28th Feb 2008 07:00
Redrow PLC28 February 2008 Thursday 28 February Redrow plc Interim Results for the six months to December 2007 • Profit before tax of £35.8m (2006/07: £54.7m) from continuing operations • Group legal completions at 2,111 (2006/07: 2,214) • Homes average selling price maintained at £162,800 (2006/07: £162,400) • High quality forward land increased to 25,750 plots • Strong balance sheet with gearing at 40% (Dec 2006: 35%) • Net assets per share of 367.9p at 31 December 2007 • Completed disposal of interest in Framing Solutions joint venture • Interim dividend per share increased by 19% to 9.3p (2006/07: 7.8p) Alan Bowkett, Chairman of Redrow plc, said: "Visitor levels have increased in the New Year but the markets in which we areoperating are clearly challenging. Redrow is very focused upon the key elementsof our business with tight control of cost and cash flow. We are continuing todifferentiate our business through a strong product offer to our customers andare pursuing our long term approach to sourcing land. We have an experienced and committed management team to position Redrow tocapitalise on the opportunities that will arise when confidence improves." Enquiries: Redrow plcNeil Fitzsimmons, Chief Executive 0207 404 5959David Arnold, Group Finance Director 01244 520044 BrunswicksPatrick Handley / Jayne Rosefield 0207 404 5959 There will be an analyst and investor meeting at 09:00 BST. A live audio webcastand slide presentation of this event will be available at 09:00 BST onwww.redrowplc.co.uk. Participants can also dial-in to hear the presentation liveat 09:00 on +44 (0)20 8609 1270. The full half-yearly financial report for the half year ended 31 December 2007will be available on www.redrowplc.co.uk. Playback will be available by phone on 0800 358 2189 or 020 8609 0289 passcode:204876#. CHAIRMAN'S STATEMENT Introduction As has been well reported, the condition of the UK housing market has clearlybeen affected by the combined effects of higher interest rates and the creditsqueeze since the autumn of 2007. This has resulted in significantly slowersales activity across the housing market and the new homes industry. In Redrow, we continue to be focused upon the key elements of our business withparticular attention to the tight management control of cost and cash flow. Weare continuing with our strategy to differentiate our business through thedelivery of a strong product offer that embraces good design and specificationfor our customers. In conjunction with this we are pursuing our long termapproach to sourcing land opportunities at higher margins for the medium termbenefit of our business. Group Results In the six months ended December 2007, Group turnover was £353.1m (06/07:£387.7m). Group legal completions were 2,111, a reduction of 4.7% on thecorresponding period in the last financial year. Profit before tax fromcontinuing operations was £35.8m (06/07: £54.7m) and earnings per share on thesame basis were 15.8p (06/07: 24.0p). Basic earnings per share were 14.6p (06/07: 23.8p). The Board anticipates proposing a 20% increase in the full year dividend in linewith its previous commitment. An interim dividend of 9.3p per share will bepaid to shareholders on 2 May 2008, representing an increase of 19% (06/07:7.8p). Homes The Homes business legally completed 1,960 new homes in the period (06/07:2,214) at an average selling price of £162,800 (06/07: £162,400). Turnover fromhome sales was £319.1m (06/07: £359.6m) reflecting the reduced volume of legalcompletions which was a consequence of the sales environment in which we wereoperating. Our business is focused on creating value either through the development ofsites ourselves or through the release of value through land sales which are nowseparately disclosed within turnover. The 2006/07 results have been restated toreflect this disclosure but there is no impact upon the earnings for eitherperiod. In the first six months, turnover relating to land sales was £6.8m (06/07: £21.5m) taking total turnover in the Homes business to £325.9m (06/07:£381.1m). The gross profit on the sale of homes declined to £59.0m (06/07: £74.2m) whichwas a result of both the lower number of completions and profitability per home.We have previously highlighted that margins would weaken due to the impact ofthe higher cost of land on more recently acquired sites but gross margins alsocame under pressure as pricing became more competitive and selling costsincreased. On some sites where construction was nearing completion weaccelerated sales to save site overheads in response to the market conditions. Strong management of cost coupled with the benefits of last year'sreorganisation to make our structure more efficient helped reduce overheads inour Homes operations to £19.9m (06/07: £22.7m). Reported overheads alsobenefited by £1.8m from the impact of a lower share price on long termmanagement bonuses. Overhead recovery was slightly improved at 6.2% of homesales turnover (06/07: 6.3%) despite the lower levels of activity. Operatingmargins from home sales were 12.3% as compared with 14.3% in the correspondingperiod in 2006/07. Activity in the land market reacted to the prevailing sales environment and webecame more selective in our land disposals. Profits from land sales in thefirst half were below our anticipated level at £2.8m and were £5.0m lower thanin the corresponding period last year. We have exchanged contracts to sell landwhich leads us to a current expectation that full year land sale profits will beat a similar level to last year (06/07 full year: £15.1m). The operating profit in the Homes business for the six months to December 2007was £41.9m (06/07: £59.3m). Mixed Use & Regeneration Our Mixed Use & Regeneration activities performed slightly ahead of ourexpectations, with turnover of £27.2m (06/07: £6.6m) and an operating profit of£2.4m (06/07: £2.2m). Redrow Regeneration legally completed 151 homes as itfinished Phase 1 of the Barking Town Square development. Phase 2 is now underconstruction and comprises 272 new homes and 40,000 sq ft of commercial space.The first revenues from this phase are expected in 2008/09 with 123 units soldand 22,000 sq ft of the commercial space already pre let. We currently expectour joint venture company established to redevelop land at Watford Junctionrailway station to submit a planning application in the next twelve months. As regards Mixed Use activities, we are currently constructing 24,000 sq ft ofoffices in the first phase of our scheme at Lichfield and further units areunder construction at Buckshaw Village, Chorley. At both locations interest inthe available units remains encouraging although we expect no significantcontribution in the second half. We also have future opportunities forcommercial income streams at Vision in Devonport, Cheswick in Bristol andStratford upon Avon. Discontinued Activities - Framing Solutions We announced in September 2007 our intention to exit the Framing Solutions jointventure which manufactured and erected light steel frames for use in residentialconstruction. In line with this objective we completed the disposal of ourinterest in this business on 3 January 2008 and as a consequence a post tax lossof £1.9m associated with this discontinued operation is reflected in the firsthalf results with no further impact expected. Profit for the Period Group operating profit from continuing operations before financing costs was£44.9m (06/07: £61.7m). Financing costs in the period at £8.7m (06/07: £6.9m) were virtually unchangedfrom the second half of the last financial year but were higher than the firsthalf of 2006/07 reflecting a combination of higher interest rates and averagedebt levels. We expect the second half interest charge to be at a broadlysimilar level to the first half. After deducting £0.4m representing Redrow's share of the loss in its jointventures after interest and taxation, the Group's profit before tax fromcontinuing operations was £35.8m (06/07: £54.7m). The tax rate on continuingoperations for the full year is expected to be 29.5% and as a consequence,profit for the period from continuing operations was £25.2m (06/07: £38.3m).Taking into account discontinued operations, reported profit for the period was£23.3m (06/07: £37.9m). Balance Sheet and Return on Capital Employed The net debt level at the end of December 2007 of £238.0m (Dec 06: £189.2m) waslower than had been anticipated at the time of our Preliminary Resultsannouncement in September as a consequence of our cautious approach to landacquisition. During the last six months net debt increased by £60.4m. Theinvestment in land increased by £5.2m to £646.6m but as a consequence of ourlimited activity in the land market, land creditors reduced by £31.6m and weexpect a further reduction in the second half as we anticipate remainingselective in completing acquisitions of new sites. Investment in site infrastructure, coupled with construction momentum from thesummer months relative to the sales rates we experienced in the autumn, resultedin work in progress increasing during the period by £25.2m to £358.3m. Ourmanagement of work in progress relative to rate of sale is an important focusand construction activity has been reduced where appropriate for the second halfof our financial year. We carefully control our exposure to part exchangeproperties and at December 2007 this investment was only £10.2m as compared with£9.8m at June 2007. The Group's capital employed was £826.2m (Dec 06: £725.6m) of which £17.5mrelated to Mixed Use and Regeneration as we continued to carefully manage ourinvestment in speculative commercial development and we completed Phase 1 of theBarking Town Square development in Redrow Regeneration. We will see someincrease in the second half as we move forward with construction on Phase 2 ofthis development. Return on capital employed for the six month period based upon continuingoperations was 11.2% (06/07: 18.0%). Our land acquisition strategy coupled withthe controls within the business on work in progress continue to be focused onreducing capital employed in the context of the markets in which we are nowoperating. Land Bank Redrow remains committed to a long term approach to sourcing developmentopportunities. As at the end of December, the forward land bank stood at 25,750plots (Dec 2006: 25,000) which were either allocated or have a realisticopportunity to secure planning. Opportunities with the prospect of short termconversion to the current land bank at Exeter, Taunton, Lydney, High Wycombe,Northampton and Kettering comprising over 2,300 plots continue to progressthrough the planning system. The major regeneration of the former Royal Ordnance site at Bishopton to thewest of Glasgow for some 2,500 new homes and over 100 acres of commercial andmixed use space which we are promoting jointly with the owner BAE Systems wasconfirmed as a Community Growth Area during the period by the ScottishExecutive. We continue to adopt a prudent accounting approach for our forward land by fullyproviding for all option and pre-development costs until the land has a planningconsent and is acquired by us. Consequently the balance sheet does notrecognise the potential value of the options within our forward land bank.Option agreements are effective tools for securing long term supply for thebenefit of the business at market values prevailing at the time of acquisition. Acquisition of land in the current market was marked by a selective approachfocused on financial returns, high quality locations and strong product mix. Wewere able to take advantage in the market to secure improved terms which shouldbenefit the business in the future. The Group's current land bank was 19,900plots at the end of December (Dec 2006: 21,200 plots), of which 16,300 plots(Dec 2006: 16,850 plots) were owned with planning with the remainder of 3,600plots (Dec 2006: 4,350 plots) generally controlled under contract awaiting thegrant of a planning consent. Within our Homes business the average plot cost atthe end of December 2007 increased to £39,200 (Dec 2006: £33,300), reflectingboth the product mix and geographic location with an increased proportion of ourland bank in the southern part of England. Competition in the land market is softening in many areas as developers assessthe future direction of the housing market. Our strategy over the coming monthswill be to remain careful in terms of commitments to new acquisitions until theposition regarding the housing market becomes more certain and to positionourselves to be able to take advantage of better margin opportunities as thesearise. We anticipate trading from a similar number of outlets in 2008/09 as inthe current financial year. Product and Cost A key objective in our business is to use our broad product range to provideattractive and sustainable homes for buyers through our design led approach as apoint of differentiation. We continue to promote the use of core housetypes todrive efficiency in our construction process, enhance quality and ensure tightmanagement of build cost without impairing the quality of the offering to ourcustomers. Our strength in central procurement has held like for like housebuild costincreases over the last twelve months to less than 1% and we are constructivelyengaging with our business partners to reduce our cost base without devaluingthe quality of our product. Sub-contractor rates are responding to the current market environment.We are exercising close control over site and office overhead costs to ensurewe operate efficiently and effectively. Sales Market Sales in the six months to December 2007 were affected by the market conditionsand the Group forward sales of 1,694 new homes (Dec 2006: 1,871) were just under10% lower than at the corresponding date last year. The interest rate reductions that took place in December and February arewelcome. Visitor levels and website activity have picked up in the New Yearwith cancellation rates showing some improvement as compared with the autumnmarket. However, prospective buyers are cautious and sales are being affected bythe tightening in mortgage availability. Our short term focus remains onimplementing sales strategies that are appropriate to each site with a marketingapproach that provides reassurance to prospective customers. Based on our current assessment of the more challenging housing market, weanticipate legal completions for the Group in the financial year to June 2008being just over 3% lower than our previous expectations, resulting in a 10%reduction as compared with last year. Reflecting the competitiveness of thesales market, net selling prices after incentives are under pressure which willlead to some further weakening in gross margins from home sales over the secondhalf. Prospects We continue to promote our long term approach to land acquisition whilst in theshort term we exercise caution in the current land market. We are focused ondelivering products that offer a mix of homes appropriate to each location andwhich will appeal to our customer base. The benefits that good design andspecification brings to our business in delivering value and in making ourproduct attractive to our customers are integral parts of our heritage whichwill stand as points of differentiation for Redrow. Our overall expectation remains that 2008 will present a more difficult tradingenvironment than the industry has experienced for many years with lower levelsof confidence in the housing market. It is difficult to assess when confidencewill improve as this will depend upon a number of factors including the cost ofborrowing, mortgage availability and general economic conditions. However, thefundamental need to increase the supply of new homes in the UK remains a keyelement in Government policy and is a positive for our future. We have anexperienced and committed management team to address the challenges we currentlyface. Our strategy remains to position Redrow to capitalise on improvements inour markets and to take advantage of the opportunities that will arise whenconfidence returns. Alan BowkettChairman Responsibility Statement The Directors confirm that, to the best of our knowledge: (i) this condensed set of financial statements has been prepared in accordancewith IAS 34, as adopted by the European Union; (ii) the interim management report contained herein includes a fair review ofthe information required by DTR 4.2.7 (indication of important events during thefirst six months and a description of the uncertainties for the remaining sixmonths of the financial year) and DTR 4.2.8 (disclosure of related partytransactions and changes therein). The Directors of Redrow plc are listed in the Redrow plc Annual Report andAccounts for the year ended 30 June 2007. By order of the Board Neil Fitzsimmons David ArnoldChief Executive Group Finance Director27 February 2008 27 February 2008 Consolidated Income Statement (Unaudited) 12 months 6 months ended ended 31 December 30 June Restated Restated 2007 2006 2007 Note £m £m £m Revenue 2 353.1 387.7 834.3Cost of sales (287.6) (302.4) (651.3)Gross profit 65.5 85.3 183.0 Administrative expenses (20.6) (23.6) (46.4)Operating profit before financing costs 2 44.9 61.7 136.6 Financial income 2.1 0.3 1.6Financial expenses (10.8) (7.2) (16.9)Net financing costs 2 (8.7) (6.9) (15.3) Share of loss of joint ventures after 2 (0.4) (0.1) (0.2) interest and taxation Profit before tax from continuing operations 2 35.8 54.7 121.1 Income tax expense 2, 3 (10.6) (16.4) (36.1) Profit for the period from continuing operations 2 25.2 38.3 85.0Discontinued operations 12 (1.9) (0.4) (0.6)Profit for the period 2 23.3 37.9 84.4Earnings per share from continuing operationsBasic earnings per share 5 15.8p 24.0p 53.3pDiluted earnings per share 5 15.8p 23.9p 53.2pEarnings per share including discontinued operationsBasic earnings per share 5 14.6p 23.8p 52.9pDiluted earnings per share 5 14.6p 23.7p 52.8p Consolidated Statement of Recognised Income and Expense (Unaudited) 12 months 6 months ended ended 31 December 30 June 2007 2006 2007 £m £m £m Effective portion of changes in fair value of interest ratecash flow hedges (1.2) 0.4 1.3Deferred tax on change in fair value of interest rate cash 0.4 (0.1) (0.4)flow hedgesActuarial gains/(losses) on defined benefit pension scheme 0.2 (2.4) 5.8Deferred tax on actuarial gains/(losses) taken directly to (0.1) 0.7 (1.7)EquityNet expense recognised directly in equity (0.7) (1.4) 5.0 Profit for the period 23.3 37.9 84.4Total recognised income and expense for the period 22.6 36.5 89.4 Consolidated Balance Sheet (Unaudited) As at As at 31 December 30 June 2007 2006 2007 Note £m £m £m Assets Intangible assets 0.4 0.3 0.3Plant, property and equipment 24.6 25.7 24.6Investments 1.7 2.5 3.7Deferred tax assets 3.6 3.6 3.4Derivative financial instruments 0.1 0.5 0.6Retirement benefit surplus 7.1 - 6.1Trade and other receivables 4.7 1.4 4.1Total non-current assets 42.2 34.0 42.8 Inventories 6 1,020.3 915.0 988.7Investments 0.9 - -Trade and other receivables 18.4 33.2 28.5Derivative financial instruments 0.5 0.3 1.1Cash and cash equivalents 9 2.5 3.6 12.2Total current assets 1,042.6 952.1 1,030.5 Total assets 1,084.8 986.1 1,073.3 Equity Issued capital 10 16.0 16.0 16.0Share premium 58.3 56.3 58.1Hedge reserve 0.4 0.6 1.2Other reserves 7.9 7.9 7.9Retained earnings 505.6 455.6 494.6Total equity 11 588.2 536.4 577.8 Liabilities Bank loans 9 209.9 177.1 169.7Trade and other payables 7 31.2 37.3 48.8Deferred tax liabilities 3.0 1.5 3.0Retirement benefit obligations - 2.6 -Derivative financial instruments 0.1 - -Long-term provisions 2.2 4.5 3.4Total non-current liabilities 246.4 223.0 224.9 Bank overdrafts and loans 9 30.6 15.7 20.1Trade and other payables 7 205.4 197.4 233.8Derivative financial instruments 0.1 - -Current income tax liabilities 14.1 13.6 16.7Total current liabilities 250.2 226.7 270.6 Total liabilities 496.6 449.7 495.5 Total equity and liabilities 1,084.8 986.1 1,073.3 Consolidated Cash Flow Statement (Unaudited) 12 months 6 months ended ended 31 December 30 June 2007 2006 2007 Note £m £m £m Cash flow from operating activities Operating profit before financing costs 44.9 61.7 136.6Depreciation and amortisation 0.9 1.1 2.3 Adjustment for non-cash items (2.2) (3.5) 3.1Operating profit before changes in working 43.6 59.3 142.0capital and provisions Decrease/(increase) in trade and other 9.5 (8.3) (6.3)receivablesIncrease in inventories (31.6) (65.4) (139.1)(Decrease)/increase in trade and other payables (45.4) 1.4 49.6Decrease in retirement benefit provision and (2.2) (5.9) (15.7)other provisions Cash generated from operations (26.1) (18.9) 30.5 Interest paid (8.6) (5.6) (13.9)Tax paid (13.1) (17.3) (35.2) Net cash from operating activities (47.8) (41.8) (18.6) Cash flows from investing activities Acquisition of plant, property and equipment (1.7) (2.9) (5.2)Proceeds from sale of plant, property and 0.8 - 2.6equipmentInterest received 1.5 0.1 0.9Payments to joint ventures - continuing operations (0.2) - (1.8)Payments to joint ventures - discontinued operations (0.4) (0.4) (0.5)Net cash from investing activities - (3.2) (4.0) Cash flows from financing activities Issue of bank borrowings 8 139.0 87.5 170.0Repayment of bank borrowings 8 (99.0) (42.0) (132.0)Issue costs of bank borrowings (0.1) - (0.1)Purchase of own shares - (0.5) (0.5)Dividends paid 4 (12.5) (13.9) (26.3)Proceeds from issue of share capital 0.2 0.1 1.9Net cash from financing activities 27.6 31.2 13.0 Decrease in net cash and cash equivalents (20.2) (13.8) (9.6)Net cash and cash equivalents at the beginningof the period (7.9) 1.7 1.7Net cash and cash equivalents at the end 9 (28.1) (12.1) (7.9)of the period NOTES (Unaudited) 1. Accounting Policies The above results, Responsibility Statement and accompanying notes are extractedfrom the condensed consolidated half-yearly financial information for the halfyear ended 31 December 2007. These results do not comprise statutory accountswithin the meaning of Section 240 of the Companies Act 1985. Statutory accountsfor the year ended 30 June 2007 were approved by the Board of Directors on 10September 2007 and delivered to the Registrar of Companies. The report of theauditors on those accounts was unqualified, did not contain an emphasis ofmatter paragraph and did not contain any statement under Section 237 of theCompanies Act 1985. The half-yearly financial statements have been prepared using accountingpolicies and presentation consistent with those applied in the preparation ofthe Group's consolidated financial statements for the year ended 30 June 2007,apart from the following changes: a. Revenue Recognition Sales of residential land holdings have historically not represented a materialpart of the Group's strategy and, because of this, have not been included withinrevenue for the Homes' business. With the increased focus on optimising theGroup's land bank through land sales and swaps which may form a more frequentpart of ordinary trading for Redrow, we have amended our revenue recognitionpolicy to include residential land sales revenue within revenue for the Homes'business. The change in accounting policy does not affect reported cash flowsand earnings. The impact is to increase reported revenue by £6.8m (2006:£21.5m). b. Financial Instruments The Group adopted IFRS 7 'Financial Instruments: disclosures' on 1 July 2007.IFRS 4, 'Insurance Contracts', revised implementation guidance, is effectivewhen an entity adopts IFRS 7. As this half-yearly report contains onlycondensed financial statements, and as there are no material financialinstrument related transactions in the period, full IFRS 7 disclosures are notrequired at this stage. The full IFRS 7 disclosures, including the sensitivityanalysis to market risk and capital disclosures required by the amendment of IAS1, will be given in the annual financial statements. c. New Standards In addition to the above the following new standards, amendments to standards orinterpretations are mandatory for the first time for the financial year ending30 June 2008: IFRIC 10, 'Interims and Impairment', effective for annual periods beginning onor after 1 November 2006. This interpretation has not had any impact on thetiming or recognition of impairment losses as the Group already accounted forsuch amounts using principles consistent with IFRIC 10. The following new standards, amendments to standards and interpretations havebeen issued, but are not effective for the financial year ending 30 June 2008and have not been early adopted. IFRIC 14, IAS 19 - 'The Limit on a Defined Benefit Asset, Minimum FundingRequirements and their Interaction' effective for annual periods beginning on orafter 1 January 2008. 2a. Segmental information - Income 12 months ended 6 months ended 31 December 30 June Restated Restated 2007 2006 2007 £m £m £mRevenueHomes - home sales 319.1 359.6 757.0 - land sales 6.8 21.5 38.6 325.9 381.1 795.6Mixed Use & Regeneration 27.2 6.6 38.7 353.1 387.7 834.3Homes - gross profit 61.8 82.0 174.7Homes - administrative expenses (19.9) (22.7) (45.0)Homes - operating profit 41.9 59.3 129.7Mixed Use & Regeneration - operating profit 2.4 2.2 6.6 44.3 61.5 136.3Add back share of joint venture operating losses 0.6 0.2 0.3Operating profit before financing costs 44.9 61.7 136.6 Net financing costs (8.7) (6.9) (15.3) 36.2 54.8 121.3 Share of loss of joint ventures after interest and taxation (0.4) (0.1) (0.2)Profit before tax from continuing operations 35.8 54.7 121.1 Income tax expense (10.6) (16.4) (36.1)Profit for the period from continuing operations 25.2 38.3 85.0Discontinued operations (1.9) (0.4) (0.6)Profit for the period 23.3 37.9 84.4 2b. Segmental information - Balance Sheet As at As at 31 December 30 June 2007 2006 2007 £m £m £m Segment assets Homes 1,066.7 955.4 1,018.3Mixed Use & Regeneration 25.2 28.4 43.2Framing Solutions - share of joint venture 0.9 1.8 1.8 1,092.8 985.6 1,063.3Elimination of inter-segment items (10.5) (3.1) (2.2) 1,082.3 982.5 1,061.1Cash and cash equivalents 2.5 3.6 12.2Consolidated total assets 1,084.8 986.1 1,073.3 Segment liabilities Homes 245.1 239.5 269.8Mixed Use & Regeneration 7.4 6.9 21.4 252.5 246.4 291.2Elimination of inter-segment items (10.5) (3.1) (2.2) 242.0 243.3 289.0Borrowings 240.5 192.8 189.8Consolidated total liabilities 482.5 436.1 478.8Current income tax liabilities 14.1 13.6 16.7 Total equity 588.2 536.4 577.8 3. Income Taxes Income tax expense is recognised based on management's best estimate of theweighted average annual income tax rate expected for the full financial year.The estimated average annual tax rate used for the year to 30 June 2008 is29.5%, taking into consideration the reduction in the corporation tax rate from30% to 28% from 1 April 2008. 4. Dividends 12 months ended 6 months ended 31 December 30 June 2007 2006 2007 £m £m £mAmounted recognised as distributions to equityholders in the period:2006 final dividend paid of 8.7p per share - 13.9 13.92007 interim dividend paid of 7.8p per share - - 12.42007 final dividend paid of 7.8p per share 12.5 - - 12.5 13.9 26.3 The Directors have declared an interim dividend of 9.3p per share (2006: 7.8p)which was approved by the board on 27 February 2008. This gives an interimdividend of £14.9m (2006: £12.4m) which will be paid on 2 May 2008 toshareholders whose names are on the Register of Members at the close of businesson 7 March 2008. The shares will become ex-dividend on 5 March 2008. In accordance with IAS 10 'Events after the Balance Sheet Date' the interimdividend has not been included as a liability as at 31 December 2007. 5. Earnings per share The basic earnings per share calculation for the 6 months ended 31 December 2007is based on the weighted number of shares in issue during the period of 159.8m(2006: 159.4m) excluding those held in trust under the Redrow Long TermIncentive Plan, which are treated as cancelled. Diluted earnings per share has been calculated after adjusting the weightedaverage number of shares in issue for all potentially dilutive shares held underunexercised options. 6 months ended 31 December 2007 Earnings No. of shares Per share £m millions penceBasic earnings per share for continuing operations 25.2 159.8 15.8Effect of share options and SAYE - 0.1 - Diluted earnings per share for continuing operations 25.2 159.9 15.8 Basic earnings per share including discontinued operations is 14.6p (diluted -14.6p). 6 months ended 31 December 2006 Earnings No. of shares Per share £m millions penceBasic earnings per share for continuing operations 38.3 159.4 24.0Effect of share options and SAYE - 0.4 (0.1)Diluted earnings per share for continuing operations 38.3 159.8 23.9 Basic earnings per share including discontinued operations is 23.8p (diluted -23.7p). 12 months ended 30 June 2007 Earnings No. of shares Per share £m millions penceBasic earnings per share for continuing operations 85.0 159.5 53.3Effect of share options and SAYE - 0.4 (0.1)Diluted earnings per share for continuing operations 85.0 159.9 53.2 Basic earnings per share including discontinued operations is 52.9p (diluted -52.8p). 6. Inventories As at As at 31 December 30 June 2007 2006 2007 £m £m £mLand for development 646.6 576.5 641.4Work in progress 358.3 323.8 333.1Stock of showhomes 15.4 14.7 14.2 1,020.3 915.0 988.7 7. Land Creditors (included in trade and other payables) As at As at 31 December 30 June 2007 2006 2007 £m £m £mDue within one year 61.4 52.9 75.4Due in more than one year 31.2 37.3 48.8 92.6 90.2 124.2 8. Borrowings and loans 12 months 6 months ended ended 31 December 30 June 2007 2006 2007 £m £m £mOpening net book amount 170.0 132.0 132.0Issue of bank borrowings 139.0 87.5 170.0Repayment of bank borrowings (99.0) (42.0) (132.0)Closing net book amount 210.0 177.5 170.0 At 31 December 2007, the Group had total unsecured bank borrowing facilities of£525.0m, representing £480.0m committed facilities and £45.0m uncommittedfacilities. 9. Analysis of net debt As at As at 31 December 30 June 2007 2006 2007 £m £m £mCash and cash equivalents 2.5 3.6 12.2Bank overdrafts and loans - current liabilities (30.6) (15.7) (20.1) (28.1) (12.1) (7.9) - non-current liabilities (209.9) (177.1) (169.7) (238.0) (189.2) (177.6) 10. Share capital As at As at 31 December 30 June 2007 2006 2007 £m £m £mAuthorised330,000,000 ordinary shares of 10p each 33.0 33.0 33.0Allotted, called up and fully paid 16.0 16.0 16.0 Number of ordinary shares of 10p eachMovement in the period was as followsAt 1 July 2007 159,827,039Share options exercised 58,682At 31 December 2007 159,885,721 11. Reconciliation of movements in consolidated equity 12 months 6 months ended ended 31 December 30 June 2007 2006 2007 £m £m £mProfit for the period 23.3 37.9 84.4Dividends on equity shares (12.5) (13.9) (26.3)Other recognised income and expense relatingto the period (net) (0.7) (1.4) 5.0Shares issued at a premium 0.2 0.1 1.9Movement in LTSIP/SAYE 0.1 (0.1) (1.0)Net increase in equity 10.4 22.6 64.0 Opening equity 577.8 513.8 513.8Closing equity 588.2 536.4 577.8 12. Discontinued operations - disposal of interest in joint venture On 3 January 2008, the Group completed the disposal of its interest in itsFraming Solutions joint venture. The loss on disposal has been included in thehalf-yearly results for the period and disclosed accordingly as discontinuedoperations. Financial information relating to the business for the period is asfollows: 12 months 6 months ended ended 31 December 30 June 2007 2006 2007 £m £m £mRevenue 1.6 1.8 3.9Expenses (2.2) (2.3) (4.8)Loss before tax (0.6) (0.5) (0.9)Tax on loss 0.2 0.1 0.3Loss after tax on discontinued operations (0.4) (0.4) (0.6)Loss on disposal (2.0) - -Tax on disposal 0.5 - - (1.5) - -Share of loss after interest and taxation onFraming Solutions joint venture (1.9) (0.4) (0.6) Investing cash flows for discontinued operations amounted to an outflow of £0.4min the period. The Group reported net loans outstanding at December 2007 with Framing Solutionsof £nil (December 2006: £1.2m, June 2007: £1.4m). The Group undertook transactions with its Framing Solutions joint venture in thenormal course of business during the financial period. This consisted of thepurchase of lightweight steel frames totalling £2.4m (2006: £2.9m). At the endof the period, the balance owed to Framing Solutions by the Group was £1.7m(2006: £1.5m). 13. Shareholder Enquiries The Registrar is Computershare Investor Services PLC. Shareholder enquiriesshould be addressed to the Registrar at the following address: Registrars Department PO Box 82The PavilionsBridgwater RoadBristolBS99 7NH This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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