Redrow PLC - Half Yearly Report

Thursday 23 February 2012

Redrow (Xetra: 906188 - news) plc

Interim results for the six months to 31 December 2011

SIGNIFICANT IMPROVEMENT IN PERFORMANCE IN A CHALLENGING MARKETPLACE

Financial Results

	H1 2012	H1 2011*
Revenue	£232.8m	£216.1m
Operating Profit	£17.4m	£12.1m
Profit before tax	£15.3m	£8.5m
EPS (adjusted)	3.7p	2.0p
Legal Completions (homes)	1,168	1,312
Private Average Selling Price	£204,000	£171,000
Net Debt	£98.8m	£51.5m
Gearing	21%	12%
NAV per share	£1.50	£1.43
ROCE	6.4%	4.9%

*Figures include Scottish business sold June 2011

Financial highlights

· Revenues rose 8% to £232.8m driven by the increased penetration of New Heritage Collection and increase in average selling prices, with private ASPs up 19% to £204,000

· Gross margin increased to 15.4% (2011: 13.4%) as a result of the change in mix of both land and homes

· Operating margin increased from 5.6% to 7.5%

· Profit before tax up 80% to £15.3m (2011: £8.5m)

· EPS (adjusted) up 85% at 3.7 pence (2011: 2.0 pence)

· NAV per share increased to £1.50

· Net (Frankfurt: A0Z22E - news) debt increased as expected to £98.8m as a result of continued investment in land (Dec 2010: £51.5m), giving gearing of 21% (Dec 2010: 12%)

· Private net reservations up 15% to £180m and private order book up 14% to £82m (excluding Scotland)

· Sale of Scottish business impacted legal completions, down 11% in the first half

· Continued focus on ROCE leading to an increase to 6.4% (2011: 4.9%)

Operational highlights

· The New Heritage Collection comprised over 60% of private turnover (2011: 30%) and now features on over 70% of developments (2011: 50%)

· Redrow one of two major housebuilders achieving HBF 5 Star Customer Satisfaction accreditation. Customer satisfaction levels at 95%

· Awarded "2011 Best Large Housebuilder of the Year" by What House? Magazine

· Total (Other OTC: TTFNF.PK - news) of six sites, 550 plots, secured in London

· Three further sites acquired by Harrow Estates

· The second half of the year has started encouragingly with the value of private net reservations in the first seven weeks of 2012 up 11% to £69m

Steve Morgan, Chairman of Redrow, said:

"Redrow has again delivered a strong set of results with a significant improvement in performance against the backdrop of a challenging marketplace. When I returned to the business in 2009 my first priority, after putting the company on a sound financial footing, was to return Redrow to its traditional focus of a high quality differentiated family housing product, where the overwhelming market demand lay. These results today show that our change of strategy is paying off with the New Heritage Collection going from strength to strength and Private ASPs of circa £200,000. At the same time, return on capital employed, a key metric for us, has increased further to 6.4%.

While the outlook for the industry undoubtedly remains fragile there is increasing confidence in the housing market, including first time buyers. This should be helped further when the availability of 95% mortgages kicks in under the NewBuy scheme at the end of March.

We believe that we are well positioned for the future and the second half has started encouragingly with the value of private reservations up 11% to £69m and with a strong portfolio of sites in the pipeline. Provided we can overcome the delays in the planning system and short of a crisis in the Eurozone damaging confidence Redrow is set to continue along our path of recovery."

Enquiries:

Redrow plc

Steve Morgan, Chairman 01244 527411

Barbara Richmond, Group Finance Director 01244 527411

Tulchan Communications

Susanna Voyle/Lucy Legh 020 7353 4200

There will be an analyst and investor meeting at 9.00 am at Merrill Lynch (NYSE: MER - news) , 2 King Edward Street, London, EC1A 1HQ, The Auditorium. Coffee will be served from 8.45 am.

A live audio webcast and slide presentation of this event will be available at 9.00am on www.redrow.co.uk. Participants can also dial in to hear the presentation live at 9.00 am on +44 (0) 20 3140 0722 or UK Toll Free 0800 368 1916.

Playback will be available by phone until 1 March 2012 on the following dial-in numbers:

+44 (0) 20 3140 0698

UK Toll Free 0800 368 1890

US Toll Free +1 877 846 3918

Conference Reference: 382561#

CHAIRMAN'S STATEMENT

I am pleased to report that Redrow has again delivered a significant improvement in performance in what continues to be a challenging marketplace.

Group revenues in the first half of the financial year increased by 7.7% to £232.8m

(2010: £216.1m). However, excluding the Scottish business, which was sold in June 2011, like for like revenues were 16% higher.

As a consequence of the sale of the Scottish business the number of legal completions in the first half fell by 11%; however our strategy to weight the product mix towards a greater proportion of traditional family homes more than compensated for the volume reduction as the average selling price of our homes increased by 19% to £194,000.

Gross margins increased from 13.4% to 15.4%, whilst operating profit increased by 44% to £17.4m, an operating margin of 7.5%. This was achieved despite the additional overhead of £1.5m resulting from our investment in our new London operation, which will not make a contribution in the current year.

Interest charges reduced to £2.1m (2010: £3.6m) following the expiry of a number of interest rate swaps. Net debt increased mainly as a result of investment in our new London operation to £98.8m (2010: £51.5m) giving a gearing ratio of 21% (2010: 12%).

Pre-tax profit for the first half increased by 80% to £15.3m (2010: £8.5m).

No dividend is being declared in line with the Board's strategy of only paying a dividend once the Group has an appropriate level of earnings and taking into account the need to invest in land for future development.

Market and Strategy

Throughout the last six months and indeed all of 2011, the housing market has continued to be stable. The New Heritage Collection continues to grow as a proportion of sales, representing over 60% of turnover of private homes in the first half, compared to 30% last year.

The change in strategy to traditional housing has also resulted in houses representing over 90% of revenue, compared to 78% in the first half of 2011. Apartments predominantly make up the balance.

As a result of the change in mix the average selling price of our homes increased to £194,000 (2010: £164,000) and our private homes to £204,000 (2010: £171,000).

Reservations per outlet per week in the first half were 0.5 (2010: 0.48). The number of active outlets at the end of the first half was 73, which is expected to increase to around 80 by the end of the financial year.

The New Heritage Collection has proved to be the main driver in Redrow's resurgence, which is reflected in our customer satisfaction levels increasing significantly to 95%. Redrow is one of only two major builders to hold the coveted HBF 5 Star Customer Satisfaction accreditation and we were also delighted to be awarded the '2011 Best Large Housebuilder of the Year' award by What House? magazine.

Mortgages

I have been saying for some time that the lack of availability of high loan to value (LTV (Other OTC: LTVCQ.PK - news) ) mortgage products has been a significant drag on the housing market. I am therefore delighted that the part-Government sponsored NewBuy Scheme will shortly be launched to provide purchasers of new build homes with the ability to secure 95% LTV mortgages.

We have had strong interest in the Scheme since the announcement of its launch. We expect mortgages under the Scheme to be available towards the end of next month and we will ensure we have homes available to meet what should be a noticeable increase in the number of purchasers able to proceed. The success of the scheme, however, will be entirely dependent on the major lenders making available mortgage products at competitive interest rates.

Land and Planning

Unfortunately we continue to experience major delays in the planning system. The publication of the Government's National Planning Policy Framework (NPPF) is due by the end of March; in the meantime the lack of formal guidance has been an excuse for many Local Authorities to frustrate or delay decisions. We currently have around 65 sites in various stages of planning, which is well over double what you would expect if the planning system was operating efficiently.

During the first half we added 1,849 plots of current land and 1,868 of forward land. After legal completions, land sales and replans our current land bank stands at 11,365 plots at the end of December (June 2011: 11,190). Our forward land bank has risen by almost 8% to 23,900 over the same period.

The number of plots in our current land bank equates to around 4.7 years supply. The average plot cost has risen in the last six months from £49,000 to £56,000 reflecting both the increase in overall quality of land purchased and the higher proportion of the land bank in central London.

Current Trading

Although sentiment remains fragile, I detect increasing confidence in the housing market, particularly amongst first time buyers. This trend should be helped when the availability of up to 95% mortgages kicks in under the NewBuy scheme towards the end of March.

The second half of the year has started encouragingly with the value of private reservations up 11% to £69m and weekly sales are broadly in line with last year's strong comparison at 0.67 per outlet.

We have a strong pipeline of new sites and provided we can overcome delays in the planning system we expect to see a steady growth in outlets over the coming months. Short of a crisis in the Eurozone seriously denting confidence, Redrow is set to continue along its path of recovery.

Steve Morgan

Chairman

Consolidated Income Statement (Unaudited)

				12 months
		6 months ended		ended
		31 December		30 June
		2011	2010	2011
	Note	£m	£m	£m
Revenue		232.8	216.1	452.7
Cost of sales		(197.0)	(187.1)	(388.4)
Gross profit		35.8	29.0	64.3
Administrative expenses		(18.4)	(16.9)	(33.1)
Operating profit before financing costs		17.4	12.1	31.2
Financial income		1.4	0.2	2.7
Financial expenses		(3.5)	(3.8)	(8.6)
Net financing costs		(2.1)	(3.6)	(5.9)
Profit before tax		15.3	8.5	25.3
Income tax (charge)	2	(6.1)	(5.0)	(11.8)
Profit for the period		9.2	3.5	13.5
Profit per share from - basic	4	3.0p	1.1p	4.4p
continuing operations - diluted	4	3.0p	1.1p	4.4p

Consolidated Statement of Comprehensive Income (Unaudited)

				12 months
		6 months ended		ended
		31 December		30 June
		2011	2010	2011
	Note	£m	£m	£m
Profit for the period		9.2	3.5	13.5
Other comprehensive income
Actuarial (losses)/gains on the defined benefit pension	5	(8.0)	2.9	9.7
scheme
Deferred tax on actuarial (losses)/gains taken directly to		2.1	(0.8)	(2.5)
equity
Effective portion of changes in fair value of interest rate		-	0.9	1.1
cash flow hedges
Deferred tax on change in fair value of interest rate		-	(0.3)	(0.3)
cash flow hedges
Other comprehensive (expense)/income for the period		(5.9)	2.7	8.0
net of tax
Total comprehensive income for the period		3.3	6.2	21.5

Consolidated Balance Sheet (Unaudited)

		As at		As at
		31 December		30 June
		2011	2010	2011
	Note	£m	£m	£m
Assets
Intangible assets		1.9	1.9	1.7
Property, plant and equipment	6	12.8	14.5	12.9
Investments		4.6	2.2	2.6
Deferred tax assets		58.5	71.2	63.8
Retirement benefit surplus	5	-	-	5.0
Trade and other receivables		28.9	9.3	31.4
Total non-current assets		106.7	99.1	117.4
Non-current assets available for sale		1.3	1.4	1.4
Inventories	7	630.7	577.9	562.7
Trade and other receivables		26.8	3.9	38.2
Cash and cash equivalents	9	11.9	14.3	32.0
Total current assets		670.7	597.5	634.3
Total assets		777.4	696.6	751.7
Equity
Issued capital	11	30.9	30.9	30.9
Share premium		58.7	58.7	58.7
Hedge reserve		-	(0.2)	-
Other reserves		7.9	7.9	7.9
Retained earnings		364.6	345.0	361.1
Total equity		462.1	442.3	458.6
Liabilities
Bank loans	9	110.0	62.5	85.0
Trade and other payables	8	20.4	10.7	12.4
Deferred tax liabilities		0.5	0.6	1.8
Retirement benefit obligations	5	3.2	1.5	-
Long-term provisions		7.6	8.5	8.0
Total non-current liabilities		141.7	83.8	107.2
Bank overdrafts and loans	9	0.7	3.3	22.4
Trade and other payables	8	172.9	166.9	163.5
Derivative financial instruments		-	0.3	-
Total current liabilities		173.6	170.5	185.9
Total liabilities		315.3	254.3	293.1
Total equity and liabilities		777.4	696.6	751.7

Redrow plc Registered no. 2877315

Consolidated Statement of Changes in Equity (Unaudited)

		Share
	Share	premium	Hedge	Other	Retained
	capital	account	reserve	reserves	earnings
	£m	£m	£m	£m	£m
At 1 July 2010	30.9	58.7	(0.8)	7.9	339.2
Total comprehensive income for the period	-	-	0.6	-	5.6
Movement in LTSIP/SAYE	-	-	-	-	0.2
At 31 December 2010	30.9	58.7	(0.2)	7.9	345.0
At 1 July 2010	30.9	58.7	(0.8)	7.9	339.2
Total comprehensive income for the period	-	-	0.8	-	20.7
Share based payments	-	-	-	-	0.3
Movement in LTSIP/SAYE	-	-	-	-	0.9
At 30 June 2011	30.9	58.7	-	7.9	361.1
At 1 July 2011	30.9	58.7	-	7.9	361.1
Total comprehensive income for the period	-	-	-	-	3.3
Movement in LTSIP/SAYE	-	-	-	-	0.2
At 31 December 2011	30.9	58.7	-	7.9	364.6

The Statement of Cash Flows (Unaudited)

				12 months
		6 months ended		ended
		31 December		30 June
		2011	2010	2011
	Note	£m	£m	£m
Cash flow from operating activities
Operating profit before financing costs		17.4	12.1	31.2
Depreciation and amortisation		0.6	0.6	1.3
Adjustment for non-cash items		(1.2)	(0.9)	(2.8)
Operating profit before changes in		16.8	11.8	29.7
working capital and provisions
Decrease in trade and other receivables		6.3	6.3	(10.2)
(Increase) in inventories		(68.0)	(38.2)	(71.1)
Increase in trade and other payables		17.3	18.7	25.1
(Decrease) in employee benefits and provisions		(0.2)	(0.2)	(0.4)
Cash (outflow) generated from operations		(27.8)	(1.6)	(26.9)
Interest paid		(1.8)	(3.3)	(4.9)
Tax received		-	0.5	0.5
Net cash (outflow) from operating activities		(29.6)	(4.4)	(31.3)
Cash flows from investing activities
Sale of Scotland business		9.0	-	5.0
Acquisition of property, plant and equipment	6	(0.6)	(0.6)	(0.7)
Proceeds from sale of property, plant and equipment 6		-	0.6	0.6
Interest received		-	-	1.0
Payments to joint ventures - continuing operations		(2.2)	-	(0.4)
Net cash inflow from investing activities		6.2	-	5.5
Cash flows from financing activities
Issue of bank borrowings		110.0	65.0	85.0
Repayment of bank borrowings		(85.0)	(50.0)	(50.0)
Issue costs of bank borrowings		-	(2.5)	(2.5)
Net cash inflow from financing activities		25.0	12.5	32.5
Increase in net cash and cash equivalents		1.6	8.1	6.7
Net cash and cash equivalents at the beginning
of the period		9.6	2.9	2.9
Net cash and cash equivalents at the end
of the period		11.2	11.0	9.6

NOTES (Unaudited)

1.

Accounting policies

The half-yearly financial statements have been prepared using accounting policies and presentation consistent with those applied in the preparation of the Group's consolidated financial statements for the year ended 30 June 2011.

New standards

a) New and amended standards adopted by the Group:

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 July 2011:

· Revised IAS 24, 'Related party disclosures', issued in November (Stuttgart: A0Z24E - news) 2009 and superseding IAS 24, 'Related party disclosures', issued in 2003. The revised IAS 24 is required to be applied from 1 January 2011.

b) Standards, amendments and interpretations to existing standards effective in 2011 but not relevant to the Group:

· 'Prepayments of a minimum funding requirement' (Amendments to IFRIC 14), issued in November 2009. The amendments correct an unintended consequence of IFRIC 14, 'IAS 19 - The limit on a defined benefit asset, minimum funding requirements and their interaction'. Without the amendments, entities are not permitted to recognise as an asset some voluntary prepayments for minimum funding contributions. This was not intended when IFRIC 14 was issued, and the amendments correct the problem. The amendments are effective for annual periods beginning 1 January 2011. The amendments should be applied retrospectively to the earliest comparative period presented.

· IFRIC 19, 'Extinguishing financial liabilities with equity instruments'. This clarifies the requirement of IFRSs when an entity renegotiates the terms of a financial liability with its creditor and the creditor agrees to accept the entity's shares or other equity instruments to settle the financial liability fully or partially. The interpretation is effective for annual periods beginning on or after 1 July 2010.

c) The following new standards, new interpretations and amendments to standards and interpretations have been issued but are not effective for the financial year beginning 1 July 2011 and have not been early adopted:

· IFRS 9 'Financial instruments' (effective 1 January 2015)

· IFRS 10 ' Consolidated (Berlin: YO3.BE - news) financial statements' (effective 1 January 2013)

· IFRS 11 'Joint arrangements' (effective 1 January 2013)

· IFRS 12 'Disclosures of interests in other entities' (effective 1 January 2013)

· IAS 19 (revised 2011) 'Employee benefits' (effective 1 January 2013)

· IFRS 13 'Fair value measurement' (effective 1 January 2013)

Basis of preparation

The condensed consolidated half-yearly financial information for the half-year ended 31 December 2011 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The

half-yearly condensed consolidated report should be read in conjunction with the annual financial statements for the year ended 30 June 2011, which have been prepared in accordance with IFRSs as adopted by the European Union.

The main operation of the Group is focused on housebuilding. As it operates entirely within the United Kingdom, the Group has only one reportable business and geographic segment.

These half-yearly financial results do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 June 2011 were approved by the Board of Directors on 7 September 2011 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph, and did not contain any statement under section 498 of the Companies Act 2006.

Principal risks and uncertainties

As with any business, Redrow plc faces a number of risks and uncertainties in the course of its day to day operations.

The principal risks and uncertainties facing the Group are outlined on pages 19 and 20 of our

half-yearly report 2011/12.

2.

Income taxes

Income tax charge is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year (25.75% (2011: 27.50%)) before taking into account the impact of the reduction in corporation tax rate to 25% on the deferred tax assets (£2.1m (2011: £2.6m)).

3.

Dividends

In line with its stated policy, the Group will not be paying an interim dividend. No dividend was paid in the 12 months ended 30 June 2011.

4.

Earnings per share

The basic earnings per share calculation for the 6 months ended 31 December 2011 is based on the weighted number of shares in issue during the period of 304.3m (2010: 308.5m) excluding those held in trust under the Redrow Long Term Incentive Plan, 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.

6 months ended 31 December 2011

	Earnings	No. of shares	Per share
	£m	millions	pence
Basic earnings per share	9.2	304.3	3.0p
Effect of share options and SAYE	-	0.2	-
Diluted earnings per share	9.2	304.5	3.0p

6 months ended 31 December 2010

	Earnings	No. of shares	Per share
	£m	millions	pence
Basic earnings per share	3.5	308.5	1.1p
Effect of share options and SAYE	-	0.3	-
Diluted earnings per share	3.5	308.8	1.1p

12 months ended 30 June 2011

	Earnings	No. of shares	Per share
	£m	millions	pence
Basic earnings per share	13.5	304.3	4.4p
Effect of share options and SAYE	-	0.3	-
Diluted earnings per share	13.5	304.6	4.4p

Basic earnings per share excluding the deferred tax rate change impact is based on earnings of £11.3m (2010: £6.1m) and £18.3m for the 12 months ended 30 June 2011.

5. Pensions

The amounts recognised in respect of the defined benefit section of the Group's Pension Scheme are as follows:

Total amounts charged against income during the period:

			12 months
	6 months ended		ended
	31 December		30 June
	2011	2010	2011
	£m	£m	£m
Amounts included within the Consolidated income
statement
Period operating costs
Current service cost	(0.4)	(0.7)	(0.9)
Financing costs
Expected return on assets	2.2	2.3	4.3
Interest cost	(2.3)	(2.2)	(4.4)
	(0.5)	(0.6)	(1.0)

Amounts recognised in the Consolidated statement

of comprehensive income

Actuarial (losses)/gains	(8.0)	2.9	9.7
	(8.5)	2.3	8.7

Amounts recognised in the Consolidated balance sheet

Present value of the defined benefit obligation	(91.0)	(85.0)	(80.7)
Fair value of the Scheme's assets	87.8	83.5	85.7
(Liability)/asset in the Consolidated balance sheet	(3.2)	(1.5)	5.0

6.

Property, plant and equipment

Acquisitions totalling £0.6m were made during the period (2010: £0.6m). There was £nil of capital expenditure contracted at 31 December 2011 (2010: £nil).

7.

Inventories

	As at		As at
	31 December		30 June
	2011	2010	2011
	£m	£m	£m
Land for development	454.3	362.3	377.8
Work in progress	152.4	194.2	161.6
Stock of showhomes	24.0	21.4	23.3
	630.7	577.9	562.7

Land and work in progress are stated net of net realisable value provisions summarised as follows:

	Type 1	Type 2	Total
	£m	£m	£m
Provision at 1 July 2011	132.1	26.2	158.3
Utilised during period	(21.3)	(4.0)	(25.3)
Created during period	11.5	-	11.5
Released during the period	(7.5)	(4.0)	(11.5)
Provision at 31 December 2011	114.8	18.2	133.0

A description of Type 1 and Type 2 land is included on page 67 of the Annual Report and Accounts 2011.

8.

Land Creditors

(included in Trade and Other Payables)

	As at		As at
	31 December		30 June
	2011	2010	2011
	£m	£m	£m
Due within one year	54.7	32.4	32.4
Due in more than one year	20.4	10.7	12.4
	75.1	43.1	44.8

9.

Analysis of Net Debt

	As at		As at
	31 December		30 June
	2011	2010	2011
	£m	£m	£m
Cash and cash equivalents	11.9	14.3	32.0
Bank overdrafts	(0.7)	(3.3)	(22.4)
Bank loans	(110.0)	(65.0)	(85.0)
Issue costs	-	2.5	-
	(98.8)	(51.5)	(75.4)

10.

Bank facilities

At 31 December 2011, the Group had total unsecured bank borrowing facilities of £202.5m, representing £200.0m committed facilities and £2.5m uncommitted facilities.

The Group syndicated loan facility matures in December 2014.

11.

Share capital

	As at		As at
	31 December		30 June
	2011	2010	2011
	£m	£m	£m
Authorised
480,000,000 ordinary shares of 10p each	48.0	48.0	48.0
(June 2011: 480,000,000)
Allotted, called up and fully paid	30.9	30.9	30.9

		Number of ordinary
		shares of 10p each
At 1 July 2011 and 31 December 2011			308,607,479

12.

Contingent Liabilities

Performance bonds, financial guarantees in respect of certain deferred land creditors and other building or performance guarantees have been entered into in the normal course of business.

13.

Related parties

Within the definition of IAS 24 'Related Party Disclosures', the Board and key management personnel are related parties, being identified as the Main Board together with Group Senior Management. Summary key management remuneration is as follows:

			12 months
	6 months ended		ended
	31 December		30 June
	2011	2010	2011
	£m	£m	£m
Short-term employee benefits	1.0	0.6	1.4
Share-based payment charges	0.2	0.2	0.6
	1.2	0.8	2.0

During the six months to 31 December 2011, purchases of £1.6m (2010: £1.9m) were made from Travis Perkins (Other OTC: TVPKF.PK - news) plc, a company in which Paul Hampden Smith is an executive director. At 31 December 2011, an amount of £0.1m (2010: £0.1m) was due to Travis Perkins plc in respect of those purchases.

Related party transactions were carried out with Steve Morgan for a total consideration of £0.2m (2010: £0.2m) primarily relating to donations to the Morgan Foundation.

The Group did not undertake any transactions with The Waterford Park Company Limited, the Waterford Park Company (Balmoral) Limited or the Ashill Developments 2 Limited joint ventures. The Group's loans to its joint ventures are summarised below:

			12 months
	6 months ended		ended
	31 December		30 June
	2011	2010	2011
	£m	£m	£m
Loans to joint ventures	5.8	3.2	3.6

14.

General Information

Redrow plc is a public limited company incorporated and domiciled in the UK and has its primary listing on the London Stock Exchange (LSE: LSE.L - news) .

The registered office address is Redrow House, St David's Park, Flintshire, CH5 3RX.

15.

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 6ZY

Independent review report to Redrow plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the

half-yearly financial report for the six months ended 31 December 2011, which comprises the Consolidated income statement, Consolidated statement of comprehensive income, Consolidated balance sheet, Consolidated statement of changes in equity, The Statement of cash flows and related Notes to the financial statements. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs, as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland (Xetra: A0Q8L3 - news) ) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 December 2011 is not prepared, in all material aspects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants

Manchester (Frankfurt: A0ETDJ - news)

22 February 2012

Note:

a) The maintenance and integrity of the Redrow plc website is the responsibility of the directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website.

b) Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.