House builder Redrow said sales activity this year has been encouraging with its sales per site are the top end of the range for the sector, while like-for-like (LFL) reservations are ahead of last year.
The volume of net private reservations for the 16 week period to April 20th was 843 homes, up 2% on a LFL basis. The average selling price of private reservations for the period was up 12% at £207,000, excluding sales in London, and up 20% at £223,000 including London. The value of the private net reservations for the period was £188m, up 14% on a LFL basis.
With London business included, the volume of net reservations for the 16 week period was up 9% year-on-year while the value rose by 32% from the same period of the year before.
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The number of Redrow's active outlets has increased from 73 at the end of December to 76 currently, and the group continues to expect to have 80 active outlets at the end of June 2012.
Net debt has risen during the period to around £120m from £80m a year earlier, due to ongoing investment in land. Net debt is expected to increase during the remainder of the calendar year, but the group has taken steps to raise fresh funds, through a placing and open offer of 46.3m new shares at 130p each - a premium to the prevailing share price.
The group will raise £19.4m through a firm placing of 14.9m shares with Bridgemere Securities and £60.2m through a 3 for 20 open offer, which has been fully underwritten for no fee by Bridgemere Securities, a company ultimately controlled by Steve Morgan, the Executive Chairman of Redrow.
"There are an increasing number of land opportunities both in London and in the regions and as such we are looking to raise further capital to enable us to take advantage of these opportunities as they arise," Morgan said.
"The structure we have chosen will mean a further substantial investment in the business by Bridgemere at a premium to the current share price - underlining its confidence in and commitment to the business and its future prospects. The board believes the level of Steve Morgan's beneficial interest in the business is appropriate and consistent with the nature of his historic and on-going relationship with Redrow and shows that his interests continue to be tightly aligned with those of other shareholders," said Alan Jackson, Senior Independent Director of Redrow.
The shares rose 5.6p to 122.6p on the news that the chairman is to put his hand in his pocket and pay over the odds for the shares.
JH
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