Week ahead: Redrow and Go-Ahead in the spotlight and Co-op reveals its interim results

Redrow is among the companies reporting this week.

Redrow is among the companies reporting this week.

Housebuilder Redrow and transport group Go-Ahead will be in the spotlight this week, alongside interim results from troubled mutual the Co-op.

The Co-operative group publishes half-year results on Thursday as it seeks to show it is on the road to recovery following the worst crisis in its history.

It slumped to a £2.5billion loss for 2013 after being dragged down by the near-collapse of its banking arm when a £1.5bn hole was discovered in its balance sheet.

The food-to-funerals group said at the time of the results that its supermarket operation was, however, showing signs of improvement, amid a better performance from its expanding convenience store network.

But latest industry data from Kantar Worldpanel showed its market share slipping to 6.4% for the 12 weeks to August 17 from 6.6% while sales fell by 1.2%.


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The group has been labouring under a £1bn-plus debt mountain but moved to ease some of the burden in July when it announced it had sold its pharmacy stores for £620million in a deal with the company behind convenience shop brand Best-one.

Meanwhile this month it said it was ending 118 years of crop-growing as it sold its farming business to the Wellcome Trust for £249 million.

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The Co-op bank’s crisis last year saw the lender rescued in a deal which ultimately saw the wider group’s share of it slip from 100% to just 20% as bondholders including US hedge funds took majority control.

A report by former City minister Lord Myners urged the Co-op group to embark on a series of radical changes but resistance saw chief executive Euan Sutherland walk out earlier this year, claiming it was ungovernable.

The interim results will have been foreshadowed by a key vote on changes to the running of the Co-op at a special general meeting.

Richard Pennycook, who has been standing in at the helm of the group following Mr Sutherland’s departure, warned that its disastrous annual results for last year were a “wake-up call” to the serious challenges faced by the group. He said it needed to change course after it had tried too hard to be “all things to all men” and painted a picture of staggering mismanagement and chaotic governance at the group.

Mr Pennycook also announced a £100m cost-cutting drive and the disposal of the majority of the sites it picked up in the ill-fated takeover of Somerfield.

Housebuilder Redrow is expected to reflect the buoyant housing market when it posts its full-year results on Tuesday.

The Flintshire-based firm is set to post sales up 40% to £847.5m on the back of strong London demand, leading to a jump in earnings before tax of 75% to £126.2m.

The firm, led by founder and chairman Steve Morgan, said in an April trading update that reservations were up 17% and average selling prices 16% higher than a year ago at £289,000.

Redrow is working on a number of London projects including a high-rise development in Kingston and luxury apartments at Connaught Place in Marble Arch. In April, Redrow said its projects in the capital will contribute £120m to annual sales, up from an earlier £95m estimate.

Under Mr Morgan, who also owns Wolverhampton Wanderers football club, the firm said it had bought 11 sites comprising 1,300 housing plots since its half year ended in December.

Redrow has welcomed Government initiatives to boost the housing market such as the Help to Buy scheme. But brokers will study the effect of the April introduction of the Mortgage Market Review to tighten affordability checks on borrowers, as well as June rules by the Bank of England designed to prevent a housing bubble.

Bus and rail group Go-Ahead is expected to post strong full-year results on Thursday, driven by its rail division.

Analysts at Investec expect the Newcastle-based firm to post pre-tax profits up 9.4% to £83m, as a result of lower energy costs and better operational performance at its three train franchises – Southern, Southeastern and London Midland.

The firm, which employs around 23,500 staff, was last week shortlisted to operate the Northern franchise which runs a mix of rural and long-distance services between Cheshire, Greater Manchester, Lancashire and Tyne & Wear. At the same time it also made the shortlist for the TransPennine Express route, linking cities such as Edinburgh, Glasgow, Newcastle and Leeds.

Go-Ahead said revenues were up between 5% and 7% at its three existing rail routes when it issued a pre-close trading update in June. The business, which was formed in 1987 and makes over 1bn passenger journeys a year, said it expects its rail division to perform in a similar fashion next year.

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