Redrow pre-tax profits up 23%

The firm reported profits of £250m for the year while total group revenue increased 20% to £1.38bn.

Redrow said demand for new homes was strong throughout the year and that it had benefitted in particular from the government’s Help to Buy scheme.

The firm saw revenues from private homes increase 24% to £1,28m in the year, bolstered by a 12% increase in private legal completions and a 10% rise in the average selling price of the homes.

Revenue from social homes was up 46% to £86m in 2016, while land sales fell 68% to £21m.

Chairman Steve Morgan said: “I am delighted to report that for the third consecutive year Redrow has delivered a record set of results.  Pre-tax profits were £250m, achieved by completing over 4,700 much needed new homes, a 17% increase over last year.

“Redrow entered the new financial year with a record private order book of £807m, up 54% year on year. Sales in the first 10 weeks are very encouraging and up 8% on a strong comparator last year.  Our strategy of continued growth for the business is on track and I am confident this will be another year of significant progress for Redrow.”

Ratings agency Fitch had said in a report published in August it believed major housebuilders would escape the impact of any price declines following the June Brexit vote because of record backlogs and limited exposure to the London market.

First signs of a London deterioration already emerged in late July when developer CapCo was forced to cut 14% – or £200m – off the valuation of its Earls Court development blaming “weakened sentiment in the central London residential market following the EU referendum”.

Additionally, a broker warned last week the inner-London new-build market was saturated, saying prices would need to come down considerably to kick start sales.

Redrow chairman Steve Morgan admitted the company had observed a cooling-off in the area but said it had escaped any meaningful impact because of its limited exposure to the market.

He said: “I reported in my interim statement in February that the higher end of the market, and in particular central London, had slowed down, principally as a result of the Stamp Duty changes that came into effect last year and further hikes that came into effect in April this year.

“Activity in this section of the market remains sluggish, however, Redrow’s exposure is very limited and all other areas in which we operate, including Outer London, have shown strong growth.  We have seen very little impact as a result of the Brexit vote.”

Redrow said it had achieved success in acquiring land and obtaining planning permission on forward land holdings this year, with the owned and contracted land bank increasing 43% to 26,000 plots.

It said it would use the land to increase the number of new homes built going forward and to maintain its expansion plans. However, it added obtaining planning through local authorities remained “tortuous”.

Redrow’s results come in the wake of positive earnings posted by a number of its competitors in recent weeks.

In August, Persimmon reported a 29% profit increase backed by a sharp rise in reservations in the first half of the year. The firm said it was encouraged by the robust level of customer demand it had seen for its properties despite the Brexit referendum, which had created economic uncertainty.

Earlier in the month residential landlord and property developer Grainger reported it had escaped any “material impact” from the EU Referendum, saying it had continued to see good rental growth and high demand from buyers.