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Housebuilder Redrow doubles profits

Redrow’s profits after tax rose by £17.3 million to £30.2m in the year to 30 June as revenues climbed 5.8 per cent to £478.9m.

The firm’s focus on high-quality family housing saw sales increase to £478.9m, while its land bank grew by 1,160 plots to 12,350. Reservations are 16 per cent ahead of last year’s figures.

Redrow founder and chairman Steve Morgan launched a takeover bid for Redrow in late August, and said the results showed “a significant improvement in profitability against the backdrop of a challenging marketplace”.

Mr Morgan’s firm Bridgemere said in August it was considering making an offer at 152p per share for Redrow in consortium with Tosca and Penta, although no further details of the bid emerged in the results statement.

Redrow’s New Heritage Collection became “firmly established” as its primary brand during the financial year, said Mr Morgan, accounting for 67 per cent of private turnover.

The average selling price of a New Heritage home is 7 per cent up on last year at £215,100.

The average plot cost is £44,000, excluding central London, rising to £50,000 including central London.

Mr Morgan said the increase in average plot cost over recent years “reflects Redrow’s continuing movement to re-establish ourselves as a premium mid-market homebuilder of larger-than-average, high-specification homes”.

The government’s recent housing initiative on easing affordable housing requirements was “strongly welcome”, he added, but said that planning in general “remains a major obstacle to development despite the government’s best efforts”.

Echoing wider industry concerns, he said that the lack of mortgage availability for potential buyers “remains the main drag to housing market recovery”.

Panmure Gordon analyst Mark Hughes said in August that he saw the bid for Redrow as “Steve Morgan-specific”, adding that he would “not necessarily see this as a catalyst for further bids in the sector”.

Bridgemere holds 40.4 per cent of Redrow’s issued share capital, while Toscafund Asset Management LLP holds about 13.8 per cent.

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