5p based on 1.75x cover   Share buyback of £50m in H2 FY25	FY24 interim dividend of 4.4p based on 1.75x cover

A. Land supply is calculated as total owned (owned land and land subject to unconditional contracts) and controlled (land subject to conditional contracts) land bank plots divided by wholly owned completions in the last 12 months.

 

Net tangible assets were £6,356.1m and £4.38 per share at 29 December 2024, (31 December 2023: £4,397.0m^R and £4.51 per share^R) of which land (net of land creditors) and work in progress totalled £7,543.2m and £5.20 per share (31 December 2023: £4,615.2m^R and £4.74 per share^R).

 

Land and planning

 

Throughout the period we have maintained a proactive but selective approach to investment in land, taking into account the continuing uncertain outlook for the housing market and the wider UK economy, as well as the ongoing constraints and delays in the planning system.

In the period, we approved 45 new sites (HY24: net approval of 6^R sites). The approved sites added 7,727 plots, at a cost of £471.8m equivalent to an average approved site size of 172 plots and an average plot cost of £61.1k. The plot cost of approved sites reflects the mix of both Barratt and higher value Redrow plots acquired in the period post-acquisition. 

We invested £395.6m (HY24: £239m^R) on land acquisitions and the settlement of land creditors during the half year and we now expect to invest between £0.9bn and £1.0bn on land and land creditors in FY25, significantly ahead of the £674.3m^R invested by Barratt in FY24. This increase in land investment includes transactions following the step up in land approvals by Barratt at the end of FY24, as well as the land investment activities at Redrow since acquisition.

We continue to target a geographically balanced land portfolio with a supply of owned land of c. 3.5 years and a further c. 1.0 year of controlled land. Reflecting selective land buying, but reduced levels of completions on a like-for-like basis, we remain above this overall target at 5.6 years (31 December 2023: 4.5 years^R).

 

Our land bank comprised of 5.0 years of owned land (31 December 2023: 3.9 years^R) and 0.6 years of controlled land at 29 December 2024 (31 December 2023: 0.6 years^R). The composition and planning status of our land bank at 29 December 2024 and the aggregated position at 30 June 2024 for Barratt Redrow and for Barratt reported on 31 December 2023 are detailed in the next table:

 

Our land bank	29 December 2024	Barratt and Redrow aggregated 30 June 2024A	31 December 2023R
Plots with detailed planning consent	57,653	58,724	43,308
Plots with outline planning consent	18,040	18,378	10,086
Plots with resolution to grant and other	7,943	5,791	1,160
Owned and unconditional land bank (plots)	83,636	82,893	54,554
Conditionally contracted land bank (plots)	10,586	11,347	9,060
Total owned and controlled land bank (plots)	94,222	94,240	63,614
Number of years' owned supply (X)	5.0	4.7	3.9
Number of years' controlled supply (X)	0.6	0.6	0.6
Total land bank years (exc. JVs) (X)	5.6	5.3	4.5
JVs owned and controlled land bank (plots)	4,359	4,631	4,166
Total land bank including JVs (plots)	98,581	98,871	67,780
Strategic land bank (plots)	148,157	145,016	107,753
Promotional land bank (plots)	105,344	105,359	102,360
Land bank carrying value	£4,879.4m	£4,751.6m	£2,979.1m

(X). Land supply is calculated as total owned (owned land and land subject to unconditional contracts) and controlled (land subject to conditional contracts) land bank plots divided by wholly owned completions in the last 12 months.

 

At 29 December 2024, the current estimated average selling price of plots in our enlarged owned land bank was £352,000 (31 December 2023: £333,000^R) and the estimated gross margin in our land bank, based on the current average selling price and estimated current build costs, was 18.3% at 29 December 2024 (31 December 2023: 18.5%^R; 30 June 2024: 18.6%^R).

 

Barratt Redrow delivered 1,432 (HY24: 1,534^R) completions from strategically sourced land in the period, and we converted 1,904 (HY24: 530^R) plots of strategic land into our owned and controlled land bank. Going forward, we will continue to target c30% of completions from strategic land in the medium term.

 

Gladman secured 4,990 plots on new sites (HY24: 4,736) and planning consents on 2,274 plots across 10 sites (HY24: 1,834 plots across 8 sites). Reflecting the increase in pace of land transaction activity across the country, Gladman secured land sale transactions to third parties equating to 3,085 (HY24: 364) plots.

 

There are some early signs of an increased appetite amongst housebuilders for consented land, and we anticipate an increase in activity from Gladman over the coming months. The business is heavily focused on driving promotional land through to planning consent and ensuring opportunities created by the Government's proposed changes to planning policy are optimised to build a portfolio of attractive sites ready to actively market as demand for permissioned development land recovers.

 

Interim ordinary dividend

 

We have declared an interim dividend of 5.5 pence per share (HY24: 4.4 pence per share^R). The interim dividend will be paid on Friday 16 May 2025 to all shareholders on the register on Friday 4 April 2025. Shareholders who wish to elect for the Dividend Reinvestment Plan should do so by 24 April 2025.

 

In line with our existing dividend policy, we intend to maintain ordinary dividend cover of 1.75 times adjusted earnings per share, excluding the impact of acquisition fair value adjustments in FY25. With effect from FY26 the Board has decided to revise the dividend cover to 2.0 times adjusted earnings per share, excluding the impact of acquisition fair value adjustments.

 

We have also announced the commencement of an ongoing share buyback programme of at least £100m per annum which will begin shortly, with £50m expected to be returned in the second half of the financial year.

 

 

Guidance for FY25

Looking to the balance of the current financial year our guidance is summarised in the following table. Where guidance has been amended, or updated for the first time inclusion of Redrow, this is highlighted, and previous guidance is included in italics.

Total home completions	c. 16,800 - 17,200 total home completions, including c. 600 JV completions (previously c. 16,600 - 17,200 total home completions, including c. 600 JV completions)
Private: affordable mix	Affordable mix expected to be in the high teens
Average sales outlet growth	c. 9% lower
Build cost inflation	Broadly flat
PPA impacts on adjusted profit from operations	Estimated adverse impact of c. £80m - £90m
Accounting policy alignment impact on adjusted profit from operations	Estimated adverse impact of c. £25m - £30m
Adjusted administrative expenses	c. £400m (including amortisation of intangible assets of c. £10m and synergies of c. £10m) (previously c. £310m, excluding integration costs (including amortisation of intangible asset charges of c. £10m) standalone
Synergy cost savings	c. £10m within adjusted administrative expenses
Interest cost	c. £20m (c. £25m cash credit, c. £45m non-cash charge including PPA charge impact of c. £5m) (previously c. £25m (c. £15m cash credit, c. £40m non-cash charge) standalone
Land approvals	Return to normal land approval activity during the year
Land cash spend	c. £0.9bn - £1.0bn (previously c. £0.8bn standalone)
Year end net cash	c. £0.5bn - £0.6bn (previously c. £0.5bn standalone)
Taxation	Tax rate on adjusted earnings anticipated at 29% reflecting current 25% corporation tax rate and 4% RPDT. (previously 29% standalone)
Ordinary dividend cover	1.75x ordinary dividend cover based on adjusted earnings per share adjusted to add back PPA fair value adjustments. (previously 1.75x ordinary dividend cover based on adjusted earnings per share standalone)

 

Current trading and outlook

We have had a solid start to our second half. In the five-week period from 30 December 2024 to 2 February 2025 Barratt Redrow has secured 248 net private reservations per week (2024:261^A) and we have operated from an average of 414 outlets (2024: 436 ^A). This has resulted in a net private reservation rate per active outlet per week of 0.60 (2024: 0.60 ^A).

 

Our total forward sales³ at 2 February 2025 were 10,903 homes (4 February 2024: 11,460 ^A) at a value of £3,350.3m (4 February 2024: £3,135.2m ^A). With our private order book ahead by 11.2% on the aggregated position in 2024, we are now 82%⁸ forward sold with respect to private wholly owned home completions for FY25 (FY24: 83% ^A).

The composition of our forward sales on 2 February 2025 and the order book movement since 29 December 2024 are included in the following tables, along with the aggregated performance of Barratt and Redrow in the comparable period in early 2024:

	2 February 2025		4 February 2024		Variance %
	£m	Homes	£m	Homes	£m	Homes
Private	2,459.0	6,126	2,065.3	5,511	19.1%	11.2%
Affordable	733.2	4,365	896.6	5,467	(18.2%)	(20.2%)
Wholly owned	3,192.2	10,491	2,961.9	10,978	7.8%	(4.4%)
JV	158.1	412	173.3	482	(8.8%)	(14.5%)
Total	3,350.3	10,903	3,135.2	11,460	6.9%	(4.9%)

 

 

	Current Year		Prior YearA		Variance %
	Private	Total3	Private	Total3	Private	Total3
29 / 31 December	5,296	10,076	4,677	10,778	13.2%	(6.5%)
Reservations	1,237	1,295	1,306	1,414	(5.3%)	(8.4%)
Completions	(407)	(468)	(472)	(732)	(13.8%)	(36.1%)
2 Feb / 4 Feb	6,126	10,903	5,511	11,460	11.2%	(4.9%)

 

The out-turn for FY25 remains dependent on activity through the Spring selling season but based on our forward sold position and encouraging reservation activity, we now expect to deliver total home completions of between 16,800 to 17,200 in FY25 (including c. 600 JV completions).

Full year adjusted profit before tax, excluding the impact of PPA adjustments, is now expected to be towards the upper end of market expectations⁵.

We are focused on delivering the benefits of the creation of Barratt Redrow for the benefit of all stakeholders:

·	By leveraging our industry-leading credentials on quality, customer service and sustainability, we have created the leading national sustainable homebuilder;
·	We are confident in our ability to unlock cost synergies, which we now target at £100m, an advance of £10m from our previous target of £90m.
·	Through optimising our three strong brands across our existing land bank, we will open 45 incremental sales outlets through FY28, accelerating sales, unlocking margin improvement through operational gearing and improving our land bank efficiency and asset turn.
·	We will continue to maintain a robust balance sheet, which alongside our growth plans will allow us to deliver a long term ordinary dividend at 2.0x adjusted earnings per share cover and return £100m annually to shareholders through an ongoing buy-back programme. This will commence with a £50m buy-back effective from today, 12 February 2025 through to 30 June 2025.

 

We are also positioning Barratt Redrow to deliver the sustainable growth in housebuilding the country needs in line with the Government's ambitions. This can only be delivered in a stable macroeconomic environment, when we see supply-side constraints ease as the welcomed reforms to the planning system announced by Government come to fruition, and when the affordability challenges inhibiting demand have been addressed either in the shorter term through positive Government actions or, over the longer term, through income growth and lower mortgage rates and availability.  

 

David Thomas

Chief Executive

11 February 2025

 

1 Refer to Glossary for definition of key financial metrics.

R = Reported and denotes a Barratt Developments PLC group ("Barratt Group") reported metric based on the reported 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 31 December 2023 and includes the performance of the legacy Redrow plc group ("Redrow Group") from 24 August 2023 to 31 December 2023, the equivalent period of ownership, 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.

2 Unless otherwise stated, all numbers quoted exclude JVs.                                                                                                                                                    

3 Including JVs in which the Group has an interest.

4 In addition to the Group using a variety of statutory performance measures, alternative performance measures (APMs) are also used. Definitions of APMs and reconciliations to the equivalent statutory measures are detailed in the Glossary and Definitions. In this period, new APMs have been introduced to allow for the assessment of the performance of the combined Group, before the impact of PPA adjustments. Net cash definition is included in Note 13.

5 Bloomberg consensus for FY25 adjusted profit before tax on 11 February 2025 was £542m with a range of £506m to £588m, excluding the impact of purchase price adjustments.

6 Based on EPC registrations to 30 September 2024.

7 Measured by the NHBC amongst the 14 major housebuilders constructing more than 1,000 homes annually.

8 Based on mid-point of FY25 total home completion guidance after deducting 600 JV home completions and assuming high teens affordable home completions.

Principal risks and uncertainties

The risks which the Group face could have a material adverse effect on the implementation of the Group's strategy, business, financial performance, shareholder value and returns, and reputation. Changes in the economic or trading environment can affect the likelihood and potential impact of risks and may create new and emerging risks.

Risk management controls are integrated into all levels of our business and across all operations, including at site, divisional, regional and Group level, and are monitored to ensure controls are in line with risks as they evolve.

Reputational risk could potentially arise from a number of sources including external and internal influences relating to the housebuilding sector that, when combined or over a period of time, could create a new principal risk. The Group actively manages the impact of reputational risk by carefully assessing the potential impact of all the principal risks and implementing mitigation actions to minimise those risks. Reputational risk is therefore covered by the management of each of our individual risks and is not presented as a principal risk in its own right.

The Board has completed its assessment of the Group's principal and emerging risks, including those that could threaten its business model, future performance, solvency or liquidity. The Directors do not consider the process of risk management and the principal risks and uncertainties to have changed since the publication of the Annual Report and Accounts for the year ended 30 June 2024.

The current risk profile is within our tolerance range as the Group is willing to accept a moderate level of operational risk to deliver financial returns.

Further details of the Group's principal risks and mitigation of the risks outlined below can be found on pages 65 to 70 of the Annual Report and Accounts for the year ended 30 June 2024, which is available at www.barrattredrow.co.uk.

Principal risks

Economic environment

Significant changes in the UK macroeconomic environment or continuing major geopolitical events and uncertainty may lead to falling demand, tightened mortgage availability, lack of funding for housing associations, or reduced purchaser liquidity, especially in the first time buyer market. This could reduce the affordability of our homes for private and rental customers, resulting in reduced sales volumes and our ability to provide profitable growth.

Land and planning

Lack of developable land due to delays in planning approval, failure of a clear and consistent Government policy or insufficient consented land and strategic land options at appropriate cost and quality could affect our ability to grow sales volumes and/or meet our margin and site ROCE hurdle rates.

Government regulation and political risk

The housebuilding industry is subject to increasingly complex legislation and regulations, Government intervention and policy changes, for example climate change building regulation, legal compliance, NHQC, competition law and sustainability regulation. Deviation from current regulations or failure to implement the changes effectively within our processes could lead to financial penalties, damage to the Group's reputation or increased costs due to inefficient processes.

Construction quality and innovation

Failure to achieve excellence in housebuilding construction and product quality, through insufficient quality assurance programmes, inability to develop, evaluate and implement new and innovative construction methods or to be a market leader with changes in technology advancement, could increase costs, expose the Group to future remediation liabilities, and result in poor product quality and reputational damage.

Highrise and complex structures

Failure to build high rise and complex structures in line with building regulations or remediate existing legacy quality issues effectively could result in remediation delays, reputational damage, increased provisions or future remediation liabilities.

Supply chain resilience

Not adequately responding to shortages or increased costs of materials and skilled labour including those events caused by geopolitical uncertainty, or the failure of a key supplier in the current economic environment, may lead to increased costs and delays in construction.

Safety, health and environment

Health and safety or environmental incidents or compliance breaches can impact employees, sub-contractors, customers and site visitors, and undermine the creation of a great place to work, visit, and live.

Attracting and retaining high-calibre employees

Increasing competition for skills may mean we are unable to recruit and/or retain the best people. Having sufficient skilled employees is critical to delivery of the Group's strategy of volume growth whilst maintaining excellence in all of our other strategic priorities.

Information technology

Failure of any of the Group's key systems, particularly those for financial and customer information, surveying and valuation, through a successful cyberattack, or lack of investment leading to outdated systems, could restrict operations and disrupt progress in delivering strategic priorities.

Redrow integration

Without careful management, there is a risk that our objectives to maximise shareholder value by successfully integrating the two businesses to generate revenue growth opportunities, and achieve operational and cost synergies, are not achieved.

 

Condensed Consolidated Income Statement and Statement of Comprehensive Income

for the 26 weeks ended 29 December 2024 (unaudited)

 

Continuing operations	Notes	26 weeks ended     29 December 2024   £m	Half year ended     31 December 2023   £m	Year ended        30 June  2024 (audited) £m
Revenue	2	2,280.8	1,850.8	4,168.2
Cost of sales		(1,942.1)	(1,612.3)	(3,658.7)
Gross profit		338.7	238.5	509.5
Administrative expenses	3	(225.6)	(140.9)	(336.9)
Part-exchange income		178.2	132.1	333.7
Part-exchange expenses		(177.3)	(131.9)	(331.6)
Operating profit	3	114.0	97.8	174.7
Finance income	5	22.7	24.0	47.2
Finance costs	5	(27.9)	(26.6)	(53.7)
Net finance costs	5	(5.2)	(2.6)	(6.5)
Share of post-tax profit from joint ventures		8.4	-	2.3
Profit before tax		117.2	95.2	170.5
Tax	6	(41.9)	(26.4)	(56.4)
Profit and total comprehensive income recognised for the period		75.3	68.8	114.1
Profit and total comprehensive income for the period attributable to the owners of the Company		75.3	68.8	114.1
Earnings per share from continuing operations:
Basic	7	5.8p	7.1p	11.8p
Diluted	7	5.7p	7.0p	11.6p

 

There was no other comprehensive income in any of the periods above.

Notes 1 to 19 form an integral part of these Condensed Consolidated Interim Financial Statements.

Adjusted items:	Gross profit			Operating profit			Share of post-tax profit from joint ventures			Profit before tax
See note 4 for further details	26 weeks ended 29 December 2024   £m	HY ended 31 December 2023   £m	FY ended 30 June 2024   £m	26 weeks ended 29 December 2024   £m	HY ended 31 December 2023   £m	FY ended 30 June 2024   £m	26 weeks ended 29 December 2024   £m	HY ended 31 December 2023   £m	FY ended 30 June  2024   £m	26 weeks ended 29 December 2024   £m	HY ended 31 December 2023   £m	FY ended 30 June 2024   £m
Reported profit	338.7	238.5	509.5	114.0	97.8	174.7	8.4	-	2.3	117.2	95.2	170.5
Cost associated with legacy properties	-	57.9	180.0	-	57.9	180.0	-	4.5	12.6	-	62.4	192.6
Legacy property recoveries	-	(0.5)	(0.5)	-	(0.5)	(0.5)	-	-	-	-	(0.5)	(0.5)
Costs incurred in respect of the acquisition of Redrow plc	-	-	-	35.5	-	22.4	-	-	-	35.5	-	22.4
Reorganisation and restructuring costs	-	-	-	14.4	-	-	-	-	-	14.4	-	-
Adjusted profit	338.7	295.9	689.0	163.9	155.2	376.6	8.4	4.5	14.9	167.1	157.1	385.0