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Wed September 23 2020

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Redrow profits fall 65%

16 Sep Volume house-builder Redrow saw its profits tumble in the past year as a result of the Covid-19 crisis.

John Tutte is remaining executive chairman until November
John Tutte is remaining executive chairman until November

For the year to 30th June 2020 Redrow made a pre-tax profit of £140m (2019: £406m) on revenue down 37% to £1.34bn (2019: £2.11bn).

Like most house-builders, Redrow closed all sales centres and construction sites when lockdown was announced in late March, reopening gradually in May and June with new operating restrictions in place.

It furloughed around 80% of its employees during the crisis, but all were nback at work by the end of June.

The temporary closure of sites and adapting to new ways of working resulted in only 264 completions in the final quarter of the year compared to 2,345 in 2019. For the full year the number of completions was 4,032 (2019: 6,443).

Redrow closed the year with net debt of £126m compared to a net cash balance at June 2019 of £124m, but still achieved an average monthly positive cash balance during the year of £2m (2019: £80m).

The forward order book is at a record high for the company, at £1.53bn (2019: £1.33bn).

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Executive chairman John Tutte had planned to step back to a non-executive role at the end of June – Matthew Pratt having been promoted from chief operating officer to group chief executive on 1st July 2020. However, at the request of the board, he has agreed to continue in an executive capacity until November 2020. His plan to retire next year remains in place though, and the search is on for the next non-executive chairman.

John Tutte said of the overall performance: "The Covid-19 pandemic had a profound impact upon the group's performance in the 2020 financial year but we entered the new financial year in a position of strength. We have a record order book and brought forward very high levels of work in progress. This was due in part, to increased investment earlier in the year in anticipation of strong demand for the Help to Buy scheme ahead of changes to the scheme next year.

"We brought forward an order book of £1.42bn: up 39%, and reservations, in terms of value, in the first 11 weeks of the new financial year, are 12% ahead.

"The group is well-placed to deliver a robust performance. We have completed substantially more homes in the first few weeks of the new financial year than during the same comparable period last year whilst maintaining a record order book.

"This, combined with reduced investment in London, will deliver strong operating cash flow over the coming months to support our regional growth plans and, subject to market conditions, allow dividend payments to resume in 2021."

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