27th Feb 2014 13:44
LONDON (Alliance News) - Housebuilder Redrow PLC Thursday said it will pay its first interim dividend in six years, after recording a 107% increase in pretax profit for its recent half year, underpinned by an improved UK housing market.
The FTSE 250 company posted pretax profit of GBP47.5 million for the period ended December 31, 2013, up from GBP23.0 million a year earlier, as revenue rose 41% to GBP363.0 million from GBP256.0 million in 2012.
Redrow said the increase was driven by a rise in legal completions, and a 9% increase in average selling prices to GBP232,000 from GBP212,000 in the corresponding period.
Gross margins grew to 20.3% from 18.0% as a result of increased sales from sites purchases since 2009 and an improved sales mix, meaning the sale of higher priced homes.
Redrow said the housing market remained strong in the first half, assisted by the government's Help to Buy scheme and increased mortgage availability.
The first phase of the Help to Buy scheme in England started in April 2013, making buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit. The second phase, which started in the Autumn, guarantees a portion of a buyer's mortgage.
As a result, Redrow said sales per outlet per week in the first half were 0.7, up 32% on the previous year.
The first half also saw the first "significant" contribution in revenue from the London business, which generated GBP41.5 million in revenue compared with GBP3.5 million a year earlier.
"For the year as a whole we expect London to generate over GBP100 million of revenue from our first two major developments at Kingston Riverside and One Commercial Street, Aldgate," it said.
During the period, the firm secured 3,526 plots, of which over 1,000 were converted from its forward land bank. At the end of December the firm's land bank amounted to 16,250 plots.
Financially, Redrow said net debt rose to GBP149.0 million from GBP91.0 million in June as a result of increased investment in land. This resulted in gearing rising to 23% at the period end from 15% in June.
Redrow also said John Tutte, the managing director, will become chief executive with effect from June 30. The role of chief executive has been vacant since 2009.
Two new senior executive posts also have been created, with Keith Parrett being promoted to regional chief executive, overseeing Redrow's Southern and South East businesses, and Matthew Pratt being promoted to regional chief executive for its Northern and Midlands businesses.
The stock was trading at 322.16 pence, down 0.24 pence or 0.1%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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