Pulling-out of London market costs Redrow £35m

Grant Prior 1 week ago
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Redrow has confirmed the cost of pulling-out of the London market as £35m.

The house builder said it will complete its Colindale Gardens development in Hendon then focus on the rest of the country outside the capital.

Redrow said: “Following a strategic review of our London operations we made the decision to exit from all sites over time, with the exception of our Colindale Gardens development.

“Making acceptable returns in London has become increasingly more difficult in recent years.

“There remains downward pressure on the London market created by weak overseas demand, shifting social trends, which suggest many buyers are now looking to live and work outside the Capital, and a convoluted two-tier planning system that has not responded to any of these changes.

“The significant impairments and related costs totalling £35m associated with scaling back the London business have been fully provided for in the 2020 accounts.”

Results for the year to June 28 2020 show Covid-19 and the London pull-out led to a fall in pre-tax profit to £140m from £406m last time as turnover dropped to £1.34bn from £2.11bn.

Sales and completions have picked-up rapidly in recent weeks and Redrow has a record order book of £1.42bn.

Executive Chairman John Tutte said: “The Group is well-placed to deliver a robust performance.

‘We have completed substantially more homes in the first few weeks of the new financial year than during the same comparable period last year whilst maintaining a record order book.

“This, combined with reduced investment in London, will deliver strong operating cash flow over the coming months to support our regional growth plans and, subject to market conditions, allow dividend payments to resume in 2021”.

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