Tuesday 4 September 2018
Redrow plc
Final results for the year to 30 June 2018
CONTINUING TO DELIVER GROWTH
Financial Results
| | 2018 | 2017 | % Change |
| Legal Completions (incl. JV) | 5,913 | 5,416 | + 9 |
| Revenue | £1.92bn | £1.66bn | +16 |
| Operating Profit | £382m | £322m | +19 |
| Profit before tax | £380m | £315m | +21 |
| EPS | 85.3p | 70.2p | +22 |
| Order Book (excl. JV) | £1.1bn | £1.0bn | +10 |
| ROCE | 28.5% | 26.0% | +10 |
| Full Year Dividend | 28p | 17p | +65 |
Financial highlights
· Group revenue up 16% to a record £1.92bn driven by higher legal completions
and a 7% increase in Average Selling Price to £332,300
· Operating margin rose to 19.9% (2017: 19.4%)
· Record pre-tax profit of £380m, up 21% (2017: £315m)
· Earnings per share up 22% to 85.3p
· Return on Capital Employed up 10% to 28.5% (2017: 26.0%)
· Positive cash position of £63m at June 2018 (2017: net debt of £73m)
· Proposed final dividend of 19p per share, making 28p for the full year, up 65%
Operational highlights
· Continuing to deliver on growth strategy:
o Legal completions up 9% to 5,913 (2017: 5,416)
o Number of employees up 5% to 2,300
· 7,455 plots added to current land holdings, 37% of which were converted from forward land
· Record Order Book of £1.1bn (2017: £1.0bn)
Commenting on the results Steve Morgan, Chairman of Redrow, said:
"I am delighted to report that Redrow has delivered another year of strong growth and record results, achieved by completing 5,913 new homes a 9% increase on the previous year. Revenues reached £1.92bn and pre-tax profit increased by 21% to £380m.
This excellent trading performance enabled us to achieve strong cash generation such that we ended the year with net cash of £63m. As a result we are proposing a final dividend of 19p which would give a full year dividend of 28p per share, 65% up on last year.
Redrow is committed to growing our output to help the country's requirement to increase the number of new homes built. We have a very strong forward order book, first class land holdings, an excellent balance sheet and we are able to react quickly to changing circumstances. However, there is no doubt that clarity over Brexit and the future of Help to Buy would improve market sentiment. Given that clarity, we will continue to deliver."
Enquiries:
| Redrow plc | |
| Steve Morgan, Chairman | 01244 527411 |
| Barbara Richmond, Group Finance Director | 01244 527411 |
| John Tutte, Group Chief Executive | 01244 527411 |
| | |
| Instinctif | 0207 457 2020 |
| Mark Garraway | 07771 860 938 |
| Helen Tarbet | 07825 609 737 |
| James Gray | 07583 936 031 |
There will be an analyst and investor meeting at 9.00 am at The London Stock Exchange,
10 Paternoster Square, London, EC4M 7LS. Coffee will be served from 8.30 am.
A live audio webcast and slide presentation of this event will be available at 9.00 am on www.redrowplc.co.uk.
Participants can also dial in to hear the presentation live at 9.00 am on +44 (0) 20 3003 2666 or
UK Toll Free on 0808 109 0700; password is Redrow.
Playback will be available by phone for the next 30 days +44 (0) 20 8196 1998 followed by
Access Pin 8223842#.
Chairman's Statement
I am delighted to report that Redrow has once again delivered another year of strong growth and record financial results, achieved by completing 5,913 new homes (including our Croydon Joint Venture), an increase of 9% on the previous year.
Financial Results
Group turnover rose by 16% to £1.92bn (2017: £1.66bn) as a result of the increase in legal completions to 5,913 together combined with a 7% rise in average selling price to £332,300 (2017: £309,800). The increase in average selling price was mainly due to the relatively faster growth of our southern businesses.
Gross profit at £469m was £64m above the 2017 level and gross margin was in line with last year at 24.4%.
With firm control of costs, operating expenses only increased by £4m to £87m, resulting in operating expenses reducing as a percentage of turnover from 5% in 2017 to 4.5% in 2018.
Operating profit was £382m, up 19% (2017: £322m), with an operating margin of 19.9% (2017: 19.4%).
Pre-tax profits were £380m, up 21% (2017: £315m) including a £5m after tax contribution from our Croydon Joint Venture. Earnings per share increased by 22% to 85.3p (2017: 70.2p).
This excellent trading performance and tight control of working capital enabled us to achieve strong cash generation which resulted in the Group moving from a net debt position of £73m at the end of the previous financial year to a positive cash position of £63m at the end of June 2018.
Our Return on Capital Employed also improved from 26.0% to 28.5% and Return on Equity from 27.7% to 28.0%.
In March 2017 we announced our intention to increase our dividend payout ratio to 33% over the medium term. Due to our ongoing strong cash position the Board is proposing a final dividend of 19p per share for 2018 (2017: 11p), making 28p per share for the full year an increase of 65% on the prior year. This equates to a payout ratio of 33% (2017: 24%), achieving our target ahead of plan.
Subject to shareholder approval at the Annual General Meeting, this will be paid on 13 November 2018 to shareholders on the register as at close of business on 21 September 2018.
Market
Despite the uncertainty surrounding Brexit, demand for new homes continues to be robust, and overall house price inflation has moderated to a sustainable 2%. We entered the current year with a strong order book of £1.14bn, an increase of £110m over the previous year.
Mortgage availability is excellent, and with low interest rates by historic levels, the mortgage market remains very competitive.
Help to Buy continues to support home buyers and the housing industry. In the last financial year 1,794 of our private reservations were secured through Help to Buy, a similar level to the previous year.
Land & Planning
During the year we added 7,455 plots to our current land holdings. Of these, 2,727 were converted from our strategic land. As a result, net of completions and re-plans, our current land holdings increased by 1,530 plots to 27,630 (2017: 26,100). Our strategic land holdings also increased by a net 4,300 plots to 30,700 (2017: 26,400).
Growing the number of outlets in line with the increased land holdings remains a challenge as the journey from 'outline planning permission' to 'implementable planning permission' remains as bureaucratic as ever.
The gross development value of our total land holdings now stands at £20bn giving Redrow an outstanding platform for continued growth.
People
As we continue to grow the business we continue to add to our workforce, creating a further 100 jobs in 2018. We now directly employ 2,300 people (2017: 2,200), with many thousands more supported indirectly through our subcontractors and suppliers.
We have recruited 173 (2017: 150) new apprentices, trainees and graduates in the last year making 343 in total, an industry leading 15% of the workforce. We have been awarded a Top 100 Apprentice Employer by the National Apprentice Awards for the fifth consecutive year.
Our excellent growth record is due to the ongoing commitment and hard work of the whole Redrow workforce together with our subcontractors and suppliers, for which I thank them.
Current Trading and Outlook
We have excellent products, especially the Heritage Collection, and demand for our homes is strong. Despite Brexit uncertainty and the exceptional summer weather, sales revenue in the first 9 weeks is in line with last year. We expect to continue to grow our land holdings and increase the number of average outlets in the current year by 5% to 130 (2018: 124).
Redrow is committed to growing our output to help the country's requirement to increase the number of new homes built. We have a very strong forward order book, first class land holdings, an excellent balance sheet and we are able to react quickly to changing circumstances. However, there is no doubt that clarity over Brexit and the future of Help to Buy would improve market sentiment. Given that clarity, we will continue to deliver.
Steve Morgan
Chairman
Chief Executive's Review
Another year of exceptional results
Continued growth and expansion
The Group's successful growth strategy continues to deliver exceptional results. Legal completions (including JV) increased by 9% to 5,913 in the year with revenue rising by 16% to £1.92bn and profit before tax up 21% to £380m (2017: £315m).
We have continued to expand our geographical coverage. Our new East Midlands division made its first full year trading contribution and our Southern divisions continue to grow strongly as we target increasing our market share in this area of high demand. Colindale Gardens, our flagship development in North London, also made a significant contribution delivering its first completions.
To underpin our future growth we have announced the launch of a new division in Thames Valley and reorganised our Greater London operations into East and West divisions to focus on growth in the capital. We have also re-structured Harrow Estates to draw on its wealth of experience to help manage and support our group-wide forward land activities.
Investing in places
The land market remained attractive throughout the year, we acquired 7,455 plots and, after taking into account legal completions, land sales and replans, our owned and contracted land holdings with planning increased to 27,630 plots (2017: 26,100 plots) representing 4.8 years of supply. Pull-through from Forward Land was again strong and accounted for 2,727 of the plots acquired.
The average size of site acquired in the year was around 180 plots as we took advantage of being able to secure some larger opportunities. These larger sites were generally acquired on more favourable terms and relieve pressure on future outlet replacement. They also allow us to make full use of our award winning product range to both create great places to live for everyone and to appeal to a wider market.
We have a reputation for designing individual homes that are attractive and meet the modern-day needs of our customers. But of equal importance is their setting. In recent years we have focused on ensuring our developments enhance and make the most of natural features as well as connecting to and sharing amenities with local communities.
Developing thriving communities by valuing people and building responsibly have become the key pillars of our operational strategy. Over the course of the last year these principles have been embedded into the business.
Thriving communities
Redrow 8 is a suite of placemaking design principles we have adopted to ensure our developments include all the key requirements to create great places. It is consistent with Building for Life 12 which is a government-endorsed standard for well-designed homes and neighbourhoods.
We recognise that the quality of the places we create can have a lasting impact upon the health and wellbeing of those who live in our homes. We have recently joined the NHS Healthy Towns Network which is an initiative to improve the health of those living on new housing developments. We are also supporting the Wellcome Trust in their research project to explore how urban development can impact long-term health.
We know our customers are increasingly more concerned about the environment in which they live. Nature for People is our way of increasing biodiversity. We have a long-standing relationship with the Bumblebee Conservation Trust and we have recently established a new partnership with The Wildlife Trusts to help us develop a strategy to achieve a net biodiversity gain across our developments.
As well as building much-needed new homes we make significant contributions to the infrastructure of the wider communities in which we work. Last year we estimate we committed £184m to fund local improvements including new schools, community centres, medical and sporting facilities, footpaths and cycleways and attractive areas of open space.
Valuing people
In response to our continued growth we created around 100 new jobs during the year: we now employ just under 2,300 people directly and many more times this through our supply-chain.
Our annual employee satisfaction survey that achieved a record response, reassured us that overall we are a highly respected employer with 95% of our people saying they are proud to work for Redrow. This said, we continue to look at ways to improve the working environment and we have recently launched a number of initiatives around communication and health and wellbeing.
Training and developing the next generation of housebuilders remains high on our agenda. 15% of the workforce are trainees on structured training programmes and I am delighted that we retained our listing as a Top 100 Apprenticeship Employer. We have a number of strategic partnerships with colleges across the country and the first students will enrol this year on our dedicated housebuilding degree which has been developed in conjunction with Liverpool John Moores University and Coleg Cambria.
We are a Patron of the 5% Club which is a movement of FTSE employer-members working to tackle critical skills challenges. Its members represent the gold standard of training and skills development across all industries.
Building responsibly
Our responsibility to work safely and considerately is a top priority for the business.
During the year we restructured our Health, Safety and Environmental Management teams. Resources have been increased and reorganised into two distinct areas of responsibility: compliance through regular site audits and development to improve overall health, safety and environmental management.
NextGeneration is an independent organisation which benchmarks the UK's top 25 housebuilders on their sustainability performance. During the year we retained our Gold standard and moved-up into third place in the rankings. We are also Gold members of the UK Green Building Council.
Quality and customer service is also a high priority for us. We are currently rolling out a tablet based quality control system to replace traditional out-dated checklists. This system will archive inspections and images and allow direct communication with contractors to better manage standards and quality.
In the annual HBF customer satisfaction survey we retained our four stars rating with a recommendation level of 89.1%. With the improvements we are making in this area of our business, our recommendation level is currently trending above 90%.
We continue to explore opportunities to improve productivity through the use of more offsite manufactured components. On our Padcroft development in West Drayton we are using services pods and in two of our divisions we are trialling modular garages. These innovations not only reduce reliance upon site based skilled workers but also give more certainty over costs. During the year we estimate that build costs increased by around 4% with spikes in some material costs being offset by easing labour cost pressures.
The market and outlook
The new homes market remained fairly stable throughout the financial year despite a continuing weak secondary market that in particular affects sales chains in the upper-end of the price range.
The Group secured just under 4,500 private reservations in the year representing £1.7bn of revenue. With the exception of Central London, where we only have a handful of properties to sell, we continue to see encouraging levels of demand for our homes.
Outlet openings were as predicted weighted towards the second-half. Although the Group opened 53 new outlets in the year, these were more than offset by closures that ran ahead of forecast including a few ongoing temporary closures due to planning and land drawdown delays. We operated from an average of 124 outlets in the year. As our larger sites come on-stream, we expect to open and close fewer outlets in financial year 2019. As a consequence, we are forecasting a small increase in the average number of outlets that will be operating throughout the year.
We live in challenging political and economic times. We can however draw comfort from knowing there remains a strong demand for new homes supported by both a competitive mortgage market and the highly successful Help to Buy scheme.
We are well-placed to meet the challenges ahead. Our focus on design means our homes are desirable and in sought-after places and we have entered the new financial year with a record order book. We have some excellent new sites in the pipeline that will underpin current sales rates as they come on-stream.
I am confident given the talent, dedication and commitment of our team and wider workforce, we remain in a strong position to overcome any political and economic stumbling-blocks to deliver excellent results in 2019 and beyond.
John Tutte
Group Chief Executive
Financial Review
Profitability
The Group once again delivered record financial results with revenue of £1.92bn (2017: £1.66bn) and profit before tax of £380m (2017: £315m). This was achieved by completing a record 5,718 new homes (5,913 including our Joint Venture).
Total Group revenue rose 16% to £1.9bn. This comprised private homes revenue which increased by 14% to £1.8bn (2017: £1.5bn) as a result of a 7% increase in private homes legal completions and a 7% increase in average selling price, social homes revenue of £145m (2017: £115m) and other revenue of £20m (2017: £12m) from land sales.
As a result of the increase in revenue, gross profit increased by £64m in the year to £469m (2017: £405m) giving a gross margin of 24.4% in line with the previous year.
The strong revenue growth has generated an operating profit for the year of £382m (2017: £322m), a 19% increase. This represents an operating margin of 19.9% (2017: 19.4%). This 50 basis point margin increase is due to tight control of costs leading to a reduction in administrative expenses as a percentage of revenue from 5.0% to 4.5%.
Net financing costs at £7m were £1m lower than the prior year due to the improved cash position in 2018. We had an average positive cash balance during the year of £22m compared to average net debt of £67m in 2017.
There was also a £5m after tax contribution from our Joint Venture on the Morello, Croydon development (2017: £1m) which delivered 195 legal completions in (2017: 97). This Joint Venture development is now complete.
As a result, the Group delivered a record profit before tax of £380m (2017: £315m) in the year with basic earnings per share up 22% at 85.3p (2017: 70.2p).
Tax
The corporation tax charge for the year was £72m (2017: £62m). The Group's tax rate for 2018 was 19% (2017: 19.75%). The normalised rate of tax for the year ending 30 June 2019 is projected to be 19% based on rates which are substantively enacted currently.
The Group paid £74m of corporation tax in the year (2017: £56m) following the normal quarterly pattern. Payments will continue in the normal quarterly pattern until the new legislation for corporation tax payments by very large companies takes effect for our financial year ending 30 June 2020, which will bring our instalment payments forward by four months.
Dividends
The Board has proposed a 2018 final dividend of 19p per share which will be paid on 13 November 2018 to Shareholders on the register on 21 September 2018, subject to Shareholder approval at the 2018 Annual General Meeting. This is a 73% increase on last year. The full year dividend is 28p (2017:17p) and a payout ratio of 33% of earnings (2017: 24%). In 2017 we announced our intention to progressively increase the dividend payout ratio to 33% over the medium term. As a result of our ongoing strong cash position we have been able to meet this commitment earlier than expected.
The Group paid dividends of £74m (2017: £44m) during the year.
Returns
Net assets at 30 June 2018 were £1,483m (2017: £1,235m), a 20% increase. Capital employed at the same date was £1,420m (2017: £1,308m) up 9%. Our return on capital employed continued to benefit from improved capital turn and higher profits and increased in the year from 26.0% to 28.5%. Return on equity also increased slightly from 27.7% to 28.0%.
Inventories
Our investment in land increased by £127m, or 10% in the year to £1,439m (2017: £1,312m) reflecting the attractive land market and our success in securing sites to best utilise our product and placemaking skills on acceptable terms. Over a third of our current land holdings additions in 2018 came from our forward land holdings broadly in line with the c.40% five year average contribution.
Our owned plot cost has increased by £1,000 per plot to £71,000 at June 2018 (2017: £70,000), reducing slightly to 19% of the average selling price of private legal completions in the year (2017: 20%).
Our investment in work in progress increased by £48m, up 7% year on year to £779m (2017: £731m). As a percentage of Homes turnover it reduced from 44% to 41% in part benefiting from the first legal completions off our Colindale Gardens development in North London.
Land creditors increased by £36m to £387m at June 2018 (2017: £351m) representing 27% of gross land value in line with the prior year.
Receivables
Trade receivables decreased by £5m during the year to £16m (2017: £21m) due to the ongoing receipt of historic shared equity scheme monies. Other receivables increased from £21m to £29m partly due to the timing of the recovery of VAT on land payments.
Payables
Trade payables, customer deposits and accruals increased by £30m to £452m (2017: £422m) again reflecting increased levels of production activity.
Cash flow and Net Cash/(Debt)
Net cash stood at £63m at June 2018 compared to net debt of £73m at June 2017. This significant movement reflects a cash inflow generated from operations of £276m (2017:£189m). This equates to a cash conversion from EBITDA of 72% in 2018, up from 58% in 2017. Together with a net £26m cash inflow from our Joint Ventures, this more than funded the growth in the business and the increase in both dividend distributions and corporation tax payments made in the year.
Financing and Treasury Management
In the light of the ongoing improving cash position, on 31 January 2018 we reduced our committed unsecured syndicated loan facility by £100m to £250m and extended its maturity from March 2020 to December 2022. We also cancelled a £15m unsecured bilateral facility.
Redrow remains a UK based housebuilder and therefore the main focus of its financial risk management surrounds the management of liquidity and interest rate risk. Financial management at Redrow is conducted centrally using policies approved by the Board.
(i) Liquidity
The Group regularly prepares and reviews its cash flow forecasts which are used to manage liquidity risks in conjunction with the maintenance of appropriate committed banking facilities to ensure adequate headroom.
Facilities are kept under regular review and the Group maintains regular contact with its banks and other financial institutions; this ensures Redrow remains attuned to new developments and opportunities and that our facilities remain aligned to our strategic and operational objectives and market conditions.
Our current banking syndicate comprises six banks and in addition to our committed facilities, Redrow also has further uncommitted bank facilities which are used to assist day to day cash management.
(ii) Interest rate risk
The Group is exposed to interest rate risk as it borrows money at floating rates. Redrow uses simple risk management products, notably sterling denominated interest rate swaps, as appropriate to manage this risk. Such products are not used for speculative or trading purposes.
Redrow regularly reviews its hedging requirements. No hedging was undertaken in the year.
Pensions
As at June 2018, the Group's financial statements showed a £22m surplus (2017: £2m deficit) in respect of the defined benefits section of The Redrow Staff Pension Scheme (which closed to future accrual with effect from 1 March 2012). The £24m improvement is mainly due to the increase in corporate bond yields along with a decrease in the market's long-term expectations for inflation which have served to decrease the liability values. In addition new census data used for the Actuarial Valuation at 30 June 2017 was incorporated which reduced the benefit obligation by £5m.
Barbara Richmond
Group Finance Director
Consolidated Income Statement
| 12 months ended 30 June | | 2018 | 2017 |
| | Note | £m | £m |
| Revenue | | 1,920 | 1,660 |
| Cost of sales | | (1,451) | (1,255) |
| Gross profit | | 469 | 405 |
| Administrative expenses | | (87) | (83) |
| Operating profit | | 382 | 322 |
| Financial income | | 3 | 4 |
| Financial costs | | (10) | (12) |
| Net financing costs | | (7) | (8) |
| Share of profit of joint ventures after interest and taxation | | 5 | 1 |
| Profit before tax | | 380 | 315 |
| Income tax expense | 2 | (72) | (62) |
| Profit for the year | | 308 | 253 |
| Earnings per share - basic | 4 | 85.3p | 70.2p |
| - diluted | 4 | 85.2p | 70.0p |
| | | 2018 | 2017 |
| 12 months ended 30 June | | £m | £m |
| | | | |
| Profit for the year | | 308 | 253 |
| Other comprehensive income/(expense) | | | |
| Items that will not be reclassified to profit or loss | | | |
| Remeasurements of post-employment benefit obligations | | 22 | (8) |
| Deferred tax on actuarial (gains)/losses taken directly to equity | | (4) | 1 |
| Other comprehensive income/(expense) for the year net of tax | | 18 | (7) |
| Total comprehensive income for the year | | 326 | 246 |
Balance Sheet
| | | As at 30 June | |
| | | 2018 | 2017 |
| | Note | £m | £m |
| Assets | | | |
| Intangible assets | | 2 | 2 |
| Property, plant and equipment | | 15 | 16 |
| Investments | | 6 | 27 |
| Deferred tax assets | | 4 | 5 |
| Retirement benefit surplus | | 22 | - |
| Trade and other receivables | | 8 | 11 |
| Total non-current assets | | 57 | 61 |
| | | | |
| Inventories | 5 | 2,218 | 2,043 |
| Trade and other receivables | | 42 | 35 |
| Cash and cash equivalents | 8 | 90 | 62 |
| Total current assets | | 2,350 | 2,140 |
| | | | |
| Total assets | | 2,407 | 2,201 |
| | | | |
| Equity | | | |
| Retained earnings at 1 July 2017 | | 1,131 | 937 |
| Profit for the year | | 308 | 253 |
| Other comprehensive income/(expense) for the year | | 18 | (7) |
| Dividend Paid | | (74) | (44) |
| Movement in LTIP/SAYE | | (4) | (8) |
| Retained earnings | | 1,379 | 1,131 |
| Share capital | 9 | 37 | 37 |
| Share premium account | | 59 | 59 |
| Other reserves | | 8 | 8 |
| Total equity | | 1,483 | 1,235 |
| | | | |
| Liabilities | | | |
| Bank loans | 8 | 5 | 90 |
| Trade and other payables | 6 | 178 | 197 |
| Deferred tax liabilities | | 5 | 3 |
| Retirement benefit obligations | | - | 2 |
| Long-term provisions | | 9 | 8 |
| Total non-current liabilities | | 197 | 300 |
| | | | |
| Bank overdrafts and loans | 8 | 22 | 45 |
| Trade and other payables | 6 | 671 | 585 |
| Current income tax liabilities | | 34 | 36 |
| Total current liabilities | | 727 | 666 |
| | | | |
| Total liabilities | | 924 | 966 |
| | | | |
| Total equity and liabilities | | 2,407 | 2,201 |
| | | | |
| Redrow plc Registered no. 2877315 | | | |
Statement of Changes in Equity
| | | 2018 | 2017 |
| £m | £m | ||
| 12 months ended 30 June | | | |
| Profit for the year | | 308 | 253 |
| Other comprehensive income/(expense) for the year | | 18 | (7) |
| Total comprehensive income relating to the year (net) | | 326 | 246 |
| Dividend paid | | (74) | (44) |
| Movement in LTIP/SAYE | | (4) | (8) |
| Net increase in equity | | 248 | 194 |
| | | | |
| Opening equity | | 1,235 | 1,041 |
| Closing equity | | 1,483 | 1,235 |
Statement of Cash Flows
| | | 12 months ended 30 June | |
| | | 2018 | 2017 |
| | Note | £m | £m |
| Cash flows from operating activities | | | |
| Operating profit before financing costs | | 382 | 322 |
| Depreciation and amortisation | | 3 | 2 |
| Adjustment for non-cash items | | (6) | (5) |
| Operating profit before changes in working capital and provisions | 379 | 319 | |
| | | | |
| (Increase)/decrease in trade and other receivables | | (5) | 6 |
| Increase in inventories | | (175) | (140) |
| Increase in trade and other payables | | 76 | 3 |
| Increase in provisions | | 1 | 1 |
| Cash inflow generated from operations | | 276 | 189 |
| | | | |
| Interest paid | | (4) | (5) |
| Tax paid | | (74) | (56) |
| | | | |
| Net cash inflow from operating activities | | 198 | 128 |
| | | | |
| Cash flows from investing activities | | | |
| Acquisition of software, property, plant and equipment | | (2) | (1) |
| Net receipts from/(payments to) joint ventures - continuing operations | 26 | (1) | |
| Net cash inflow/(outflow) from investing activities | | 24 | (2) |
| | | | |
| Cash flows from financing activities | | | |
| Issue of bank borrowings | 7 | 5 | 90 |
| Repayment of bank borrowings | 7 | (90) | (230) |
| Purchase of own shares | | (12) | (16) |
| Dividend paid | | (74) | (44) |
| Net cash (outflow) from financing activities | | (171) | (200) |
| | | | |
| Increase/(decrease) in net cash and cash equivalents | | 51 | (74) |
| Net cash and cash equivalents at the beginning of the year | | 17 | 91 |
| Net cash and cash equivalents at the end of the year | 8 | 68 | 17 |
NOTES
1. Basis of preparation
The above results and the accompanying notes do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006.
The Auditors have reported on the Group's statutory accounts for the year ended 30 June 2018 under s495 of the Companies Act 2006, which do not contain a statement under s498 (2) or s498 (3) of the Companies Act 2006 and are unqualified. The statutory accounts for the year ended 30 June 2017 have been delivered to the Registrar of Companies and the statutory accounts for the year ended 30 June 2018 will be filed with the Registrar in due course.
The audited consolidated financial statements from which these results are extracted have been prepared under the historical cost convention and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The principal accounting policies have been applied consistently in the periods.
2. Income Tax expense
| | | 12 months ended 30 June | |
| | | 2018 | 2017 |
| | | £m | £m |
| Current year | | | |
| UK Corporation Tax | | 73 | 62 |
| | | | |
| Deferred tax | | | |
| Origination and reversal of temporary differences | | (1) | - |
| Total income tax charge in income statement | | 72 | 62 |
| | | | |
| Reconciliation of tax charge for the year | | | |
| Profit before tax | | 380 | 315 |
| | | | |
| Tax calculated at UK Corporation Tax Rate | | 72 | 62 |
| Tax charge for the year | | 72 | 62 |
3. Dividends
The following dividends were paid by the Group:
| | | 2018 | 2017 |
| | | £m | £m |
| Prior year final dividend per share of 11.0p (2017: 6.0p); current year interim dividend per share of 9.0p (2017: 6.0p) | | 74 | 44 |
| | | 74 | 44 |
The Board decided to propose a final dividend of 19.0p per share in respect of 2018 (£70m (2017: 11.0p £41m)). The dividend has not been provided for and there are no income tax consequences.
4. Earnings per ordinary share
The basic earnings per share calculation for the year ended 30 June 2018 is based on the weighted average number of shares in issue during the period of 361m (2017: 361m) excluding those held in trust under the Redrow Long Term Incentive Plan (9m shares (2017: 9m shares)), which are treated as cancelled.
Diluted earnings per share has been calculated after adjusting the weighted average number of shares in issue for all potentially dilutive shares held under unexercised options.
12 months ended 30 June 2018
| | Earnings | No. of shares | Per share |
| | £m | millions | pence |
| Basic earnings per share | 308 | 361 | 85.3 |
| Effect of share options and SAYE | - | 1 | (0.1) |
| Diluted earnings per share | 308 | 362 | 85.2 |
12 months ended 30 June 2017
| | Earnings | No. of shares | Per share |
| | £m | millions | pence |
| Basic earnings per share | 253 | 361 | 70.2 |
| Effect of share options and SAYE | - | 2 | (0.2) |
| Diluted earnings per share | 253 | 363 | 70.0 |
5. Inventories
| | | As at 30 June | |
| | | 2018 | 2017 |
| | | £m | £m |
| Land for development | | 1,443 | 1,339 |
| Work in progress | | 781 | 723 |
| Stock of showhomes | | 67 | 57 |
| | | 2,291 | 2,119 |
| Payments on account | | (73) | (76) |
| | | 2,218 | 2,043 |
Inventories of £1,375m were expensed in the year (2017: £1,193m). Work in progress includes £2m (2017: £2m) in respect of part exchange properties.
Payments on account comprises £4m (2017: £27m) attributable to land and £69m (2017: £49m) attributable to work in progress.
6. Land Creditors
(included in trade and other payables)
| | | As at 30 June | |
| | | 2018 | 2017 |
| | | £m | £m |
| Due within one year | | 209 | 154 |
| Due in more than one year | | 178 | 197 |
| | | 387 | 351 |
7. Borrowings and loans
| | | As at 30 June | |
| | | 2018 | 2017 |
| | | £m | £m |
| Opening net book amount | | 90 | 230 |
| Issue of bank borrowings | | 5 | 90 |
| Repayment of bank borrowings | | (90) | (230) |
| Closing net book amount | | 5 | 90 |
At 30 June 2018 the Group had total unsecured bank borrowing facilities of £253m representing £250m committed facilities and £3m uncommitted facilities.
8. Analysis of net cash/(debt)
| | | As at 30 June | |
| | | 2018 | 2017 |
| | | £m | £m |
| Cash and cash equivalents | | 90 | 62 |
| Bank overdrafts | | (22) | (45) |
| Net cash and cash equivalents | | 68 | 17 |
| Bank loans | | (5) | (90) |
| | | 63 | (73) |
9. Share capital
| | | As at 30 June | |
| | | 2018 | 2017 |
| | | £m | £m |
| Authorised | | | |
| 480,000,000 ordinary shares of 10p each | | 48 | 48 |
| Issued and fully paid | | 37 | 37 |
| | | Number of ordinary | |
| | | shares of 10p each | |
| | | | |
| As at 1 July 2017 and 30 June 2018 | | 369,799,938 | |
10. Shareholder Enquiries
The Registrar is Computershare Investor Services PLC.
Shareholder enquiries should be addressed to the Registrar at the following address:
Registrars Department
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
11. Annual General Meeting
The Annual General Meeting of Redrow plc will be held at the offices of Instinctif Partners, 1st floor, 65 Gresham Street, London EC2V 7NQ on 7 November 2018, commencing at 11.30am. A copy of this statement is available for inspection at the registered office.
LEI Number:
2138008WJZBBA7EYEL28
Announcement Classification:
1.1: Annual financial and audit reports