Trading Statement

Redrow PLC
01 July 2005


REDROW PLC


PRE-CLOSE TRADING UPDATE


As part of its normal investor relations activity, Redrow plc is issuing this
pre-close trading update in advance of its preliminary results announcement for
the twelve months ended June 2005 on 13 September 2005.


ANALYST PRESENTATION


Redrow plc hosted a presentation for analysts after close of trading on the
London Stock Exchange on Thursday 30 June 2005.  The presentation covered
financial performance for the year ended June 2005 and the Group's medium term
strategy, with a particular focus upon the role of forward land.

It was also announced that Neil Fitzsimmons is to become Chief Executive and
Paul Pedley is to become Executive Deputy Chairman, with effect from 1 August
2005.

Copies of the presentation are available from the Redrow website
www.redrow.co.uk.


SUMMARY

  • Pre tax profit for both the year and six months ended June 2005 are
    expected to be ahead of the same periods last year
  • For the year ended June 2005, Redrow delivered legal completions 2% higher
    at 4,372 with the average selling price 11% higher at approximately £172,000
  • Redrow's forward sales position remains robust with 2,129 sales in hand at
    the end of the financial year - ahead of the historic norm
  • As at June 2005, Redrow owned 15,800 plots with planning consent, an
    increase of 800 plots on the position twelve months' previous
  • Forward land made a very strong contribution during the year - with 43%
    (2,200 plots) of all land acquired from the forward land bank
  • Net debt reduced by approximately £25m to circa. £105m leaving the Group
    well placed to take advantage of future opportunities
  • Forecast increase in sales outlets by Spring 2006, together with the new
    Debut range, provides the capability to deliver volume growth


FINANCIAL PERFORMANCE - HOMES

2004/05 marked the fifteenth consecutive financial year of growth in legal
completions for Redrow.  Having deliberately established a record forward sales
position at the start of the financial year, the Group has successfully focused
upon the maximisation of selling price and profit in the face of a softer sales
environment where prices remain stable but market activity is at a lower level
than is expected of a 'normal' market.

                                      2004/05                    2003/04                   Change
Legal completions                      4,372                      4,284                      +2%
Average selling price               c. £172,000                  £154,700                  +c.11%

In the financial year ended June 2005, Redrow achieved 4,372 legal completions,
an increase of 2% on the previous year (2003/04: 4,284).  The average selling
price for the year as a whole was approximately £172,000 (2003/04: £154,700), an
increase of some 11%.  This average selling price is considered to be indicative
of the average selling price for the financial year ended June 2006.  This is
before taking account of any legal completions from the new Debut range where
the average selling price will be approximately £75,000.

As a result of the current housing market, the full year operating margin for
the Homes' business is anticipated to be marginally lower than the 19.8%
achieved in the previous financial year.

A distinguishing feature of Redrow's financial performance in 2004/05 was the
delivery in the second half of the financial year of top line growth when
compared with the same period last year.  Turnover in the six months ended June
2005 is anticipated to be some 6% higher at approximately £380m (H2 2003/04:
£357.9m).  This increase is on the back of an average selling price
approximately 7% ahead of the same period last year at circa. £168,000 (H2 2003/
04: £156,400).  In the second half of the year, legal completions at 2,261
remained at a broadly similar level to the corresponding period last year (H2
2003/04: 2,288).

The average selling price of circa. £168,000 was lower than in the first half
(H1 2004/05: £176,700) due to geographic and product mix.  The average selling
price in the first six months benefited from completions with a relatively high
average selling price at the Group's Odyssey development in London Docklands
whilst the Northern region, with its lower average selling price, represented a
lower proportion of turnover in the first half.

In respect of the second half performance, as a result of the higher turnover
and taking into account the movement in operating margin previously highlighted,
the Homes' business is expected to report growth in operating profit over the
same period last year.  Furthermore, the Group overall is expected to report an
increase in profit before tax for both the second half and for the financial
year as a whole when compared to the previous year.


FINANCIAL PERFORMANCE - MIXED USE & REGENERATION


Redrow's mixed use activities performed more strongly than expected at the time
of the interim results in March.  Completion of the sale of commercial land and
the remaining distribution unit at Severnside, Bristol, together with disposals
at Buckshaw Village, Chorley played an important role in delivering both profit
and cash to the Group.

In its first year of operation, Redrow Regeneration, based in London with a
specific focus to deliver sustainable communities through mixed use development,
acquired an option through a joint venture which secures an opportunity to
redevelop Watford Junction railway station and surrounding land.  This major
project, at the heart of one of London and the South East's key transport hubs,
has the potential to provide in excess of 2,200 new homes and 150,000 square
feet of commercial space as well as delivering significant improvements to the
local infrastructure and community.

The strong performance from the Group's mixed use interests means that even
after providing for the relatively significant option and up-front
pre-development expenditure on Watford Junction, the net operating result for
these activities will be approximately £4m, an increase of around £2m on
previous expectations.

Looking forward to the financial year ended June 2006, as a result of Redrow's
prudent accounting policy, which provides for option and pre-development
expenditure until such time as a site has planning and is purchased, it is
anticipated that the continued expenditure of such costs on Watford Junction,
together with those of potential new schemes, is likely to match and therefore
offset any profits generated from the mixed use activities.


SALES


Redrow entered 2004/05 with a record forward sales position.  This sales
position was equivalent to approximately 28 weeks sales and compares with a
historic norm of approximately 15 weeks.

This strong forward sales position had been established during the buoyant
markets of the two previous financial years in anticipation that the market
would revert to more normal levels of activity and, in so doing, would likely
experience an element of weakness prior to reaching a sustainable level.  Whilst
the establishment of this strong forward sales position did restrain margin
growth in more favourable markets, it has now provided and continues to provide
a cushion in the current market.

Demand in the U.K. housing market weakened in June 2004 following four interest
rate rises and, in particular, further comments in a speech by the Governor of
the Bank of England in June 2004.  Prices have remained relatively stable during
the last twelve months although the market as a whole has been operating at a
lower level of activity than would be expected of a 'normal' market.  As
anticipated and as previously highlighted, Redrow's forward sales position has
started to unwind although it remains robust in historic terms.

                                               2004/05                   2003/04           Change

1 July b/f                                      2,344                     2,062
6 months ended Dec
Sales                                           1,715                     2,006              -15%
Legal completions                              (2,111)                   (1,996)              +6%
31 Dec sales c/f                                1,948                     2,072               -6%

6 months ended June
Sales                                           2,442                     2,560               -5%
Legal completions                              (2,261)                   (2,288)              -1%
30 June sales c/f                               2,129                     2,344               -9%


Of the 2,129 forward sales at June 2005, 151 are social homes at Celestia,
Redrow's In the City scheme in Cardiff.  The build contract for these units will
be novated to the scheme's main contractor early in 2005/06, thereby eliminating
construction risk for Redrow.  These units will therefore not feature as legal
completions in future years and the underlying profitability of this contract is
embedded within the overall profitability of the development.  Sales in the six
months ended June 2005 also include 90 reservations, the majority of which are
now exchanged, secured at the launch of the first Debut development at Rugby.

As at the end of June 2005, Redrow was trading from 112 outlets.  The strength
of the owned and controlled land bank provides the potential to maintain outlet
growth and it is currently expected that the Group will be trading from
approximately 10% more outlets by Spring 2006.  This higher level of outlets
will be an important element of the Group's strategy to increase the level of
sales in 2005/06.


LAND
                                                          Jun 05              Dec 04              Jun 04
Current Land

Land owned with planning                                  15,800              15,200              15,000
Contracted plots                                           1,500               2,300               2,400
                                                          17,300              17,500              17,400
Forward land

Forward land with planning                                   750               1,500               1,800
Allocations                                                7,500               6,500               6,200
Sub-total                                                  8,250               8,000               8,000
Realistic prospect - Homes                                12,750              13,750              14,500
Realistic prospect - Regeneration                          1,100                   -                   -
                                                          22,100              21,750              22,500


As at June 2005, Redrow owned, with planning permission 15,800 plots, an
increase of 800 plots on twelve months previous.  Included within this figure
are 300 plots in respect of Debut developments at Willans Green in Rugby, Castle
Vale in Birmingham and Buckshaw Village near Chorley.

Redrow remained cautiously active in the land market during the year and whilst
there appeared to be greater realism about values from vendors, the market
remained competitive.  This greater caution is reflected in the land held under
contract, which stood at 1,500 plots at the end of the financial year.  The
Group is able to adopt this approach without adversely impacting its future
sustainability since it already owns, with planning, all the plots it requires
for 2005/06 and owns or controls approximately 85% of the following year's
anticipated production.

2004/05 marked an extremely successful year as regards the conversion of the
forward land bank into current land.  Forward land will always represent the
Group's most profitable land as a result of the discount to open market value,
an integral part of option arrangements.  In 2002/03, 30% (1,400 plots) of all
plots acquired in the year were from forward land and in 2003/04, this figure
was 28% (1,500 plots).  In 2004/05, 43% (2,200 plots) of net land acquired in
the year was from forward land, representing 13 sites with the potential to
generate approximately £385m of revenue.

Notwithstanding its significant contribution in 2004/05, the forward land bank
stood at 22,100 plots at the end of the financial year, including 1,100 plots at
Watford Junction, Redrow's share of this potential development.  This forward
land bank has the potential to deliver 30% of the Group's land requirements over
the next three years, thus maintaining the strong transfer of plots to the
current land bank and thereby contributing to the on-going sustainability of
Redrow.


PRODUCTION AND BUILD COSTS


Materials prices have seen greater pressure than in recent years, particularly
those with a high energy or commodity content.  Nevertheless, Redrow's central
purchasing function and existing partnering arrangements have contained overall
increases to a minimal level.  Labour cost pressures continue to abate from
their historic levels, however hot spots will always appear around the country
as a result of major infrastructure or redevelopment schemes.

Framing Solutions, the Group's 50:50 joint venture which provides light steel
frames for use in residential construction, is anticipated to report in line
with expectations.  The Framing Solutions business with Redrow will be
increasingly focused upon the new Debut range and the Group's standard apartment
schemes.  Looking to the new financial year, it is currently anticipated that
the joint venture will report a marginally reduced loss.  Whilst the Framing
Solutions' financial result remains small in a Group context, its operational
and commercial significance, particularly to the new Debut range, is important
to the future development of Redrow.


BALANCE SHEET


Despite further investment in land, net debt at June 2005 of approximately £105m
was circa. £25m lower than at June 2004 with a resultant reduction in gearing.
Cash flow during the year benefited from the successful performance of the
Group's mixed use activities and lower work in progress on In the City schemes,
principally as a result of legal completions at Odyssey and Altolusso.  Land
creditors remained at similar levels to last year.  Average net debt in the
twelve months ended June 2005 was approximately £175m and it is anticipated that
the interest charge for 2004/05 will be circa. £10m.  The reduction in net debt
and gearing means that the Group remains financially well placed to take
advantage of future opportunities.


DIVIDEND


The Board re-confirms its previous commitment to increase the dividend by 20% in
respect of each of the financial years ended June 2005 and June 2006.  This
means that the dividend will have grown from 4.95 pence per share paid in
respect of the year ended June 2000 to 13.0 pence per share to be paid in
respect of the year ended June 2006, representing a compound annual growth rate
of 17.5% p.a..


MANAGEMENT CHANGES


The Group's strength rests with its people, its land bank and its products.  As
regards people, there are many aspects to building and maintaining a quality
team and the issue of succession planning is fundamentally important at all
levels throughout the organisation.  Paul Pedley and Neil Fitzsimmons have
worked together for the last eight years, initially as Chief Executive and Group
Finance Director and more recently as Chief Executive and Group Managing
Director.  It is the Board's collective view that the time is now right for Neil
to assume the responsibility of Chief Executive, a position he will formally
adopt from 1 August 2005.  Paul will have been part of Redrow for 20 years on
that date and remains firmly committed to Redrow's continued development.
Accordingly, Paul will become Executive Deputy Chairman with specific
responsibilities for piloting major land transactions and the continued
development of the Group's product range.  Specifically, Paul will focus upon
the Debut range, to support the objective of delivering at least 2,000 units per
annum within a five year period.  This role will also allow Paul to participate
more actively in representing the views of the industry during an important
phase of consultation with Government.


CURRENT MARKET AND OUTLOOK


As the market continues its process of adjustment, the sales rate per outlet
remains marginally below the level expected in normal markets.  Redrow's forward
sales strategy has enabled, and will continue to enable, the Group to focus upon
the maximisation of selling price and profit at a time when selling prices have
been stable.  It is currently expected that house prices will remain broadly
static for the remainder of this calendar year and markets are likely to remain
competitive.  As a result, operating margins will continue the move towards the
previously identified sustainable level of approximately 17%.  The underlying
macro-economic position remains supportive but consumers are generally cautious
at present.  However, delayed housing transactions will gradually increase pent
up demand and affordability will improve as time passes.  This will further be
supported if interest rates begin to fall.  These factors, taken together with
the benefit from potential changes to the U.K. pension regime in April 2006,
suggest that there may be a stronger market in the Spring of 2006.

Redrow retains a robust forward sales position.  It has the land bank and
organisational structure in place to deliver increased outlets and support
volume growth.  It has the product range to provide the ability to optimise the
returns inherent in its land bank.  With the launch of the new Debut range,
Redrow has a market leading opportunity to address a significant market sector
and to deliver incremental growth.  All these factors leave Redrow well
positioned to meet the challenges of a more normal market and to continue to
deliver value for its shareholders.


Enquiries

Redrow plc                                             020 7839 6072 (1 July)
                                                       01244 520044 (thereafter)

Neil Fitzsimmons, Group Managing Director
David Arnold, Group Finance Director

Brunswick                                              020 7404 5959

Patrick Handley
Nina Coad



Note on Debut for Editors:

Debut is a new housing range from Redrow, designed to provide affordable homes
for people to buy. Utilising light steel frame and other modern methods of
construction, together with communal heating and hot water systems, it offers a
range of homes that are innovative, exciting and designed to stand the test of
time. With a single monthly service charge to cover the main utility bills and
external maintenance, Debut is geared towards making home ownership accessible,
affordable and easy to manage. It is also available on a shared equity basis,
with Redrow retaining up to 10% equity in the property as an interest free fixed
sum for up to 10 years.  At Redrow's first Debut development at Willans Green
Rugby, cash prices for a one bedroom home start at £49,995.  Redrow has now
commenced construction of its second Debut development at Buckshaw Village, near
Chorley.


Images of Debut are available from Brunswick


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