Redrow builds up landbank

With the government’s Help to Buy programme boosting forward sales, Redrow has grown its net debt from £14m a year ago to £91m to fund land buying.

“We expect net debt to increase further in line with our ongoing investment in inventory,” the company said.

Redrow has reported a 63% rise in pre-tax profit to £70.0m for the year to 30 June 2013 (2012: £43.0m). Revenue was up 26% to £604.8m (2012: £478.9m).

Revenue growth was due to a combination of a 15% growth in legal completions to 2,827 (2012: 2,458) and an 11.8% increase in average selling price to £212,300 (2012: £189,900) largely as a result of a change of product mix.

The board said that while Help to Buy added just 3% to private completions, it made “a significant contribution” to forward sales.  The value of private reservations is up 42% from £472m to £668m.

As of June 2013 the land bank amounted to 14,162 plots, up 15% on a year before, with average plot cost at £57,000 (2012: £50,000).

Chairman Steve Morgan repeated his familiar frustrations with the planning system but was otherwise glad of government support.

“Market confidence is returning to more normal levels, and we have started the new year well with reservations up 54%,” he said. “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.

“With the ongoing assistance of good mortgage availability and Help to Buy, we expect Redrow will continue to make further strong progress."

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