TIDMRDW
RNS Number : 9647B
Redrow PLC
05 February 2020
FOR IMMEDIATE RELEASE
Wednesday 5 February 2020
Redrow plc
Interim results for the six months to 31 December 2019
ROBUST FIRST HALF PERFORMANCE AND
STRONG START TO SECOND HALF
EXPECTATIONS FOR FULL YEAR UNCHANGED
Financial Results
H1 2020 H1 2019 % Change
Private Net Reservations GBP936m GBP795m 18
--------- --------- ---------
Total Order Book GBP1.2bn GBP1.2bn -
--------- --------- ---------
Revenue GBP870m GBP970m (10)
--------- --------- ---------
Legal Completions 2,554 2,970 (14)
--------- --------- ---------
Profit Before Tax GBP157m GBP185m (15)
--------- --------- ---------
EPS 37.2p 41.5p (10)
--------- --------- ---------
ROCE 25% 28% (11)
--------- --------- ---------
Interim Dividend per share 10.5p 10p 5
--------- --------- ---------
Operational Summary
-- Balance of Homes Turnover weighted to second half with 40:60 split (2019: 46:54)
-- Average number of outlets expected to rise to 131 for the year (2019: 126)
-- First half Private Net Reservations up 18% to GBP936m
-- Second half Private Net Reservations to date up 15% at GBP180m (2019: GBP156m)
Financial Summary
-- Group revenue of GBP870m (2019: GBP970m) due to the second half weighting of Homes Turnover
-- First half pre-tax profit of GBP157m (2019: GBP185m)
-- Earnings per share (EPS) of 37.2p (2019: 41.5p)
-- Return on capital employed of 25% (2019: 28%)
-- Net cash of GBP14m (Dec 2018: GBP101m)
-- Interim dividend of 10.5p per share (2019: 10p), up 5%
Board Changes
-- John Tutte to step-down to non-executive Chairman from July
2020 and retire ahead of the AGM in 2021
-- Search for an independent non-executive Chairman to commence towards end of 2020
-- Matthew Pratt to be appointed Group Chief Executive from 1st July 2020
John Tutte, Executive Chairman of Redrow, said
"Redrow has once again delivered a robust operational and
financial first-half performance consistent with our expectation
that revenue will be considerably more weighted than usual to the
second half.
The Group delivered a record value of first half reservations at
GBP936m (2019: GBP795m), a pre-tax profit of GBP157m (2019:
GBP185m) and ended the period with net cash of GBP14m (2019:
GBP101m). Given our confidence in the full year performance we have
declared an interim dividend of 10.5p, up 5% on the previous
year.
The market in the first five weeks of the second half has been
resilient with the value of reservations up 15% at GBP180m (2019:
GBP156m).
Current market conditions, combined with our very strong order
book give me confidence this will be yet another year of progress
for Redrow and our expectations for the full year remain
unchanged."
Enquiries:
Redrow plc
John Tutte, Executive Chairman
Barbara Richmond, Group Finance 01244 527411
Director 01244 527411
Instinctif Partners 0207 457 2020
Mark Garraway 07814 379412
James Gray 07583 936031
There will be an analyst and investor meeting at 10.30 am at The
London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS.
Coffee will be served from 10.00 am.
A live audio webcast and slide presentation of this event will
be available at 10.30 am on www.redrowplc.co.uk.
Participants can also dial in to hear the presentation live at
10.30 am on +44 (0) 20 3936 2999 or UK Toll Free
0800 640 6441; access code 607244.
A recording will be available until 4th March 2020 on +44 (0) 20
3936 3001; access code 120712.
Chairman's Statement
Redrow has once again delivered a robust operational and
financial set of results for the first-half of the financial year
and traded strongly despite an uncertain political and economic
background.
The results are consistent with our expectations highlighted in
September, that returns will be considerably more weighted than
usual to the second-half due to constrained outlet growth last year
and the timing of apartment block completions.
We secured a record number of private reservations in the six
months to the end of December and the value of our total forward
order book was maintained at December 2018's record level and
closed 15% ahead of the opening position at the beginning of
July.
Our Financial Performance
Group revenue was GBP870m in the first half compared to GBP970m
last year due to legal completions reducing from 2,970 to 2,554.
Private completions were down by 99 and social completions were 317
lower and accounted for 19% (2019: 27%) of total completions. The
private average selling price was similar to last year at
GBP387,000 (2019: GBP391,000).
The gross margin was 23.9% (2019: 24%) as the impact of build
cost inflation was largely offset by the change in tenure mix.
Overheads increased from GBP46m to GBP49m following the opening
our new Thames Valley division in July. Operating profit reduced
from GBP187m to GBP159m, mainly due to the reduced turnover, and
pre-tax profit was GBP157m (2019: GBP185m). Earnings per share were
37.2p (2019: 41.5p).
Net cash at the end of December 2019 was GBP14m (2019: GBP101m)
despite paying out GBP149m in dividends and tax in the first-half
(2019: GBP105m).
Return on Capital Employed reduced to 25% (2019: 28%) in the
first-half due to the lower profits.
Given the Group's ongoing strong earnings and cash position, the
Board has declared an interim dividend of 10.5p (2019: 10p), a 5%
increase on the prior year. The interim dividend will be paid on 9
April 2020 to holders of ordinary shares on the register at the
close of business on 6 March 2020.
Operating Highlights
The wider housing market continued to be affected by political
uncertainty around Brexit and during the run-up to the general
election. This had an impact on the time taken to close new homes'
sales, particularly where extended chains were involved.
Notwithstanding this, the Group achieved a record number of private
reservations in the six months to the end of December with the
value of reservations up 18% at GBP936m (2019: GBP795m). Excluding
the Colindale PRS deal we announced in September, the value of
reservations was 3% ahead.
At the end of December 2019, we had a total order book of
GBP1.2bn, in line with last year's record level.
Outlets averaged the same as last year at 129 and the weekly
sales rate was 0.73 (2019: 0.61) and 0.62 excluding the Colindale
PRS sale.
The market was fairly consistent across all of our operating
areas with London showing some early signs of improvement. Pricing
was stable throughout the period and 36% (2019: 39%) of private
buyers utilised Help to Buy.
Our new Thames Valley division made a positive contribution to
Group profits in the first-half.
Our long-standing supplier and sub-contractor relationships and
cost saving initiatives are helping to ease cost pressures. We
anticipate underlying build cost inflation will reduce in calendar
year 2020 to around 3% and will be largely offset by modest house
price gains.
During 2019 we rolled-out our bespoke tablet-based quality
management system. We are now able to better track and measure
standards and deal more efficiently with workmanship issues during
the build process. Our industry-leading online reservation system
is now operating across nearly all of our developments and is
proving very popular with our customers. Our customer
recommendation score is currently running at 91.8%.
We continue to invest in creating great places to live that
respond to our customers' growing awareness of the environment and
the need to address climate change and the threat to biodiversity.
As part of this commitment, today we have published our social
impact review: Creating Communities - Giving Our Customers a Better
Way to Live. The review, which is available on our website, sets
out how our business makes a meaningful social impact and strives
to leave a positive environmental legacy.
Land and Planning
We remained active but cautious in the land market in the
first-half. The Group acquired 1,946 plots with planning and the
owned and contracted land holdings with planning closed at 28,125
plots (June 2019: 28,566 plots). The Group is processing a sizeable
pipeline of sites with terms agreed and we therefore expect
acquisitions to accelerate in the second-half.
Although our cautious approach to land acquisition during a
prolonged period of political and economic uncertainty impacted the
rate of outlet growth, our strategy to acquire larger sites has
reduced the rate at which outlets are now closing. As a result, we
are expecting outlet growth to be strong in the second-half despite
ongoing delays in the planning system.
Board Changes
My appointment as Executive Chairman and Matthew Pratt's
promotion to Chief Operating Officer earlier last year were
integral to a smooth transition to a more conventional board
structure following Steve Morgan's retirement. The transition has
gone well, and it is therefore my intention to step back to a
non-executive Chairman role from 1st July 2020 and to retire from
the board ahead of the AGM in 2021. Matthew Pratt will take up the
position of Group Chief Executive with effect from 1st July 2020
and the search for an independent non-executive Chairman to replace
me will start towards the end of this calendar year.
I am confident that under Matthew's leadership, supported by
Barbara Richmond and the wider executive team, Redrow will continue
to go from strength to strength. Barbara recently celebrated ten
exceptional years as Group Finance Director.
During the first half we further strengthened the board with the
appointment of Nicky Dulieu as a non-executive Director: Nicky's
extensive knowledge of retailing and customer service complements
the existing Board's wealth of experience.
Current Trading and Outlook
The market in the first five weeks of the second-half has been
resilient. Private reservations in terms of value are 15% ahead at
GBP180m (2019: GBP156m). We are currently operating from 134
outlets (2019: 128) and continue to expect to operate from an
average of 131 outlets for the full year (2019: 126).
Planned changes to Help to Buy next year will limit the scheme
to first-time buyers and introduce regional price caps. Whilst we
expect this will see demand increase in the short-term from buyers
that will not qualify for the scheme in 2021, we continue to urge
government to review the caps that, as they stand, will
disadvantage buyers in the North and Midlands.
Due to constrained outlet growth last year and the timing of
apartment block completions, we budgeted to deliver significantly
more completions than usual in the second-half. We are on-track to
do so and our expectations for the full year remain unchanged.
With our very strong order book, a promising start to the
second-half and a more stable political outlook, prospects are
encouraging and I am confident this will be another year of
progress for Redrow.
John Tutte
Executive Chairman
Consolidated Income Statement
Unaudited Audited
6 months ended 12 months
31 December ended
30 June
2019 2018 2019
Note GBPm GBPm GBPm
Revenue 870 970 2,112
Cost of sales (662) (737) (1,608)
---------------------------------------- ----- ------- -------- ----------
Gross profit 208 233 504
Administrative expenses (49) (46) (93)
---------------------------------------- ----- ------- -------- ----------
Operating profit 159 187 411
Financial income 1 1 3
Financial costs (3) (3) (8)
---------------------------------------- ----- ------- -------- ----------
Net financing costs (2) (2) (5)
Profit before tax 157 185 406
Income tax expense 2 (29) (35) (77)
---------------------------------------- ----- ------- -------- ----------
Profit for the period 128 150 329
---------------------------------------- ----- ------- -------- ----------
Earnings per share - basic 4 37.2p 41.5p 92.3p
- diluted 4 37.1p 41.4p 92.0p
Consolidated Statement of Comprehensive Income
Unaudited Audited
6 months ended 12 months
31 December ended
30 June
2019 2018 2019
Note GBPm GBPm GBPm
------------------------------------------------ ----- -------- ------- ----------
Profit for the period 128 150 329
Other comprehensive (expense):
Items that will not be reclassified to profit
or loss
Remeasurements of post-employment benefit
obligations 5 (3) (5) (7)
Deferred tax on remeasurements taken directly
to equity 1 1 1
------------------------------------------------ ----- -------- ------- ----------
Other comprehensive (expense) for the period
net of tax (2) (4) (6)
------------------------------------------------ ----- -------- ------- ----------
Total comprehensive income for the period 126 146 323
------------------------------------------------ ----- -------- ------- ----------
Consolidated Balance Sheet
Unaudited Audited
As at As at
31 December 30 June
2019 2018 2019
Note GBPm GBPm GBPm
Assets
Intangible assets 2 2 2
Property, plant and equipment 17 15 16
Lease right of use assets 8 - -
Investments 8 6 6
Deferred tax assets 4 4 4
Retirement benefit surplus 5 17 16 18
Trade and other receivables 7 7 9
----------------------------------------------- ----- ------------- ------ ---------
Total non-current assets 63 50 55
----------------------------------------------- ----- ------------- ------ ---------
Inventories 6 2,350 2,258 2,297
Trade and other receivables 37 43 48
Current corporation tax receivables 14 - -
Cash and cash equivalents 8 89 102 204
----------------------------------------------- ----- ------------- ------ ---------
Total current assets 2,490 2,403 2,549
----------------------------------------------- ----- ------------- ------ ---------
Total assets 2,553 2,453 2,604
----------------------------------------------- ----- ------------- ------ ---------
Equity
Retained earnings at 1 July 2019 1,481 1,379 1,379
Profit for the period 128 150 329
Other comprehensive (expense) for the period (2) (4) (6)
Dividends paid (72) (70) (218)
Movement in LTIP/SAYE 3 1 (3)
----------------------------------------------- ----- ------------- ------ ---------
Retained earnings 1,538 1,456 1,481
Share capital 10 37 37 37
Share premium account 59 59 59
Other reserves 8 8 8
----------------------------------------------- ----- ------------- ------ ---------
Total equity 1,642 1,560 1,585
----------------------------------------------- ----- ------------- ------ ---------
Liabilities
Bank loans 8 75 1 80
Trade and other payables 7 125 143 167
Deferred tax liabilities 4 4 4
Long-term provisions 8 9 8
----------------------------------------------- ----- ------------- ------ ---------
Total non-current liabilities 212 157 259
----------------------------------------------- ----- ------------- ------ ---------
Bank overdrafts and loans 8 - - -
Trade and other payables 7 699 702 726
Current income tax liabilities - 34 34
----------------------------------------------- ----- ------------- ------ ---------
Total current liabilities 699 736 760
----------------------------------------------- ----- ------------- ------ ---------
Total liabilities 911 893 1,019
Total equity and liabilities 2,553 2,453 2,604
----------------------------------------------- ----- ------------- ------ ---------
Redrow plc Registered no. 2877315
Consolidated Statement of Changes in Equity
Share
Share premium Other Retained
capital account reserves earnings Total
GBPm GBPm GBPm GBPm GBPm
----------------------------------- -------- -------- --------- --------- ------
At 1 July 2018 37 59 8 1,379 1,483
Total comprehensive income for
the period - - - 146 146
Dividends paid - - - (70) (70)
Movement in LTIP/SAYE - - - 1 1
At 31 December 2018 (Unaudited) 37 59 8 1,456 1,560
----------------------------------- -------- -------- --------- --------- ------
At 1 July 2018 37 59 8 1,379 1,483
Total comprehensive income for
the period - - - 323 323
Dividends paid - - - (218) (218)
Movement in LTIP/SAYE - - - (3) (3)
At 30 June 2019 (Audited) 37 59 8 1,481 1,585
----------------------------------- -------- -------- --------- --------- ------
At 1 July 2019 37 59 8 1,481 1,585
Total comprehensive income for
the period - - - 126 126
Dividends paid - - - (72) (72)
Movement in LTIP/SAYE - - - 3 3
At 31 December 2019 (Unaudited) 37 59 8 1,538 1,642
----------------------------------- -------- -------- --------- --------- ------
Consolidated Statement of Cash Flows
Unaudited Audited
6 months ended 12 months
31 December ended
30 June
2019 2018 2019
Note GBPm GBPm GBPm
Cash flows from operating activities
Operating profit 159 187 411
Depreciation and amortisation 3 1 3
Adjustment for non-cash items (3) (1) (7)
Decrease/(increase) in trade and other receivables 13 1 (6)
Increase in inventories (53) (40) (79)
(Decrease)/increase in trade and other payables (74) (3) 50
(Decrease)/increase in provisions - - (1)
----------------------------------------------------- ----- -------- ------- ----------
Cash inflow generated from operations 45 145 371
Interest paid (1) (1) (2)
Tax paid (77) (35) (77)
----------------------------------------------------- ----- -------- ------- ----------
Net cash (outflow)/inflow from operating
activities (33) 109 292
----------------------------------------------------- ----- -------- ------- ----------
Cash flows from investing activities
Acquisition of software, property, plant
and equipment (3) (1) (4)
Interest received - - 1
Net payments to joint ventures (2) - -
------------------------------------------------------------ -------- ------- ----------
Net cash (outflow) from investing activities (5) (1) (3)
----------------------------------------------------- ----- -------- ------- ----------
Cash flows from financing activities
Issue of bank borrowings 75 1 80
Repayment of bank borrowings (80) (5) (5)
Purchase of own shares - - (10)
Dividends paid 3 (72) (70) (218)
----------------------------------------------------- ----- -------- ------- ----------
Net cash outflow from financing activities (77) (74) (153)
----------------------------------------------------- ----- -------- ------- ----------
(Decrease)/increase in net cash and cash
equivalents (115) 34 136
Net cash and cash equivalents at the beginning
of the period 204 68 68
----------------------------------------------------- ----- -------- ------- ----------
Net cash and cash equivalents at the end
of the period 8 89 102 204
----------------------------------------------------- ----- -------- ------- ----------
NOTES (Unaudited)
1. Accounting policies
Basis of preparation
The condensed consolidated half-yearly financial information for
the half-year ended 31 December 2019 has been prepared on a going
concern basis in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with IAS 34, 'Interim
financial reporting' as adopted by the European Union. The
half-yearly condensed consolidated report should be read in
conjunction with the annual consolidated financial statements for
the year ended 30 June 2019, which have been prepared in accordance
with IFRSs as adopted by the European Union.
These half-yearly financial results do not comprise statutory
accounts within the meaning of section 435 of the Companies Act
2006. This condensed half-yearly financial information has been
reviewed, not audited. The comparative figures for the financial
year ended 30 June 2019 are not the Group's statutory accounts for
that financial year. Audited statutory accounts for the year ended
30 June 2019 were approved by the Board of Directors on 4 September
2019 and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph, and did not contain any statement
under section 498 (2) of (3) of the Companies Act 2006.
The principal accounting policies adopted in the preparation of
this consolidated half-yearly report are included in the annual
consolidated financial statements for the year ended 30 June 2019.
The accounting policies are consistent with those followed in the
preparation of the financial statements to the year ended 30 June
2019 with the exception of one main new accounting standard which
has been adopted by the Group from 1 July 2019.
IFRS 16, 'leases' is the standard that has replaced the guidance
in IAS 17. Under IAS 17, the Group did not have any finance leases
only operating leases which were off balance sheet. IFRS 16
requires lessees to recognise a lease liability reflecting future
lease payments and a lease right of use asset for virtually all
lease contracts. Under IFRS 16, a contract is, or contains a lease,
if the contract conveys the right to control the use of the
identified asset in exchange for consideration. This standard is
effective for the Group for the year ending 30 June 2020.
The Group has a number of leases in relation to cars,
photocopiers and some office properties which have been brought
onto the balance sheet as a result of the adoption of IFRS 16. The
Group has used the modified retrospective method to implement IFRS
16. Under this approach, comparative information is not restated.
Rather at 1 July 2019, the Group recognised the accumulative effect
of the initial application as an adjustment to the opening balance
sheet, increasing both fixed assets and liabilities by GBP8m.
Discount rates are used in the calculation of the lease liability.
For photocopier leases, the discount rates implicit in the lease
have been used. For cars, the discount rate has been estimated
across the asset type based on a sample of implicit rates provided
by the lessor. For the office property leases an estimate has been
used based on adjusted borrowing rates.
As at 31 December 2019, lease right of use assets on the balance
sheet were GBP8m.
There were no other key judgements or estimates made in
assessing the impact of IFRS 16 on the Group.
The preparation of condensed half-yearly financial statements
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may subsequently differ from these estimates. In preparing
these condensed half-yearly financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the annual consolidated financial
statements for the year ended 30 June 2019.
After making due enquiries and in accordance with the FRC's
'Going Concern and Liquidity Risk: Guidance for Directors of UK
Companies 2009', the Directors have a reasonable expectation that
the Group has adequate resources to continue trading for the
foreseeable future. Accordingly, the Directors continue to adopt
the going concern basis in preparing the condensed consolidated
half-yearly financial statements.
The main operation of the Group is focused on housebuilding. As
it operates entirely within the United Kingdom, the Group has only
one reportable business and geographic segment. After considering
the requirements of IFRS 15 to present disaggregated revenue, the
Group does not believe there is any disaggregation criteria
applicable to its one reportable business and geographic segment.
There is no material difference between any assets or liabilities
held at cost and their fair value.
Principal risks and uncertainties
As with any business, Redrow plc faces a number of risks and
uncertainties in the course of its day to day operations.
The principal risks and uncertainties facing the Group are
outlined within our half-yearly report 2020. We have reviewed the
risks pertinent to our business in the six months to 31 December
2019 and which we believe to be relevant for the remaining six
months to 30 June 2020. The only material change to those outlined
in our Annual Report 2019 is that economic uncertainty around
Brexit which has decreased following the recent election.
2. Income Tax expense
Income tax charge is recognised based on management's best
estimate of the weighted average annual income tax rate expected
for the full financial year (18.5% (2019: 19.0%)). Deferred
taxation balances have been valued at 17% being the corporation tax
rate from 1 April 2020 substantively enacted on 6 September
2016.
3. Dividends
A dividend of GBP72m was paid in the six months to 31 December
2019 (six months to 31 December 2018: GBP70m).
4. Earnings per share
The basic earnings per share calculation for the six months
ended 31 December 2019 is based on the weighted number of shares in
issue during the period of 344m (31 December 2018: 362m) excluding
those held in trust under the Redrow Long Term Incentive Plan,
which are treated as cancelled.
Diluted earnings per share has been calculated after adjusting
the weighted average number of shares in issue for all potentially
dilutive shares held under unexercised options.
6 months ended 31 December 2019 (Unaudited)
Earnings No. of shares Per share
GBPm millions Pence
Basic earnings per share 128 344 37.2
Effect of share options and SAYE - 1 (0.1)
-------------------- -------------- ----------
Diluted earnings per share 128 345 37.2
-------------------- -------------- ----------
6 months ended 31 December 2018 (Unaudited)
Earnings No. of shares Per share
GBPm millions Pence
Basic earnings per share 150 362 41.5
Effect of share options and SAYE - 1 (0.1)
-------------------- -------------- ----------
Diluted earnings per share 150 363 41.4
-------------------- -------------- ----------
12 months ended 30 June 2019 (Audited)
Earnings No. of shares Per share
GBPm millions Pence
Basic earnings per share 329 356 92.3
Effect of share options and SAYE - 2 (0.3)
-------------------- -------------- ----------
Diluted earnings per share 329 358 92.0
-------------------- -------------- ----------
5. Pensions
The amounts recognised in respect of the defined benefit section
of the Group's Pension Scheme are as follows:
Unaudited Audited
6 months ended 12 months
31 December ended 30
June
2019 2018 2019
GBPm GBPm GBPm
Amounts included within the consolidated income
statement
period operating costs
Scheme administration expenses - 1 (1)
Net interest on defined benefit liability - - 1
---------- ---------- -----------
- 1 -
---------- ---------- -----------
Amounts recognised in the consolidated income
statement of comprehensive income
Return on scheme assets excluding interest income 1 (5) 13
Actuarial gains arising from change in financial
assumptions (3) - (20)
Actuarial gains arising from change in demographic
assumptions (1) - -
Actuarial gains arising from experience adjustments - - -
---------- ---------- -----------
(3) (5) (7)
---------- ---------- -----------
Amounts recognised in the consolidated balance
sheet
Present value of the defined benefit obligation (134) (112) (130)
Fair value of the Scheme's assets 151 1 148
---------- ---------- -----------
Surplus in the consolidated balance sheet 17 1 18
---------- ---------- -----------
6. Inventories
Unaudited Audited
As at As at
31 December 30 June
2019 2018 2019
GBPm GBPm GBPm
Land for development 1,464 1,460 1,515
Work in progress 814 723 715
Stock of showhomes 72 75 67
------- ------ ---------
2,350 2,258 2,297
------- ------ ---------
7. Land Creditors
(included in trade and other payables)
Unaudited Audited
As at As at
31 December 30 June
2019 2018 2019
GBPm GBPm GBPm
Due within one year 229 244 271
Due in more than one year 125 143 167
------- ------ ---------
354 387 438
======= ====== =========
8. Analysis of Net Cash/(Debt)
Unaudited Audited
As at As at
31 December 30 June
2019 2018 2019
GBPm GBPm GBPm
Cash and cash equivalents 89 102 204
Bank overdrafts - - -
------- ------ ---------
Net cash and cash equivalents 89 102 204
Bank loans (75) (1) (80)
------- ------ ---------
14 101 124
======= ====== =========
Net cash excludes land creditors and lease liabilities arising
under IFRS 16.
9. Bank facilities
At 31 December 2019, the Group had total unsecured bank
borrowing facilities of GBP253m, representing GBP250m committed
facilities and GBP3m uncommitted facilities.
The Group's syndicated loan facility matures in December
2022.
10. Issued Share capital
Allotted, called up and fully paid.
GBPm
At 31 December 2018 - 369,799,938 ordinary shares of 10p
each (unaudited) 37
At 31 June 2019 - 352,190,420 ordinary shares of 10.5p each
(audited) 37
At 31 December 2019 - 352,190,420 ordinary shares of 10.5p
each (unaudited) 37
Number of ordinary
shares of 10.5p
each
As at 1 July 2019 and 31 December 2019 352,190,420
11. Contingent Liabilities
Performance bonds, financial guarantees in respect of certain
deferred land creditors and other building or performance
guarantees have been entered into in the normal course of
business.
12. Related parties
Key management personnel, as defined under IAS 24 'Related Party
Disclosures', are identified as the Executive Management Team and
the Non-Executive Directors. Summary key management remuneration is
as follows:
Unaudited Audited
6 months ended 12 months
31 December ended
30 June
2019 2018 2019
GBPm GBPm GBPm
Short-term employee benefits 3 3 5
Share-based payment charges 1 1 2
-------- ------- ----------
4 4 7
-------- ------- ----------
The Group did not undertake any material transactions with Menta
Redrow Limited or Menta Redrow (II) Limited. The Group's loans to
its joint ventures are summarised below:
Unaudited Audited
As at As at
31 December 30 June
2019 2018 2019
GBPm GBPm GBPm
Loans to joint ventures 7 4 4
======= ====== =========
13. Alternative performance measures
Redrow uses return on capital employed (ROCE) as one of its
financial measures. The Directors consider this to be an important
indicator of whether the Group is achieving appropriate returns on
its invested capital. As this is not defined or specified by IFRSs,
a definition and calculation is provided below:
Capital employed is defined as total equity plus net debt or
minus net cash.
ROCE - at half year end, this is calculated as operating profit
for the 12 months to December before exceptional items as a
percentage of the average of current year December and prior year
December capital employed.
December December
2019 2018
GBPm GBPm
-------------------------------- --------- --------------------------- ---------
Operating Profit
6 months to December 2019 159 6 months to December 2018 187
12 months to June 2019 411 12 months to June 2018 382
6 months to December 2018 (187) 6 months to December 2017 (175)
-------------------------------- --------- --------------------------- ---------
12 months to December 2019 383 12 months to December 2018 394
-------------------------------- --------- --------------------------- ---------
Capital Employed
Total equity December 2019 1,642 Total equity December 2018 1,560
Net cash December 2019 (14) Net cash December 2018 (101)
-------------------------------- --------- --------------------------- ---------
Capital employed December Capital employed December
2019 1,628 2018 1,459
-------------------------------- --------- --------------------------- ---------
Total equity December 2018 1,560 Total equity December 2017 1,343
Net cash December 2018 (101) Net debt December 2017 35
-------------------------------- --------- --------------------------- ---------
Capital employed December Capital employed December
2018 1,459 2017 1,378
-------------------------------- --------- --------------------------- ---------
Average capital employed 1,544 Average capital employed 1,419
-------------------------------- --------- --------------------------- ---------
ROCE % 25% ROCE % 28%
-------------------------------- --------- --------------------------- ---------
14. General information
Redrow plc is a public limited company incorporated and
domiciled in the UK and has its primary listing on the London Stock
Exchange.
The registered office address is Redrow House, St David's Park,
Flintshire, CH5 3RX.
Financial Calendar
Interim dividend record date 6 March 2020
Interim dividend payment date 9 April 2020
Announcement of results for the year to 30 June 2020 9 September
2020
Final dividend record date 25 September 2020
Circulation of Annual Report 28 September 2020
Annual General Meeting 6 November 2020
Final dividend payment date 13 November 2020
15. Shareholder enquiries
The Registrar is Computershare Investor Services PLC.
Shareholder enquiries should be
addressed to the Registrar at the following address:
Registrars Department
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Shareholder helpline: 0370 707 1257
16. Risks and Risk Management
Risk Risk Owners Key Controls and Mitigating Strategies
Housing Market Chief Operating Market conditions and trends are
The UK housing market Officer being closely monitored allowing
conditions have a management to identify and respond
direct impact on to any sudden changes or movements.
our business performance.
With underlying build costs continuing
to rise and house price inflation
remaining relatively subdued we maintain
tight controls on costs and continue
to build our relationships with key
suppliers and broaden our supplier
base.
Weekly review of sales at Group,
divisional and site level.
Ensuring strong relationships with
lenders and valuers to ensure they
recognise our premium product.
Ongoing and regular monitoring of
Government policy and lobbying as
appropriate.
Following the recent election delivering
a strong majority, there is a clearer
view of the direction of Brexit.
Although clear guidance is a benefit
to the economy
there remain considerable unknowns
surrounding the
UK leaving the EU.
-------------------------- ----------------------------------------------
Availability of Mortgage Group Finance Proactively engage with the Government,
Finance Director Lenders and
Availability of mortgage Insurers to support the housing market.
finance and increased
lending criteria Expert New Build Mortgage Specialists
requirements are provide updates on and monitoring
key factors in the of regulatory change.
current environment.
The threat of early withdrawal of
Help to Buy dissipated.
-------------------------- ----------------------------------------------
Liquidity and Funding Group Finance Suitable committed banking facilities
The Group requires Director with covenants and headroom.
appropriate facilities
for its short-term Regular communication with our investors
liquidity and long-term and relationship banks, including
funding. visits to developments.
Regular review of our banking covenants
and capital structure.
Ensuring our future cash flow is
sustainable through detailed budgeting
process and reviews.
Strong forecasting and budgeting
process.
-------------------------- ----------------------------------------------
Customer Service Group Customer My Redrow website to support our
Failure of our customer and Marketing customers purchasing their new home.
service could lead Director
to relative under Hard Hat Tours for customers of their
performance of our new home at an appropriate stage
business. of production.
Regular review of our marketing and
communications policy at both Group
and divisional level.
-------------------------- ----------------------------------------------
Land Procurement Group Development Proactive monitoring of the market
The ability to purchase Director conditions to implement a clear defined
land suitable for strategy at both Group and divisional
our products and level.
the timing of future
land purchases are Experienced and knowledgeable personnel
fundamental to the in our land, planning and technical
Group's future performance. teams.
Effective use of our Land Bank Management
system to support the land acquisition
process and monitor opportunities
has led to the risk decreasing overall.
Peer review by Legal Directors and
use of third party legal resources
for larger site acquisitions to reduce
risk.
-------------------------- ----------------------------------------------
Planning and Regulatory Group Development Close management and monitoring of
Environment Director planning expiry dates and CIL.
The inability to
adapt to changes Group Human Resources Well prepared planning submissions
within the planning Director addressing local concern and deploying
and regulatory environment good design.
could adversely impact Group Company
on our ability to Secretary Careful monitoring of the regulatory
comply with regulatory environment and regular communication
requirements. of proposed changes across the Group
through the Executive Management
Team.
Proactive approach to the introduction
of GDPR with a broad based project
team defining and implementing new
policies and procedures.
-------------------------- ----------------------------------------------
Appropriateness of Group Design and Regular review and product updates
Product Technical Director in response to the demand in the
The failure to design market and assessment of our customer
and build a desirable needs.
product for our customers
at the appropriate Design focused on high quality build
price may undermine and flexibility to planning changes.
our ability to fulfil
our business objectives. Regular site visits and implementation
of product changes to respond to
demands.
Introduction of Internal Product
Review Panel.
-------------------------- ----------------------------------------------
Attracting and Retaining Group Human Resources Personal Development Programmes supported
Staff Director by National training centres at four
The loss of key staff locations.
and/ or our failure
to attract high quality Graduate training, Undergraduate
employees will inhibit placements and
our ability to achieve Apprentice training programmes to
our business objectives. aid succession planning.
Development of a bespoke housebuilding
degree course in conjunction with
Liverpool John Moores University
and Coleg Cambria.
Remuneration strategy in order to
attract and retain talent within
the business is reviewed regularly
and benchmarked.
Engagement Team and continued refinement
of internal communications platform
in addition to annual employee survey
to create framework for strong, two-way
communication.
-------------------------- ----------------------------------------------
Health and Safety/ Group Health and Dedicated in-house team operating
Environment Safety and Environmental across the Group to ensure compliance
Instances of non-compliance Director of appropriate Health and Safety
with Health & Safety standards supported by external professional
standards and Environmental expertise.
regulations could
put our people and Separate focus on Assurance visits
the environment at to site and proactive management
risk, ultimately support to develop planning and processes.
damaging our reputation.
Increased levels Monthly Divisional H, S & E Leadership
of scrutiny of the meetings.
housebuilding industry
heightens the risk Tri-annual Group H, S & E Leadership
environment. meetings.
Internal and external training provided
to all employees.
Divisional Construction (Design and
Management) Regulation (CDM) inspections
carried out to assess our compliance
with our client duties under CDM.
Health and Safety discussion at both
Group and divisional level board
meetings.
CDM competency accreditation requirement
as a minimum for contractor selection
process.
-------------------------- ----------------------------------------------
Key Supplier or Subcontractor Group Commercial Use of reputable supply chain partners
Failure Director with relevant experience and proven
The failure of a track record.
key component of
our supply chain Monitoring of subcontract supply
to perform due to chain to maintain appropriate number
financial failure for each trade to identify potential
or production issues shortage in skilled trades in the
could disrupt our near future.
ability to deliver
our homes to programme Subcontractor utilisation on sites
and budgeted cost. monitored to align workload and capacity.
Materials forecast issued to suppliers
and reviewed regularly.
Group Monthly Product Development
meetings to identify and monitor
changes in the regulatory environment.
-------------------------- ----------------------------------------------
Cyber Security Chief Information Communication of IT policy and procedures
Failure of the Group's Officer to all employees.
IT systems and the
security of our internal Regular systems back up and storage
systems, data and of data offsite. Internal IT security
our websites can specialists.
have significant
impact to our business. Use of third party entity to test
The introduction the Group's cyber security systems
of GDPR has increased and other proactive approach for
the requirements cyber security including Cyber Essentials
for the control of Plus accreditation.
personal data.
Compulsory GDPR and IT security online
training to all employees within
our business.
-------------------------- ----------------------------------------------
Fraud/Uninsured Loss Group Finance Systems, policies and procedures
A significant fraud Director in place which are designed to segregate
or uninsured loss duties and minimise any opportunity
could damage the for fraud.
financial performance
of our business. Regular Business Process Reviews
undertaken to ensure compliance with
procedure and policies followed by
formal action plans.
Timely management reporting.
Insurance strategy driven by business
risks.
Fraud awareness training.
-------------------------- ----------------------------------------------
Responsibility Statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU; and
-- the interim management report includes a fair review of the information required by:
a) DTR 4.2.7R of the Disclosure Guidance and Transparency Rules,
being an indication of important events that have occurred during
the first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
b) DTR 4.2.8R of the Disclosure Guidance and Transparency Rules,
being related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
During the period since the approval of the Redrow plc Annual
Report for the year ended 30 June 2019, Nicky Dulieu was appointed
to the board on 6 November 2019 following the close of the 2019
Annual General Meeting.
The Directors of Redrow PLC as at the date of this statement
are:
John Tutte
Matthew Pratt
Barbara Richmond
Nicholas Hewson
Sir Michael Lyons
Vanda Murray
Nicky Dulieu
By order of the Board
Graham Cope
Company Secretary
4 February 2020
Redrow plc
Redrow House
St David's Park
Flintshire
CH5 3RX
Independent Review Report to Redrow plc
Report on the half-yearly report
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31st December 2019 which comprises the
Consolidated Income Statement, Consolidated Statement of
Comprehensive Income, Consolidated Balance Sheet, Consolidated
Statement of Changes in Equity, Consolidated Statement of Cash
Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31st
December 2019 is not prepared, in all material respects, in
accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and the Disclosure Guidance and Transparency Rules ("the
DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly financial report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
The impact of uncertainties due to the UK exiting the European
Union on our review
Uncertainties related to the effects of Brexit are relevant to
understanding our review of the condensed financial statements.
Brexit is one of the most significant economic events for the UK,
and its effects are subject to unprecedented levels of uncertainty
of consequences, with the full range of possible effects unknown.
An interim review cannot be expected to predict the unknowable
factors or all possible future implications for a company and this
is particularly the case in relation to Brexit.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the DTR of the UK FCA.
The interim financial statements of the group are prepared in
accordance with International Financial Reporting Standards as
adopted by the EU. The directors are responsible for preparing the
condensed set of financial statements included in the half-yearly
financial report in accordance with IAS 34 as adopted by the
EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement to assist the company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the company for our
review work, for this report, or for the conclusions we have
reached.
Nick Plumb
For and on behalf of KPMG LLP
Chartered Accountants
KPMG LLP
8 Princes Parade
Liverpool
L3 1QH
4 February 2020
LEI Number:
2138008WJZBBA7EYEL28
Announcement Classification:
1.2: Half yearly financial report and audit reports/limited
reviews
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BLGDDGUGDGGS
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February 05, 2020 02:00 ET (07:00 GMT)
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