Where the additional costs arose
General cost increases accounted for £42m of the additional charges, according to the Construction Enquirer. A further £61m related to two developments, covering newly identified fire safety defects and additional work at a site already within the group’s building safety portfolio.
One of those developments comprises four buildings in Barratt Redrow-approval-took-31-weeks)’s Southern region. They were completed in 2002. Further fire safety defects have been found in those buildings, adding to the group’s repair costs.
The other development is in London and was already included in the building safety portfolio. Additional costs there cover both fire safety work and refurbishment. The report does not give a separate cost for either development.
Buildings still being assessed
The remaining remediation provision includes £898m for building safety and £176m for reinforced concrete frame defects. The overall provision was little changed from the previous year’s £1.0738bn.
There are still 270 buildings under review within the group’s building safety portfolio. Another 522 buildings are outside its active review programme. Those figures sit alongside a separate breakdown of the position across its reinforced concrete frame portfolio.
That portfolio contains 164 buildings. Defects have been identified at 53, which are at different stages of remediation. A further 18 remain under review, work has finished at 17, and 76 have been cleared.
Profits and cash
The charges were disclosed alongside annual results showing statutory pre-tax profit of £364m. That was 48% higher than the previous year’s £245m, with the earlier figure presented on an aggregated basis.
Revenue increased by 6.6% to £6.05bn. Home completions reached 17,667, up 5%. However, the improvement in statutory profit was not matched by the group’s adjusted measure of profitability.
Adjusted pre-tax profit, before purchase price allocation adjustments, fell 7.1% to £572.8m. The adjusted operating margin also declined, from 10.5% to 9.9%.
Year-end net cash was £772.8m. During the period, Barratt Redrow paid £242.2m in dividends and spent £100m buying back shares.
Chief executive David Thomas said adjusted pre-tax profit had met market expectations. He described difficult market conditions while pointing to the group’s operational and financial performance.
Lower completion forecast
Barratt Redrow now expects to complete between 17,500 and 17,900 homes in the current financial year. Its previous forecast was between 17,700 and 18,200. The group attributed the reduction to continued planning delays and fewer expected sales outlet openings.
The company also warned that its legacy property repair costs could be revised again. It linked that uncertainty to the progress of building assessments and remediation work, rather than treating the latest charges as a final figure.