Redrow plc, the Flintshire-based house building giant, announced on Thursday that it will commence a share buyback programme for up to £100 million.
Redrow shares rose about 5% to around £5.17 — but the stock is still down about 27% year to date.
Redrow said the primary purpose of the buyback is to reduce the share capital of the company. The majority of the ordinary shares purchased under the buyback will be cancelled and a portion will be held in Treasury.
“As previously reported, the primary capital allocation policy of the company is to grow the business,” said Redrow.
“Second to that is to pay a regular dividend with a dividend pay-out ratio of 33% of earnings.
“Subject to the above, any material amount of surplus cash beyond those needs is intended to be returned to the company’s shareholders.
“In 2019 the company returned £111 million to its 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, the company had a net cash inflow of £128 million in the financial year ended 3 July 2022, with a net cash balance at that date of £288 million. 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 £100 million. Given the current share price, the company has decided to execute this cash return in the form of a share buyback programme.”