Redrow profits rise 70%

The resurgent house builder's pre-tax profit leapt from £25.3m to £43m in the past financial year.

Group revenue increased 5.8% to £479m, driven by 15% increase in average selling prices, with private average prices up by 17% to £204,100.

Reporting annual results in the year to July 2012, Redrow said operating margin rose from 7.5% to 10%. The improvement was put down to a mixture of increased sales from sites purchased since the downturn, improved product mix and the benefit of high profit on land sales and freehold reversion sales.

Private net reservations were up 4% from £416m to £434m excluding London due to a change in mix to larger homes.

Net debt was slashed from £61.4m to £14.0m, largely due to a £78m share placing, with borrowing at year end just 2% (2011: 16%).

Steve Morgan, chairman of Redrow, based in Deeside, said: "Redrow has once again delivered a strong set of results with a significant improvement in profitability against the backdrop of a challenging marketplace. Our strategy of focusing on high quality differentiated family housing product is clearly paying off with the New Heritage Collection firmly established as our primary brand accounting for 67% of our private turnover during the year. The average selling price of a New Heritage home is now £215,100, which is a 7% increase on the previous year.

"We have started the new year with reservations per outlet at a similar level to last year. Total private reservations in the first 11 weeks of the financial year are up 16% as a result of a year on year increase on outlets from 73 to 84. We are encouraged by the recent Government Housing and Growth announcement, however the outlook for the industry remains challenging. Supply of mortgages, although slightly improved on last year, remains a significant constraint, as does public confidence due to the country's fragile economic state. Nevertheless, we have an excellent product range and a strong pipeline of new sites, which gives the board every confidence that Redrow will continue along its path of improving performance."

Morgan is in talks with the board about a buy-out of the company he founded in the 1970s.

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