Final Results
Redrow PLC
16 September 2003
Tuesday 16 September 2003
Redrow plc today announces its Preliminary results for the 12 months to 30 June
2003:
Highlights:
June 2003 June 2002 Increase
£m except where indicated
Turnover 607.9 573.3 +6.0%
Operating Profit 113.7 94.1 +20.8%
Profit before tax 106.1 85.1 +24.7%
Return on capital employed 31% 30%
Earnings per share - basic (pence) 46.9 38.5 +21.8%
Dividend per share (pence) 7.50 6.06 +23.8%
• Basic earnings per share increased by 21.8% to 46.9p (2002: 38.5p)
• Proposed dividend per share increased by 23.8% to 7.50p
• Profit before tax increased by 24.7% to £106.1m
• Return on capital employed rose to 31% (2002: 30%)
• Full year operating margins in Redrow Homes at 18.7% (2002: 17.6%) with
operating margins in the second half of the financial year at 19.0% (H2
2002 : 17.5%)
• Value of forward sales up 39.4% to £304m (2002: £218m)
• Current land bank increased to 16,000 plots (June 2002: 15,600)
representing 4 years supply
Commenting on the results, Robert Jones, Chairman of Redrow plc said:
'Redrow has had a record year, delivering further growth with profit before tax
exceeding the significant milepost of £100m. To support this continuing growth,
the Board has decided to strengthen the Executive team with the promotion of
Neil Fitzsimmons to Group Managing Director and the appointment of David Arnold
to the Board as Group Finance Director.
Looking forward, Redrow is in an excellent position. Against a background of a
stable housing market, a continuing under-supply of new homes and pent-up
aspiration to home ownership, I remain confident that Redrow will go from
strength to strength.'
Enquiries:
Paul Pedley, Chief Executive Redrow plc
David Arnold, Group Finance Director 0207 404 5959 (16 September)
01244 520044 (thereafter)
Patrick Handley/Nina Richmond Brunswick Public Relations
0207 404 5959
Further information on Redrow plc can be found at www.redrow.co.uk including,
from 9.00 am, a copy of the Preliminary Results Presentation Pack.
CHAIRMAN'S STATEMENT
Redrow has had a record year, with profit before tax exceeding the significant
milepost of £100m. Our confidence in the full year's profitability at the time
of our interim results has been confirmed with profit before tax of £106.1m and
as a consequence it is proposed that the 23.8% increase in the interim dividend
will be matched by a corresponding increase in the final dividend. Without the
support, skills and commitment of our employees, subcontractors and suppliers,
this would not have been possible and we are grateful to them for their
contribution in achieving these results.
The Board remains firmly of the view that delivering increasing shareholder
value should be the business's core strategy and once again I can report strong
progress in this regard. In addition to the increased dividend, earnings per
share have increased this year by 21.8%.
The key drivers in generating such returns continue to be our determination to
generate margins and return on capital employed at the upper end of our
industry's performance. Operating margins within Redrow Homes have increased
during the year reaching 19.0% in the second half to yield an annual margin of
18.7%, compared with 17.6% last year. Our return on capital employed has also
risen to 31%. This efficient and prudent management of our capital has enabled
us to invest further in our owned land bank and in increasingly complex city
centre and mixed use schemes without any significant change in our level of
borrowings. Indeed the Group's gearing has fallen further from 39.0% to 30.9%.
Building high quality homes for a broad range of customers continues to be the
central focus of the business. The Homes Division's record year has taken
completions to 4,031, at an average selling price of £147,900, generating a
turnover approaching £600m. The location, pricing and styling of these homes
continue to be balanced across the Group, to avoid excessive exposure to
particular markets. Since 2000 we have implemented a number of measures aimed
at developing the synergies between the various ranges of our products,
culminating in the recent announcement of a new housing range. Our markets are
the theatres of substantial change, economically, socially and in terms of
planning policy. It is therefore appropriate that we should be committed to a
process of continuous refinement in what we have to offer, harnessing together
the individuality of development tailored to its location and seeking the
benefits of consistent elements within those developments, to generate further
improvements in build quality and efficiency.
Such an approach depends both on people and build processes and in both regards
there have been significant initiatives aimed at underpinning the quality and
reputation of the Company. Our joint venture with Corus, Framing Solutions, is
aimed at securing the efficiency and quality of system building without losing
the traditional feel of our developments. I am pleased to report that the joint
venture is performing in line with expectations and early developments within
the Group justify the confidence we have in its part of our future. Equally,
competent, well-trained and effective people lie at the heart of our
achievements. Significantly we have now invested in a new training centre at
Tamworth, which will enable a wide range of courses to be provided, ensuring
that our employees are equipped to continue to play their part in driving the
business forward.
In recognition of the contribution of all employees to the performance of Redrow
we have widened our bonus scheme arrangements to now embrace all employees. In
addition we have further strengthened the Executive Team with the appointment of
Neil Fitzsimmons to the position of Group Managing Director with David Arnold
becoming our new Group Finance Director. Rhiannon Walker stepped down from the
role of Company Secretary after sixteen years and has been succeeded by Graham
Cope. Bob Williams will also be standing down as a Non-Executive Director at
the forthcoming Annual General Meeting on 5th November. May I take this
opportunity to thank both Rhiannon and Bob for their important contribution to
Redrow over the years.
Land continues to be what we regard as our 'Crown Jewels'. Within an
increasingly complex planning system, bedevilled by delays at every stage, there
is undoubtedly a premium for those most able to work within it. Redrow prides
itself on anticipating, rather than following, developments in planning policy.
We were pioneers in mixed use developments, the more efficient use of land
through higher density schemes and were significant brownfield developers long
before such approaches became fashionable. We have also benefited immensely
from our attention to forward land. As a result our first class land and
planning teams continue to deliver excellent opportunities. Our current
landbank with planning has now risen to 14,000 plots with a further 2,000 plots
under contract at various stages in the planning system and over 8,000 plots
allocated in draft or adopted local plans.
Of importance in the continued growth of Redrow is our Commercial operation,
which in addition to contributing £3.0m of operating profit this year, ensures
that we have the necessary expertise to project manage the complex 'In the City'
schemes and identify mixed use and change of use land opportunities.
Looking forward, Redrow is in an excellent position. Forward sales have
increased to £304m, a rise of 39.4%. Redrow owns or controls all the land
required for development in the next two years, and a very substantial
proportion of that required for three years time. Our products continue to be
valued by our very varied base of customers and we have implemented changes in
staff training and in building methods, which will underpin both our quality and
our control of developments. Against a background of a stable housing market, a
continuing under-supply of new homes and pent-up aspiration to home ownership, I
remain confident that Redrow will go from strength to strength.
Robert B Jones
Chairman
CHIEF EXECUTIVE'S REVIEW
The year ended 30 June 2003 has been another period of record achievement for
Redrow. Operating profits have increased from £94.1m to £113.7m delivering
earnings per share of 46.9p, an increase of 21.8%. Our balance sheet continues
to strengthen with shareholders' funds now exceeding £300m and gearing at 30.9%,
a further reduction on last year. The efficient utilisation of capital has
always represented one of the main financial objectives within the Group and
this is reflected in our return on capital employed which has increased to 31%.
During the last twelve months the Group has been carefully positioned in
anticipation of a more sustainable housing market. The strength of our land
bank enabled Redrow Homes to increase the number of active outlets as we entered
the new calendar year so as to capture the benefit of the important Spring
market. This resulted in record forward sales as at June 2003 of £304m. In
addition, Redrow Commercial has commenced the new financial year with forward
transactions exchanged at both St. David's Park and Buckshaw Village.
The increasing recognition by the Government of the problems created by the
continuing shortage of new homes is to be welcomed. The three major Government
sponsored studies covering the barriers to increased housing supply, the
development of a market for long term fixed rate mortgages and the improvement
of the efficiency of the industry, all represent key opportunities to influence
the housing industry of the future. The supply constraints resulting from a
restrictive and under-resourced planning regime are well documented. However,
it is important that our industry is capable of responding if Government
initiatives do result in an increase in the supply of land with planning. For
this to be achieved, improved construction techniques are required to counter
the impact of skilled labour shortages. During the last twelve months we have
undertaken a careful review of both the design of our housing portfolio and our
build practices. This has resulted in the creation of a new housing range
which will be launched during 2004.
The new range combines the kerb appeal and the quality of design with which the
Group has become synonymous, with improved construction methods, in particular
increased off-site prefabrication. In addition, the new range has been designed
to deliver the added benefits of light steel-frame construction which will flow
as production is increased at our joint venture company, Framing Solutions.
REDROW HOMES
Redrow Homes has again reported record results, with turnover increasing by 9.7%
to £596.0m and operating profit by 17.0% to £111.5m. These results were secured
from 4,031 (2002: 3,908) legal completions with an average selling price of
£147,900 (2002: £139,000). The legal completion profile was broadly in balance
between the first and second halves with 1,970 (48.9%) and 2,061 (51.1%) legal
completions respectively.
During the last twelve months there have been significant variations in our
various regional markets. Within the Southern Region, the market has generally
undergone a period of stabilisation whilst in both the Western and Northern
Regions the positive ripple emanating from an historically strong Southern
market has been experienced. The conflict in Iraq resulted in a temporary
period of uncertainty whilst late Spring and early Summer witnessed an overall
return to a more sustainable housing market throughout the country.
In recognition of the potential uncertainty and changing conditions within the
market, a significant number of new development launches were scheduled for
early 2003 to capture the benefit of the important Spring market. One of the
most successful launches was at Altolusso, the Division's 'In the City'
development in Cardiff, where, over the initial launch period, 155 reservations
were secured with a sales value of £25m. As a result of this overall strategy,
reservations in the six months to June 2003 were 9.1% ahead of the very strong
corresponding period in 2002. For the financial year as a whole, reservations
were 4,567 as compared with 4,168 in the previous year, an increase of 9.6%.
This improvement enabled the Division to end the year with a record forward
sales position of 2,062 units with a sales value of £304m, representing
increases of 35.1% and 39.4% respectively on last year.
Cost pressures within the industry have continued during the financial year.
Whilst the Group's proactive policy of establishing key relationships with
suppliers has resulted in material price increases being controlled generally in
line with inflation, the continuing shortage of skilled labour has resulted in
labour cost increases of up to 10%. In the long term, these cost pressures can
only be alleviated by both increasing the overall attractiveness of our industry
to new entrants, so increasing the total work force, and by embracing new
construction techniques.
Operating margins within Redrow Homes have continued to increase, recording
levels of 18.4% and 19.0% in the first and second halves respectively. The
overall annual operating margin of 18.7% compares with 17.6% last year. This
improvement is in part due to the strength of the sales market during calendar
year 2002, but equally reflects the quality of the Division's land bank and the
active management of our cost base.
The identification by the Government of key growth areas at Milton Keynes,
Stansted, the East Thames Corridor and Ashford, to satisfy the increased demand
for new homes in the South East, is of strategic importance. To enable the
Division to maximise the potential from these growth areas, a new company,
Redrow Homes (South Midlands), has been formed to focus on the area known as the
'Milton Keynes triangle'. As a result, the geographical coverage of Redrow
Homes (Southern), Redrow Homes (Eastern) and Redrow Homes (South East) has been
reviewed to enhance the efficiency and effectiveness of these companies. The
decision has been taken to relocate the first to Basingstoke in Hampshire and to
merge the other two, with the relocation of the merged business to Laindon, near
Basildon in Essex.
Framing Solutions, our light steel-frame joint venture company with Corus plc,
continues to progress. The commissioning of the new roll-forming machinery
together with the related design and control programmes has been successfully
completed. This is a major achievement, greatly increasing the efficiency of
the design and production process, representing a significant step towards
enhancing the production capability over the next few years to approximately
4,000 units per annum. To date, light steel-frames have been incorporated
successfully into four Redrow developments with further sites scheduled to come
on stream prior to the end of the calendar year.
REGIONAL PERFORMANCE
The Northern Region delivered 1,982 legal completions as compared with 1,888 in
the previous year, an increase of 5.0%, representing 49.2% of the Division's
completions. These results reflect the acquisition of Tay Homes in January 2002
with the resultant expansion of our activities in both Scotland and Yorkshire.
The average selling price increased by 8.2% to £128,500 to yield an overall
increase in turnover of 13.6%.
The Southern Region achieved 1,091 legal completions, broadly in line with the
previous year, representing 27.1% of the total completions of Redrow Homes. The
average selling price increased by 9.1% to £186,400 to give an overall increase
in turnover of 6.5%.
The expansion of the Western Region continues with legal completions increasing
by 6.2% to 958 units. The average selling price was marginally higher at
£144,000 with turnover increasing by 8.1% to £138.0m.
THE REDROW PORTFOLIO
Over the last ten years the development of the Heritage, Harwood and 'In the
City' brands has been of major importance in the expansion of Redrow Homes.
During that period the number of legal completions has almost doubled, from
2,038 in 1994 to 4,031 in 2003. The Heritage Range, which in the financial year
had an average selling price of £166,100, still represents the cornerstone of
the portfolio, accounting for 63.2% of legal completions. As anticipated last
year, the last twelve months have witnessed a significant expansion in the
utilisation of the Harwood Range. This is primarily due to the fact that on the
acquisition of Tay Homes in January 2002, the majority of that company's
developments in Yorkshire and Scotland were more suited to the Harwood
specification. In addition, increased usage has been made of the Harwood Range
in both South West and South Wales. As a result, Harwood represented 29.0% of
the Division's legal completions in the current financial year and had an
average selling price marginally in excess of £100,000.
To complement Heritage and Harwood, several 'In the City' developments have been
and are being undertaken. The number of such schemes is carefully controlled
due to the significant management time involved in each scheme and, from a
financial viewpoint, their capital intensive nature. During the year, 'In the
City' schemes contributed 7.8% to the Division's legal completions, with an
average selling price of £174,900. Of particular significance was the highly
successful scheme at Whitworthwest in Manchester which secured the award for '
Best City Centre Residential Development' from the Association of Town Centre
Management in conjunction with the NHBC.
Ongoing 'In the City' schemes include Odyssey in London, Altolusso in Cardiff,
Jupiter in Birmingham, Velocity in Leeds and Neptune Marina in Ipswich. To
balance the higher capital investment associated with 'In the City' schemes it
is important to maintain a strong forward sales position. It is therefore
pleasing to report that by the financial year end the above developments have
already secured 348 forward sales for legal completion in the year ending 30
June 2005.
Whilst the Heritage and Harwood ranges have been highly successful, the changing
requirements of Planning Policy Guidance, in particular PPG3, have resulted in
an increasing percentage of bespoke concept schemes marketed under the Heritage
and Harwood banners. The increase in such schemes has resulted in a greater
absorption of management time in their design and a dilution of the benefits
that flow from the construction of a more standardised housing range.
In response to these changes a new highly flexible range of generic house styles
has been designed. This new range combines the quality of design that has
characterised the Heritage and Harwood Ranges with the re-introduction of
greater standardisation within the construction process whilst maintaining the
flexibility in elevational treatments to match the local vernacular. With three
different specification levels in the new housing range, the benefits derived
from a diverse product portfolio will be maintained, but complemented by the
efficiencies of greater standardisation, both from a build and financial
viewpoint. This new range has equally been designed to respect the
requirements of PPG3 and to enhance the utilisation of off-site prefabrication.
Furthermore, whilst designed initially to be predominantly built traditionally,
the requirements of light steel-frame construction have been fully recognised so
as to provide further benefits as production from Framing Solutions is
increased.
Finally, from a marketing perspective, the new range, irrespective of
specification, will be marketed under the single Redrow brand to provide greater
synergy with the Division's national marketing programme, and in particular, the
highly successful campaign on digital television.
DEVELOPING A SUSTAINABLE FUTURE
Land remains the key to the Group's future profitability. During the last
twelve months, the current land bank has increased from 15,600 plots to 16,000
plots, representing, on an historic basis, a four year land supply. Of these
plots, 14,000 are owned with planning, an increase on the previous year of 600
plots. The balance is held under contract awaiting, in the vast majority of
cases, the grant of a satisfactory planning consent.
It is, however, the effectiveness of this land bank that is of paramount
importance. The Homes Division owns with planning all the land required to
deliver the budgeted completions for the new financial year. Further, 85% of
the forecast legal completions for the year ending 30 June 2005 are on land
owned with planning and indeed all are on land controlled by the Division. This
places Redrow Homes in an extremely strong position for the future.
During 2003, Redrow Homes acquired approximately 4,630 plots for a total
consideration of £126.9m representing an average plot cost of £27,400. At the
financial year end, the average plot cost has increased from £21,200 to £22,900,
which, when expressed as a percentage of annual historic sales price, represents
a marginal increase from 15.3% last year to 15.5% for the current year.
With the increasing concentration on brownfield development, the historic
distinction between current and forward land has been eroded, with our planning
teams now equally involved in securing planning consent on both categories of
land. Nevertheless, forward land remains a major contributor to the land
acquired each year and during the last twelve months some 30% of the land
acquired was secured through this route. Further, at the financial year end,
the forward land bank totalled approximately 23,750 plots. Of particular
significance is the number of plots allocated in either draft or adopted local
plans. Despite the contribution to the current land bank during the year, these
allocations have been maintained at over 8,000 plots, representing over
one-third of the forward land bank, clearly demonstrating its planning pedigree.
REDROW COMMERCIAL
The recent relocation of Redrow Commercial to new office premises within the
Group's mixed use scheme at Whitworthwest, Manchester represents the culmination
of a very successful year. Operating profits of £3.0m were at a similar level
to last year, with contributions being secured from each of the company's major
developments.
At St. David's Park, Optima, the 27,000 sq. ft. office development to which I
referred last year, was sold to moneysupermarket.com. At Buckshaw Village, the
80,000 sq. ft. of industrial units built speculatively has generated significant
interest with the sale of a 20,000 sq. ft. unit prior to the year end and the
disposal of a further 14,000 sq. ft. unit subsequent to the year end. In
addition, on both developments the sale of undeveloped parcels of land has been
achieved so further improving the company's results. At Western Approach,
Bristol, the 51,000 sq. ft. distribution warehouse pre-let to MacFarlane Group
U.K. Ltd has been successfully sold and marketing continues on the second unit,
also of 51,000 sq. ft., constructed in parallel. Lastly, the investment sale of
the ground floor retail space at Whitworthwest in Manchester, pre-let to
Sainsbury's Supermarkets Ltd, has been successfully completed.
The company has commenced the new financial year with forward transactions
secured at both St. David's Park and Buckshaw Village. At the former, contracts
were exchanged prior to the year end for the sale of Evolution, nursery office
units totalling approximately 15,000 sq. ft.. Following build completion in mid
July, the sale has been successfully completed. At Buckshaw Village, contracts
have been exchanged, subject to planning, for the sale to Aldi Stores Ltd of a
31 acre parcel of land for the development of a 650,000 sq. ft. distribution
warehouse. This transaction, together with those previously referred to,
establishes Buckshaw Village as a major mixed use development within the North
West.
Over the last two years, the focus within Redrow Commercial has been on the
identification and development of mixed use schemes so adding value on a
Group-wide basis. Twelve months ago the structure of the management team was
reviewed and brought in line with that of the Homes Division. The results for
the year, together with the foundations laid for the future, are a solid
endorsement of these policies.
Last year, I referred to the 'extensive project management skills within Redrow
Commercial which have been harnessed to provide the appropriate controls on all
'In the City' schemes undertaken throughout the Group'. To recognise the
significant Group-wide contribution made by this project management team, the
decision has been taken to relocate the team to St. David's Park so facilitating
greater integration in all relevant aspects of the Group's business.
THE REDROW TEAM - OUR TRAINING INITIATIVE
One of the core strengths of the Group remains the 'Redrow Team'. Our
continuing growth, combined with the increasing complexity of our industry,
means that Redrow must be recognised as 'an employer of choice' so as to be able
to both retain our existing staff and attract future employees of the highest
calibre. It is however equally important that these new employees receive the
appropriate induction, which not only encompasses our policies and procedures,
but also our culture, so that all new staff can feel part of the Redrow Team and
contribute fully at the earliest opportunity. In addition to recognising the
need for a structured induction process, there is an ongoing requirement for
training across many disciplines throughout the Group.
During the last financial year, a detailed review was undertaken as to how these
objectives could best be achieved. The conclusion of the review was the
formation of 'The Redrow Training Centre'. This facility is now housed within a
purpose built 4,000 sq. ft. building, constructed next to the offices of Redrow
Homes (Midlands) at Tamworth. The centre had a capital cost of approximately
£500,000 and is staffed by professional trainers recruited from both within and
outside the Group to provide the appropriate balance of skills. Furthermore,
existing team members may be seconded to provide specialist courses,
particularly in more technical disciplines and in the important area of health
and safety. The centre is fully integrated into the Group-wide computer systems
to provide a 'real life' environment for learning purposes. On an annual basis,
some 400 courses will be provided at a cost of approximately £400,000.
This initiative clearly demonstrates Redrow's commitment to its employees and
its desire to be 'the employer of choice' within our industry.
OUTLOOK
Redrow has entered the new financial year having delivered record results and
secured an excellent platform for future growth. The Homes Division, through
careful planning and the launch of several new developments, has secured a
record forward sales position. The Division's land bank has been further
strengthened and provides an effective and solid base for the future. The
review of the housing portfolio will ensure that the qualities of the existing
ranges are combined with the requirements for enhanced construction methods, so
supporting our future financial returns.
Redrow Commercial has established a sound development programme, adding
significant value through its focus on mixed use schemes.
Accordingly, barring the impact of factors totally outside the control of the
Group, Redrow can look forward with confidence to maintaining its record of
delivering long term sustainable growth and by so doing deliver value to our
shareholders.
Paul L Pedley
Chief Executive
CONSOLIDATED PROFIT AND LOSS ACCOUNT
12 MONTHS ENDED 30 JUNE 2003
Continuing Operations
2003 2002
Note £m £m
Turnover - total 2 608.3 573.3
- share of joint venture (0.4) -
Group turnover 607.9 573.3
Cost of sales (457.7) (443.0)
Gross Profit 150.2 130.3
Net operating expenses before integration costs 2 (35.7) (31.9)
Integration costs - (4.3)
Net operating expenses after integration costs 2 (35.7) (36.2)
Operating profit 2 114.5 94.1
Share of operating loss of joint venture (0.8) -
Operating profit including share of joint venture 113.7 94.1
Interest payable 2 (7.6) (9.0)
Profit on ordinary activities before taxation 2 106.1 85.1
Tax on profit on ordinary activities 3 (31.8) (24.3)
Profit on ordinary shares after taxation 74.3 60.8
Dividends 4 (11.9) (9.6)
Retained profit 62.4 51.2
Earnings per ordinary share
- basic 5 46.9p 38.5p
- diluted 5 46.8p 38.3p
- adjusted 5 46.9p 40.4p
Dividends per ordinary share 4 7.5p 6.06p
The Group has no material recognised gains or losses other than as shown above.
There is no material difference between the profit on ordinary activities before
taxation and the
retained profit for the period stated above and their historic cost equivalents.
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2003
As at As at
30 June 2003 30 June 2002
Note £m £m
Fixed assets
Tangible assets 16.5 15.8
Investment in joint venture 6 2.1 -
Other investments 0.5 0.1
19.1 15.9
Current assets
Assets held for resale - 0.8
Stocks and work in progress 7 579.0 496.8
Debtors 11.0 8.8
Bank and cash deposits 8 6.2 1.0
596.2 507.4
Creditors
Creditors due within one year 9 (175.6) (214.8)
Creditors due after more than one year 9 (134.7) (66.3)
Provisions for liabilities and charges (3.7) (3.6)
(314.0) (284.7)
Equity shareholders' funds 301.3 238.6
Movement in shareholders' funds:
Opening shareholders' funds 238.6 187.1
Retained profit for the period 62.4 51.2
Shares issued 0.5 0.6
Contribution to QUEST (0.2) (0.3)
Closing shareholders' funds 301.3 238.6
CONSOLIDATED CASH FLOW STATEMENT
12 MONTHS ENDED 30 JUNE 2003
2003 2002
Note £m £m
Cash inflow from operating activities 10 59.6 104.6
Returns on investments and servicing of
finance
Net interest paid (7.3) (8.4)
Issue costs of new bank borrowings (0.5) -
Net cash (outflow) from returns on (7.8) (8.4)
investments and servicing of finance
Corporation tax paid (29.2) (24.2)
Capital expenditure and financial investment
Net (purchases)/sales of tangible fixed assets (2.4) 0.3
Payment to joint venture (2.7) -
Acquisitions
Purchase of subsidiaries 11 - (30.6)
Net overdrafts acquired 11 (7.9) (12.9)
Dividends paid (10.4) (9.0)
Net cash (outflow)/inflow before financing (0.8) 19.8
Financing and liquid resources
Issue of ordinary share capital 0.3 0.3
Cash deposits - restricted use (0.6) -
Net movement in bank borrowings 55.0 (70.0)
Net cash inflow/(outflow) from financing 54.7 (69.7)
Increase/(decrease) in cash in period 53.9 (49.9)
Cash deposits - restricted use 0.6 -
Net movement in bank borrowings (55.0) 70.0
Net movement in issue costs of bank borrowings 0.4 (1.0)
Change in net (debt) (0.1) 19.1
Net (debt) at start of period (93.1) (112.2)
Net (debt) at end of period (93.2) (93.1)
NOTES
1. Basis of preparation
The above results and the accompanying notes do not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. They are
taken from the full accounts which have received an unqualified report by the
auditors and will be filed with the Registrar of Companies.
2. Segmental information
2003 2002
£m £m
Turnover
Homes 596.0 543.1
Commercial 11.9 30.2
Share of Framing Solutions JV 0.4 -
608.3 573.3
Profit on ordinary activities before
taxation
Homes 111.5 95.3
Commercial 3.0 3.1
114.5 98.4
Share of Framing Solutions JV (0.8) -
Integration costs - (4.3)
113.7 94.1
Interest (7.6) (9.0)
106.1 85.1
Net assets
Homes 376.2 317.8
Commercial 16.2 13.9
Share of Framing Solutions JV 2.1 -
394.5 331.7
Net (debt) (93.2) (93.1)
301.3 238.6
In 2003, net operating expenses were comprised entirely of administrative
expenses.
In 2002, net operating expenses comprised £31.9m administrative expenses and
£4.3m integration costs. The £4.3m integration costs were attributable within
the results of the Homes Division and were in respect of the acquisition of Tay
Homes plc.
3. Tax on Profit on Ordinary Activities
2003 2002
£m £m
Current year
UK corporation tax at 30% (2002:30%) 30.1 25.3
Over provision in respect of prior year - (1.3)
Share of Framing Solutions taxation credit (0.2) -
29.9 24.0
Deferred tax
Origination and reversal of timing differences 1.9 0.3
31.8 24.3
Reconciliation of current taxation charge
Tax on total profits @ 30% (2002:30%) 31.8 25.5
Over provision in respect of prior year - (1.3)
Origination and reversal of timing differences (1.9) (0.3)
Expenses not deductible for tax purposes - 0.1
Current tax charge 29.9 24.0
4. Dividends
The final dividend of 5.0p will be recommended to Shareholders for approval at
the Annual General Meeting on 5 November 2003. This dividend will be paid on 21
November 2003 to Shareholders whose names are on the Register of Members at
close of business on 26 September 2003. The shares will become ex-dividend on
24 September 2003. This dividend, when added to the interim, makes a total
dividend for the year of 7.5p (2002: 6.06p).
5. Earnings per share
The calculation of the basic earnings per share of 46.9p (2002: 38.5p) is based
on Group profit on ordinary activities after taxation of £74.3m (2002: £60.8m)
and on the weighted average number of 10p ordinary shares in issue of 158.3m
(2002:158.1m). The average reflects an adjustment in respect of surplus shares
held in trust under the Redrow Long Term Share Incentive Plan.
Diluted earnings per share has been calculated in accordance with FRS 14 based
on the weighted average number of 10p ordinary shares in issue of 158.8m (2002:
158.8m).
In 2002, the Directors disclosed the adjusted basic earnings per share before
integration costs (net of tax) of 40.4p, to demonstrate the underlying trading
performance of the business.
6. Joint Venture - Framing Solutions plc
The Group invested £2.7m in Framing Solutions plc, giving a 50% interest in the
joint venture company with Corus plc, on its formation in September 2002. As at
30 June 2003, the book value of this investment was £2.1m reflecting the Group's
£0.6m share of Framing Solutions' retained loss for the period.
7. Stocks and work-in-progress
2003 2002
£m £m
Land held for development 327.3 294.5
Work-in-progress 257.9 203.3
Stock of showhomes 9.4 10.3
594.6 508.1
Cash on account (15.6) (11.3)
579.0 496.8
8. Bank and cash deposits
Bank and cash deposits at 30 June 2003 of £6.2m (2002:£1.0m) represent balances
on deposit accounts.
9. Amounts due in respect of development land
2003 2002
£m £m
Due within one year 35.2 41.0
Due after more than one year 40.1 25.9
75.3 66.9
10. Analysis of cash flow from operating activities
2003 2002
£m £m
Total operating profit 113.7 94.1
Add back share of joint venture operating loss 0.8 -
Group operating profit 114.5 94.1
Depreciation, including profits and losses on
disposal of fixed assets 1.7 1.3
Increase in stock and work-in-progress (61.1) (27.3)
Movement in other current assets, creditors
and provisions 4.5 36.5
Cash inflow from operating activities 59.6 104.6
11. Acquisitions
On 14 January 2003, the Group acquired four residential sites in Scotland
through the acquisition of 100% of the share capital of Park Lane City Limited
(now renamed Redrow Homes (City Scotland) Limited), a company whose activities
were limited to the development of these land holdings, for a total deferred
consideration of £4.6m.
The substance of the transaction was that of a land purchase. The net assets
acquired were land balances of £20.3m at market value, bank overdrafts of £7.9m,
amounts due in respect of development land of £5.6m and a deferred taxation
liability of £2.2m.
Figures for 2002/03 relate to the acquisition of Tay Homes plc.
12. Half Year Comparison
6 months to 6 months to
30 June 2003 31 December 2002
Unit sales 2,061 1,970
£m £m
Turnover 311.9 296.4
Operating profit 58.6 55.1
Interest (4.0) (3.6)
54.6 51.5
13. Annual General Meeting
The Annual General Meeting of Redrow plc will be held at St. David's Park Hotel,
St. David's Park, Flintshire on 5 November 2003, commencing at 12.00 noon. A
copy of this statement is available for inspection at the registered office.
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 1 hour ago Regional REIT Limited
- 1 hour ago Regional REIT Limited
- 1 hour ago Polar Capital Holdings
- 2 hours ago Norcros
- 2 hours ago London Stock Exchange Group