Profits surge at Redrow
HOUSEBUILDER Redrow has seen full-year sales and earnings surge on the back of higher prices and more completions.
The business, based at Ewloe near Chester, said revenue grew by 26% to £604.6m, in the year to the end of June.
Pre-tax profits were up 63% to £70m, described as a more normal level by chairman Steve Morgan who has reinstated a final dividend of 1p a share as a result.
Despite the strong performance he again criticised the planning system which he said is holding back the firm’s growth. Some 16,600 plots are “locked” in the planning system, said Mr Morgan.
In a stock market statement Redrow said the figures reflected a 15% increase in legal completions and an 11.8% rise in the average selling price to £212,300. During the year it built 2,827 homes.
The Help to Buy scheme made a “significant contribution” to forward sales but was involved in just 3% of completions. The scheme allows first-time buyers to borrow 20% of the purchase price from the Government, interest free for five years.
Redrow’s landbank has grown from 12,350 in June 2012 to 14,162 and it said starting on new building sites was a priority. During the year the number of sites grew by 10 to 92.
Mr Morgan said: “Redrow has today reported another set of strong results as we continue our journey towards more normalised profit levels. As a consequence of this the board is proposing the reinstatement of a final dividend of 1p per share.
“Our strategy of focusing on high quality differentiated family housing product continues to pay off with The Heritage Collection firmly established as our primary brand accounting for 85% of our private turnover during the year.
“Market confidence is returning to more normal levels, and we have started the new year well with reservations up 54%. However, the pace at which we can continue to increase output is very much dependent on our ability to increase the number of outlets through the planning system, which continues to be bureaucratic, costly and time consuming.”
During the period net debt increased from £14m to £91m due to investment in land and work in progress. Earlier this month Redrow agreed a £250m facility with a syndicate of five banks, replacing a £50m debt agreement.
