11th Jan 2007 07:00
Redrow PLC11 January 2007 11 January 2007 REDROW PLC - TRADING UPDATE Redrow plc today issues its pre close trading update ahead of the publication onTuesday 6 March 2007 of its interim results for the six months ended 31 December2006. Redrow delivered 2,214 legal completions in the first half of the financialyear, an increase of 7% on the same period last year (H1 2005/06: 2,077). Legalcompletions of Signature and In the City homes, the Group's core product, werein line with the previous year at 1,979 (H1 2005/06: 1,972), with 235 Debuthomes legally completed in the period (H1 2005/06: 105). The average sellingprice was virtually unchanged at approximately £162,000 (H1 2005/06: £163,100).As with the last financial year, operating margins for Homes in the first halfwill be influenced by recovery of overhead costs. At this stage of thefinancial year our expectations for the operating margin for the full yearremain unchanged. In the first half our mixed-use activities performed ahead of expectation tomore than offset our continuing investment in developing Redrow Regeneration.As anticipated, net debt, supported by a strong balance sheet, increased duringthe six months to December 2006 to approximately £190m (June 2006: £130m). The Group's overall forward sales position of 1,871 homes at the end of December2006 was at a similar level to twelve months previous (Dec 2005: 1,816). Duringthe last six months we sold 1,878 homes of our core product, 3% ahead of thecorresponding period last year, and as at 31 December had forward sales of 1,436homes (Dec 2005: 1,740), representing approaching four months sales. We arewell placed to deliver our target of 500 Debut completions in 2006/07, withforward sales of 189 homes at the end of December. In addition, RedrowRegeneration has sold the entirety of the first phase of its development inBarking, representing 246 homes, with the first legal completions due in thesummer of 2007. We achieved significant growth in our current land bank during the lastfinancial year with a 21% increase to 21,000 plots. In the last six months, wehave maintained our current land bank and we are making good progress with anumber of significant sites controlled under contract. In addition, there arekey sites within our forward land bank which are continuing to progress throughplanning, with a resolution to grant now secured for approximately 450 plots atCranbrook Village, near Exeter. However, the increasingly complex planning system continues to inhibit theindustry's ability to open new outlets and this has influenced our salesperformance in the last six months. We support the Government's objective todeliver a more efficient planning system but, at the present time, sites with aplanning consent command a significant premium in the land market; furtherdelays in the delivery of planning consents will only serve to exacerbate thissituation. The housing market has been relatively stable during 2006, recovering from themore challenging markets of 2005. It remains competitive across many of ourmarkets with the stronger conditions being reported in certain areas, notablycentral London, not necessarily being representative of the wider housingmarket. Whilst underlying demographics continue to support strong demand fornew homes, we anticipate the strength of the spring market in 2007 will beinfluenced by any further speculation regarding interest rate increases. In these markets we are focusing on optimising returns from the existing landbank through our sales strategy whilst maintaining our long term approach toland acquisition and exercising close control over our cost base. We remain ofthe view that 2006/07 will be a year of further progress for Redrow. Enquiries: Redrow plcNeil Fitzsimmons, Chief Executive 020 7404 5959 (11 January)David Arnold, Group Finance Director 01244 520044 (thereafter) BrunswickPatrick Handley/Nina Coad 020 7404 5959 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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