18th Sep 2013 06:38
LONDON (Alliance News) - Housebuilder Redrow PLC Wednesday reported a 63% increase in pretax profit for the full year, as it said market confidence has returned, assisted by the UK government's mortgage-support schemes, such as Help To Buy, to get first-time buyers into the market.
The company posted pretax profit of GBP70.0 million for the period ended 30 June, up from GBP48.0 million a year earlier, while revenue jumped 26% to GBP604.8 million from GBP478.9 million in 2012.
Redrow said the increase in revenue was driven by a 15% growth in legal completions to 2,827, compared with 2,458 a year earlier, and a 12% increase in average selling price to GBP212,3000.
The firm said it is seeing improvement in the housing market as mortgage availability gradually increases on the back of the government schemes. Redrow said the flagship Help-To-Buy programme had made a significant contribution to forward sales.
Help to Buy guarantees part of a borrower's mortgage advance, allowing them to get a loan with a lower deposit than would be normally required.
However, Redrow said only 3% of its private completions during the year arose from the initiative.
On top of the increase in the average selling price of Redrow's new homes, sales per outlet rose to 0.62 per week throughout the financial year, compared to 0.58 per week in the previous year.
Overal,l the value of private reservations taken during the year increased 42% to GBP668 million, from GBP472 million, with all regions of the business performing well apart from Wales, where Welsh government initiatives similar to Help-to-Buy have yet to materialise.
Redrow secured a total of 4,729 plots, of which 1,068 were converted from its strategic land bank, which pushed its total land bank to 14,162 plots, an increase of 15% on last year.
Net debt increased to GBP91 million, from GBP14million in 2012, due to ongoing investment in land and work in progress. Redrow expects net debt to increase further in line with its ongoing investment in inventory.
Despite the company's strong performance it remained cautious.
"Market confidence is returning to more normal levels, and we have started the new year well with reservations up 54%," Chairman Steve Morgan said in a statement.
"However, the pace at which we can continue to increase output is very much dependent on our ability to increase the number of outlets through the planning system, which continues to be bureaucratic, costly and time consuming," he added.
Amid the good news for the company, it resumed dividend payments, declaring a final dividend of 1 pence per share.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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