Barratt Redrow Plc (LON:BTRW) has announced its half year results for the period ended 29 December 2024.
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 ended29 December 2024 | Impact of purchase price allocation (‘PPA’) | Half year ended 29 December 2024before PPA | Half year ended31 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.
The Group’s next scheduled announcement will be a trading update on Wednesday 16 April 2025.
