With completions up 30 per cent at the half-year mark, Redrow (RDW) has been building sales and earnings on the back of a buoyant domestic housing market. Moreover, the value of private reservations rose by 72 per cent over the period, giving management sufficient confidence in near-term prospects to declare the first interim dividend in six years.
Steve Morgan, Redrow's founder chairman, expects the UK housing market to remain robust this year. Indeed, with a "strong pipeline of new sites in planning", the company has upped borrowing to expand its land bank by 15 per cent and increase the number of its sales outlets.
Until now, Redrow's commercial activities have been largely confined to the UK's regions. But it recorded its "first significant contribution" from its London division in the second half of 2013: £41.5m in revenues on 133 completions. The London figures represent 8.5 per cent of all houses sold, but 11 per cent of total revenues, which explains why Redrow's management are intent on expanding its footprint in the capital. Management is particularly excited about the prospects for a mixed-use scheme at the Peel Centre in Hendon, which is currently at the pre-application stage.
| REDROW (RDW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 327p | MARKET VALUE: | £1.2bn | |
| TOUCH: | 327-328p | 12-MONTH HIGH: | 353p | Low: 169p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 173p | NET DEBT: | 23% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 257 | 23.0 | 4.2 | na |
| 2013 | 363 | 47.5 | 9.7 | 1.0 |
| % change | +41 | +107 | +131 | - |
Ex-div: 5 Mar Payment: 2 May | ||||
