11th Feb 2015 11:06
LONDON (Alliance News) - Shares in housebuilder Redrow PLC surged higher on Tuesday morning after the company doubled its interim dividend, as it reported its pretax profit also nearly doubled on the back of higher revenue and a rise in sales in the first half.
The FTSE 250-listed company said its pretax profit for the six months to the end of December was GBP91.2 million, up from GBP47.5 million last year. Revenue in the half rose to GBP560.6 million from GBP363 million, with gross margins rising to 22.4% from 20.3%. The revenue increase was also given a boost by the GBP46.8 million sale of all the commercial units and reversionary interest in the One Commercial Street development in east London.
The jump in pretax profit prompted the group to double its interim dividend, up to 2 pence per share from 1 pence last year.
Redrow shares were up 9.5% to 324.90 pence on Wednesday, one of the best performers in the FTSE 250.
The group said its legal completions in the half rose by 18% to 1,850 from 1,565, with its regional private order book sitting at GBP334 million at the end of the half, up from GBP256 million from a year earlier. Its private average selling price also rose in the half, up to GBP300,000 from GBP262,000 a year earlier.
The rise in the average selling price in the half was driven in part by geographical mix, with more completions done in London and the south east, along with general house price inflation.
Redrow echoed its rival housebuilders in saying average sales per outlet in the first half were slightly lower due to the boost provided to 2013 sales by the launch of the UK government-backed Help to Buy scheme. It said sales per outlet for its regional business averaged 0.61 for the half-year, against 0.68 a year ago.
This was in line with the private reservation rate reported by rival FTSE 250-listed housebuilder Bellway PLC on Tuesday. Bellway said its rate of private reservations had slowed in the first half to the end of January as a result of the extraordinary boost the Help to Buy scheme provided a year earlier.
Redrow also noted its first half reservations in London fell substantially in the first half, down to 24 against 138 last year, owing to its current sites in the capital being almost completely sold out and new sites only now about to come on stream. Due to the lower level of London reservations, the total value of private reservations in the first half was down to GBP449 million, 7% lower year-on-year. Excluding London, private reservations were up 8% to GBP428 million.
Redrow said it has seen higher build costs and house prices in the first half, but said both have moderated to sustainable levels.
In the first half, the group secured a further 2,050 plots for its current land bank, 11% higher than its legally completed sales, with more than 900 converted from its forward land bank. The group said its pipeline of development sites is robust and should allow the group to increase its outlets and the number of homes it builds.
Redrow said the customer traffic and sales so far in 2015 have been encouraging, in spite of the uncertainties surrounding the upcoming General Election in the UK. It said demand for new homes remains strong and added the changes made to the Stamp Duty regime in the Autumn Statement last year are providing a boost to homebuyers.
"I am delighted to report Redrow has again generated outstanding results," said Redrow Chairman Steve Morgan.
"Whilst we are only at the beginning of the spring selling season, demand for new homes is strong and the welcomed changes to [UK] stamp duty will undoubtedly help home buyers within our market segment," Morgan added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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