Barratt Redrow (BTRW) Trading Update summary

Integration and Strategic Positioning

• Acquisition of Redrow completed on 21 August 2024, with CMA clearance on 4 October, creating a leading UK homebuilder with three complementary brands: Barratt, David Wilson, and Redrow.

• Integration is underway, including office closures and divisional network optimization, with consultation on five closures and a total reduction of nine divisions anticipated.

• The combined group leverages a differentiated multi-brand strategy to serve diverse customer segments, enhance geographic reach, and optimize land bank efficiency.

• Strategic land positions exceed 145,000 plots, with an additional 105,000 plots promoted through Gladman, providing a strong pipeline and flexibility in land acquisition.

• The group is committed to maintaining a robust balance sheet and efficient land bank, supporting resilience and growth.

Synergy and Operational Efficiency

• Targeting at least £90 million in annual run-rate cost synergies within three years, with £45 million expected in year one and £81 million by year two, mainly from procurement, office consolidation, and reduced corporate costs.

• Revenue synergies expected from deploying multiple brands across the land bank, targeting 45 incremental sales outlets by FY28 and increasing sales outlets by at least 10% over three years.

• One-off costs of £73 million anticipated to realize these synergies.

• Office closures and central function consolidation are underway, with synergy delivery measured from 4 October.

• Best practice sharing and management integration are expected to further enhance operational efficiency.

Trading Update and Financial Outlook

• Private reservation rates improved year-on-year: Barratt standalone at 0.62 (up 31.9%), combined group at 0.67 (up 36.7%).

• Combined forward order book at 13 October 2024 was £3,165.0 million, with 57% private forward sold, supporting FY25 completions guidance of 16,600–17,200 homes.

• Net cash for the combined group expected to be around £700 million at FY25 year-end.

• Gross margin in the land bank is stable, with new land being acquired at target margins of 23–24%.

• Build cost inflation is expected to be flat for FY25, following recent deflation.