13th Sep 2005 07:00
Redrow PLC13 September 2005 Tuesday 13 September 2005 Redrow plc today announces its Preliminary results for the 12 months to 30 June2005: Highlights: June 2005 June 2004 Turnover £781.0m £670.3m +17%Operating profit £151.0m £132.7m +14%Profit before tax £141.1m £124.1m +14%Legal completions 4,372 4,284 +2%Earnings per share - basic (pence) 62.1 54.8 +13%Dividend per share (pence) 10.8 9.0 +20% • Record profits achieved in more challenging trading conditions • Second half profit before tax up by 7% to £72.0m (H2 2004: £67.4m) • Continued focus on operating margins and return on capital employed: - Homes operating margin 19.6% (2004: 19.8%) - Group ROCE 28.2% (2004: 29.4%) • Current land bank maintained at 17,300 plots (2004: 17,400) with strong pull through from forward land • Proposed full year dividend per share increased by 20%. Intention to increase by the same percentage for 2006 reaffirmed • Robust forward sales position with over 2,100 sales in hand as at June 2005 • Sales in first 10 weeks of the new financial year up 10% from just over 10% more outlets • Successful launch of new Debut product providing affordable homes for customers at Rugby, Chorley and Castle Vale Commenting on the results, Robert Jones, Chairman of Redrow plc said: "Redrow has delivered another year of progress in a more challenging tradingenvironment reflecting our strategy of building a strong forward sales positionand increasing our outlets. Consumer confidence will be a key factor in determining the strength of thehousing market in the short term. However, the fundamentals for our industryare sound and we have a high quality land bank, effective product range andstrong management team which in the medium term provide a platform for growthand the capability to deliver shareholder value." Enquiries: Redrow plcNeil Fitzsimmons, Chief Executive 0207 404 5959 (13 September)David Arnold, Group Finance Director 01244 520044 (thereafter) Patrick Handley / Nina Coad Brunswick 0207 404 5959 There will be an analyst and investor meeting at 0845 (BST). A live audio castand slide presentation of this event will be available at 0845 (BST) onwww.redrow.co.uk or live by phone on the following dial in number: +44 (0) 207365 8426. Playback available online through www.redrow.co.uk from 1200 (BST) or by phoneuntil 27 September 2005, on the following dial in number: +44 (0) 207 365 8427;password: 69490341. CHAIRMAN'S STATEMENT I am pleased to report another year of progress for Redrow, delivering for ourShareholders a 13% increase in earnings per share to 62.1p. Accordingly, theBoard reaffirms its previously stated dividend policy and it remains ourintention to increase the dividend by 20% to 10.8p per share for the year ended30 June 2005 (2004: 9.0p) and by a further 20% for the year ending 30 June 2006. Turnover increased by 17% to £781.0m (2004: £670.3m) and profit before taxincreased by 14% from £124.1m to £141.1m, reflecting the Board's strategy overthe last few years of building a strong forward sales position and increasingthe number of outlets for our homes as we broaden our geographic coverage. Thisperformance was achieved against a background of more challenging tradingconditions that began to take effect in the middle of 2004 and prevailedthroughout the financial year and it is therefore of particular note that profitbefore tax increased by 7% in the second half of the financial year compared tothe equivalent period last year. Redrow's focus remains the combined delivery of a high return on capitalemployed and operating margins which we believe will generate value for ourShareholders. During the last financial year return on capital employed was28.2% (2004: 29.4%) with an operating margin within Redrow Homes of 19.6% (2004:19.8%), demonstrating our ability to deliver against those benchmarks. TheGroup's balance sheet strengthened further with net assets increasing by 22% to£459.0m (2004: £376.6m) and gearing falling to 22% (2004: 35%). Interest coverremained very robust at 15.3 times (2004: 15.4 times). The key to the delivery of shareholder value in our sector rests primarily inthe quality of our land bank and the ability to maintain that quality into thefuture. During the year we have increased the number of owned plots withplanning permission from 15,000 to 15,800. Whilst the sources of this landremain very varied, we continue our commitment to brownfield development, withover 70% of our owned plots on such sites. Redrow's long term approach tosecuring opportunities through forward land has contributed substantially to oursuccess providing a pipeline of developments at enhanced margins when comparedwith the open market. This past year, 43% of our land acquired has come fromthis source and it has the potential to make a further strong contribution overthe next few years. In a highly competitive market, it is important to have a broad range of productappealing to a wide cross section of home buyers. Redrow's attractive coreproduct, the Signature range, together with its successful In the Citydevelopments, have now been joined by the Debut range. Debut deliversaffordable homes for customers to buy whose aspirations have been largelyunaddressed by the new homes industry. I have been delighted at the innovationand imagination shown by the Redrow team in taking this initiative from conceptto completed and occupied homes within 12 months. We are extremely pleased onour three current Debut sites with the supportive attitude of the planningauthorities for their vision in embracing the Debut concept. We continue todiscuss opportunities to promote Debut with a significant number of LocalAuthorities, landowners and other stakeholders and I am encouraged by thepotential for incremental growth that Debut offers Redrow. Such initiatives depend very much on the skills and commitment of all members ofthe Redrow team. I would like to thank each and every one for their part indelivering not only these results but for the dedicated way in which they workfor the benefit of customers and company alike. The success of our product hasbeen enhanced by the efforts of our Product Development Team where, in additionto their contribution to Debut, they have played a prominent role in our successin reaching the final stages of the Office of the Deputy Prime Minister andEnglish Partnership's Design for Manufacture Competition. Our in-house Healthand Safety department has also demonstrated its effectiveness by achieving forRedrow the coveted ROSPA Silver Award following on from our Bronze Award lastyear. Succession planning is hugely important to any business and the Redrow Boardgives a high priority to this matter. I am delighted to report that as announcedon 30 June 2005, Neil Fitzsimmons, our Group Managing Director, succeeded PaulPedley as Chief Executive on 1 August 2005. Neil joined Redrow in August 1997following many years involvement in residential development and became GroupFinance Director in June 1998 before being appointed Group Managing Director inSeptember 2003. Paul has spent twenty years with Redrow in a series of keyroles, and on behalf of the Company and Shareholders, I would like to thank himfor his commitment thus far to Redrow and for the key part he has played intransforming Redrow from a small regional builder to a major force within theindustry. In his new role, as Executive Deputy Chairman, Paul's primaryresponsibilities will be to pilot through significant land acquisitions and theongoing development of the product range with a particular focus on Debut. Despite the recommendations in the Barker Review published in March 2004regarding the need to increase the output of the new homes industry, we have yetto experience a discernible improvement in the efficiency of the planningsystem. We welcome and remain supportive of Government policy to increase thesupply of new homes which is important for the economic wellbeing of the UKeconomy. Redrow looks forward to working with the Government to help shapeeffective strategies to improve the efficiency of the planning system so as toenable the building of a sufficient quantity of new homes to meet the broadspectrum of needs and aspirations of home buyers in general. We continue to experience a challenging and competitive environment as thesector goes through a period of adjustment during the transition to more normalmarkets. In the medium term, there remains an inequality between demand for,and supply of, housing in the UK that, together with a favourable underlyingmacro-economic position of high levels of employment and historically lowinterest rates, should be supportive for our industry. The quality of our landbank together with our attractive product range provides a sound base tocapitalise on these fundamentals. Since June 2000, the Group has delivered a25% annual compound growth rate in earnings per share and a 17% annual growthrate in dividends. Over the same period, Total Shareholder Return has been 22%per annum. We remain firmly committed to delivering shareholder value, and lookforward to the challenges of the coming years, confident of our ability todeliver further success for our Shareholders, for whose continued support weremain extremely grateful. Robert JonesChairman CHIEF EXECUTIVE'S OPERATIONAL REVIEW In the year ended 30 June 2005, Redrow delivered a 14% increase in profit beforetax to £141.1m (2004: £124.1m) and a 13% increase in earnings per share to 62.1p(2004: 54.8p), whilst continuing its unique track record amongst majorhomebuilders of increasing legal completions in every year since 1990 as legalcompletions reached 4,372 (2004: 4,284). These results were achieved against a backdrop of a changing trading environmentas the housing market began to adjust from the very strong conditions of thelast few years towards a more normal market. This change in market conditionsresulted from successive increases in interest rates and increasing concernsexpressed by the Governor of the Bank of England regarding the level of consumerdebt. As a result, the consumer exercised greater caution, reflected in reducedlevels of activity in the housing market which began to take effect in themiddle of 2004 and has continued through 2005. Strategy Redrow had recognised that the strength displayed in the housing market in theperiod up to the middle of 2004 was not sustainable and it was inevitable thatthere would be a period of adjustment as the market returned to more normallevels of activity. The Group was positioned to meet the short term challengesof this adjustment and adopted a strategy that would provide the capability todeliver shareholder value in more normal markets. The first element in the strategy was focused upon sales. By establishing astrong forward sales position and increasing the number of sales outlets toprovide some protection against a period of relative weakness in demand, weachieved an increase in forward sales from an historic norm of approximately 15weeks to 28 weeks at June 2004. In addition, having delivered an uplift in thenumber of sales outlets during 2004, we further increased our outlets in thefinancial year to June 2005 and reached 112 as we entered the new financialyear. The strength of our forward sales position and the increased number of outletshave been fundamental to delivering growth in profit before tax not only for theyear to June 2005 but in particular during the second half of the year when theGroup increased its profit before tax by 7% to £72.0m (2004: £67.4m) despite themore challenging markets. As anticipated, the market slowed during the financial year, and we adjusted oursales strategy accordingly. With the support of the Group's strong forwardsales position established in previous years, during the last twelve months wefocused on the maximisation of sales values and the protection of margins in theface of the softer sales environment. As a consequence of this deliberatediffering approach, sales were 9% below the extraordinary level of the previousyear. At June 2005, the Group was well placed with forward sales of 2,129(2004: 2,344), comfortably in excess of our historic norm. This provides somecontinued protection over the next 12 months, as we anticipate the market willcontinue to operate below normal levels of activity. In addition, we expect toincrease our outlets by 10% over the period up to Spring 2006 to further supportour sales performance. The second element in our strategy has been to position Redrow to have thecapability to deliver enhanced volume growth. Over the last few years, we havefocused upon the fundamental drivers of land, product and people. These aspectswill become increasingly important as house price inflation relates more closelyto growth in earnings and margins return to more sustainable levels. In thesecircumstances, delivery of value for shareholders will depend more upon theability to drive volume for top line growth and the management of the cost baseto support margins. The strength of the Redrow land bank, the effectiveness ofthe product range and the contribution and commitment of the Redrow teamunderpins our ability to achieve these objectives. Land The success of a developer is dependent on the quality of its land bank. Redrowcontinues to take a long term approach to land acquisition as this approachprovides the capability to deliver sustainable margins in normal markets and theplatform for volume growth. The current land bank provides for our short term needs. Whilst the Governmenthas indicated a desire to improve the supply of land for new homes, it is stillimportant within the current land bank to hold land owned with planning,representing approximately three years supply. This provides some insulationfrom the delays experienced from the planning system that currently do notappear to be reducing. During the financial year, Redrow increased land owned with planning by over 5%to 15,800 plots (2004: 15,000 plots). The quality of the land bank withplanning is reflected in the year end plot cost of £29,300 (2004: £27,300).This represents approximately 17% of the current estimated average selling priceof the land bank and maintains it as one of the most cost effective land banksin the industry. In addition, it also provides the strength to allow the Groupsome flexibility within the land market. During the financial year, weexercised some caution in terms of new commitments to land acquisition and thisis reflected in the reduction of land controlled under contract to 1,500 plots(2004: 2,400 plots). However, the Redrow land bank as at June 2005 had thecapability to provide 100% of projected needs from land owned with planning forthe new financial year and 85% of the projected requirements for 2006/07 fromthe current land bank. Our land bank provides both visibility in terms ofgrowth of outlets for 2005/06 and also the potential for further outlet growthin the medium term. Forward land plays a key part in our long term approach to land acquisition,providing land at enhanced margins and reducing the need to buy land in thecurrent market. The quality of Redrow's forward land bank is demonstrated byits contribution to the current land bank and its ability to continue to makethat contribution into the future. In 2004/05, 13 forward land sites weretransferred into the current land bank contributing some 2,200 plotsrepresenting 43% of land purchased. This includes Peacock Farm, Bracknell whichwill provide a significant core development for Redrow Homes (Southern) duringthe next 10 years. Over the last 3 years, forward land has contributed one thirdof the land acquired. In the future, the forward land bank has the potential to continue thiscontribution. It comprises 22,100 plots (2004: 22,500) of which over one thirdeither has planning or is allocated for residential development in local plans.The forward land bank has a broad geographic spread with 67 different locationsacross the three Regions. The terms of these options generally allow land to bepurchased at a discount to open market value. There are some 750 plots on 4sites where the land already has a planning consent with a further 7,500 plotson 16 sites allocated in local plans. Finally there are a further 47 locationsamounting to 13,850 plots that have a realistic prospect of securing aresidential planning consent. Product Whilst land provides the key to sustainable margins and the ability to delivervolume growth, our product provides the catalyst to convert that land intoprofit and cash. The Redrow product portfolio enables us to optimise themargins and return on capital employed inherent in our land bank as it providesa range of product designed to appeal to a broad customer base and the tools todeliver improved control of the cost base. Redrow has rationalised the product portfolio into three distinct offerings,each appealing to different homebuyers. The Signature Range represents our coreproduct. This is complemented by In the City, Redrow's major apartment schemes,and Debut, the Group's new affordable product. During the year, the first Debutunits were legally completed on our development at Rugby Signature is now the Group's core housing range, combining the formerContemporary, Sapphire and Emerald specifications. These had an average sellingprice in the last financial year of £166,200 (2004: £155,400) maintaining theaverage sales price broadly in line with that of new homes in the UK. Thisrange can be adapted in terms of internal specification and external elevationsto make it appropriate to the target market and local environment. The rangeincludes 'tool kit' types such as flats over garages, corner turn and bridgeunits that allow enhanced street scenes and optimisation of coverage. There isalso a selection of apartment floor plates that are designed to be efficient interms of construction and can be configured in blocks to suit each site. Theincreased use of these house types will provide both improved certainty of costand delivery of build. Redrow continues to undertake In the City schemes whilst carefully managing itscommitment to this sector of the market. During the year, the Group legallycompleted 667 In the City units (2004: 460) at an average selling price of£207,400 (2004: £148,700). Legal completions were secured at Altolusso inCardiff, Jupiter in Birmingham and at Neptune Marina in Ipswich as well as atour higher value development at Odyssey in London Docklands, the impact of whichis reflected in the average selling price during the year. The Group iscurrently progressing Vie in Manchester, Celestia in Cardiff Bay and TheBoardwalk at Sovereign Harbour as well as the next phase of Jupiter inBirmingham. Because of the timing of construction, In the City developments arelikely to represent a lower proportion of completions in 2006 than in 2005 andwill be weighted towards the second half. We continue to procure theconstruction of these schemes through our central project management team thathas developed a skill base to optimise design and specification to deliverbuilding efficiency and control of cost. Debut by Redrow It is widely recognised that there is a fundamental inequality between thedemand and supply of homes in the market. The Barker Report clearly highlightedthe under provision of new homes and the Government has shown an increasingfocus on delivering affordable homes for people to buy. Redrow introduced theDebut range to address this key sector of demand in the market largely ignoredby the new homes industry. It delivers on aspects of Government policy relatingto affordability, use of Modern Methods of Construction and improvedsustainability. Debut homes range from 275 sq. ft. to 700 sq. ft. and on the first developmentat Rugby, sold for an initial cash consideration ranging from £49,995 up to£109,995. Debut will create communities with a sense of place and neighbourlyspirit and delivers quality homes which are contemporary in design to suit thetarget market. Quality of construction and the environment is a key componentwithin the Debut concept and the use of Modern Methods of Construction, inparticular lightweight steel frames produced by Framing Solutions, improves bothefficiency and quality. To deliver more sustainable communities, Debut schemestarget Eco-Excellent ratings under the BRE classification and the first schemeat Rugby is one of the few developments in the UK to have achieved thisdemanding target. Debut is targeted at customers who wish to buy and live intheir own home and the legal framework prevents purchase by investors. Redrowintends to operate the management of the developments into the future to ensurethat the initial quality is maintained. Importantly, Debut delivers margins broadly in line with the Signature range,thereby delivering appropriate returns for Shareholders. Increased coverage andspeed of build mitigate the increased cost associated with the quality of buildand the enhanced sustainability. However, Debut will benefit the Group's returnon capital employed as it enables us to bring forward the development of some ofour land bank as well as securing a faster rate of sales and build to returncash for re-investment more quickly. The Debut concept commenced development in the middle of 2004 and within 12months has delivered its first legal completions. It demonstrates Redrow'sability to be imaginative and innovative and to adapt its business to themarket. We now have planning permission for nearly 300 Debut units and havesubmitted planning applications for a further 400 units on five sites. We havebeen particularly encouraged by the response of the Local Authorities in respectof our first three Debut schemes, each of which secured planning consentunanimously and within the Government's thirteen week target. This new productoffers a significant opportunity for incremental volume growth for Redrow and wehave set our objective of delivering 2,000 Debut homes per annum within fiveyears. Homes Operations Overall, the Homes operations increased legal completions by 2% to 4,372 (2004:4,284). The average selling price was £172,400 as compared with £154,700 lastyear. This increase of 11% primarily reflected the product mix with anincreased proportion of In the City legal completions, particularly on thehigher value Odyssey scheme in London Docklands. Turnover increased by 14% to£753.8m (2004: £662.7m). Operating margins for the year were broadly maintainedat 19.6% as compared with 19.8% last year. As we have previously indicated, weanticipate an easing in margins in the current year as the inflationary elementwithin our land bank continues to unwind. During the last twelve months, we have seen greater pressure on material pricesthan in recent years, particularly where materials have a high energy or steelcontent. Our policy of central purchasing and historic partnering arrangementshave contained overall increases to a minimum level, with some 90% of materialson the Signature Range being sourced through Group deals. Encouragingly, wehave experienced an easing of pressures on labour costs with the changinghousing market but inevitably there are 'hot spots' in terms of labour rateswhere there are high levels of construction activity. The Northern Region is our most mature area of operation and legally completed1,832 units (2004: 2,108) in the year to June 2005. Whilst there remainopportunities to increase volumes in this Region, our key areas for volumegrowth are in the Western and Southern Regions. In the Western Regionsignificant growth has been delivered over the last few years and 1,290 homes(2004: 1,134) were legally completed during the financial year. Redrow Homes(West Country) will make its maiden contribution in the year to June 2006 as itlaunches its first sites in the second half of this calendar year to increasethe capacity for volume growth in this Region. In the Southern Region wedelivered 1,250 legal completions (2004: 1,042). We have geographicallypositioned our operations to be able to take advantage of the growth areasidentified by Government and have in addition established Redrow Homes (EastMidlands) in Newark to provide a further opportunity for growth. It will launchits first sites in the second half of this calendar year and will also make itsfirst contribution to volumes in the year to June 2006. We have developed our organisational structure to provide us with the capacityto grow our business organically. We have the potential to drive top linegrowth and deliver 7,000 legal completions per annum in the medium term from ourSignature and In the City products plus the opportunity for additionalincremental growth from Debut, without significant further investment in ourfixed cost base. Mixed Use and Regeneration The mixed use capability within the Group continues to assist in unlockingresidential development opportunities. We have continued to progress our mixeduse scheme at Buckshaw Village, Chorley where, in addition to the legalcompletion of 102 residential units during the financial year and securing oursecond Debut development for 71 units, we made significant progress with MatrixPark, the commercial scheme. During the year, we have disposed of twoindustrial units totalling 45,500 sq. ft., developed and sold four office unitscomprising 15,000 sq. ft. and completed the pre-sold investment of the 100,000sq. ft. facility for Vernon Carus Limited. We have now commenced a furtherphase of offices on the development. In addition, at Western Approach, Bristolwe completed the disposal of the 51,000 sq. ft. warehouse unit as well as theremaining land holdings on the distribution park. As regards the future, amongst other opportunities, we continue to progress themajor mixed use scheme at Bishopton near Glasgow through a development agreementwith BAE SYSTEMS plc that has the potential to provide 1,500 residential plotsand 100 acres of commercial development. During the last year, the ScottishExecutive approved in principle a new motorway access to facilitate thedevelopment representing a major milestone in the progress towards securing aplanning consent. In addition, as part of the Group's long term strategy to land acquisition andto provide further opportunities for growth in London and the South East, RedrowRegeneration was established during the first half of the financial year tofocus on large scale regeneration opportunities in this area. It has enteredinto a 50:50 joint venture for the redevelopment of Watford Junction railwaystation. This is a major transport hub and the scheme has the potential todeliver 2,200 residential units and 150,000 sq. ft. of commercial property aswell as significant infrastructure and community benefits. The strong trading performance from our mixed use developments means that evenafter taking into account the significant pre-development and option costs onthe Watford Regeneration joint venture, the mixed use and regenerationactivities have generated £4.5m of operating profits (2004: £2.7m). The relatedturnover of £26.6m (2004: £7.2m) benefited the Group's year end cash position.Looking forward to the new financial year, we would expect that furtherpre-development expenditure within Redrow Regeneration is likely to offsetprofits from the mixed use elements of our developments. Framing Solutions Framing Solutions, our joint venture company that supplies lightweight steelframes to the housebuilding industry, performed in line with our expectationsduring the last financial year. In terms of financial results, its performanceis not significant in a Group context and we expect to see a marginally reducedloss in the new financial year. There is an increasing focus on Modern Methodsof Construction that were a feature of the Barker Report and which are animportant element in current Government thinking. Lightweight steel frameconstruction plays an increasingly important role within Redrow, providing asystem that offers benefits as regards build speed and quality. This system isnow an integral part of the Group's new Debut product and in our success inreaching the final stages of the ODPM and English Partnership Design forManufacture competition. Employees and Skills Redrow remains committed to developing the skills of its employees. During 2004/05 the in-house training@redrow team delivered some 40 different courses andapproximately 4,000 equivalent days of training to our employees includingformal induction for all new employees. All new Directors promoted from withinand recruited externally attend an induction course. We continue to invest inthe future by taking on young people as apprentices in a variety of trades andby continuing to develop the skills of our graduate trainees, more of whom havenow reached manager level. In 2005 we are introducing a new Assistant SiteManager Development Programme aimed at those with the potential to progresstheir careers. The Barker Report challenged the sector as a whole to develop skills within ourindustry. As part of the Major Home Builder Group, we are taking part in theskills initiative with CITB-ConstructionSkills to pilot an alternativeapprenticeship aimed at providing a new route for young people to learn a trade,to develop a new qualification for our site managers and to aim for all personsworking on our sites to have CSCS cards by December 2007, leading to a qualifiedworkforce by December 2010. We also remain committed to providing safe environments on our sites and Redrowis playing an active role in developing the Home Builders Federation Health &Safety Charter. All our operating companies once again received British SafetyCouncil awards and a Silver Award was secured from the Royal Society for thePrevention of Accidents to complement the Bronze Award of last year. Furtherreductions in our Accident Incidence Rate and the number of injuries reportedunder the Reporting of Injuries, Diseases and Dangerous Occurrences Regulationswere achieved. In terms of Health and Safety Executive action, as in theprevious year, there was only one prohibition notice issued and no prosecutionswere made or improvement notices issued. Outlook In the short term we are focused on the maximisation of sales values andprotecting our margins, increasing our outlets, maintaining the quality of ourland bank, enhancing the effectiveness of our product and controlling cost.Reservations in the first 10 weeks of the new financial year are 10% ahead ofthe corresponding period last year from just over 10% more outlets, albeit themarket has remained competitive and deal led in the seasonally weaker months ofJuly and August. Whilst we anticipate a normal seasonal upturn in activitylevels during the Autumn, it is too early to conclude whether the current levelsof incentives will continue through the balance of the calendar year. Thedegree of competitiveness or otherwise within the market will have a significantimpact on the outturn for the first half. Looking ahead, consumer confidencewill be a key factor in determining the strength of the housing market in 2006. Redrow has been positioned to manage the period of adjustment to a normalhousing market. In the medium term it has opportunities to deliver organicgrowth through its regional structure, mixed use and regeneration capability,the incremental benefits of Debut and by continuing to build relationships withother stakeholders. These opportunities, together with a high quality landbank, effective product range and strong management team, position Redrow to becapable of delivering shareholder value into the future. Neil FitzsimmonsChief Executive CONSOLIDATED PROFIT AND LOSS ACCOUNT 12 MONTHS ENDED 30 JUNE 2005 Continuing Operations 2005 2004 Note £m £m Turnover - total 2 781.0 670.3 - share of joint venture (0.6) (0.4)Group turnover 780.4 669.9Cost of sales (584.0) (497.0)Gross Profit 196.4 172.9 Net operating expenses 2 (42.1) (39.0)Operating profit 2 154.3 133.9Share of operating loss of joint ventures (3.3) (1.2)Operating profit including share of loss of joint 151.0 132.7ventures Interest payable 2 (9.9) (8.6)Profit on ordinary activities before taxation 2 141.1 124.1Tax on profit on ordinary activities 3 (42.4) (37.2)Profit on ordinary activities after taxation 98.7 86.9Dividends 4 (17.2) (14.3)Retained profit 81.5 72.6 Earnings per ordinary share- basic 5 62.1p 54.8p- diluted 5 61.9p 54.6p Dividend per ordinary share 4 10.8p 9.0p 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 beforetaxation and the retained profit for the period stated above and their historic cost equivalents. CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2005 As at As at 30 June 2005 30 June 2004 Note £m £m Fixed assets Tangible assets 24.3 22.5Investments in joint ventures 2.6 1.8 26.9 24.3 Current assets Stocks and work in progress 7 783.5 713.4Debtors 12.9 11.6Bank and cash deposits 8 23.7 1.2 820.1 726.2Creditors Creditors due within one year 9 (227.9) (235.6)Creditors due after more than one year 9 (156.2) (134.4)Provisions for liabilities and charges (3.9) (3.9) (388.0) (373.9) Net assets 459.0 376.6 Capital and ReservesCalled up share capital 15.9 15.9Share premium account 54.2 53.2Revaluation reserve - 0.3Capital redemption reserve 7.0 7.0Consolidation reserve 0.9 0.9Profit and loss account 381.0 299.3 Equity shareholders' funds 6 459.0 376.6 CONSOLIDATED CASH FLOW STATEMENT 12 MONTHS ENDED 30 JUNE 2005 2005 2004 Note £m £m Cash inflow from operating activities 10 99.5 24.5Returns on investments and servicing offinanceNet interest paid (9.8) (8.0)Issue costs of new bank borrowings (0.8) -Net cash (outflow) from returns on (10.6) (8.0)investments and servicing of finance Corporation tax paid (39.8) (34.1) Capital expenditure and financial investmentNet purchases of tangible fixed assets (4.0) (7.1)Payments to joint ventures (3.1) (0.5)Dividends paid (15.2) (12.7)Net cash inflow/(outflow) before financing 26.8 (37.9)Financing and liquid resourcesIssue of ordinary share capital 1.0 0.5Cash deposits - restricted use (2.1) (0.6)Purchase of own shares (0.7) -Net movement in bank borrowings (0.5) 10.0Net cash (outflow)/inflow from financing (2.3) 9.9Increase/(decrease) in cash in period 24.5 (28.0)Cash deposits - restricted use 2.1 0.6Net movement in bank borrowings 0.5 (10.0)Net movement in issue costs of bank borrowings 0.4 (0.1)Change in net (debt) 27.5 (37.5)Net (debt) at start of period (130.7) (93.2)Net (debt) at end of period (103.2) (130.7) NOTES 1. Basis of preparation The above results and the accompanying notes do not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. They aretaken from the full accounts which have received an unqualified report by theauditors and will be filed with the Registrar of Companies. 2. Segmental information 2005 2004 £m £m Turnover Homes 753.8 662.7 Mixed Use & Regeneration 26.6 7.2 780.4 669.9 Share of Framing Solutions JV 0.6 0.4 781.0 670.3 Profit on ordinary activities before taxation Homes 147.7 131.2 Mixed Use & Regeneration 4.5 2.7 152.2 133.9 Share of Framing Solutions JV (1.2) (1.2) 151.0 132.7 Interest (9.9) (8.6) 141.1 124.1 Net assets Homes 538.1 487.1 Mixed Use & Regeneration 22.5 18.4 Share of Framing Solutions JV 1.6 1.8 562.2 507.3Net (debt) (103.2) (130.7) 459.0 376.6 Mixed Use & Regeneration includes a loss of £2.1m in respect of The WaterfordPark Company Limited, a joint venture company. In 2005, net operating expenses were comprised of £42.1m administrative expenses(2004: £39.7m) and other operating income of £nil in respect of office disposals(2004: £0.7m). 3. Tax on Profit on Ordinary Activities 2005 2004 £m £mCurrent year UK corporation tax at 30% (2004:30%) 43.5 36.8(Over)/under provision in respect of prior year (0.2) 0.4Share of joint ventures' tax losses (1.0) (0.4) 42.3 36.8Deferred taxOrigination and reversal of timing differences 0.1 0.4 42.4 37.2 Reconciliation of current taxation chargeTax on total profits @ 30% (2004:30%) 42.3 37.2(Over)/under provision in respect of prior year (0.2) 0.4Origination and reversal of timing differences (0.1) (0.4)Expenses not deductible for tax purposes 0.3 (0.4)net of rolled over capital gainsCurrent tax charge 42.3 36.8 4. Dividends The final dividend of 7.2p will be recommended to shareholders for approval atthe Annual General Meeting on 9 November 2005. This dividend will be paid on 18 November 2005 to shareholders whose names are on the Register of Members atclose of business on 23 September 2005. The shares will become ex-dividend on21 September 2005. This dividend, when added to the interim, makes a totaldividend for the year of 10.8p (2004: 9.0p). 5. Earnings per share The calculation of the basic earnings per share of 62.1p (2004: 54.8p) is basedon Group profit on ordinary activities after taxation of £98.7m (2004: £86.9m)and on the weighted average number of 10p ordinary shares in issue of 159.0m(2004:158.6m). The average reflects an adjustment in respect of surplus sharesheld in trust under the Redrow Long Term Share Incentive Plan. Diluted earnings per share has been calculated in accordance with FRS 14 basedon the weighted average number of 10p ordinary shares in issue of 159.5m (2004:159.2m). 6. Reconciliation of movement in equity shareholders' funds 2005 2004 £m £mOpening shareholders' funds 376.6 302.0Retained profit for the period 81.5 72.6Shares issued 1.0 0.9Credit in respect of LTSIP 0.4 1.6Contribution to QUEST (0.5) (0.5)Closing shareholders' funds 459.0 376.6 7. Stocks and work in progress 2005 2004 £m £mLand held for development 472.2 419.0Work in progress 314.6 316.4Stock of showhomes 11.0 7.0 797.8 742.4Cash on account (14.3) (29.0) 783.5 713.4 8. Bank and cash deposits Bank and cash deposits at 30 June 2005 of £23.7m (2004: £1.2m) representbalances on deposit and money market accounts. 9. Amounts due in respect of development land 2005 2004 £m £m Due within one year 31.9 56.1Due after more than one year 52.4 29.7 84.3 85.8 10. Analysis of cash flow from operating activities 2005 2004 £m £mTotal operating profit 151.0 132.7Add back share of joint ventures' operating losses 3.3 1.2Group operating profit 154.3 133.9Depreciation, including profits and losses ondisposal of fixed assets 2.2 1.1Increase in stock and work in progress (70.1) (134.4)Movement in other current assets, creditorsand provisions 13.1 23.9Cash inflow from operating activities 99.5 24.5 11. 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 9 November 2005, commencing at 12.00 noon. Acopy 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 ExchangeRelated Shares:
RDW.L