In a year-end trading update this morning, Britain’s biggest house builder highlighted the growing financial impact of legacy building issues, with the group taking an additional net legacy property provision charge of around £95m, alongside £13m of extra charges linked to joint ventures. These costs were partly offset by the booked recoveries from subcontractors responsible for defects on legacy developments, although Barratt Redrow also incurred £14m of legal costs pursuing third-party claims. Cash spending on building safety work is also set to accelerate sharply after regulatory approvals and construction delays held back remediation programmes in the last financial year. Legacy property work spend reached around £155m in the last 12 months, roughly £100m below initial expectations. But this morning Barratt Redrow said this is forecast to jump to £300m this year before rising again to £450m in the year 27/28. Despite these substantial liabilities, the group said its balance sheet remained strong enough to support a major increase in shareholder distributions. It will replace ordinary dividends with share buybacks, returning around £400m to investors in a share buyback programme launched today and a nominal 1p-a-share dividend.
The house builder said adjusted profit before tax for the year to 28 June would be in line with market expectations after completing 17,667 homes, while ending the year with net cash of around £772m. Looking ahead, Barratt Redrow expects to complete between 17,700 and 18,200 homes in FY27 from around 415 average sales outlets. It also forecasts build cost inflation of 3% to 4% in the year ahead.
