Housebuilder Redrow announces £100m share buyback programme

Housebuilder Redrow has launched a share buyback programme up to a maximum of £100m.

It will purchase ordinary shares of 10.5p each in the company, it announced this morning.

The group, based in Ewloe, near Chester, said its capital allocation policy is to grow the business and pay a regular dividend to shareholders, and any surplus cash beyond those needs is intended to be returned to its stakeholders.

In 2019 the company returned £111m to shareholders in the form of a B share scheme.

Since the resumption of activity following the first lockdown in 2020, the company has returned to growth and continued to generate cash. As a result, it had a net cash inflow of £128m in the financial year ended July 3, 2022, with a net cash balance at that date of £288m.

Having recently reviewed the cash needs of the business to achieve its growth plans, the board has concluded that the company has sufficient funds to enter into a capital return programme of up to £100m. Given the current share price, the company has decided to execute this cash return in the form of a share buyback programme.

The buyback is structured in two tranches. In the first tranche Peel Hunt will purchase shares up to a maximum consideration of £50m. The second tranche will be undertaken by Barclays Bank.

The directors say they consider the buyback to be in the best interests of the company and its shareholders generally, with the implementation of the buyback expected to enhance earnings per share.

Purchases of th ordinary shares will begin immediately and will end no later than February 18, 2023, the second tranche will begin as soon as the first tranche is complete and end no later than July 31, 2023.