REG - Redrow PLC - Final Results <Origin Href="QuoteRef">RDW.L</Origin>

RedrowAnnouncement

05/09/2017 07:05

RNS Number : 7835P
Redrow PLC
05 September 2017
Tuesday 5 September 2017
Redrow plc
Final results for the year to 30 June 2017
CONTINUING TO DELIVER GROWTH
Financial Results
2017
2016
% Change
Legal Completions (incl. JV)
5,416
4,716
 +15
Revenue
1.66bn
1.38bn
 +20
Operating Profit
322m
261m
 +23
Profit before tax
315m
250m
 +26
EPS
70.2p
55.4p
 +27
Order Book (incl. JV)
1.1bn
967m
 +14
ROCE
26.0%
23.7%
 +10
Full Year Dividend
17p
10p
 +70
 
Financial highlights
 Group revenue up 20% to a record 1.66bn driven by higher legal completions and a 7% increase in Average Selling Price to 309,800
 Operating margin rose to 19.4% (2016: 18.9%)
 Record pre-tax profit of 315m, up 26% (2016: 250m)
 Earnings per share up 27% to70.2p 
 Record Order Book, up 14% to 1.1bn
 Return on Capital Employed up 10% to 26.0% (2016: 23.7%)
 Net debt reduced from 139m in June 2016 to 73m in June 2017
 Proposed final dividend of 11p per share, making 17p for the full year, up 70%
Operational highlights
 Continuing to deliver on growth strategy:
o Legal completions up 15% to 5,416 (2016: 4,716) 
o Outlets increased 3% to 132 (2016: 128)
o Number of employees up 12% to 2,200
 5,419 plots added to the current land bank of which over 60% were converted from forward land
Steve Morgan, Chairman of Redrow, said:
"Redrow has continued to build much-needed new homes across England and Wales with completions up 15% to over 5,400.
"Our growth strategy has delivered record financial results for the fourth consecutive year. Pre-tax profits were 315m, up 26% on the prior year, with a 27% increase in earnings per share to 70.2p.
"Redrow began the current financial year with a record order book, up 14% year on year to 1.1bn. Sales in the first 9 weeks are very encouraging, up 8% on a strong comparator last year.
"Based on the strength of our current performance and the robust demand that we are seeing, we are today updating our medium term guidance. We now expect turnover in 2020 of c2.2bn and pre-tax profit of c430m. We expect the dividend in 2020 to rise to 32p per share.
"Our strategy of continued growth for the business is on track. I am confident this will be another year of significant progress for Redrow."
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 5012554#.
CHAIRMAN'S STATEMENT
I am delighted to report that for the fourth consecutive year Redrow has delivered record financial results, and it has done so by completing 5,416 new homes (including our Croydon Joint Venture), an increase of 15% on the prior year.
Financial Results
Group turnover rose by 20% to 1.66bn (2016: 1.38bn) due to the combination of the increase in legal completions to 5,416 combined with a 7% rise in average selling price to 309,800 (2016: 288,600). The increase in average selling price was mainly due to the continued growth of our southern businesses.
Gross margin improved by 20 basis points to 24.4% and is now at close to normal levels as we have completed construction on almost all the sites purchased before the downturn.
Operating expenses increased by 10m to 83m as we continue to invest in the expansion of the business. For the first time these include the operating expenses of the new East Midlands division from February 2017, created from the acquisition of Radleigh Homes. Due to the overall growth of the business, operating expenses reduced as a percentage of turnover from 5.3% in 2016 to 5% in 2017.
Operating profit was 61m higher at 322m (2016: 261m), with an operating margin of 19.4% (2016: 18.9%).
Pre-tax profits were 315m, up 26% (2016: 250m) including a 1m after tax contribution from our Croydon Joint Venture. Earnings per share increased by 27% to 70.2p (2016: 55.4p).
This strong trading performance, along with continued control of working capital, enabled us to reduce our net debt to 73m (2016: 139m) at the end of the financial year, representing a gearing ratio of 6% (2016: 13%).
The improvement in profitability and control of working capital has resulted in Return on Capital Employed and Return on Equity of the business increasing to 26.0% (2016: 23.7%) and 27.7% (2016: 26.1%) respectively.
In March 2017 we announced our intention to increase our dividend payout ratio to 33% over the medium term. In line with this, the Board is proposing a final dividend of 11p per share (2016: 6p) making 17p in total for the year, an increase of 70% on 2016. Subject to shareholder approval at the Annual General Meeting, this will be paid on 10 November 2017 to shareholders on the register at the close of business on 22 September 2017.
We are also taking the opportunity to update our medium term guidance. Subject to market conditions remaining unchanged we expect our turnover in 2020 to be c2.2bn and our pre tax profit to be c430m giving fully diluted earnings per share of 95p. With our projected 33% dividend payout, the dividend in 2020 will rise to 32p per share.
Market
Overall housing transactions in the UK have reduced as a consequence of the political uncertainty and increasing cost of moving home, particularly Stamp Duty which, over the last seven years, has increasingly become a tax on mobility. Nevertheless, demand in the new homes market remains robust and we have not seen any impact from recent domestic and international political events.
Mortgage availability is good and interest rates on mortgages have again improved. The Government's Help to Buy scheme continues to support both home buyers and the new homes industry. In this financial year 1,882 of our private reservations utilised Help to Buy, up from 1,521 in 2016. Help to Buy has boosted housing supply and we look forward to working with government to consider the future of the scheme beyond 2021.
Land and Planning
Redrow entered the 2017 financial year with a very strong land bank. As a consequence, when the land market slowed in the first half following the Brexit vote we were not adversely impacted. The land market has since picked up and we remain active but disciplined in pursuing the right opportunities to further our growth.
As announced at the Half Year, in February 2017 we acquired Radleigh Homes, a Derby based regional housebuilder. Now re-named Redrow East Midlands, I am pleased to say that it has been fully integrated into the Group and made a positive contribution in the second half.
People
Eight years after returning to Redrow, I have decided to ease back from a full time Executive role towards a Non-Executive role; the transition is to take place during the current financial year. It is my intention to continue to focus with the Board on the strategic development of the business and I will retain my keen involvement with the product and key important projects.
On 3 July we announced the change in non-executive directors with the appointment of Vanda Murray OBE and the retirement of Liz Peace from the Board. I would like to welcome Vanda to Redrow; I am sure that she will add considerable value and experience to the business. I also thank Liz for her valuable contribution during her tenure on the Board and wish her well in her new roles.
The continued growth of the business has meant we have again expanded our workforce adding 228 new direct jobs, a 12% increase in the year. We now employ 2,200 people directly with over 30,000 jobs supported in total through our subcontractors and suppliers.
We continue to meet our commitment to having 15% of our workforce in training and development. A record number of 150 apprentices, trainees and graduates will join the Group at the start of this new training year.
Our outstanding growth performance over recent years is down to the hard work and effort of my colleagues here at Redrow together with our loyal subcontractors and suppliers. I would like to thank them all for their continued support.
Current Trading and Outlook
Redrow began the current financial year with a record order book of 1.1bn (including our Croydon Joint Venture), up 14% on last year. Sales in the first 9 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 the business.
Steve Morgan
Chairman
CHIEF EXECUTIVE'S REVIEW
Delivering Growth
I am delighted to report that the Group has again delivered outstanding results for the year. We have continued to grow the business and for the first time in our history we completed over 5,000 new homes in a financial year. Our success is attributable to a robust business model implemented by a talented team of people across a well-structured divisional organisation.
These exceptional results were achieved against an uncertain political and economic backdrop as a result of Brexit and also an ongoing requirement to manage an industry-wide shortage of skills to meet our build programmes.
In the year we delivered 5,416 new homes (including JV's), an increase of 15% on the previous year. Turnover grew by 20% to 1.66 billion and pre-tax profits were up 26% to 315m.
During the year we acquired Radleigh Homes, a small Derby-based homebuilder. The acquisition allowed us to accelerate the opening of a new East Midlands division and has given us a pipeline of excellent sites from which to expand. We now have 14 operational divisions across the Group including Colindale Gardens - our major regeneration project in North London.
The strategic decision we took in 2015 to focus our London operation on the outer boroughs was timely. We have now substantially completed our high-end Central London developments. Significant volumes of completions are now coming through from our Outer London sites and these are set to increase materially as Colindale completions begin to come on-stream later in 2017.
Overall our compound rate of growth has been exceptional in recent years. However, whilst our strategy is to continue to grow the business, the rate of growth is expected to moderate over time as divisions reach optimal scale and our scope for divisional expansion reduces.
Creating Great Places to Live
Long before the recent resurgence of interest in Garden Towns and Villages, Redrow was leading the way: in the nineties we masterplanned and developed Kingsmead in Cheshire - a thriving community of around 2,000 homes. The development has stood the test of time and continues to be a sought-after location to live. Many of the design principles that made Kingsmead such a success are being applied to the Garden Villages we are developing today.
Our major Garden Village developments at Woodford in Cheshire, Ebbsfleet in Kent, Tamworth in the Midlands and Plasdwr in Cardiff are designed to create attractive and great places to live. They are well-located to take advantage of excellent transport links but more importantly, are set in landscaped environments where families can live and enjoy a healthy lifestyle. We have also applied the same principles to our Colindale Gardens development in North London. This high density new Urban Village development is just a short walk from the tube and will eventually consist of over 3,000 homes set in generous areas of open space and formal gardens.
This careful approach to designing great places to live is equally applied to our smaller sites that made up a large proportion of the land we acquired in 2017.
In the year we added 5,419 plots with planning and marginally increased our owned and contracted land bank to 26,100 plots. In the first half of the year, immediately following Brexit, there were fewer opportunities in the land market and we also adopted a more cautious approach - in the second half momentum returned to our land buying and we added 3,703 plots. Our forward land pull-through was particularly strong and accounted for 3,356 plots representing over 60% of the plots acquired in the year.
Our Central divisions had an excellent year due to both the Radleigh acquisition and a sizeable contribution from forward land. They now account for 25% of the owned and contracted land bank compared to 22% last year. Over half (54%) of the Group's land bank is in the South and Greater London with the balance of 21% located in the North.
Notwithstanding the strong forward land pull-through, we increased the forward land bank to 26,400 plots by adding 4,000 new plots.
At a strategic level we saw planning improve following the introduction of the National Planning Policy Framework in 2012. There are now signs this improvement has stalled as local authorities fail to get Adopted Local Plans in place. This is adding to the delays that continue to frustrate the detailed planning and technical approval process. We have also seen timescales for appeals extend which unfortunately reduces the pressure on local authorities to make timely decisions.
Our caution in the land market in the first-half combined with planning delays will inevitably have some impact on the timing of new outlets coming on-stream. As a consequence, outlets are only expected to marginally increase over the course of the next year. However, with our strong land bank and output per outlet continuing to steadily increase, we remain firmly on-track to meet our growth plans.
Building Responsibly
Ensuring our sites are safe places to work, visit and live is central to our build operations. We are also conscious of our responsibilities to protect the environment and to be considerate to those affected by our building works.
We continually strive to improve our build operations and we have recently achieved ISO14001 certification for our environmental management systems. We also retained our Gold rating in the annual NextGeneration Sustainability Benchmark and our 'Three Trees' status from the World Wildlife Fund.
We were also recognised in the year for our standards of Health and Safety winning one Commended and four Highly Commended Awards in the coveted NHBC Health and Safety Awards - one of the best performances amongst the major homebuilders.
Our success in the NHBC Pride in the Job Awards continued - a record 27 of our site managers received awards in this year's competition. We also won two LABC (Local Authority Building Control) awards for the quality of our site management on our high-rise apartment blocks at Colindale Gardens.
Growing output and maintaining high levels of quality and productivity remains a challenge. However, we are working hard to overcome and manage skills and a few isolated materials shortages as the industry, and its supply chain, adapts and invests to increase resources to meet the ongoing demand to build more new homes. We need the Government to continue to support training initiatives and in particular reach an early agreement as part of the Brexit negotiations on the status of EU workers who make such a valuable contribution to our industry.
Against these challenges and rising customer expectations, it is pleasing to report we maintained a customer recommendation score of close to 90% last year.
Valuing our People
Much of what we have achieved is attributable to the quality of land we have acquired, our award winning homes and the places we create, but fundamentally, it's about the talented people we employ and their dedication to making our business successful. It is pleasing that when industry-wide talent is in short supply so many of our people remain loyal and committed. In our most recent Employee Satisfaction Survey, 96% of colleagues said they were proud to work for Redrow.
By ensuring we create a rewarding and enjoyable place to work we are able to both retain and expand our workforce. Last year we created over 200 new jobs and increased the directly employed workforce to 2,200 people. We are seeing gratifying returns from our investment in people - in particular, it is pleasing to see so many young people building their careers with us. To support our career development programmes we have expanded our training facilities across the country opening new centres in the North West and at our Colindale Gardens development in London.
Looking Ahead
The longer-term prospects for the housing market remain encouraging: unemployment is low, mortgage rates are attractive and there is robust underlying demand for new homes. However, aside from the short-term risk of political and economic uncertainty, there are key issues that need to be addressed by Government to support future growth: in particular the status of EU workers, the future for Help to Buy and the need to revitalise stalled planning reforms.
Notwithstanding the need to address these issues, we are in a strong position to both deliver another set of record results in 2018 and to meet the ambitious targets we have set for 2020. We have a very strong order book, an excellent land bank, a sought-after product range and, above all, a talented team of people. I am confident we can overcome the challenges we face and maintain our track-record of meeting or exceeding our targets.
John Tutte
Group Chief Executive
FINANCIAL REVIEW
Profitability
This year the Group again delivered record financial results with revenue of 1.66bn (2016: 1.38bn) and profit before tax of 315m (2016: 250m), exceeding the 300m milestone for the first time. In addition it is particularly pleasing to report this was achieved by reaching a new record in the number of new homes completed by the business of 5,319.
Total Group revenue rose 20% to 1.66bn. This comprised private homes revenue which increased by 20% to 1.5bn (2016: 1.3bn) as a result of an 11% increase in private homes legal completions and an 8% increase in average selling price, social homes revenue of 115m (2016: 86m) and other revenue of 12m (2016: 21m) from land sales.
As a result of the increase in revenue, gross profit increased by 71m in the year to 405m (2016: 334m) giving a gross margin of 24.4% (2016: 24.2%). The gross margin benefited from a decrease in the proportion of our homes legal completions from provisioned land acquired before the downturn from 6% to 4% together with net House Price Inflation of 20 basis points, but these were partially offset by the impact of a 22% increase in the number of social home legal completions in the year.
The strong revenue growth has generated an operating profit for the year of 322m (2016: 261m), a 23% increase. This represents an operating margin of 19.4% (2016: 18.9%) close to our medium term target operating margin of 19.5%. 
Net financing costs at 8m were 3m lower than the prior year due to lower levels of average net debt in the year. Net debt averaged 67m during the year (2016: 174m).
There was also a 1m contribution from our Joint Venture on the Morello, Croydon development which delivered its first 97 legal completions in 2017.
As a result, the Group delivered a record profit before tax of 315m (2016: 250m) in the year which produced a basic earnings per share up 27% at 70.2p (2016: 55.4p). 
Tax
The corporation tax charge for the year was 62m (2016: 50m). The Group's tax rate for 2017 was 19.75% (2016: 20%). The normalised rate of tax for the year ending 30 June 2018 is projected to be 19% based on rates which are substantively enacted currently.
The Group paid 56m of corporation tax in the year (2016: 46m) in 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 2017 final dividend of 11p per share which will be paid on 10 November 2017, subject to Shareholder approval at the 2017 Annual General Meeting. This is an 83% increase on last year.
The Group paid dividends of 44m (2016: 30m) during the year. 
Returns
Net assets at 30 June 2017 were 1,235m (2016: 1,041m), a 19% increase. Capital employed at the same date was 1,308m (2016: 1,180m) up 11%. Our return on capital employed again benefited from increased capital turn and higher profits and increased in the year from 23.7% to 26.0%. Return on equity also increased from 26.1% to 27.7%.
Inventories
Our investment in land increased by 50m, up 4%, in the year to 1,312m (2016: 1,262m) which reflected a deliberate slowdown in land buying in the first half of the 2017 financial year following the Brexit referendum, with land buying momentum returning in the second half. A healthy 62% of our current land bank additions in 2017 came from our forward land holdings and this contribution has averaged 40% over the last five years. 
We have taken the decision to change our accounting policy in respect of forward land to align it with normal industry practice. This change to initially recognise forward land expenditure in inventory at cost and review regularly for impairment has added 30m to land assets at June 2015 and June 2016, restating previous figures and 24m to net assets, net of tax. This change of accounting policy has not affected profits in either 2017 or 2016.
Our owned plot cost has increased by 2,000 per plot to 70,000 at June 2017 (2016: 68,000), reducing slightly to 20% of the average selling price of private legal completions in the year (2016: 21%).
Our investment in work in progress increased by 90m, up 14% year on year to 731m (2016: 641m). This reflected the higher number of strategic sites in production and the levels of apartment schemes in the later stages of production in the South East. However, as a percentage of Homes turnover it reduced from 47% to 44%.
Our net realisable value provision on land and work in progress reduced by 11m to 8m in the year.
Land creditors decreased slightly by 27m to 351m at June 2017 (2016: 378m) representing 26% of land inventory (2016: 29%).
Receivables
Trade receivables decreased by 2m during the year to 21m (2016: 23m) due to the ongoing receipt of historic shared equity scheme monies.
Payables
Trade payables, customer deposits and accruals increased by 21m to 422m (2016: 401m) reflecting increased levels of production activity.
Cash flow and Net Debt
Net debt reduced by 66m to 73m at June 2017 (2016: 139m) giving gearing of 6% at June 2017 (2016: 13%). This significant reduction in net debt reflects a cash inflow generated from operations of 189m (2016: 130m) which 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
Financial management at Redrow is conducted centrally using policies approved by the Board.
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.
(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 five 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 2017, the Group's financial statements showed a 2m deficit (2016: 6m surplus) 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 8m deterioration is mainly due to the reduction in corporate bond yields and an increase in the market's long term expectations for inflation which have served to increase the liability values. This was partially offset by an update on the assumption for life expectancy.
Barbara Richmond
Group Finance Director
Consolidated Income Statement
12 months ended 30 June
2017
2016
Note
m
m
Revenue
1,660
1,382
Cost of sales
(1,255)
(1,048)
Gross profit
405
334
Administrative expenses
(83)
(73)
Operating profit
322
261
Financial income
4
3
Financial costs
(12)
(14)
Net financing costs
(8)
(11)
Share of profit of joint ventures after interest and taxation
1
-
Profit before tax
315
250
Income tax expense
2
(62)
(50)
Profit for the year
253
200
Earnings per share - basic
4
70.2p
55.4p
 - diluted
4
70.0p
55.2p
Statement of Comprehensive Income
2017
2016
12 months ended 30 June
m
m
Profit for the year
253
200
Other comprehensive (expense)/income
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations
(8)
8
Deferred tax on actuarial losses/(gains) taken directly to equity
1
(2)
Other comprehensive (expense)/income for the year net of tax
(7)
6
Total comprehensive income for the year
246
206
Balance Sheet
 As at 30 June
Restated
2017
2016
m
m
Note
Assets
Intangible assets
2
2
Property, plant and equipment
16
17
Investments
27
25
Deferred tax assets
5
5
Retirement benefit surplus
-
6
Trade and other receivables
11
12
Total non-current assets
61
67
Inventories
5
2,043
1,903
Trade and other receivables
35
36
Cash and cash equivalents
8
62
135
Total current assets
2,140
2,074
Total assets
2,201
2,141
Equity
Retained earnings at 1 July 2016
937
769
Profit for the year
253
200
Other comprehensive (expense)/income for the year
(7)
6
Dividend Paid
(44)
(30)
Movement in LTIP/SAYE
(8)
(8)
Retained earnings
1,131
937
Share capital
9
37
37
Share premium account
59
59
Other reserves 
8
8
Total equity
1,235
1,041
Liabilities
Bank loans
8
90
230
Trade and other payables
6
197
156
Deferred tax liabilities
3
2
Retirement benefit obligations
2
-
Long-term provisions
8
7
Total non-current liabilities
300
395
Bank overdrafts and loans
8
45
44
Trade and other payables
6
585
631
Current income tax liabilities
36
30
Total current liabilities
666
705
Total liabilities
966
1,100
Total equity and liabilities
2,201
2,141
Redrow plc Registered no. 2877315
Statement of Changes in Equity
2017
m
2016
m
12 months ended 30 June
Profit for the year
 253
 200
Other comprehensive (expense)/income for the year
 (7)
 6
Total comprehensive income relating to the year (net)
 246
 206
Dividend paid
 (44)
 (30)
Movement in LTIP/SAYE
(8)
(8)
Net increase in equity
 194
 168
Opening equity
 1,041
 873
Closing equity
 1,235
 1,041
Statement of Cash Flows 
 12 months
 ended 30 June
2017
2016
Note
m
m
Cash flows from operating activities
Operating profit before financing costs
 322
 261
Depreciation and amortisation
 2
 1
Adjustment for non-cash items
 (5)
 (5)
Operating profit before changes in working capital and provisions
 319
 257
Decrease in trade and other receivables
 6
 7
Increase in inventories
 (140)
 (373)
Increase in trade and other payables
 3
 239
Increase in provisions 
 1
 -
Cash inflow generated from operations
 189
 130
Interest paid
 (5)
 (6)
Tax paid
 (56)
 (46)
Net cash inflow from operating activities
 128
 78
Cash flows from investing activities
Acquisition of software, property, plant and equipment
 (1)
 (6)
Net payments to joint ventures - continuing operations
 (1)
 (11)
Net cash (outflow) from investing activities
 (2)
 (17)
Cash flows from financing activities
Issue of bank borrowings
7
 90
 230
Repayment of bank borrowings
7
 (230)
 (150)
Purchase of own shares
 (16)
  (16)
Dividend paid
 (44)
 (30)
Net cash (outflow)/inflow from financing activities
 (200)
 34
(Decrease)/increase in net cash and cash equivalents
  (74)
95
Net cash and cash equivalents at the beginning of the year
 91
(4)
Net cash and cash equivalents at the end of the year
8
 17
91
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 2017 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 2016 have been delivered to the Registrar of Companies and the statutory accounts for the year ended 30June 2017 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 presented apart from the change in accounting policy in respect of Forward land. This change in accounting policy to initially recognise expenditure relating to forward land options and conditional contracts in inventory at cost has given rise to the restatement together with a reclassification of customer deposits.
2. Income Tax expense
 12 months
 ended 30 June
2017
2016
m
m
Current year
UK Corporation Tax 
62
51
Deferred tax
Origination and reversal of temporary differences
-
(1)
Total income tax charge in income statement
62
50
Reconciliation of tax charge for the year
Profit before tax
315
250
Tax calculated at UK Corporation Tax Rate
62
50
Tax charge for the year
62
50
3. Dividends
The following dividends were paid by the Group:
2017
2016
m
m
Prior year final dividend per share of 6.0p (2016: 4.0p); current year
interim dividend per share of 6.0p (2016: 4.0p)
44
30
44
30
The Board decided to propose a final dividend of 11.0p per share in respect of 2017 (41m (2016: 6.0p 22m)). 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 2017 is based on the weighted average number of shares in issue during the period of 361m (2016: 361m) excluding those held in trust under the Redrow Long Term Incentive Plan (9m shares (2016: 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 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
12 months ended 30 June 2016 
Earnings
No. of shares
Per share
m
 millions
 pence
Basic earnings per share
200
361
55.4
Effect of share options and SAYE
 -
1
(0.2)
Diluted earnings per share 
200
362
55.2
5. Inventories
 As at
 30 June
Restated
2017
2016
m
m
Land for development
1,339
1,282
Work in progress
723
600
Stock of showhomes
57
54
2,119
1,936
Payments on account
(76)
(33)
2,043
1,903
Inventories of 1,193m net of 11m net realisable value provision utilisation, were expensed in the year (2016: 992m net of 9m net realisable value provision utilisation). Work in progress includes 2m (2016: 3m) in respect of part exchange properties.
Payments on account comprises 27m (2016: 20m) attributable to land and 49m (2016: 13m) attributable to work in progress.
Of the net realisable value provision of 8m (2016: 19m), nil (2016: 9m) is attributed to land and 8m (2016: 10m) is attributed to work in progress.
The net realisable value provision movement is analysed below:
Total
 m
As at 1 July 2016
19
Utilised during the year
(11)
Created during the year
1
Released during the year
(1)
As at 30 June 2017
8
The net realisable value provisions of 1m and 1m created and released in the year are the result of our review at the balance sheet date in the context of prevailing market conditions and the
re-assessment of selling prices and costs. They represent the creation of additional provisions against sites acquired pre June 2009 and the reduction of provisions already in place against such sites as required.
6. Land Creditors 
 (included in trade and other payables)
 As at
 30 June
2017
2016
m
m
Due within one year
 154
 222
Due in more than one year
 197
 156 
 351
 378
7. Borrowings and loans
 12 months
 ended 30 June
2017
2016
 m
m
Opening net book amount
230
150
Issue of bank borrowings
90
230
Repayment of bank borrowings
(230)
(150)
Closing net book amount
90
230
At 30 June 2017 the Group had total unsecured bank borrowing facilities of 368m, representing 365m committed facilities and 3m uncommitted facilities.
8. Analysis of net debt
 As at
 30 June
2017
 2016
 m
 m
Cash and cash equivalents
62
135
Bank overdrafts
(45)
(44)
Net cash and cash equivalents
17
91
Bank loans
(90)
(230)
(73)
(139)
9. Share capital
 As at
 30 June
2017
2016
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 2016 and 30 June 2017
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 Village Urban Resort St Davids, St. David's Park, Flintshire on 9 November 2017, commencing at 12.00 noon. A copy of this statement is available for inspection at the registered office.

This information is provided by RNS
The company news service from the London Stock Exchange
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