Barratt Redrow plc – Annual report – 28 June 2026
Industry: real estate
1. Basis of preparation (extract)
Critical accounting judgements and key sources of estimation uncertainty
The preparation of Financial Statements in conformity with UK adopted IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the Directors’ best knowledge of the amounts, actual results may ultimately differ from those estimates. The Directors have made no individual critical accounting judgements that have had a significant impact upon the Financial Statements, apart from those involving estimations.
The most significant estimates made by the Directors in these Financial Statements, which are the key sources of estimation uncertainty that may have a significant risk of causing a material difference to the carrying value of assets and liabilities within the next financial period, are the valuation of legacy property provisions (see note 19), margin recognition (see note 3) and the impairment of goodwill and indefinite life brands (see note 10).
There are no key sources of estimation uncertainty in the Company Financial Statements.
19. Provisions
Accounting policy
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material.
The Company had no provisions in either year.
Costs in relation to completed developments
Following the legal completion and handover to customers of all units on a site, the Group may retain obligations which are not settled for a number of years. These include costs in relation to the adoption of roads or public open space by local authorities, other contractual obligations to third parties and, in certain cases, the costs of remedial works where defects have been identified.
Whilst a proportion of this cost will not be realised within 12 months, the Group has an obligation to complete the works immediately should it be requested to do so. The balance in total is therefore considered to be current in nature. All outstanding issues on completed developments are resolved as soon as is practicable.
Critical accounting judgements and key sources of estimation uncertainty
Legacy property provisions
Building safety
On 13 March 2023, the Group signed the Self-Remediation Terms and Contract, codifying the commitments previously made under the Building Safety Pledge to undertake, or to fund, remediation or mitigation works on external wall systems (EWS) on all buildings of 11 metres or above in England and Wales that it has developed or refurbished in the 30 years preceding the date of the Building Safety Pledge, and to reimburse the Government’s Building Safety Fund wherever it has contributed to such activities. The Group has provided for the cost of fulfilling this commitment, as well as assisting with remedial work identified at a limited number of other legacy properties where it has a legal liability to do so, where relevant build issues have been identified, or where it is considered probable that such build issues exist.
The Group signed the Scottish Government Self Remediation Terms and Contract on 24 March 2026. The external wall provision, previously recorded in relation to the Group’s obligations under the Scottish Safer Buildings Accord, signed on 31 May 2023, and the Housing (Cladding Remediation) (Scotland) Act, passed on 21 June 2024, is provided on the basis that the standard of remediation required in Scotland is consistent with England and Wales. Whilst the final contract has been signed, we are still awaiting the conclusion of the single building assessments to determine the exact levels of remediation for each building. Until these assessments have been concluded, we will continue to provide on the basis that remediation is consistent with England and Wales (see note 28).
At 28 June 2026, of the 270 buildings in the portfolio under review in the combined Group, 236 were at tender or site mobilisation or were in the process of being remediated (29 June 2025: 278 buildings, of which 192 were at tender or site mobilisation or were in the process of being remediated).
As part of the ongoing works to remediate building safety issues, it has been identified that additional work on one building in our London region is required to improve the fire protection of the internal structure. Additional costs have also been recognised for the remediation of previously identified issues at a large development in the Southern region that was already part of our building safety provision. An additional £60.7m has been provided at the reporting date for these two developments, based on the current estimate of remediation cost.
At 29 June 2025, the Group held £17.2m in relation to completed developments in respect of the above development in the London region. All work at this development is being undertaken under a single remediation programme and therefore the amount previously held in the provision for costs in relation to completed developments has been reclassified to be shown in the building safety provision.
A further £42.4m has been provided in respect of expected cost increases on buildings across the rest of the portfolio.
During the year, management have reviewed the timing of remediation work across the portfolio and expect the majority of works to be completed within five years. Works that are now expected to be completed at a later date have been revalued at the balance sheet date with consideration to the time value of money and additional cost that may be incurred as a result of inflation. This has resulted in an increase of £1.9m in the provision. Estimated future costs are discounted to their present value using the yield for a UK gilt with maturity approximating the duration of the remediation programme.
The Group continues to review all of its current and legacy buildings where it has used EWS or cladding solutions, assessing the action required in line with the latest updates to Government guidance as it applies to multi-storey and multi-occupied residential buildings.
All our buildings, including those incorporating EWS or cladding solutions, were signed off by approved inspectors as compliant with the relevant Building Regulations at the time of completion.
This is a complex area requiring significant estimates with respect to the estimates for the number of buildings affected, the individual remediation requirements of each building and the costs associated with that remediation (see also note 28). The investigation of the works required at some of the buildings is at an early stage and work at others is ongoing. Therefore, it is possible that the scope of works required could change. If government legislation and regulation further evolve, or if the estimated timing of work is affected by building owner engagement or contractor availability, these estimates could change.
The estimates are based on key assumptions that will be updated as work and time progress. The sensitivity of the provision held at the balance sheet date, to the following movements in key assumptions, is shown below:
Reinforced concrete frames
The Group holds a provision for the remediation of reinforced concrete frames on developments designed by two engineering firms whose work has previously been found to be defective.
During the prior year, a high-level assessment of structural issues in buildings constructed by the Redrow group resulted in a best estimate of the costs of remediation of £105.2m. Following detailed reviews of the buildings affected, the estimate of extent of work required has been revised and £47.0m released from the provision accordingly.
During the period one building already in the portfolio has been identified as requiring additional remediation. Early investigation of the locations affected and works needed to remediate the structure have been estimated at £46.1m. This amount has been recorded as an addition to the provision at 28 June 2026. Further analysis must be undertaken to determine the exact nature and location of the remediation work required, which may result in revisions to the estimated costs and time frame of delivery.
During the year, management has revisited the expected timing of completing all remediation works and revalued the provision for the time value of money, alongside whether there are any inflationary cost increases as a result. This has resulted in a decrease of £7.3m in the provision.
Management expect the majority of the works to be completed within four years. Management has made estimates as to the future costs, the extent of the remedial works required and the costs of providing alternative accommodation to any residents affected by the remedial works. These Financial Statements have been prepared based on currently available information, including known costs and quotations where possible. However, the extent, cost and timing of remedial work may change as work progresses.
28. Contingent liabilities
Contingent liabilities related to subsidiaries
The Company has guaranteed certain bank borrowings of its subsidiary undertakings.
Certain subsidiary undertakings have commitments for the purchase of trading stock entered into in the normal course of business.
In the normal course of business, the Group has given counter-indemnities in respect of performance bonds and financial guarantees. At 28 June 2026 the bonds and guarantees amount to £631.5m (2025: £626.8m) and, at the date of approval of these Financial Statements, the possibility of cash outflow is immaterial and no provision is required.
Building safety
As disclosed in note 19, on 13 March 2023, the Group signed the Self-Remediation Terms and Contract, codifying the commitments previously made under the Building Safety Pledge. The Group is currently undertaking a review of all of its current and legacy buildings where it has used EWS or cladding solutions on buildings over 11m in height. Approved inspectors signed off all of our buildings, including the EWS or cladding used, as compliant with the relevant building regulations at the time of completion.
Further to the Scottish Safer Buildings Accord, signed by the Group on 31 May 2023, the Group signed the Scottish Government Self Remediation Terms and contract on 24 March 2026, committing to resolve life-critical fire safety defects in multi-occupancy residential domestic or part-domestic buildings, over 11 metres in Scotland, built by us as a developer in the period of 30 years to 1 June 2022. The Group has undertaken preliminary cost assessments at multi-occupancy buildings over 11 metres in Scotland at which fire safety defects have been identified. The Group’s EWS provision at 28 June 2026 reflects the outcome of these assessments, based on the assumption that the standard of remediation required in Scotland is consistent with that in England and Wales. Further to signing the contract, we are still awaiting the detailed single building assessments to be completed in order to determine the exact levels of remediation for each building under the Scottish Government Self Remediation Terms. Until these assessments have been concluded, we will continue to provide on the basis that remediation costs will be consistent with England and Wales. The estimated cost may vary depending on the outcomes of the single building assessments.
At 28 June 2026, the Group held provisions of £898.1m (2025: £886.4m) in relation to building safety, based on management’s best estimate of the cost and timing of remediation of in-scope buildings. It is possible that as remediation work proceeds, additional remedial works will be required which do not relate to EWS or cladding solutions. Such works may not have been identified from the reviews and physical inspections undertaken to date and may only be identified when detailed remediation work is in progress. Therefore, the nature, timing and extent of any such costs were unknown at the balance sheet date.
It is also possible that the number of buildings requiring remediation may increase. This could occur because buildings which hold valid EWS1 certificates are found to require remediation or because investigatory works identify remediation not previously identified.
In addition, we recognise that the retrospective review of building materials and fire safety matters continues to evolve. These Financial Statements have been prepared based on currently available information and regulatory guidance. However, these estimates may be updated if government legislation and regulation further evolve.
Reinforced concrete frames
As disclosed in note 19, the Group is undertaking remediation at developments designed by certain engineering firms or associated companies. The Financial Statements have been prepared based on currently available information; however, the detailed review is ongoing and the extent and cost of any remedial work may change as this work progresses.
We are actively seeking to recover costs from third parties in respect of building safety and reinforced concrete frames; however, there is no certainty regarding the extent of any financial recovery.
Contingent liabilities relating to JVs
The Group has given counter-indemnities in respect of performance bonds and financial guarantees to its JVs totalling £14.3m at 28 June 2026 (2025: £11.9m).
The Group has also given a number of performance guarantees in respect of the obligations of its JVs, requiring the Group to complete development agreement contractual obligations in the event that the JVs do not perform as required under the terms of the related contracts. At 28 June 2026, the probability of any loss to the Group resulting from these guarantees is considered to be remote.
The Group has guaranteed up to £14.0m of the amount drawn on a £25m rolling credit facility held by one of its joint ventures. As at 28 June 2026, no amount was drawn on this facility (29 June 2025: no amount drawn).
Contingent liabilities related to legal claims
Provision is made for the Directors’ best estimates of all known material legal claims and all legal actions in progress. The Group takes legal advice as to the likelihood of success of claims and actions and no provision is made (other than for legal costs) where the Directors consider, based on such advice, that claims or actions are unlikely to succeed, or a sufficiently reliable estimate of the potential obligations cannot be made.
On 24 June 2026 an application to commence proposed collective action was filed in the Competition Appeal Tribunal, against seven housebuilders, including Barratt Redrow, alleging that exchanges of competitively sensitive information reduced competition and led to higher prices for certain purchasers of new build homes, in breach of UK competition law. The claim is being brought on behalf of more than 700,000 people who purchased new-build homes from the seven housebuilders in Great Britain between October 2015 and June 2026. The claim follows the Competition and Markets Authority’s (CMA) investigation into information-sharing practices in the sector, which closed on 30 October 2025 following the CMA’s acceptance of binding commitments from the housebuilders. The CMA did not make any decision that the Competition Act 1998 had been infringed, and the acceptance of commitments did not involve an admission of wrongdoing by the housebuilders. The proposed collective action remains at an early stage.
