Housebuilder reports record interim revenues and strong order book

Cheshire housebuilder Redrow laid firm foundations for a strong year with record interim results, today.

The group, based in Ewloe, near Chester, reported an 20% increase in turnover of £1.041bn for the six months to December 27, 2020, it best for a first half.

Pre-tax profits were 11% better than the previous year, at £174m, while the interim dividend has been reinstated, at 6p per share.

Net cash stands at £238m, compared with £14m a year ago.

Legal completions were 20% ahead of the previous year, at 3,065, another record performance, and the group’s total order book is eight per cent better than last year, at £1.3bn.

Redrow also revealed that more than 95% of stock is already forward sold for the current financial year.

In the six weeks to February 5, private reservations in terms of value have averaged £265,000 per outlet per week. This is below a very strong comparable last year – £298,000 – and is also being affected by reduced availability of product created by the strong forward sales position.

The private sales rate of 0.67 per outlet per week (2020: 0.78) is, however, in line with long term expectation of trading within a more normal market.

The group said the acceleration of changing buyer trends, which are completely aligned to Redrow’s strategy, point to a positive outlook for the business.

Its private forward sold position of £750m beyond the end of both the original Help to Buy scheme and the Stamp Duty holiday, demonstrates the resilience of its target market and the desirability of its product and the places it creates, it said.

Chief executive, Matthew Pratt, said “The group delivered a strong first-half performance whilst continuing to operate under strict COVID-secure procedures.

“We have seen a strong sales market during the first half driven by a combination of pent-up demand from the first national lockdown, the introduction of the Stamp Duty holiday and the impending end of the Help to Buy scheme for existing home owners.

“At the end of December 2020, the group had net cash of £238m compared to net debt of £126m at the end of June 2020, as we converted our high level of brought forward work in progress into completions.

“Given the group’s cash position and order book, the board has resumed dividend payments with an interim dividend of 6p.

“The changing trends in home ownership, accelerated by COVID-19, align with Redrow’s Heritage product and ‘Better Way to Live’ philosophy. Our differentiated strategy taps into customers’ changed priorities that balance work, home and the local community into a more sustainable lifestyle.

“Despite a 20% increase in revenue in the first half, we have continued to maintain a very strong order book. At the end of the first half, we had a record December total order book of £1.3bn (2020: £1.2bn) of which 72% is contracted. We are now over 95% forward sold for the current financial year.”

He added: “The acceleration of changing buyer trends, which are completely aligned to Redrow’s strategy, point to a positive outlook for the business. Our private forward sold position of £750m beyond the end of both the original Help to Buy scheme and the Stamp Duty holiday, demonstrates the resilience of our target market and the desirability of our product and the places we create. These fundamentals mean we can look confidently to the future and fulfilling our ambitions to rebuild and grow the business.”