Housebuilder turns last year鈥檚 拢44m loss into a 拢700,000 profit in figures released this morning

Steve Morgan, chairman of housebuilder Redrow, claims his firm鈥檚 return to profitability is down to a new management team and a better product.

The firm made a loss of 拢44.2m in 2009, but returned a modest 拢700,000 in its latest set of results, released this morning. Its revenue was up from 拢302m in 2009 to 拢397m, while operating profit was up from a 拢22.4m loss in 2009 to a 拢12.7m profit.

Chairman Steve Morgan said: 鈥淭he past year has been one of considerable change for Redrow - change that has resulted in a return to profitability. We have introduced a great new product which is proving popular with consumers, doubled our build output in response to an improved sales market and embarked on an ambitious land-buying programme.

鈥淎t the same time we have strengthened and restructured our management team, re-opened three regional offices and integrated Harrow Estates into the Group.  Our regional teams have coped enthusiastically with the changes and we are now well placed to respond to the demands of growing the business in a challenging environment.鈥�

The new product is the firm鈥檚 Heritage Collection, for which the average selling price was 拢180,000, 15% higher than previous houses. Overall the firm鈥檚 average selling price was 拢149,300 for the year, compared with 拢137,400 in 2009. It also saw a sharp rise in the number of completions, from 2,113 in 2009 to 2,587 in 2010.

Redrow鈥檚 net debt reduced from 拢214.6m in 2009 to 拢47.1m in 2010, while net assets rose from 拢293.5m to 拢435.9m. The shift made a huge impact on gearing, reducing it from 73% in 2009 to 11% this year.

Morgan said his big concern now is the return of first-time buyers. 鈥淚 am particularly concerned with the plight of first time buyers, who, unless assisted by their parents, are forced into saving upwards of 20% of the value of their first home by way of deposit, which compares to an historic first time buyer deposit of around 6%.  Until this issue is resolved it will remain the major constraint to the full recovery of the UK housing market with overall transactions set to continue at the current historically low levels,鈥� he said.

鈥淵oung people need help to get onto the housing ladder one way or another and it is a sad reflection of our society that the average age of an unassisted first time buyer is now 37 years old, with the latest report from the National Housing Federation suggesting that this will increase to 43 for today鈥檚 21 year olds.鈥�

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