Interim Results - 6 Months to 31 December 1999
Redrow Group PLC
7 March 2000
Redrow Group plc today announces record interim results for the six months to
31st December 1999:
Highlights:
* Turnover increased by 27.4% to £205.2m (1998: £161.1m).
* Operating Profit up 31.4% to £34.3m (1998: £26.1m).
* Pre-tax profits up 31.0% to £34.2m (1998: £26.1m).
* Earnings per share increased by 33.7% to 11.5p (1998: 8.6p).
* Interim dividend of 1.65p per share (1998: 1.50p).
* Return on capital employed of 30.6% (1998: 26.0%).
* Current land bank increased to 12,600 plots (June 1999: 12,300).
* Forward land bank increased to 28,100 plots (June 1999: 27,000).
* Homes completions during 6 months totalled 1,647 units (1998: 1,573 units).
Commenting on the results, Steve Morgan, Chairman of Redrow Group plc said:
'The half year to 31st December 1999 has again produced very strong results
for the Group with PBT up over 30% and return on capital employed at 30.6%.
Redrow has continued to build on its impressive record.
The demand for new homes has not been depressed by rising interest rates and I
expect it to remain strong, particularly as planning policies continue to
restrict land supply. With one of the strongest forward land banks in the
industry and value of home reservations 17% ahead of last year, the outlook
for both the current period and the foreseeable future looks healthy and
sustainable.'
For further information contact:
Steve Morgan, Chairman Redrow Group plc
Paul Pedley, Chief Executive 0171-404-5959 (7th March)
Neil Fitzsimmons, Finance Director 01244 520044 (thereafter)
Stephen Breslin Brunswick Public Relations
0171-404-5959
Chairman's Statement
I am pleased to report a continuation of Redrow's impressive growth record
with a 31.0% increase in profits before tax and a 30.6% return on capital
employed.
RESULTS
Turnover for the 6 months to December 1999 increased by 27.4% to £205.2m
(1998: £161.1m) producing a 31.4% rise in operating profits to £34.3m (1998:
£26.1m), with an operating margin of 16.7% (1998: 16.2%). Profit before tax
increased by 31.0% to £34.2m (1998: £26.1m) and earnings per share rose by
33.7% to 11.5p (1998: 8.6p).
The Group ended the period with a £5m cash surplus. Return on capital
employed, which has always been a major focus, was a highly satisfactory
30.6%. The Board are pleased to declare a 10% increase in the interim
dividend to 1.65p (1998: 1.5p) which is covered 7 times by earnings.
HOUSING
The housing market remains in a healthy condition with strong demand being
experienced throughout the country. The rises in interest rates over the last
six months have not impacted demand, although there are signs they are having
the desired effect of moderating house price inflation.
The housing companies achieved a 27.0% increase in operating profits to £32.9m
(1998: £25.9m) with the number of legal completions 4.7% ahead at 1,647 (1998:
1,573). The average selling price increased substantially to £120,300 (1998:
£102,200) primarily due to the southern companies contributing a larger share
of completions, a small increase in the average size of the homes sold and
house price inflation.
Redrow Homes completed 1,385 homes (1998: 1,284) in the UK with an additional
5 completions in Jersey. The average selling price in the UK was £129,000
(1998: £105,800) with almost 57% (1998: 47%) of completions emanating from the
southern companies. Harwood Homes suffered from the usual planning delays,
which is ironic considering all of the sites concerned are brownfield in
urban areas. These delays reduced the number of completions slightly to 257
(1998: 269). However, the average selling price increased to £65,700 (1998:
£62,800). Operating margins in the UK housing operations improved by 0.6% to
16% which I consider a sustainable level in current market conditions.
LAND
Redrow, with one of the strongest land and planning teams in the industry, has
a forward land policy which dates back 13 years. Despite the present
difficult planning environment, this policy has enabled the Group to continue
to grow both its current and forward land banks at highly competitive prices.
At December 1999, the Group had 12,600 plots in its current land bank
including 3,400 plots awaiting planning permission, (June 1999: 12,300 plots
including 3,300 awaiting planning). The forward land bank consists of 28,100
plots with realistic prospects of securing planning, of which 5,100 plots are
allocated in draft local plans. The land owned with planning permission has
an average cost of £19,200 per plot (June 1999: £18,600) which represents just
16.1% (June 1999: 17.8%) of the current average selling price.
COMMERCIAL
Redrow Commercial generated operating profits of £1.4m (1998: £0.2m) during
the period. The office development in Victoria, London, which was carried out
in joint venture with Grosvenor Estates was completed and sold for £12.5m.
Redrow has also entered into a joint venture with Norwich Union for the £55m
office development in Windsor. Construction of the 134,000 sq.ft. offices
should be completed by the Summer of 2001. Work has recently commenced on a
33,000 sq.ft. office and retail facility for ICI in Altrincham and
infrastructure works are continuing in preparation of the next phase of the
2.3m sq.ft. distribution park at Severnside, Bristol.
E-BUSINESS
Following the introduction of a site based computerised direct cost control
system 3 years ago, Redrow is now benefiting from a more efficient supply
chain management. Document image processing and on screen authorisation of
invoices will, in due course, enable electronic data transfer with suppliers
and sub-contractors.
The number of sales enquiries generated through the internet continues to grow
strongly. Recent enhancements to the Group's web site have added improved
functionality which should generate even more sales leads through this
increasingly important channel.
OUTLOOK
At a time when Government planning policies are increasingly restricting the
supply of land, Redrow remains well placed to continue its impressive growth
record thanks to its long term land policy. Indeed, since the beginning of
January 2000, Redrow has already received planning permission for 1,160 plots
with a development value of £210m.
Demand for new homes will remain strong particularly as current planning
policies restrict land supply. Redrow has entered the second period with a
forward sales value 17% ahead of last year. The outlook for both the current
year and the foreseeable future looks healthy and sustainable.
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited Audited
6 months ended 12 months ended
31 December 30 June
1999 1998 1999
Note £m £m £m
Turnover 2 205.2 161.1 341.6
------- ------- -------
Profit from operations 2 34.3 26.1 56.3
Interest payable (0.1) - (0.7)
------- ------- -------
Profit before taxation 34.2 26.1 55.6
Taxation 3 (8.6) (6.7) (14.2)
------- ------- -------
Profit after taxation 25.6 19.4 41.4
Dividends 4 (3.7) (3.4) (10.1)
------- ------- -------
Profit retained 21.9 16.0 31.3
------- ------- -------
Earnings per share - basic 5 11.5p 8.6p 18.5p
------- ------- -------
- diluted 5 11.4p 8.6p 18.4p
------- ------- -------
Dividends per share 4 1.65p 1.50p 4.50p
------- ------- -------
The Group has no recognised gains or losses other than the profit for the
period, which has been achieved from continuing operations.
CONSOLIDATED BALANCE SHEET
Unaudited Audited
As at 31 December As at 30 June
1999 1998 1999
Note £m £m £m
Fixed assets 12.6 11.3 11.1
------- ------- -------
Current assets
Land for development 199.2 175.7 186.3
Work in progress 101.3 101.8 105.6
Stock of showhomes 14.2 12.9 14.1
Debtors 4.5 6.5 4.3
Bank and cash deposits 6 5.0 3.9 7.5
------- ------- -------
324.2 300.8 317.8
------- ------- -------
Creditors
Bank borrowings - (10.7) -
Land creditors 7 (17.3) (26.4) (30.6)
Other creditors and provisions (78.0) (70.9) (79.0)
------- ------- -------
(95.3) (108.0) (109.6)
------- ------- -------
Equity shareholders funds 241.5 204.1 219.3
------- ------- -------
Movement in shareholders funds:
Equity shareholders funds brought
forward 219.3 188.0 188.0
Retained profit 21.9 16.0 31.2
Issue of ordinary share capital 0.3 0.1 0.1
Equity shareholders funds carried ------- ------- -------
forward 241.5 204.1 219.3
------- ------- -------
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited
6 months ended 12 months ended
31 December 30 June
1999 1998 1999
£m £m £m
Cash inflow from operating activities 5.8 3.2 31.2
Returns on investments and servicing ------- ------- -------
of finance
Interest received 0.3 - 0.3
Interest paid (0.4) - (1.0)
Net cash (outflow) from returns on ------- ------- -------
investments and servicing of finance (0.1) - (0.7)
------- ------- -------
Taxation
Corporation tax paid - (0.7) (10.2)
Capital expenditure and financial ------- ------- -------
investment
Net purchases of tangible fixed assets (1.8) (0.6) (0.8)
------- ------- -------
Dividends paid (6.7) (6.1) (9.4)
Net cash (outflow)/inflow before ------- ------- -------
financing (2.8) (4.2) 10.1
------- ------- -------
Financing
Issue of ordinary share capital 0.3 0.1 0.1
------- ------- -------
Net cash inflow from financing 0.3 0.1 0.1
------- ------- -------
Change in net cash in period (2.5) (4.1) 10.2
Net cash/(debt) at start of period 7.5 (2.7) (2.7)
------- ------- -------
Net cash/(debt) at end of period 5.0 (6.8) 7.5
------- ------- -------
Analysis of cash inflow from operating
activities:
Profit from operations 34.3 26.1 56.3
Depreciation 0.3 0.3 0.7
Increase in stocks and work in progress (8.7) (15.6) (31.3)
(Increase)/decrease in debtors (0.2) 1.1 3.3
(Decrease)/increase in creditors (19.9) (8.7) 2.2
------- ------- -------
5.8 3.2 31.2
------- ------- -------
NOTES
1. The interim report does not represent statutory accounts within the
meaning of section 240 Companies Act 1985. The comparative figures for
the year ended 30 June 1999 are however an abridged version of the Group's
statutory accounts which received an unqualified audit report and have
been delivered to the Registrar of Companies.
2. Segmental information:-
Unaudited Audited
6 months ended 12 months ended
31 December 30 June
1999 1998 1999
£m £m £m
Turnover
Total continuing operations
Homes 198.2 160.8 334.9
Commercial 7.0 0.3 6.7
------- ------- -------
205.2 161.1 341.6
------- ------- -------
Profit from operations
Total continuing operations
Homes 32.9 25.9 54.6
Commercial 1.4 0.2 1.7
------- ------- -------
34.3 26.1 56.3
------- ------- ------
3. The taxation charge takes account of tax losses within Redrow Homes (South
East) Limited (formerly Costain Homes Limited) established prior to its
acquisition from Costain Group PLC and reflects the estimated effective
rate for the full year to June 2000.
4. The directors have declared an interim dividend of 1.65p per share (1998:
1.50p). This gives an interim dividend of £3.7m (1998: £3.4m) which will
be paid on 19 May 2000 to shareholders whose names are on the Register of
Members at the close of business on 14 April 2000. The shares will become
ex-dividend on 10 April 2000.
NOTES (continued)
5. The basic earnings per share calculation for the half year ended 31
December 1999 is based on the weighted average number of shares in issue
during the period of 223.9m (1998: 223.9m) after adjusting for surplus
shares held in trust under the Redrow Long Term Share Incentive Plan. The
weighted average number of shares in issue for the year ended 30 June 1999
was 223.9m. Diluted earnings per share has been calculated after
adjusting the weighted average number of shares in issue for shares held
under unexercised options in accordance with FRS 14.
6. Bank and cash deposits includes £1.5m (1998: £3.9m) in respect of land
acquisitions held in stakeholder accounts by solicitors.
7. Land creditors:-
Unaudited Audited
As at As at
31 December 30 June
1999 1998 1999
£m £m £m
Due within one year 16.8 21.3 27.7
Due in more than one year 0.5 5.1 2.9
------- ------- -------
17.3 26.4 30.6
------- ------- -------
8. The interim report has been prepared using accounting policies consistent
with those applied in the Group accounts for the year ended 30 June 1999.
The interim report has not been audited or reviewed and was approved by
the Board of Directors on 6 March 2000.
9. The Registrar is Computershare Services PLC. Shareholder enquiries should
be addressed to the Registrar at the following address:
Registrars Department
Caxton House
Radcliffe Way
Bristol
BS99 7NH
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