Last updated 15 September 2022
Redrow Plc
Redrow is one of the UK’s biggest housebuilders and sells more than 5,000 units a year. Steve Morgan founded the group in 1974 and Redrow initially focused on civil engineering, particularly trench digging and cable laying, but expanded into building in 1980 and later that decade into house building.
Redrow listed on the London Stock Exchange in 1994 and is a member of the mid-ranking FTSE 250 index. Now a pure house builder, the group turns over more than £2 billion a year.
Financials
Turnover in the 12 months to June 2021 rose 10% to £2,140 million (2021: £1,939 million) but pre-tax profits fell back to £246 million (2021: £314 million). At an operating level, profits dropped to £250 million (2021: £321 million (2020: £148 million).
To view the full-year financials for Redrow Plc, visit Companies House and use Company ID 2877315.
Operations
Redrow was revitalised when founder Steve Morgan began to reassert his hold on the business. Morgan’s stake had dwindled to just 6% of the group’s shares but in early 2009 he began rebuilding his stake, which grew to 29% and, in March 2009, resulted in Redrow’s founder returning to the boardroom as chairman. His influence was soon felt with Redrow acquiring Harrow Estates, a company specialising in purchasing, remediation and re-planning of brownfield sites, which was then very much part of the government’s agenda.
In February 2017, the group acquired Radleigh Homes, a Derbyshire-based housebuilder with a landbank of 1,300 plots with planning permission. In September 2018, Morgan reduced his stake in Redrow to around 21% after selling £153 million-worth of stock. Two months later, Morgan stood down from the Redrow board and ended a four-decade long association with the company he founded.
After a slump in the previous year due to the impact of the pandemic, completions have bounced back but the rise slowed in the latest year to 5,715 units (2021: 5,620 units). The average selling price rose 9% to £370,800 (2021: £338,500), driven by a private ASP, which also rose 9% to £428,900 (2021: £391,900).
Like most mainland housebuilders, Redrow has no exposure to the ailing Northern Irish market, and the company exited Scotland in 2011 with the sale of this £31 million turnover business to Springfield Properties for £49 million.
Glenigan Data
In 2021, Redrow submitted 57 detailed planning applications (2020: 35) to build a total of 7,951 units (2020: 4,194 units). This total ranked the group in fifth position in Glenigan’s 2021 ranking of the top 50 housebuilders by planning activity (2020: 11th).
Conclusion: Rebound slowing
Redrow performed strongly in the latest trading year as the group continued to recover from the worst of the Covid-19 pandemic and underlying pre-tax profits hit a record level of £410 million at an underlying level.
However, the cost of remediation work on flats built by Redrow prior to the Grenfell disaster and subsequent planning changes cost the group £164 million, which sent profits at all levels into reverse.
The rise in completions has slowed and the order book, at £1.44 billion at June 2022, is only 1% up on the previous year’s total of £1.43 billion as the end of the stamp duty holiday and Help to Buy buoyed impact trading.
Cash buyers represented 33% (2021: 23%2) of latest reservations as the group continues to tap into the resilient downsizer market and, after a fall in the average number of sales outlets to 111 (2021: 119), this measure is expected to increase to around 120 outlets in 2023.
Redrow has completed the exit from London with six sites not earmarked for development now sold or acquisitions not completed, but the overall landbank has been supplemented by 5,958 plots (2021: 8,290 plots added) and the landbank strengthened to 29,600 plots (2020: 29,460 plots).
In 2022, revenue from private houses rose 23% to £1.7 billion (2021: £1.4 billion) while revenue from private apartments fell 28% to £0.2 billion (2021: £0.3 billion). This shift is reflected in Glenigan’s data on Redrow’s planning programme, which has rebounded – although remains nearly a quarter smaller than the pre-pandemic figure – but a shift outside of London that resulted in a strong focus on housing in planning applications has strengthened. In 2021, 96% of the units were some form of house and the balance were apartments or sheltered housing (2020: 89% housing/11% flats).
The group also appears to be proposing smaller developments. In 2021, the average planning application submitted by Redrow included 139 units (2020: 120 units).
With land acquisitions slowing, net cash has strengthened significantly to £288 million (2021: £160 million). Going forward, the management expects revenue to reach £2.4 billion by 2024, but the impact of the cost of living crisis and an increase in interest rates on mortgages to a level that a generation of new home buyers have never seen before both cast a pall over the wider housing market.
Winning Work With Redrow
Redrow is a member of a number of trade bodies and industry initiatives from the Home Builders Federation to working with environmental and recycling programme Waste and Resources Action Programme (WRAP). Redrow adheres to the principals of Lean Construction and aims to source ethically and is a member of the Supply Chain School. Details on the group’s involvement at the SCS can be found here.
The group aims to operate in a partnering fashion in all areas, including materials, transportation and delivery, packaging, health and safety, workforce competency and training and welfare as well as pricing and payment terms. All suppliers are given a Supplier Service Agreement with which they agree to comply as part of the basis of any order. Information on Redrow’s sustainability policy can be found here.
Companies interested in joining Redrow’s supply chain are, in the first instance, asked to write to group commercial manager Stephen Horridge at: Redrow Plc, Redrow House St. David”s Park Ewloe Flintshire CH5 3RX
Key Redrow procurement contacts include:
Operations director – Andy Whiting
Tel: 01244-520044
Purchasing Manager – Wayne Love
Tel: 01244-520044
Research and Sustainability Manager – Nigel Smith
Tel: 01244-520044