Redrow reported a year of strong growth and record results, achieved by completing 5,913 new homes – a 9% increase on the previous year. Revenues reached £1.92bn and pre-tax profit increased by 21% to £380m. The company also cleared its debt. However, political upheaval and the uncertainty of the future of Help to Buy continues to weigh on sentiment.
- Group revenue up 16% to a record £1.92bn driven by higher legal completions and a 7% increase in Average Selling Price to £332,300;
- Record pre-tax profit of £380m, up 21% (2017: £315m);
- Earnings per share up 22% to 85.3p;
- Positive cash position of £63m at June 2018 (2017: net debt of £73m);
- Proposed final dividend of 19p per share, making 28p for the full year, up 65% Operational highlights;
- Continuing to deliver on growth strategy: o Legal completions up 9% to 5,913 (2017: 5,416) o Number of employees up 5% to 2,300;
- 7,455 plots added to current land holdings, 37% of which were converted from forward land;
- Record Order Book of £1.1bn (2017: £1.0bn).
Steve Morgan, Chairman of Redrow, said, “This excellent trading performance enabled us to achieve strong cash generation such that we ended the year with net cash of £63m. As a result, we are proposing a final dividend of 19p which would give a full year dividend of 28p per share, 65% up on last year.
“However, there is no doubt that clarity over Brexit and the future of Help to Buy would improve market sentiment. Given that clarity, we will continue to deliver.”
Tension has been mounting over Help to Buy, with MPs hitting out that the scheme doesn’t benefit enough people. It has been claimed that one in five who use it aren’t even first-time buyers.
Speaking to media this morning, John Tutte said he doesn’t want to even speculate about Help to Buy being axed. “It would be a ridiculous thing to do,” he said. “It’s got its critics, but it’s allowed thousands of new homes to be built and people to buy their own homes who wouldn’t have been able to otherwise. Anyone with any common sense wouldn’t think about scrapping it.
“Help to Buy continues to support home buyers and the housing industry. In the last financial year 1,794 of our private reservations were secured through Help to Buy, a similar level to the previous year.”
The Group CEO also criticised the planning system. “Sometimes I wonder if the authorities really want us to build more homes,” he mused. “Growing the number of outlets in line with the increased land holdings remains a challenge as the journey from ‘outline planning permission’ to ‘implementable planning permission’ remains as bureaucratic as ever.
“Some permissions come with as many as 40 conditions attached. It’s madness that, as housebuilders, we can’t get on and build on 40% of our landbank.”
Despite these niggles, Tutte remains optimistic about the years ahead. “Despite the uncertainty surrounding Brexit, demand for new homes continues to be robust, and overall house price inflation has moderated to a sustainable 2%,” he said. “Mortgage availability is excellent, and with low interest rates by historic levels, the mortgage market remains very competitive.
“We live in challenging political and economic times. We can however draw comfort from knowing there remains a strong demand for new homes supported by both a competitive mortgage market and the highly successful Help to Buy scheme.”
Shares in Redrow opened 1.9% higher this morning, buoyed by the record results.