Redrow renegotiates debt
Redrow chairman Alan Bowkett said that he believes the current situation in the housing market is likely to persist for some time and he has taken steps to manage the business accordingly.
It has also limited its buying and selling of land to preserve cash and
Minimise exposure to falling land values. More importantly, Redrow has also secured a new £450m three-year debt facility until 2011.
For the full year, the group has taken an exceptional provision of £259.4m, which has left the group with a pre-tax loss of £193.9m. Revenues dipped from £834.3m to £650.1m over the period.
Bowkett says: “The results for the twelve months ended 30 June 2008 reflect the extremely difficult trading environment created by the change in the credit markets. As a result of mortgage lenders tightening their criteria, the availability of funding has become scarce particularly for first time buyers and those without substantial deposits. More recently, homebuyer confidence has been further affected by concerns about the future for house prices and the well being of the UK economy.”
However, while Bowkett says that the current situation is likely to persist for some time, he adds: “In due course the long term structural shortage in housing supply relative to demand can be expected to return.”
The shares were unchanged at 189.75p today. They have followed the same trajectory as many of the housebuilders, slumping from highs of over 700p at the beginning of last year. Few believe the stamp duty changes will be enough to regenerate the market. Renegotiating its debt was vital as the group runs with high gearing. This provides it some respite, but its prospects remain difficult in the short-term.
