Redrow’s upmarket housing policy paying off

The builder is currently subject to a £560m or 152p per share approach from chairman and founder Steve Morgan, but gave no update on the takeover.

Mr Morgan, who owns Wolverhampton Wanderers FC, hailed Redrow’s “third consecutive year of significant growth in profitability despite challenging market conditions”.

Redrow, one of the smaller listed builders, said revenues increased by 5.8 per cent to £479m in the year to the end of June, despite it selling six per cent fewer homes at 2,458 completions. Its average private sale was £204,100, compared with £174,100 a year earlier.

Pre-tax profits surged 70 per cent to £43m.

In common with other listed housebuilders, Redrow has taken advantage of the downturn to buy land cheaply, plus increased the proportion of family homes it builds.

Redrow has focused on its premium ‘New Heritage’ brand, using a 1930s architecture style. Making up 67 per cent of the company’s private turnover, the homes sell for around £215,000.

Both factors helped it squeeze more profit out of home sales and increase operating margin to 10 per cent from 7.5 per cent.

The company added 30 per cent of its sales were made in the north, up from 26 per cent a year earlier.

Redrow has developments in Sheffield, Wakefield, Leeds, Halifax, Cottingham in East Yorkshire and Easingwold and Sherburn-in-Elmet in North Yorkshire.

Redrow’s brownfield arm Harrow Estates is also behind the regeneration of the former Clariant chemical works in Horsforth, Leeds, where it won planning permission for up to 400 homes earlier this year after an appeal to the Secretary of State Eric Pickles.

Mr Morgan said planning laws are holding Redrow back from stronger growth, and welcomed proposed changes.

“More outlets is the name of the game and it is still proving very difficult with the planners,” said Mr Morgan.

Net debt was down to £14m from £75.4m a year earlier.