Redwire

Redrow plc
Redrow House, St. David’s Park, Flintshire CH5 3RX
Tel: 01244 520044 Fax: 01244 520720
Email: groupservices@redrow.co.uk

2017
ANNUAL REPORT

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A Better  
Way to Live

Contents

STRATEGIC REPORT
01   Highlights
02   Our Investment Case
04   Our Strategy
06   Our Business Model
A Better Way…
08 
16 
Our Markets
20   Chairman’s Statement
Chief Executive’s 
22 
Review

26   Operating Review
48  
52   Risk Management

Financial Review

GOVERNANCE REPORT
61   Corporate Governance 

Report

62   Board of Directors
68   Audit Committee Report
72   Nomination Committee 

74  

Report
Sustainability 
Committee Report
76   Directors’ Remuneration 

Report

98   Directors’ Report
104   Statement of Directors’  
Responsibilities

FINANCIAL STATEMENTS
Independent Auditors’ 
108  
Report

114  Consolidated Income 

Statement

114   Statement of 

Comprehensive Income

115   Balance Sheets
116  Statement of Changes  

in Equity

117   Statement of Cash Flows
118   Accounting Policies
123   Notes to the Financial 

Statements

147  Glossary

SHAREHOLDER 
INFORMATION
148   Corporate and 

Shareholder  
Information
149   Five Year Summary

FIND MORE INFORMATION AT: 
REDROWPLC.CO.UK

COVER IMAGE: ROYAL WATERSIDE, PARK ROYAL, NORTH WEST LONDON

REDROW ANNUAL REPORT 2017 
Highlights

£1,660m

£315m

70.2p

£1,382m

£1,150m

£250m

£204m

55.4p

44.5p

15

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17

15

16

17

15

16

17

£1,660m

Revenue

+20%

£315m

Profit before tax

+26%

17p

5,416

4,716

4,022

10p

6p

70.2p

Earnings per share

+27%

£1,099m

£967m

£635m

15

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17

15

16

17

15

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17

17p

5,416

Dividend per share

Legal completions (inc. JV)

+70%

+15%

£1,099m

Order book (inc. JV)

+14%

Award highlights

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02 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Our Investment Case

Successful leadership team
Redrow has a strong, experienced and 
successful leadership team and is 
committed to developing the next 
generation of homebuilders.

15% 

of workforce on structured 
training programmes 

+75%

increase in employees 
undertaking leadership  
skills training

Excellent product range
Redrow has an excellent product range 
which continues to evolve.

£983m 

private order book  
at record level (inc. JV)

Creating 
communities 
a key focus

Expertise in land buying
Redrow has the expertise and  
resources to ensure that the right land 
opportunities are taken to deliver  
targeted geographic expansion.

c5,400 plots

added to current  
land bank

3,356  
plots added
from forward land  
to owned land bank

Quality and  
customer service
By listening to and understanding our 
customers’ requirements, we continue to 
evolve our product and customer service. 
We focus on quality, differentiation and 
value for money for customers.

Placemaking
We focus on delivering high quality homes 
and creating community and physical 
environments that help promote people’s 
sense of wellbeing.

A strong and efficient 
balance sheet
Redrow has net assets of over £1.2bn and a 
balance of equity and debt. The Group is 
focused on delivering superior levels of 
return on equity and return on capital 
employed from an efficient use of its  
capital base.

89% 

customer  
recommendation 

27

NHBC Pride in  
the Job awards

£163m

committed to fund 
improvements to local 
communities

1,014

affordable homes delivered 
to our communities

27.7%

return on equity

26.0%

return on capital  
employed

Our 
benchmark 
for success 
in 2020

c£2,200m

c£430m

£1,660m

£315m

£1,382m

£1,150m

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£204m

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Turnover

Profit before tax

95.0p

26.0%

25+%

70.2p

23.7%

22.8%

55.4p

44.5p

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EPS

ROCE

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04 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Our Strategy

To create long-term sustainable value for all our stakeholders 
by delivering to our communities high quality homes and 
environments that provide a better way to live.

MEASURE

2020 OBJECTIVES

KEY PERFORMANCE INDICATORS

COMMENT

We have a clearly defined growth strategy, to increase revenue, 
profits and returns to shareholders by increasing outlets and legal 
completions over the medium-term.

EPS

DPS

Revenue

Sales outlets

To ensure that we grow our business responsibly, we are focused  
on managing all our resources efficiently and effectively.

ROCE

Land bank years

Waste diverted  
from landfill

We are focused on creating high quality places to live by delivering 
well designed, well built, attractive homes whilst at the same time 
enhancing the beneficial characteristics of the local landscape, 
ecology and communal resources.

Monies committed to 
fund improvements to 
local communities

•  EPS increasing to 95p

•  DPS of 32p

•  Revenue increasing to c£2.2bn

•  150 outlets

•  ROCE of 25+%

•  Maintain land bank at c4 years

•  >95%

•  Continued investment in  

local communities

•  Affordable homes delivered

We are working hard to ensure we are well placed to deliver the 
best possible customer service and customer experience as our 
number of customers increases in line with our growth strategy.

90% or more customer 
recommend rating

Private reservation rate 
(excluding PRS)

•  HBF 90% customer  
recommend rating

•  Maintain an appropriate balance 
in availability of product in the  
right locations

GROW OUR  
BUSINESS 
RESPONSIBLY

MANAGE OUR 
RESOURCES 
EFFICIENTLY

CREATE  
BETTER PLACES  
TO LIVE

PUT  
CUSTOMERS  
FIRST

2017

70.2p

17p

£1,660m

132

26.0%

4.5 years

95.4%

£163m

1,014

88.9%

0.68

2016

55.4p

10p

£1,382m

128

23.7%

4.95 years

94.8%

£142m

834

88.4%

0.70

READ MORE ON 
PAGES 48 AND 49

READ MORE ON 
PAGE 30

READ MORE ON 
PAGES 48 AND 49

READ MORE ON 
PAGE 26

READ MORE ON 
PAGE 36

READ MORE ON 
PAGES 26 TO 29

READ MORE ON 
PAGES 44 TO 47

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We are focused on developing the skills of our current team and 
ensuring we attract both experienced talent and new and enthusiastic 
young people into our business to underpin our growth objectives. 
Our training centres, dedicated Learning and Development team and 
innovative graduate and apprentice programmes play an important 
role in delivering our strategy.

VALUE AND 
DEVELOP OUR 
PEOPLE

Number of trainees

•  Maintain level of trainees at 15% 

of an increasing workforce

328

297

We are dedicated to maintaining the highest standards of health and 
safety as our business grows. We have again expanded our own 
in-house dedicated team of Health and Safety professionals to 
ensure that our teams on site are appropriately trained, supported 
and monitored.

Accident incident  
rate by site

•  Accident incident rate by site 
maintained at 0.3 or below

0.30

0.20

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READ MORE ON 
PAGES 32, 34 AND 35

READ MORE ON 
PAGES 23 AND 37

 
 
 
 
 
06 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Our Business Model

Our strategy is achieved by channelling our resources through 
our strategic principles and ensuring these are embedded in 
our relationships with our primary stakeholders.

Our Strategy

READ MORE ON 
PAGES 4 AND 5

GROW OUR  
BUSINESS RESPONSIBLY

MANAGE OUR  
RESOURCES EFFICIENTLY

CREATE BETTER  
PLACES TO LIVE

PUT CUSTOMERS 
FIRST

VALUE AND DEVELOP 
OUR PEOPLE

Our key resources 
and relationships

What we do and how we do it

We share value with our stakeholders  
and reinvest to deliver a better future

Resources

LAND, PLANNING & DESIGN

COMMERCIAL & SYSTEMS

Relationships

CONSTRUCTION

Risk 
Management  
& Corporate 
Governance

Resources

SALES & MARKETING

CUSTOMER SERVICE

Reinvestment

Customers
Our customers are fundamental to our business and we take great care to research their needs, 
listen to their feedback and respond with new homes where every detail is carefully considered. 
This enables us to create high quality homes and engenders loyalty and recommendation.

Communities
We adopt a collaborative approach, engaging with community stakeholders to ensure our 
developments become sustainable communities and better places to live.

Suppliers & Subcontractors
We work closely with experienced suppliers and subcontractors to deliver quality products  
and workmanship and to maintain a strong supply chain.

Shareholders
Our Shareholders are the primary providers of financial resources enabling us to create 
long-term sustainable value. We aim to provide a balance between capital growth and 
dividend income to our Shareholders.

Our 
Land Bank

Our 
People

Our 
Placemaking

Our Financial 
Resources

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08 

Redrow plc Annual Report 2017

A better 
way to  
live

CREATING THRIVING COMMUNITIES 

At Redrow, we build more than just homes; we create thriving 
communities. We are growing in both reputation and popularity by 
providing what modern homebuyers want, from their homes, from their 
neighbourhood and from their local environment. Redrow creates a 
better place to live by putting customer expectations at the heart of our 
home designs. Our creative and determined approach combines the 
best of town and country to create healthy, vibrant communities.

Inside our homes we have enhanced our specification by making our 
ceilings higher, our doors and windows taller and increasing the floor 
space. Outside, we have created public open spaces, sports facilities, 
footpaths and cycleways and contributed £163m to local communities in 
the last year alone.

What’s more, we are growing the scale of these ideas; leading the way in 
the garden village movement so that even our largest developments 
offer the same superb quality of life.

Our developments encourage a better way to live, connecting people 
to community and nature, enabling happier, healthier lifestyles.

“We create networks of footpaths and cycleways to encourage 
families out into their community to enjoy precious time together 
in beautiful landscapes.”

Matthew Pratt, Regional Chief Executive

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ASH GARDENS, BURCOTE PARK, TOWCESTER

 
 
 
 
10 

Redrow plc Annual Report 2017

A better 
way to 
work

VALUING PEOPLE

At Redrow, we value both our own people and our partners when we 
build homes and form communities. We know that to grow as a business 
we need to make sure that every one of our team has the opportunity to 
grow as an individual. 

We develop all of our people, to help them achieve their full potential, 
both for themselves and for our business. We have delivered c6,800 
training days in the last year alone, with no less than 15% of our total 
workforce in trainee roles.

Of course, there is more to working at Redrow than just work, and we 
strive to promote the highest degree of wellbeing throughout our team, 
respecting diversity in all its forms.

As well as developing our current team, we are also looking to the future, 
working with schools and colleges to encourage the next generation to 
consider careers in homebuilding and construction.

Our approach to training and development creates a better way to 
work, supporting all our employees to fulfil their potential.

“Redrow values each and every one of our staff, providing 
opportunities for everyone, because we know that real success 
is the success that you share.”

Karen Jones, Group HR Director

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SALES CONSULTANT DONNA SABIN AT OUR AMINGTON  
GARDEN VILLAGE DEVELOPMENT, TAMWORTH

 
 
 
 
12 

Redrow plc Annual Report 2017

A better 
way to  
build

BUILDING RESPONSIBLY

As a responsible business, sustainability is at the heart of our operations. 

We are proud to have received a Gold award from the NextGeneration 
benchmark for our management approach and sustainable procurement, 
alongside achieving ISO14001 certification, in recognition of our focus on 
reducing our environmental impact across the business. 

We were the first housebuilder to be awarded the Three Trees accolade 
on the WWF Timber Scorecard, which we have retained for a second 
year, with 99.94% of our timber responsibly sourced. 

We have invested in a reporting tool that monitors in excess of 200 
sustainability KPIs, which enables us to analyse our operations in great 
detail, ensuring that as our business grows, we can demonstrate the 
wider positive environmental, social and economic effects we have on 
the communities in which we develop. 

As we grow, we are working hard to minimise waste, reduce energy 
consumption and cut carbon emissions, while maximising the amount of 
land available in each development for open spaces, woodlands and 
wildlife habitats.

We know that we are not just building homes for today, but building a 
sustainable future for generations to come.

“Redrow were benchmark leaders in environmental site management 
and sustainable procurement. We expect that Redrow will continue 
to rise in our rankings using their newly integrated strategy.”

Claire Racine, Associate Director, NextGeneration

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CONSTRUCTION IN PROGRESS AT COLINDALE GARDENS, LONDON

 
 
 
 
14 

Redrow plc Annual Report 2017

A better 
way to  
add value

GENERATING SUSTAINABLE  
GROWTH FOR SHAREHOLDERS

As we announce our seventh consecutive year of growth, Redrow continues 
to set the benchmark for delivering sustainable returns for our Shareholders. 

All of our key indicators are up, from revenue and legal completions to 
earnings per share and dividends and the value of our order book. We 
are contributing more to the UK economy, delivering more homes to 
meet the national housing shortage and helping more homebuyers 
than ever before.

We ensure that we grow in a carefully planned and sustainable way and 
in 2017 over 60% of plots added to our current land bank were converted 
from our forward land bank. By doing this we are securing the future for 
our business, our employees and our investors.

This considered and responsible growth strategy means we can 
continually improve the returns for our Shareholders, without 
compromising the quality of our product, our commitment to our 
customers or our focus on sustainability.

By delivering solid, sustainable growth, at Redrow we reward  
our Shareholders, adding lasting value to their investment.

“Our success is attributable to a robust business model 
implemented by a talented team of people across a  
well-structured divisional organisation.”

John Tutte, Group Chief Executive

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REGENERATING A BROWNFIELD SITE AT SUDBROOK, MONMOUTH

 
 
 
 
16 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Our Markets

The housing market remains fundamentally strong,  
with supply and demand maintained through recent  
market uncertainties.

PLANNING
The number of applications granted 
has increased for the fourth year in  
a row and is up to 386,000 
applications granted in the year.  
The approval rate has been 
maintained at 88%, leading to an 
increase in the supply of residential 
land in the market (Chart 1).

MORTGAGE APPROVALS
Mortgage approvals are a key indicator of the level of activity in the housing 
market. There was a slight drop in approvals in 2016 compared to the previous 
year, reflecting the greater uncertainty in the market following the Brexit 
referendum (Chart 2). However, approvals are still significantly above the 
average (667,000 approvals a year) since 2008. Seasonally adjusted figures for 
the first half of 2017 are relatively stable throughout the period (Chart 3), with an 
average of 66,200 mortgage approvals per month. This is consistent with the prior 
calendar year, which had an average of 66,700 approvals per month.

ISAS
Lifetime ISAs were introduced in 
April 2017 to anyone aged between 
18 and 40 and run alongside the 
existing Help to Buy ISA. Up to 
£4,000 a year can be saved in the 
account and the Government will 
add a bonus of 25% to any savings 
put in before the saver is 50. The 
savings and bonus can then either 
be used to purchase a first home, up 
to the value of £450,000, or saved 
towards retirement.

HOUSING SUPPLY
NHBC new build starts were 135,700 
for the year to June 2017, a 1.8% 
increase on the previous year (Chart 
4). However, in the three month 
period to June 2017 the NHBC data 
showed a 0.9% decrease in starts on 
the same period in the prior year. 
There is a marked year on year 
variation in new build starts by 
region, with starts in London down 
25% in the year to June 2017, 
compared to the preceding 12 month 
period, whereas Yorkshire & the 
Humber (up 21%) and the South 
East (up 14%) show the most 
significant increases.

In the three months to the end of 
June 2017, completions for all 
sectors in England and Wales were 
up 3.6% on the equivalent period in 
the previous year. Completions for 
the 12 month period to June 2017 
increased across all regions against 
the preceding year, with the most 
significant increases shown in the 
North East (up 17%) and Yorkshire & 
the Humber (up 16%).

RESIDENTIAL TRANSACTIONS
Residential transactions in England 
and Wales have continued to 
increase year on year, with 1.1 
million residential property 
transactions of £40,000 or above in 
calendar year 2016 (Chart 5). This 
includes a spike in transactions in 
March, followed by a substantial 
decrease in April, most likely due to 
the change in SDLT rates around 
that period. 

UK average prices per the 
Nationwide House Price Index 
increased by 2.8% in the 12 months 
to June 2017, down on the 5.1% 
increase in the 12 months to June 
2016. The growth in London in 
particular was lower than the 
previous year, with prices only 
edging up 1.2%, compared to 9.9% in 
the preceding 12 months (Chart 6). 
The recent stamp duty tax changes 
and the Brexit vote have had a 
greater impact on Central London, 
with the pricing in the more 
affordable outer boroughs remaining 
much more robust.

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Chart 1 

Planning applications  
granted to March (‘000)

Chart 2 

Mortgage approvals  
calendar year (‘000) 

Chart 3 

Mortgage approvals 2017  
(seasonally adjusted) (‘000) 

Chart 4 

Chart 5 

Chart 6

NHBC build starts, all sectors 
(England and Wales) (‘000)

Residential transactions calendar  
year (England and Wales) (‘000)

House Prices Nationwide  
House Price Index (’000)

342

349

360

373

386

736

769

806

798

69

68

66

65

65

65

610

40

30

20

10

1,101

1,105

1,111

969

800

843

13

14

15

16

17

12

13

14

15

16

Jan

Feb

Mar

Apr

May

Jun

Source: Department for Communities and  
Local Government – District Level applications 

Source: Bank of England, CML

Source: Bank of England, CML

0
Q3 
14

Q4 
14

Q1 
15

Q2 
15

Q3 
15

Q4 
15

Q1 
16

Q2 
16

Q3 
16

Q4 
16

Q1 
17

Q2 
17

11

12

13

14

15

16

Source: HM Revenue & Customs

500

400

300

200

100

Q3 
14

Q4 
14

Q1 
15

Q2 
15

Q3 
15

Q4 
15

Q1 
16

Q2 
16

Q3 
16

Q4 
16

Q1 
17

Q2 
17

London Average

UK Average

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18 

Redrow plc Annual Report 2017

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WOODLANDS, HORSFORTH VALE, LEEDS

 
 
 
 
20 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Chairman’s Statement

Group turnover rose by 20% to £1.66bn.

I am delighted to report that for the fourth 
consecutive year Redrow has delivered record 
financial results, and it has done so by completing 
5,416 new homes (including our Croydon Joint 
Venture), an increase of 15% on the prior year.

FINANCIAL RESULTS
Group turnover rose by 20% to £1.66bn (2016: 
£1.38bn) due to the combination of the increase in 
legal completions to 5,416 combined with a 7% rise 
in average selling price to £309,800 (2016: 
£288,600). The increase in average selling price 
was mainly due to the continued growth of our 
southern businesses.

Gross margin improved by 20 basis points to 24.4% 
and is now at close to normal levels as we have 
completed construction on almost all the sites 
purchased before the downturn.

Operating expenses increased by £10m to £83m  
as we continue to invest in the expansion of the 
business. For the first time these include the 
operating expenses of the new East Midlands 
division from February 2017, created from the 
acquisition of Radleigh Homes. Due to the overall 
growth of the business, operating expenses 
reduced as a percentage of turnover from 5.3%  
in 2016 to 5% in 2017.

Operating profit was £61m higher at £322m 
(2016: £261m), with an operating margin of 19.4% 
(2016: 18.9%).

Pre-tax profits were £315m, up 26% (2016: £250m) 
including a £1m after tax contribution from our 
Croydon Joint Venture. Earnings per share 
increased by 27% to 70.2p (2016: 55.4p).

This strong trading performance, along with 
continued control of working capital, enabled us to 
reduce our net debt to £73m (2016: £139m) at the 
end of the financial year, representing a gearing 
ratio of 6% (2016: 13%).

The improvement in profitability and control of 
working capital has resulted in Return on Capital 
Employed and Return on Equity of the business 
increasing to 26.0% (2016: 23.7%) and 27.7% (2016: 
26.1%) respectively.

In March 2017 we announced our intention to 
increase our dividend payout ratio to 33% over the 
medium term. In line with this, the Board is 

proposing a final dividend of 11p per share (2016: 6p) 
making 17p in total for the year, an increase of 70% 
on 2016. Subject to shareholder approval at the 
Annual General Meeting, this will be paid on 
14 November 2017 to shareholders on the register  
at the close of business on 22 September 2017.

We are also taking the opportunity to update our 
medium term guidance. Subject to market conditions 
remaining unchanged we expect our turnover in 
2020 to be c£2.2bn and our pre tax profit to be 
c£430m giving fully diluted earnings per share of 
95p. With our projected 33% dividend payout, the 
dividend in 2020 will rise to 32p per share.

MARKET
Overall housing transactions in the UK have 
reduced as a consequence of the political 
uncertainty and increasing cost of moving home, 
particularly Stamp Duty which, over the last seven 
years, has increasingly become a tax on mobility. 
Nevertheless, demand in the new homes market 
remains robust and we have not seen any impact 
from recent domestic and international 
political events.

Mortgage availability is good and interest rates on 
mortgages have again improved. The Government’s 
Help to Buy scheme continues to support both 
home buyers and the new homes industry. In this 
financial year 1,882 of our private reservations 
utilised Help to Buy, up from 1,521 in 2016. Help to 
Buy has boosted housing supply and we look 
forward to working with government to consider 
the future of the scheme beyond 2021.

LAND AND PLANNING
Redrow entered the 2017 financial year with a very 
strong land bank. As a consequence, when the land 
market slowed in the first half following the Brexit 
vote we were not adversely impacted. The land 
market has since picked up and we remain active 
but disciplined in pursuing the right opportunities to 
further our growth.

As announced at the Half Year, in February 2017 we 
acquired Radleigh Homes, a Derby based regional 
housebuilder. Now re-named Redrow East Midlands, 
I am pleased to say that it has been fully integrated 
into the Group and made a positive contribution in 
the second half.

PEOPLE
On 3 July we announced the change in  
non-executive directors with the appointment of 
Vanda Murray OBE and the retirement of Liz Peace 
from the Board. I would like to welcome Vanda to 
Redrow; I am sure that she will add considerable 
value and experience to the business. I also thank 
Liz for her valuable contribution during her tenure 
on the Board and wish her well in her new roles.

The continued growth of the business has meant 
we have again expanded our workforce adding 
228 new direct jobs, a 12% increase in the year.  
We now employ 2,200 people directly with over 
30,000 jobs supported in total through our 
subcontractors and suppliers.

We continue to meet our commitment to having  
15% of our workforce in training and development.  
A record number of 150 apprentices, trainees and 
graduates will join the Group at the start of this new 
training year.

Our outstanding growth performance over recent 
years is down to the hard work and effort of my 
colleagues here at Redrow together with our loyal 
subcontractors and suppliers. I would like to thank 
them all for their continued support.

CURRENT TRADING AND OUTLOOK
Redrow began the current financial year with a 
record order book of £1.1bn (including our Croydon 
Joint Venture), up 14% on last year. Sales in the first 
9 weeks are very encouraging and up 8% on a 
strong comparator last year. Our strategy of 
continued growth for the business is on track and I 
am confident this will be another year of significant 
progress for the business.

STEVE MORGAN
Chairman

4 September 2017

Pre-tax profits were £315m, up 
26% (2016: £250m). Earnings  
per share increased by 27%  
to 70.2p (2016: 55.4p).”

5,416

Record legal 
completions  
(including JV)

+70%

Increase in dividend

26.4%

26.1%

27.7%

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Return on equity

27.7%

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Chairman

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Redrow plc Annual Report 2017

STRATEGIC REPORT 
Chief Executive’s Review

For the first time in our history we completed over 5,000 homes 
in a financial year.

DELIVERING GROWTH
I am delighted to report that the Group has again 
delivered outstanding results for the year. We have 
continued to grow the business and for the first time 
in our history we completed over 5,000 new homes 
in a financial year. Our success is attributable to a 
robust business model implemented by a talented 
team of people across a well-structured 
divisional organisation.

These exceptional results were achieved against  
an uncertain political and economic backdrop as a 
result of Brexit and also an ongoing requirement to 
manage an industry-wide shortage of skills to meet 
our build programmes. 

In the year we delivered 5,416 new homes (including 
JV’s), an increase of 15% on the previous year. 
Turnover grew by 20% to £1.66 billion and pre-tax 
profits were up 26% to £315m. 

During the year we acquired Radleigh Homes, a 
small Derby-based homebuilder. The acquisition 
allowed us to accelerate the opening of a new East 
Midlands division and has given us a pipeline of 
excellent sites from which to expand. We now have 
14 operational divisions across the Group including 
Colindale Gardens – our major regeneration project 
in North London.

The strategic decision we took in 2015 to focus our 
London operation on the outer boroughs was timely. 
We have now substantially completed our high-end 
Central London developments. Significant volumes 
of completions are now coming through from our 
Outer London sites and these are set to increase 
materially as Colindale completions begin to come 
on-stream later in 2017.

Overall our compound rate of growth has been 
exceptional in recent years. However, whilst our 
strategy is to continue to grow the business, the 
rate of growth is expected to moderate over time  
as divisions reach optimal scale and our scope for 
divisional expansion reduces.

CREATING GREAT PLACES TO LIVE
Long before the recent resurgence of interest in 
Garden Towns and Villages, Redrow was leading 
the way: in the nineties we masterplanned and 
developed Kingsmead in Cheshire – a thriving 
community of around 2,000 homes. The 
development has stood the test of time and 
continues to be a sought-after location to live. Many 
of the design principles that made Kingsmead such 
a success are being applied to the Garden Villages 
we are developing today. 

Our major Garden Village developments at 
Woodford in Cheshire, Ebbsfleet in Kent, Tamworth 
in the Midlands and Plasdŵr in Cardiff are designed 
to create attractive and great places to live. They 
are well-located to take advantage of excellent 
transport links but more importantly, are set in 
landscaped environments where families can live 
and enjoy a healthy lifestyle. We have also applied 
the same principles to our Colindale Gardens 
development in North London. This high density 
new Urban Village development is just a short walk 
from the tube and will eventually consist of over 
3,000 homes set in generous areas of open space 
and formal gardens. 

This careful approach to designing great places  
to live is equally applied to our smaller sites that 
made up a large proportion of the land we acquired 
in 2017. 

In the year we added 5,419 plots with planning and 
marginally increased our owned and contracted 
land bank to 26,100 plots. In the first half of the year, 
immediately following Brexit, there were fewer 
opportunities in the land market and we also 
adopted a more cautious approach – in the second 
half momentum returned to our land buying and we 
added 3,703 plots. Our forward land pull-through 
was particularly strong and accounted for 3,356 
plots representing over 60% of the plots acquired in 
the year. 

Our Central divisions had an excellent year due  
to both the Radleigh acquisition and a sizeable 
contribution from forward land. They now account  
for 25% of the owned and contracted land bank 
compared to 22% last year. Over half (54%) of the 
Group’s land bank is in the South and Greater 
London with the balance of 21% located in the North.

Notwithstanding the strong forward land  
pull-through, we increased the forward land bank  
to 26,400 plots by adding 4,000 new plots.

At a strategic level we saw planning improve 
following the introduction of the National Planning 
Policy Framework in 2012. There are now signs this 
improvement has stalled as local authorities fail to 
get Adopted Local Plans in place. This is adding to 
the delays that continue to frustrate the detailed 
planning and technical approval process. We have 
also seen timescales for appeals extend which 
unfortunately reduces the pressure on local 
authorities to make timely decisions. 

Our caution in the land market in the first-half 
combined with planning delays will inevitably have 
some impact on the timing of new outlets coming 
on-stream. As a consequence, outlets are only 
expected to marginally increase over the course of 
the next year. However, with our strong land bank 
and output per outlet continuing to steadily 
increase, we remain firmly on-track to meet our 
growth plans.

BUILDING RESPONSIBLY
Ensuring our sites are safe places to work, visit and 
live is central to our build operations. We are also 
conscious of our responsibilities to protect the 
environment and to be considerate to those 
affected by our building works. 

We continually strive to improve our build 
operations and we have recently achieved 
ISO14001 certification for our environmental 
management systems. We also retained our Gold 
rating in the annual NextGeneration Sustainability 
Benchmark and our ‘Three Trees’ status from the 
World Wildlife Fund. 

We were also recognised in the year for our 
standards of Health and Safety winning one 
Commended and four Highly Commended Awards 
in the coveted NHBC Health and Safety Awards 
– one of the best performances amongst the 
major homebuilders.

2,200

Employees

+200

New directly employed 
jobs created

We continually  
strive to improve  
our build operations.”

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Group Chief Executive

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24 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Chief Executive’s Review continued

Our success in the NHBC Pride in the Job Awards 
continued – a record 27 of our site managers 
received awards in this year’s competition. We also 
won two LABC (Local Authority Building Control) 
awards for the quality of our site management on our 
high-rise apartment blocks at Colindale Gardens.

Growing output and maintaining high levels of 
quality and productivity remains a challenge. 
However, we are working hard to overcome and 
manage skills and a few isolated materials 
shortages as the industry, and its supply chain, 
adapts and invests to increase resources to meet 
the ongoing demand to build more new homes. We 
need the Government to continue to support 
training initiatives and in particular reach an early 
agreement as part of the Brexit negotiations on the 
status of EU workers who make such a valuable 
contribution to our industry.

Against these challenges and rising customer 
expectations, it is pleasing to report we maintained 
a customer recommendation score of close to 
90% last year. 

VALUING OUR PEOPLE
Much of what we have achieved is attributable to 
the quality of land we have acquired, our award 
winning homes and the places we create, but 
fundamentally, it’s about the talented people we 
employ and their dedication to making our business 
successful. It is pleasing that when industry-wide 
talent is in short supply so many of our people 
remain loyal and committed. In our most recent 
Employee Satisfaction Survey, 96% of colleagues 
said they were proud to work for Redrow. 

By ensuring we create a rewarding and enjoyable 
place to work we are able to both retain and expand 
our workforce. Last year we created over 200 new 
jobs and increased the directly employed workforce 
to 2,200 people. We are seeing gratifying returns 
from our investment in people – in particular, it is 
pleasing to see so many young people building their 
careers with us. To support our career development 
programmes we have expanded our training 
facilities across the country opening new centres in 
the North West and at our Colindale Gardens 
development in London. 

LOOKING AHEAD
The longer-term prospects for the housing market 
remain encouraging: unemployment is low, mortgage 
rates are attractive and there is robust underlying 
demand for new homes. However, aside from the 
short-term risk of political and economic uncertainty, 

there are key issues that need to be addressed by 
Government to support future growth: in particular 
the status of EU workers, the future for Help to Buy 
and the need to revitalise stalled planning reforms.

Notwithstanding the need to address these issues, 
we are in a strong position to both deliver another 
set of record results in 2018 and to meet the 
ambitious targets we have set for 2020. We have  
a very strong order book, an excellent land bank,  
a sought-after product range and, above all, a 
talented team of people. I am confident we can 
overcome the challenges we face and maintain our 
track-record of meeting or exceeding our targets.

JOHN TUTTE
Group Chief Executive

4 September 2017

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RADLEIGH HOMES PRODUCT AT LANGLEY COUNTRY PARK, DERBY

 
 
 
 
 
26 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review

LAND, PLANNING & DESIGN

Using our planning and design skills to 
convert our quality land bank into great 
places to live is fundamental to our 
continued success.

SOCIAL HOUSING  
LEGAL COMPLETIONS (NO.)

1,014

834

634

571

353

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OWNED AND CONTRACTED  
LAND BY GEOGRAPHY (PLOTS)

2017

North

Central

South 

Greater London 

2017

5,382

6,483

9,963

4,272

26,100

LAND
The Group added 5,419 plots with planning 
permission to our owned and contracted land bank 
in the year. This more than replaced the record 
5,319 legal completions (excluding JV) and we 
ended the year with 26,100 plots in our owned and 
contracted land bank. This was a small increase on 
the very strong closing position in the previous 
year and represents about five years output and a 
Gross Development Value, based on our 2017 
average selling price, of £8.2bn.

Forward land again made a significant contribution, 
comprising over 60% of the 5,419 additions in the 
year across 22 sites. This included the important 
strategic ‘Plasdŵr’ site – Cardiff’s new Garden City.

Despite transferring 3,356 plots to the owned  
and contracted land bank, we still increased our 
forward land bank by a net 766 plots to 26,400 
plots. Over 40% of these plots are allocated for 
housing in Local Authority Plans.

PLACEMAKING
Redrow has long embraced the design principles  
of Garden Towns and Villages to create new 
communities that stand the test of time. During the 
year we brought together our planning, design and 
technical teams from across the business in a series 
of Placemaking workshops to share best practice 
and formalise a set of design principles. As a result 
we established seven key design principles that are 
essential to creating better places to live and are 
applied to all of our developments, irrespective of 
their scale and location.

‘Nature for People’ is one of our seven principles.  
At our Caddington Woods development in Chaul 
End we are creating a duck pond and a trim trail 
along the edge of 35 acres of woodland. 

Bedminster, are now providing nest boxes 
integrated into external walls to help address  
the decline in the swift population. 

Our unique corporate partnership with the 
Bumblebee Conservation Trust (BBCT) is working to 
make our developments as bee friendly as possible.  
The landscaping at our Saxon Brook, Exeter 
development has been designed to provide the 
best habitat for bumblebees to thrive. The 
development includes a bee trail that runs right 
across the axis of the site and will help to educate 
and inform residents about bumblebees. 

As we move into the new financial year we are 
strengthening our relationship with the BBCT. 
Through greater customer engagement and by 
working with our supply chain to increase our  
focus on conservation, we believe even more  
can be done to help bumblebees flourish.

REGENERATION – CREATING NEW 
COMMUNITIES ON PREVIOUSLY USED LAND
The demand and need for more new homes cannot 
be met by only building on previously used land. 
However, we have to ensure wherever possible, as 
a priority we redevelop redundant sites. Brownfield 
sites account for c50% of our owned and contracted 
land bank.

At Sudbrook, Monmouth in South Wales, Harrow 
Estates have demolished an unsightly factory on  
the Severn Estuary and are remediating the site to 
provide an attractive 212 home outlet with views of 
the Severn Bridge – the site will be developed by 
our South Wales division.

During the year our London Division was selected 
by Wandsworth Borough Council to be their 
development partner to regenerate the Alton Estate 
in Roehampton. The development plans include the 
replacement of parts of the post-war housing with 
up to 1,000 new private and affordable homes as 
well as a new library and healthcare and children’s 
centres. As part of the regeneration programme 
we aim to provide local residents with jobs, training 
and apprenticeships.

At Barton Park, in the Northamptonshire village of 
Barton Seagrave, we have made a long-term 
commitment to the ecological protection, diversity 
and enhancement of the development. Existing 
trees and hedgerows have been retained and 
enhanced with new trees, shrubs, hedgerows and 
wetland planting. There are a number of park areas 
across the development, including ‘Sanctuary’ 
which is rural in character, utilising natural materials 
with native tree and hedge planting. In the 
equipped play area, stepping-stones, low 
mounding and timber constructed elements 
provide areas for natural play.

Transport links are important and 97% of our legal 
completions this year were within 500m of a public 
transport node.

BRINGING BENEFITS TO  
LOCAL COMMUNITIES
We delivered 1,014 social housing homes in the year 
across our developments with a value of £115m –  
a 22% increase on the number of homes in the 
previous year (2016: 834 homes, £86m value).

We also committed £163m in 2017 to fund 
improvements to communities local to our 
developments, a 15% increase on last year (2016: 
£142m). These improvements included providing 
new schools, community centres, local medical  
and sports facilities, footpaths and cycleways  
and attractive areas of public open space.

We aim to enhance the ecological value of our 
developments recognising the importance of 
strengthening people’s connections with nature and 
their natural surroundings. We achieve this through 
design, partnerships and our commitment to 
continually refine our understanding of important 
biodiversity principles. 

We plan to create valuable and functional wildlife 
corridors and interconnected habitat areas on our 
developments. For example, at Harbour Village, 
Fleetwood a coastal path and ecological corridor 
to the adjacent estuary has been created. On the 
Sycamore Green development, Cheshire we have 
created a natural corridor to enable barn owls to 
cross the site from east to west.

At our Glenwood Park, Barnstaple development and 
at Caddington Woods, Chaul End we are installing 
‘hedgehog highways’. These highways are simply 
small holes created in the bottom of fence panels to 
allow hedgehogs to move easily from garden to 
garden. Many of our sites, such as Abode in 

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28 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review continued

LAND, PLANNING & DESIGN

A Unique Opportunity in Cardiff
A trusted team

Plasdŵr is one of Redrow’s most ambitious 
projects to date. A brand new, £2bn Garden 
City in north west Cardiff, South Wales that 
will deliver 7,000 high quality homes on 350 
hectares of land over the next 15 to 20 years.

Based on Garden City principles the planning 
application which was consented in outline 
form earlier this year is one of the largest ever 
considered by the planners at Cardiff and 
ranks amongst the largest single applications 
ever to be granted consent in the UK. It is 
also the biggest challenge the Redrow Land 
and Planning team, which includes Grant 
Strong and Dafydd Andrews, have ever faced.

“Plasdŵr is a once in a generation 
opportunity for us,” explained Dafydd. “It’s 
like managing twenty unique developments 
rolled into one. It’s amazing to have this 
opportunity so early in our careers.”

The pair came to Plasdŵr via Redrow’s 
Graduate Training Scheme; an experience 
they found invaluable as they took on the 
sheer size and scale of this landmark project. 
While it may come under the remit of Land 
and Planning, this massive project uses skills 
from all areas of the company.

“Plasdŵr is like a business in its own right,” 
says Grant. “One day we’re working on 
marketing, the next we’re dealing with 
drainage, then the next it’s land purchases.”

The team have been involved in everything 
from two years of planning applications, to  
six months negotiating Redrow’s section 106 
commitments. They are currently managing 
the process of both buying parcels of land for 
Redrow and packaging other parcels for sale 
to partner developers. 

While Grant and Dafydd have felt fully 
supported by their Redrow colleagues, they 
still enjoy the freedom and rewards of making 
their own decisions.

“At Redrow, you can knock on any door for 
help and advice and not lose ownership of 
your project,” says Dafydd. “Without that,  
we’d just be pen-pushing!”

“Everyone is happy to help, without feeling  
the need to take over,” agrees Grant. “Which 
gives you the confidence to proceed with the 
project in your own way.”

Their ‘own way’ has been highly successful, as 
they proved when they encountered an issue 
with a topographically challenging parcel near 
the entrance to the site, which prevented 
conventional attenuation and residential 
development. Thinking outside the box, they 
created a series of cascading ponds in the 
location, getting around the planning 
constraint in an attractive and creative way 
that was perfect for the Plasdŵr site, since  
the name translates as ‘Water Hall’.

After working with the plans for so long, the 
team are thrilled to finally see the fruits of  
their labours. “There’s a massive sense of 
achievement to see homes finally coming  
out of the ground,” says Grant. 

Although the project is expected to run for 
between 15 and 20 years, both Dafydd and 
Grant hope to stay involved until the end, if 
Redrow will have them. After working on such  
a massive and challenging project for so long, 
it’s easy to see why. “We’d love to see the 
project through to completion,” says Dafydd.  
“It will be incredible to have that legacy.”

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Our purpose drives the way we work

Plasdŵr is a once 
in a generation 
opportunity, both 
for Redrow and  
for my career.”

Dafydd Andrews 
Redrow Land and Planning

There’s a  
massive sense  
of achievement  
to see homes 
finally coming out 
of the ground.”

Grant Strong 
Redrow Technical Team

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30 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review continued

COMMERCIAL & SYSTEMS

We continue to grow our business  
both organically and from acquisitions 
such as Radleigh Homes.

REVENUE (£M)

1,660

1,382

1,150

864

605

13

14

15

16

17

LEGAL COMPLETIONS (NO.)  
(inc. JV)

5,416

4,716

4,022

3,597

2,827

13

14

15

16

17

In order to meet this growth, it is essential we  
work closely with our suppliers and subcontractors 
and continue to develop our supply chain and  
our systems.

REVENUE
Revenue has increased by 174% since 2013 to 
£1.66bn (2016: £1.38bn). We have the divisional 
capacity to deliver £2.2bn of revenue per annum in 
2020.

The sale of homes accounted for £1.65bn of revenue 
with the balance of £12m attributable to land sales 
– 50% of revenue in the year came from the South 
of England, including London.

COMPLETIONS
We delivered a record 5,416 legal completions 
(including JV) in 2017, a 15% increase on 2016 
(2016: 4,716).

Social housing accounted for 19% of legal 
completions volumes compared to 17.7% last year. 
Apartments represented 16% of private legal 
completions and 19% of private sales revenue 
compared to 12% and 15% respectively last year. 
This reflected the increased contribution from 
Greater London and the South East where 
apartments are more prevalent.

OUTLETS
Active outlets increased by four in the year to 132 
outlets (2016: 128): the Group opened 56 new 
outlets in the year and closed 52. The closures were 
slightly higher than forecast due to a stronger than 
expected sales performance.

Bringing new outlets on-stream remains a challenge 
for the industry. Planning remains tortuous and 
many planning departments lack the resources to 
process applications and deal with the plethora of 
pre-start conditions they continue to attach to 
planning consents.

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BLAKE TOWER, BARBICAN , LONDON

 
 
 
 
32 

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STRATEGIC REPORT 
Operating Review continued

COMMERCIAL & SYSTEMS

Redrow’s apprentice electricians are better connected

As a Top 100 Apprentice Employer for the 
last four years, Redrow leads the industry 
in developing the next generation of 
builders and skilled tradespeople, with 
trainees making up no less than 15% of  
our workforce. 

Not only do our apprentices get first class 
training, both on site and at local colleges, 
Redrow also partners with key suppliers  
to ensure they get a comprehensive 
understanding of the wider aspects  
of their chosen field.

For example, MA Broughton Electrical 
Contractors worked with Redrow to devise 
a week-long training programme at their 
Nottingham premises. The company has 
trained electrical apprentices for over  
30 years, and currently mentors Redrow 
apprentices on site.

Their new in-house training programme 
gives our apprentices a unique insight into 
the day to day workings of a busy electrical 
contracting company, including stores, 
warehouse and technical departments.  
It covers aspects of the industry that our 
site-based programme simply cannot 
provide, as Redrow apprentice, Shane 
Bagby, explained:

“The MA Broughton electricians have been 
teaching me how to wire a house at the 
Pennine Grange development in Tamworth. 
Spending time at their business helped me 
understand some of the other skills and 
work involved in being an electrician.”

As part of the partnership, MA Broughton 
are given access to Redrow’s training 
facilities to teach their own apprentices, 
raising standards across the industry.

We’re very  
proud of our 
apprenticeship 
programme and 
are constantly 
looking for ways 
to improve and 
develop the 
training we offer." 

Clare Horton 
New Entrant  
Programmes Manager

GROWING OUR BUSINESS RESPONSIBLY
It is important that as we grow, the Group maintains 
its high environmental and placemaking standards 
and delivers on its commitment to create socially 
and economically sustainable communities.

During the year we were pleased to achieve the 
British Standards Institute ISO14001 environmental 
standards accreditation. This ensures we apply a 
systematic approach to environmental 
management right across the business, helping us 
to identify and manage our key risks and 
opportunities.

In addition, we have developed and deployed a 
sustainability reporting platform throughout the 
company which is helping us to better collect and 
evaluate data, both ensuring compliance and 
driving performance improvements across all 
aspects of sustainability.

OUR SUPPLY CHAIN
We work closely with key suppliers and 
subcontractors in our supply chain to improve 
quality and efficiency and to help develop the 
homebuilders of the future.

We have secured the coveted ‘Three Trees’ status 
from the World Wildlife Fund (WWF) for the second 
assessment period in a row. We were the first UK 
homebuilder to achieve the status in 2015, which 
was awarded for our ongoing work to promote 
responsible forest management and the 
eradication of illegal wood products from our 
supply chain. At present our responsibly sourced 
and credibly certified timber stands at 99.94%.  
The accolade places Redrow among the  
top 40 companies in the country using Forest 
Stewardship Council (FSC) certified and other 
responsibly sourced timber and paper products.

During the year we became partners in the Supply 
Chain Sustainability School (SCSS), which is an 
award-winning initiative providing free learning 
and development support to help our supply chain 
partners to address sustainability issues. We have 
evaluated the sustainability risks of our different 
suppliers and are collaborating with the SCSS to 
prioritise a learning and development programme. 
We have also encouraged our suppliers to attend 
a number of events organised by the School 
across the UK. 

We sit on the Homes Leadership and Wales 
Leadership groups supporting the development of 
the School. Moving forward our intention is to 
strengthen our commercial and procurement teams’ 
direct links with the School and encourage more of 
our supply chain partners to improve their knowledge 
and understanding to make them more sustainable.

IMPROVING OUR SYSTEMS
We are continually looking to improve our systems 
and processes to better support our business  
as it grows, evolves and responds to changes  
in technology.

We have a dedicated team of IT specialists including 
systems analysts, software developers, a digital 
team and help desk experts at our Head Office, led 
by our Group IT Director. During the year we 
developed and introduced a new in-house manual 
payments system and made improvements to our 
land appraisal system and management reports.

During the year we also implemented a new 
application to manage all the meetings that form 
part of our Customer First 'Made for You' process. 
It uses handheld electronic tablets to display the 
specification the customer has chosen and to 
record photographically any issues that need 
attention. These, together with any issues reported 
by customers after they have moved in, are tracked 
by the application to help our customer service 
teams deal with issues promptly and to the 
customer’s satisfaction. It includes full email and 
telephone integration for both our customers and 
subcontractors, for example by recognising 
incoming calls and popping-up appropriate 
prompts on screen to improve our service to our 
customers. We are now working on a portal for use 
by our subcontractors to further improve how they 
manage the calls and appointments involved in 
resolving issues.

We will be introducing an online version of our 2017 
Annual Report. This aims to make it easier for 
Shareholders and other stakeholders to access  
key information and information on areas of their 
particular interest and will be available on our 
website by early October.

We have also introduced a new third party 
integrated HR and Payroll system with self-service 
features to replace out-dated paper systems, 
streamline processes and support future growth. 

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Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review continued

CONSTRUCTION

To meet the need and demand for new 
homes, the construction industry must 
work with Government to address the 
skills shortage.

EMPLOYEE ENGAGEMENT
In order to ensure that we are supporting all our 
employees to fulfil their potential, we regularly 
evaluate employee engagement and use the 
results to improve working practices, training  
and development.

We conducted a major survey in 2017, having 
conducted a mini survey in 2016. This was 
undertaken by Employee Feedback Ltd on our 
behalf. We had an 88% response rate and 
achieved a 95% employee satisfaction rating – 
96% of our employees said they were proud to 
work for Redrow.

BUILD OUTPUT
Build output increased by c15% in the year as the 
Group continues to position itself to meet its growth 
targets. We also continue to manage pressures in 
both labour and material supply chains.

Colindale Gardens is the largest development in 
the Group and continues to make excellent 
progress. There are currently c600 homes under 
construction there and the daily workforce often 
exceeds 600 people. It was pleasing to see the 
first apartment block ‘unwrapped’ in June 2017 
and we are on-track to deliver our first legal 
completions from this important strategic site  
at the end of this calendar year.

DEVELOPING HOMEBUILDERS  
OF THE FUTURE
Here at Redrow we are proud of our record of 
training and developing our colleagues. We have 
been listed as a Top 100 Apprentice Employer in  
the National Apprenticeship Service awards for  
the fourth consecutive year. In addition to our  
Trade apprenticeship, Trainee Site Assistant  
and our Commercial apprenticeship training 
programmes, this year we have introduced a 
fast track management programme for graduates 
with a construction related degree.

We created 228 directly employed new jobs in the 
year, increasing our employee numbers to a record 
c2,200. We have continued to invest in our people 
to ensure we have the skilled and qualified 
workforce we need for the future. We again 
maintained our proportion of trainees at 15%  
of the increased workforce.

We also continue to develop our team at all levels  
to support the growth of our business, underpin 
our structured approach to succession planning and 
encourage all our colleagues to reach their 
potential. This year we completed c6,800 training 
days, an increase of over 40% on the prior year 
(2016: c4,800). Much of our training is carried out 
in-house by our Learning and Development Team 
and delivered at either our Tamworth training 
centre, Head Office or our newly-opened training 
facilities at Colindale and Daresbury.

We work with recognised training providers and 
experts in their field to design our training courses: 
for example, this year we became the first company 
in the homebuilding industry to work with the NHBC 
to design a bespoke course. Our ‘Effective 
Snagging and NHBC Warranty’ course can now  
be rolled-out across the business under licence 
from the NHBC.

CONSTRUCTION

Hands-on experience for graduates

At Redrow, we’re proud to attract some of the 
most promising graduates in the industry, but 
we know that getting a construction related 
degree is just the start.

Before they can manage the creation of 
complex residential developments, our 
graduates need hands-on experience, 
working on site, and learning from our expert 
construction directors and site managers.

That’s why we put all of our graduates 
through a two-year programme, designed to 
show how what they learned at university is 
applied in real life, to ensure the highest 
levels of quality and health and safety are 
achieved on site.

As well as being mentored on site, graduates 
can continue their learning with Redrow.  

We offer a variety of courses designed to 
help them work towards membership of the 
Chartered Institute of Building, as well as 
specialising in areas of the business that 
interest them. 

“With Redrow there is endless potential to 
learn and progress,” says graduate trainee, 
Sean McFadden. “I’m really interested in 
getting more involved in the sustainability 
side of things and learning about different 
build processes.”

Redrow welcomed 20 new graduates on 
to its fast track management programme 
in 2017.

We’re opening 
the door for 
graduates who 
want to fast track 
their careers in 
construction 
management.”

Karen Jones 
Group HR Director

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Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review continued

DRIVING DOWN WASTE
The percentage of homes and apartments that  
have been connected to on-site renewables or  
low carbon community energy has substantially 
increased this year from 13% (2016) to 36%. This  
is largely due to the increasing use of community 
energy infrastructure on sites such as Saxon 
Brooke, Devon and Royal Waterside, Park Royal, 
North West London. When the Saxon Brooke 
development is fully completed in three years time, 
the community energy project will save 4,173 tonnes 
of CO2 per year, using 64% less than an equivalent 
development using traditional individual home 
energy systems.

We have been disclosing our carbon emissions and 
reduction activities to the Carbon Disclosure Project 
(CDP) annually since 2010. In the most recent 

submission we have moved upwards in the CDP 
benchmark to a B grade (2015: C). The improvement 
in grade reflects the progress we have made by 
measuring awareness, management and by taking 
actions on climate change.

Our Greenhouse Gas (GHG) emissions expressed in 
relation to the quantity of build we have undertaken 
have decreased by 4.2% to 2.5 tonnes of CO2e per 
100m2 (2016: 2.61tCO2e/100m2). Our GHG emissions 
are independently verified to a limited level of 
assurance.

We carefully consider the environmental impacts 
from all of our activities from the initial planning and 
design stage of the development through to the 
construction and completion of homes. At Colindale 
Gardens, London, 16 unused buildings were 
demolished to make way for new homes to be built. 

All the materials from the demolition process were 
separated, with c5,500 tonnes of metal recycled 
and 61,000 cubic metres of concrete crushed and 
re-used on site as aggregates. The re-use of 
crushed concrete as infill, greatly reduces our 
environmental impact: it reduces the need to source 
fresh material from quarries and cart to landfill sites 
– as a result a huge number of local traffic 
movements are eliminated.

We are working closely with our subcontractors to 
reduce waste and increase recycling. For example, 
it is now a requirement of our trade specification for 
our painting contractors to recycle their paint cans. 
This has resulted in c10,000 cans being recycled in 
the year. We have increased the amount of waste 
we divert from landfill to 95.4% (2016: 94.8%).

HEALTH & SAFETY
Subcontractor engagement is essential to promote 
a positive health & safety culture. At Redrow, we 
continue to support our supply chain by organising 
and hosting numerous events over the year across 
the business.

Build output increased by 15% across the Group 
during the year: this increase in build activity on our 
sites led to a higher number of notifiable accidents 
per site during the year to 0.30 (2016: 0.20). Overall 
the number of reported accidents increased to 393 
(2016: 318). Our accident trends are constantly 
reviewed and measures and campaigns are 
introduced and launched to improve performance 
– most recently we introduced a ‘slips and trips’ 
campaign to address an increase in minor accidents 
associated with this cause.

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COLINDALE GARDENS, LONDON

 
 
 
 
38 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review continued

SALES & MARKETING

At Redrow we have a reputation 
for building award winning homes.

Our sales and marketing activities promote the 
quality of our homes and developments and have 
established the Redrow brand as one of the UK’s 
leading homebuilders.

BRAND PURPOSE
Our brand purpose is central to everything we do: 
everyone in the business, across all levels, locations 
and functions has a clear sense of purpose and how 
they contribute to the team effort which underpins 
our continued success.

This shared vision is particularly important as the 
business grows and new colleagues join the team. 
Redrow strives for continuous improvement regardless 
of how good the previous performance level has 
been. This is achieved through Group-wide values of 
hard work, attention to detail, innovation, passion and 
the pursuit of excellence. Communication is an 
essential ingredient and senior management across 
the Group endeavour to ensure that everyone in the 
business understands the brand purpose and why 
Redrow operates in a certain way: The Redrow Way.

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AMINGTON GARDEN VILLAGE, TAMWORTH

 
 
 
 
40 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review continued 

SALES & MARKETING

Employing Technology 
to Enhance our 
Customer Journey

Customers increasingly expect a digital 
experience when making major 
purchases. Redrow has always been  
at the forefront of adopting new 
technologies to help our prospective 
customers visualise their lifestyle in a 
Redrow Home. One example is the 
introduction of 3D immersive and 
interactive site plans in place of models. 
These allow users to accurately see in 
virtual reality where their home is situated, 
even being able to walk to or out of their 
front door. It is therefore possible to 
experience, in virtual reality, the 
development long before it is built.

They can also remove the roof from any 
house type and see the layout in 3D,  
walk through the house and benefit from 
a much clearer understanding of the living 
space and flow.

The Futurium system  
is a fantastic tool that 
enables us to show the 
customer what their 
home will look like and 
remove the need to  
try and imagine how  
it might appear, it really 
takes the site plan in  
to the 21st century.”

Rob McCann  
Sales Consultant, Woodford  
Garden Village, Cheshire

This technology is linked directly to 
Redrow’s sales and build management 
system in real time so that sales 
consultants are always showing the very 
latest sales position to purchasers and are 
able to give the best possible advice.

3D kitchen configurators also help people 
to make more informed decisions on the 
various combinations that appeal most to 
them and how they might choose to 
upgrade some items.

User feedback from sales staff and 
customers has been extremely positive 
with many sales consultants reporting  
that the technology has helped them to 
increase sales.

Having recently 
completed and moved 
into our new Redrow 
home, it was amazing to 
view the plot we bought 
and how it would look 
from the very beginning 
of the project when 
there wasn't even a brick 
laid, and how true to life 
it was when compared 
to the final outcome.”

Mr John Wildman 
Customer, Woodford Garden 
Village, Cheshire

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Redrow plc Annual Report 2017

STRATEGIC REPORT 
STRATEGIC REPORT 
Operating Review continued
Operating Review continued

MARKETING COMMUNICATIONS
At Redrow, our attention to detail and focus on how 
we can improve our customers’ lifestyles ensures 
our homes remain sought-after and award winning. 
This is reflected in the high level of interest 
generated through all our marketing platforms – 
particularly our website, redrow.co.uk, and major 
social media channels. We work hard to understand 
our customers’ needs and preferences and in 
particular how they want us to communicate with 
them. Buyer profiles have been created for all of our 
house types and a detailed understanding of the 
media each segment prefers to use to inform their 
buying decision, enables us to maximise our return 
on marketing investment.

The presentation of our show homes is also essential 
to showing our customers how our homes can meet 
and be furnished to suit their lifestyles. Our Interior 
design team keep abreast of the latest fashion trends 
to ensure our show homes are contemporary and 
empathetic to a wide range of lifestyles. 

SALES EXCELLENCE
Our sales consultants pride themselves on their 
product knowledge and customer communication 
and engagement. They receive regular training and 
each year the entire team come together at the 
Annual Sales Conference to discuss market 
conditions, sales strategies and product innovation. 
Over 400 people attended the event in January 
2017 which culminated in an award ceremony to 
recognise exceptional performance throughout  
the previous year.

To best share and implement the ideas that come 
forward from events such as the Annual Sales 
Conference, a Sales Excellence Champions  
Group has been created. They meet regularly 
to discuss new ideas and to agree programmes 
to implement new initiatives to improve  
sales performance.

MARKET RESEARCH
To ensure we keep in the forefront of product design 
we regularly commission market research. To better 
understand what creates great places to live we have 
recently undertaken research into sustainable 
communities. The findings of the research are set out 
in a report – ‘Creating Britain’s New Communities’. 
The report outlines a framework to help ensure 
developments foster a sense of community. One of 
the key findings from the report is that 81% of people 
don’t think the Government is doing enough to 
prioritise creating communities. When asked what 

features are most important to a new community,  
the 2,000 respondents ranked ‘access to a doctor’s 
surgery’ highest closely followed by high speed 
broadband and green open spaces.

We are also actively involved in two research 
projects looking at the role new homebuilding has 
on health. In the Town and Country Planning 
Association’s ‘Developers and Wellbeing’ project 
we have participated in national and local events, 
workshops, interviews and case studies. The 
objective of the project is to better understand the 

role planning and the development process has in 
improving the health and wellbeing of communities. 
In addition, as a major developer working in urban 
environments, we are assisting the research team to 
identify the barriers and opportunities for making 
urban environments healthier and more sustainable.

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THE VILLAS, LYMINGTON SHORES, LYMINGTON

 
 
 
 
44 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review continued

CUSTOMER SERVICE

The quality and design of our product 
distinguishes Redrow from its main 
competitors and appeals to our customers.

PRODUCT
Outside Greater London, our divisions focus on our 
award winning Heritage Collection. In 2017 this 
accounted for 75% of the Group’s private sales 
revenue (2016: 82%). During the year we added a 
number of house types to the Heritage Collection 
especially designed to appeal to customers looking 
to downsize without compromising on design, 
specification and space.

ORDER BOOK (£M)
(inc. JV)

1,099

967

635

554

317

13

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16

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MY REDROW EXTRAS SOLD (£M)

20

17

10

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17

Our purpose drives the way we work

The Heritage Collection is complemented by 
bespoke product which represented 25% of private 
sales revenue (2016: 18%) in the year. In Greater 
London our main area of operation is the outer 
boroughs (zones 3 to 6) where each scheme is 
specifically designed to reflect the site’s constraints. 
£218m of our homes sales revenue came from 
Greater London in 2017 (2016: £152m). In addition, 
our joint venture development, Morello, Croydon 
delivered its first 97 legal completions and a £1m 
contribution to Group profits.

CUSTOMER FEEDBACK
We achieved an 88.9% HBF customer recommend 
rating in 2017 (2016: 88.4%) in a year when legal 
completions increased by 13%. 

We continually look at ways to enhance our 
customers’ experience during both the home 
buying process and after they have taken 
occupation. An example of this is improved training 
for our colleagues: our ‘Customer Service Culture’ 
course is accredited with the Institute of Customer 

Service and has been attended by 675 people 
across the business. Similarly, Redrow is the first 
homebuilder to achieve endorsement of its internal 
sales training by the Institute of Sales & Marketing.

During the year we have rationalised our ‘My 
Redrow’ extras offering to the most popular choices 
to improve build quality and efficiency. ‘My Redrow’ 
extras accounted for £20m (2016: £17m) of sales in 
the year, an 18% increase. 

RESERVATIONS AND ORDER BOOK
The strength of our order book is testament to the 
appeal of our homes and developments.

The Group secured £1.6bn of reservations in the 
year (2016: £1.5bn excluding PRS) and closed the 
year with a total order book including social and 
joint ventures of £1.1bn, a record for Redrow and 14% 
higher than the previous year.

Private reservations per outlet per week were 0.68 
(2016: 0.70 excluding PRS). The cancellation rate 
remained at 15%, in line with the previous year.

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KITCHEN IN THE CAMBRIDGE SHOW HOME AT 
WOODFORD GARDEN VILLAGE, WOODFORD

 
 
 
 
46 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Operating Review continued

CUSTOMER SERVICE

Going Digital

During the year we implemented a new application to manage 
all the meetings that form part of our Customer First ‘Made for 
You’ process. It uses handheld electronic tablets to display  
the specification the customer has chosen and to record 
photographically any issues that need attention.

The Group has actively used social media as a part of its 
marketing campaigns for a number of years. We are now 
seeing that it is becoming the medium of choice for many of  
our customers to communicate with us both during the sales 
process and after they have taken occupation.

Customers using social media expect us to respond quickly 
and in detail to their queries: this is difficult to achieve using a 
centralised approach. To address this we have partnered with 
Crowd Control HQ to launch their innovative enterprise social 
media management software across the Group. Within a 
framework of appropriate controls, we now have more than 
100 colleagues with access to social media accounts. All 
users have been trained to use the software and to adopt  
an appropriate style and consistent tone of voice 
when responding.

In the first month of use, over 400 replies were sent by our 
customer service teams. Feedback has shown customers 
experienced quicker responses and were far more positive 
about the content of the replies they received. 

Matt Grayson 
Group Communications Director

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48 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Financial Review

The Group exceeded the £300m profit before tax milestone  
for the first time.

PROFITABILITY
This year the Group again delivered record financial 
results with revenue of £1.66bn (2016: £1.38bn) and 
profit before tax of £315m (2016: £250m), exceeding 
the £300m milestone for the first time. In addition it 
is particularly pleasing to report this was achieved 
by reaching a new record in the number of new 
homes completed by the business of 5,319. 

Total Group revenue rose 20% to £1.66bn. This 
comprised private homes revenue which increased 
by 20% to £1.5bn (2016: £1.3bn) as a result of an 11% 
increase in private homes legal completions and an 
8% increase in average selling price, social homes 
revenue of £115m (2016: £86m) and other revenue  
of £12m (2016: £21m) from land sales.

TAX
The corporation tax charge for the year was £62m 
(2016: £50m). The Group’s tax rate for 2017 was 
19.75% (2016: 20%). The normalised rate of tax for 
the year ending 30 June 2018 is projected to be 
19% based on rates which are substantively 
enacted currently.

The Group paid £56m of corporation tax in the  
year (2016: £46m) in the normal quarterly pattern. 
Payments will continue in the normal quarterly 
pattern until the new legislation for corporation tax 
payments by very large companies takes effect for 
our financial year ending 30 June 2020, which 
will bring our instalment payments forward by 
four months.

DIVIDENDS
The Board has proposed a 2017 final dividend of 
11p per share which will be paid on 14 November 
2017, subject to Shareholder approval at the 2017 
Annual General Meeting. This is an 83% increase 
on last year.

The Group paid dividends of £44m (2016: £30m) 
during the year. 

RETURNS
Net assets at 30 June 2017 were £1,235m (2016: 
£1,041m), a 19% increase. Capital employed at the 
same date was £1,308m (2016: £1,180m) up 11%. Our 
return on capital employed again benefited from 
increased capital turn and higher profits and 
increased in the year from 23.7% to 26.0%. Return  
on equity also increased from 26.1% to 27.7%.

As a result of the increase in revenue, gross profit 
increased by £71m in the year to £405m (2016: 
£334m) giving a gross margin of 24.4% (2016: 24.2%). 
The gross margin benefited from a decrease in the 
proportion of our homes legal completions from 
provisioned land acquired before the downturn from 
6% to 4% together with net House Price Inflation of 
20 basis points, but these were partially offset by 
the impact of a 22% increase in the number of social 
home legal completions in the year.

The strong revenue growth has generated an 
operating profit for the year of £322m (2016: £261m), 
a 23% increase. This represents an operating 
margin of 19.4% (2016: 18.9%) close to our medium 
term target operating margin of 19.5%. 

Net financing costs at £8m were £3m lower than 
the prior year due to lower levels of average net  
debt in the year. Net debt averaged £67m during  
the year (2016: £174m).

There was also a £1m contribution from our  
Joint Venture on the Morello, Croydon 
development which delivered its first 97  
legal completions in 2017.

As a result, the Group delivered a record profit 
before tax of £315m (2016: £250m) in the year 
which produced a basic earnings per share  
up 27% at 70.2p (2016: 55.4p). 

Revenue by geography (£m)

2017

2016

North

Central

South 

Greater London 

2017

463

360

614

223

1,660

2016

376

328

524

154

1,382

Earnings per share (p)

Dividend per share (p)

70.2

17

10

6

3

14

1
13

15

16

17

55.4

44.5

28.3

14.6

13

14

15

16

17

26.0%

23.7%

22.8%

ROCE (%)

18.0%

12.2%

13

14

1515

16

17

BARBARA RICHMOND
Group Finance Director

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£315m

Profit before tax

£1,235m

Net assets

Earnings per share 
increased 27% to 70.2p.”

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50 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Financial Review continued

INVENTORIES
Our investment in land increased by £50m, up  
4%, in the year to £1,312m (2016: £1,262m) which 
reflected a deliberate slowdown in land buying in 
the first half of the 2017 financial year following the 
Brexit referendum, with land buying momentum 
returning in the second half. A healthy 62% of our 
current land bank additions in 2017 came from our 
forward land holdings and this contribution has 
averaged 40% over the last five years. 

We have taken the decision to change our 
accounting policy in respect of forward land to  
align it with normal industry practice. This change  
to initially recognise forward land expenditure in 
inventory at cost and review regularly for impairment 
has added £30m to land assets at June 2015 and 
June 2016, restating previous figures and £24m to 
net assets, net of tax. This change of accounting 
policy has not affected profits in either 2017 or 2016.

Our owned plot cost has increased by £2,000 per 
plot to £70,000 at June 2017 (2016: £68,000), 
reducing slightly to 20% of the average selling price 
of private legal completions in the year (2016: 21%).

Our investment in work in progress increased by 
£90m, up 14% year on year to £731m (2016: £641m). 
This reflected the higher number of strategic sites in 
production and the levels of apartment schemes in 
the later stages of production in the South East. 
However, as a percentage of Homes turnover it 
reduced from 47% to 44%.

Our net realisable value provision on land and work 
in progress reduced by £11m to £8m in the year.

Land creditors decreased slightly by £27m to £351m 
at June 2017 (2016: £378m) representing 26% of 
land inventory (2016: 29%).

Current land by geography (no. of plots)

2017

2016

North

Central

South 

Greater London 

2017

5,382

6,483

9,963

4,272

2016

5,753

5,579

10,420

4,248

RECEIVABLES
Trade receivables decreased by £2m during the 
year to £21m (2016: £23m) due to the ongoing 
receipt of historic shared equity scheme monies.

PAYABLES
Trade payables, customer deposits and accruals 
increased by £21m to £422m (2016: £401m) 
reflecting increased levels of production activity.

CASH FLOW AND NET DEBT
Net debt reduced by £66m to £73m at June 2017 
(2016: £139m) giving gearing of 6% at June 2017 
(2016: 13%). This significant reduction in net debt 
reflects a cash inflow generated from operations of 
£189m (2016: £130m) which more than funded the 
growth in the business and the increase in both 
dividend distributions and corporation tax payments 
made in the year.

FINANCING AND TREASURY MANAGEMENT
Financial management at Redrow is conducted 
centrally using policies approved by the Board.

Redrow remains a UK based housebuilder and 
therefore the main focus of its financial risk 
management surrounds the management of liquidity 
and interest rate risk.

(i)  Liquidity

 The Group regularly prepares and reviews its 
cash flow forecasts which are used to manage 
liquidity risks in conjunction with the 
maintenance of appropriate committed banking 
facilities to ensure adequate headroom.

Forward land pull through  
into current land bank (%)

62%

42%

35%

34%

23%

26,100

26,000

13

14

15

16

17

 Facilities are kept under regular review and the 
Group maintains regular contact with its banks 
and other financial institutions; this ensures 
Redrow remains attuned to new developments 
and opportunities and that our facilities remain 
aligned to our strategic and operational 
objectives and market conditions.

 Our current banking syndicate comprises  
five banks and in addition to our committed 
facilities, Redrow also has further uncommitted 
bank facilities which are used to assist day to 
day cash management.

(ii)  Interest rate risk

 The Group is exposed to interest rate risk as it 
borrows money at floating rates. Redrow uses 
simple risk management products, notably 
sterling denominated interest rate swaps, as 
appropriate to manage this risk. Such products 
are not used for speculative or trading purposes.

 Redrow regularly reviews its hedging 
requirements. No hedging was undertaken  
in the year. 

PENSIONS
As at June 2017, the Group’s financial statements 
showed a £2m deficit (2016: £6m surplus) in respect 
of the defined benefits section of The Redrow Staff 
Pension Scheme (which closed to future accrual 
with effect from 1 March 2012). The £8m 
deterioration is mainly due to the reduction in 
corporate bond yields and an increase in the 
market’s long term expectations for inflation which 
have served to increase the liability values. This was 
partially offset by an update on the assumption for 
life expectancy.

Plot cost (%)

25%

22%

22%

23%

24%

21%

21%

21%

21%

20%

13

13

14

14

15

15

16

16

17

17

Plot cost in COS as % ASP

Plot cost owned and contracted as % ASP

Land bank plot cost (£’000)

72

70

70

69

68

68

63

60

57

56

BARBARA RICHMOND
Group Finance Director

4 September 2017

13

13

14

14

15

15

16

16

17

17

Owned

Owned and contracted

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52 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Risk Management

HOW WE MANAGE RISK

BOARD OVERSIGHT

MAIN BOARD

OUR RISK MANAGEMENT PROCESS

Our Risk Assessment Process

Principal risks and material concerns identified by the Main Board

Audit Committee

Nomination Committee

Remuneration Committee

Sustainability Committee

Operational review and feedback from Divisions

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OPERATIONAL MEETINGS

EXECUTIVE BOARD

Divisional Boards

Functional Seminars

Team Meetings

POLICIES FOR IDENTIFYING AND CONTROLLING RISKS

Budgeting & Forecasting

Price & Sales Monitoring

Cost Reviews

Land Bank Management System

PROCEDURES AND INTERNAL CONTROLS

Business Policies and Procedures

Authorisation Processes

System Based Controls

Business Process Reviews

Site Completion Reviews

PEOPLE AND CULTURE

Professionalism

Strong Communication

Qualified Personnel

Pride and Achievement

Interests Aligned with Shareholders

Commitment to Training

BUSINESS RISKS

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Risk owners and Executive Board

Risk Register and policies and procedures update

The Main Board has the ultimate responsibility over 
the effective management of the risks we face in order 
to achieve our strategic and financial objectives. 

As part of our risk assessment framework, a detailed 
review is carried out of the Company’s strategic 
objectives and identifies the principal risks and 
material concerns we face as a business. These 
headline risks are then approved and compiled 
into a risk register. 

The risks and material concerns are then further 
broken down into components and sub level risks. 
These sub level risks are reviewed by each Divisional 
Board, individually assessing the probability and 
impact of each risk. In order to mitigate, control and 
continually monitor these risks, appropriate internal 
controls are implemented.

Any new risks identified are assessed one at a time, 
evaluating any potential impact to our business and 
the likelihood of its occurrence. These new risks are 
then fed back to the risk owners who use this 
assessment to inform their formal review, ensuring 
there are preventive and detective controls in 
place and included in the risk register.

The risk register is reviewed annually to ensure  
it is up to date. It is also reviewed by the Audit 
Committee to ensure that it is relevant and 
appropriate to our business.

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54 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Risk Management continued

Risk

Risk Owners

Key Controls and Mitigating Strategies

Risk Movement

Risk

Risk Owners

Key Controls and Mitigating Strategies

Risk Movement

Group Chief 
Executive

Housing Market 
UK housing market 
conditions have a direct 
impact on our business 
performance and Help to 
Buy continues to provide 
significant support. 

GROW OUR  
BUSINESS 
RESPONSIBLY

The UK housing market is closely 
monitored, with management  
responding if there are any changes 
in market conditions.

Regular review and product updates 
in response to demand in the market. 

Weekly review of the sales at both  
Group and Divisional level.

Regular review of competitor actions  
and their performance.

Ongoing and regular monitoring of 
Government policy.

Availability of  
Mortgage Finance 
Lending criteria and 
deposit requirements for 
mortgages remain key 
issues in the current 
environment.

GROW OUR  
BUSINESS 
RESPONSIBLY

Group  
Finance 
Director

Proactively engage with the Government, 
Lenders and Insurers to support the 
housing market. 

Expert New Build Mortgage Specialists 
provide updates on regulatory changes.

Group  
Finance 
Director

Liquidity and Funding 
The Group requires 
appropriate borrowing 
facilities in place for its 
short term liquidity and 
long term funding.

MANAGE OUR 
RESOURCES 
EFFICIENTLY

Suitable committed banking facilities  
with covenants and headroom.

Regular review of our banking covenants 
and capital structure.

Regular communication with our investors 
and relationship banks.

Robust forecasting and budgeting process 
in order to provide a clear view of future 
cash flows.

Customer Service 
The failure of our 
customer services could 
undermine Redrow’s 
business performance.

PUT  
CUSTOMERS  
FIRST

Regional  
Chief Executive

Customer First initiative continues to  
further improve our engagement with  
our customers.

‘My Redrow’ website to support our 
customers purchasing their new home.

Regular review of our marketing and 
communications policies at Group and 
Divisional level.

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Land Procurement
The ability to purchase 
land suitable for our 
products and the timing 
of future land purchases 
are fundamental to the 
Group’s future 
performance.

MANAGE OUR 
RESOURCES 
EFFICIENTLY

Group 
Development 
Director

Proactive monitoring of the market conditions 
to implement a clear defined strategy at both 
Group and Divisional level.

Experienced and knowledgeable personnel 
in our land, planning and technical teams.

Use of third party legal resources for larger 
site acquisitions in order to reduce risk.

Effective use of our Land Bank Management 
System to support the land acquisition 
process.

MANAGE OUR 
RESOURCES 
EFFICIENTLY

CREATE 
BETTER 
PLACES TO 
LIVE

Planning and Regulatory 
Environment
The inability to respond 
and adapt to the 
changing planning and 
regulatory environment 
will adversely impact 
upon our ability to 
comply with the 
regulatory requirements 
of the industry.

Appropriateness  
of Product 
The failure to design  
and build a desirable 
product for our 
customers at the 
appropriate price may 
undermine Redrow’s 
ability to fulfil its 
business objectives.

Group 
Development 
Director

Close monitoring of the planning and 
regulatory environment at Group and 
Divisional level.

Communication of proposed changes across 
the Group through the Executive Board.

Well prepared planning submissions 
addressing local concerns and displaying 
good design.

Group  
Design and 
Technical 
Director

Regular review and product updates in 
response to the demand in the market. 

Design focused on high quality build and 
flexibility to planning changes.

Regular site visits and implementation of 
product changes to meet demands.

Group  
Human 
Resources 
Director

Attracting and 
Retaining Staff 
The loss of key staff and/
or our failure to attract 
high quality employees 
will inhibit our ability to 
achieve our business 
objectives.

VALUE AND 
DEVELOP OUR 
PEOPLE

Personal Development Programmes 
supported by National training centres  
at three locations.

Graduate training, Undergraduate 
placements and Apprentice training 
programmes to aid succession planning.

Remuneration strategy to attract and  
retain talent within the business is 
reviewed regularly and benchmarked.

Regular INsight e-magazine and annual 
employee survey create a framework for 
strong communication.

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56 

Redrow plc Annual Report 2017

STRATEGIC REPORT 
Risk Management continued

Risk

Risk Owners

Key Controls and Mitigating Strategies

Risk Movement

Group Health 
and Safety 
Director

Dedicated team operating across the Group 
to ensure compliance of appropriate Health 
and Safety standards. 

VALUE AND 
DEVELOP OUR 
PEOPLE

Health and Safety/ 
Environment 

Instances of non-
compliance with  
Health & Safety and 
Environmental 
regulations could 
expose our people, 
the environment and 
Redrow’s reputation.

Group 
Commercial 
Director

GROW OUR  
BUSINESS 
RESPONSIBLY

Key Supplier or 
Subcontractor Failure 
The failure or inability to 
expand capacity of a key 
supplier, main contractor 
or subcontractor may 
disrupt our ability to 
manage our production 
process in an efficient 
and cost effective 
manner.

Undertaking regular visits and audits on sites.

Internal and external training provided to all 
employees.

Divisional Construction (Design and 
Management) Regulation (CDM) inspections 
carried out to assess our compliance with our 
client duties under CDM.

Health and Safety discussion at both Group 
and Divisional level board meetings.

CDM competency accreditation requirement 
as a minimum for contractor selection process.

Use of reputable supply chain partners with 
relevant experience and proven track record.

Monitoring of subcontract supply chain to 
maintain appropriate number for each trade 
and to identify any potential shortage in 
skilled trades in the near future.

Subcontractor utilisation on sites monitored  
to align workload and capacity.

Bi-annual quality assessments of suppliers, 
contractors and subcontractors.

Group Monthly Product Development 
meetings to identify and monitor changes  
in the regulatory environment.

Cyber Security 
Failure of the Group’s IT 
systems and the security 
of our internal systems, 
data and our websites 
can have significant 
impact to our business.

GROW OUR  
BUSINESS 
RESPONSIBLY

Fraud/Uninsured Loss 
A significant fraud or 
uninsured loss could 
damage the financial 
performance of our 
business.

MANAGE OUR 
RESOURCES 
EFFICIENTLY

IT Director

Communication of IT policy and procedures 
to all employees.

Regular systems back up and storage of 
data offsite. 

Internal specialist IT security personnel.

Use of third party entity to test the Group’s 
cyber security systems and other proactive 
approach for cyber security including Cyber 
Essentials Plus accreditation.

Finance 
Director 
Operations

Systems, policies and procedures in place 
which are designed to segregate duties  
and minimise any opportunity for fraud.

Regular Business Process Reviews 
undertaken to ensure compliance with 
procedure and policies followed by formal 
action plans.

Timely management reporting. 

Insurance strategy driven by business risks.

STRATEGIC REPORT APPROVAL 
The Strategic Report outlined on pages 1 to 57 
has been approved by the Board.

By order of the Board

GRAHAM COPE
Company Secretary

4 September 2017

VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK 
Corporate Governance Code 2014, the Directors 
have assessed the prospects and viability of  
the Group.

The Group’s investment case, business model and 
strategy are key to understanding Redrow’s future 
prospects. The Directors’ assessment has made 
reference to our current position, our strategy, the 
potential impact of the principal risks facing the 
Group, and the Board’s appetite for risk which are 
to be found in this Report in the Strategic Report. 
The Group has committed banking facilities 
through to March 2020.

The Directors have selected a three year timeframe 
over which to assess the viability of the Group, from  
1 July 2017 to 30 June 2020. This timeframe was 
chosen as it corresponds with the Board’s three year 
planning horizon. On an annual basis, the Directors 
review the financial forecasts for the Group 
constructed using a detailed bottom up process 
incorporating assumptions about the timing of legal 
completions of new homes and land purchases, 
selling prices, profitability, working capital 
requirements and cash flows. The Group also uses  
a top down model to give another perspective.

The three year plan is stress tested for robust 
downside scenarios. This involves flexing key 
assumptions including the impact of reduced 
average selling prices, sales rates and land prices 
which could arise from a deterioration in housing 
market conditions and mortgage availability.

The Directors confirm that they have a reasonable 
expectation that the Group will be able to continue 
in operation and meet its liabilities as they fall due 
over the three year period ending 30 June 2020.

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Redrow plc Annual Report 2017

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60 

GOVERNANCE REPORT
Corporate Governance

“The Board is committed to complying with corporate 
governance guidelines and to maintaining high 
standards of corporate governance.”

DEAR SHAREHOLDER
I am delighted to introduce the Corporate 
Governance report outlining the Company’s 
approach to corporate governance. As outlined 
elsewhere in the report, the Board remains 
committed to high standards of corporate 
governance. This report on corporate governance 
sets out and explains in clear terms the processes in 
place which are essential for delivery of long-term 
success, while ensuring that the Company complies 
with all applicable laws and regulations and, of 
course, meeting the requirements of our 
shareholders and their representative bodies. 

This report has been prepared and approved by  
the Board and, on behalf of the Board I confirm that 
during the financial year ended 30 June 2017, the 
Company was compliant with the provisions of the 
UK Corporate Governance Code other than as set 
out in this report. This report also explains what the 
Board of Directors actually does and describes how 
it is responsible for setting the codes and values of 
the Company, thereby ensuring that the Company  
is run in the best interests of our shareholders and 
other stakeholders and how it interacts with its 
shareholders and explains the Company’s strategic 
goals and performance against them. 

The Board continues to believe that the balance  
of Non-Executives and Executive Directors has 
worked well. A number of Board meetings have 
been held in a number of the Divisions during the 
year and have included open discussions with the 
Management Teams on such matters as land 
acquisition, sales outlets, sales and our product. 

There have been no changes in corporate 
governance best practice during the financial year 
ended 30 June 2017.

Our 2017 Annual General Meeting will be held on 
Thursday, 9 November 2017 and the Notice of 
Annual General Meeting together with Explanatory 
Notes will be sent to you separately. 

Finally on behalf of the Board, for those who wish to 
attend our 2017 Annual General Meeting, the Board 
looks forward to meeting with you.

GRAHAM COPE
Company Secretary 

GRAHAM COPE 
Company 
Secretary

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Composition of  
the Board

Length of tenure of  
Non-Executive Directors

Main Board  
by gender

Executive

Non-Executive 

Over three years

One to three years

Female

Male

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NORTHWAY HOUSE, TOTTERIDGE & WHETSTONE, LONDON

Redrow plc Annual Report 2017 
 
 
 
62 

GOVERNANCE REPORT
Board of Directors

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STEVE MORGAN (64)
CHAIRMAN

JOHN TUTTE (61)
GROUP CHIEF EXECUTIVE

BARBARA RICHMOND (57)
GROUP FINANCE DIRECTOR

GRAHAM COPE (53)
COMPANY SECRETARY

ROLE: He is primarily responsible for 
the effective working of the Board, 
taking a leading role in determining 
the Board’s composition and 
structure and ensuring effective 
communications with shareholders. 

STRENGTHS AND SKILLS:  
Steve Morgan founded Redrow 
in 1974 and led the business to 
become one of the UK’s leading 
home builders. He floated the 
Company in 1994 and stepped 
down as Chairman in November 
2000, returning to the helm in 
March 2009.

Steve is also Chairman of The 
Bridgemere Group of Companies, 
Carden Leisure and Trinity Aviation. 
He set up The Steve Morgan 
Foundation in 2000, one of the 
largest charitable trusts in the north 
of England.

Steve is a Fellow of the Chartered 
Institute of Building and holds 
five Honorary Degrees. He was 
awarded an OBE in 1992 for services 
to the construction industry and a 
CBE in 2016 for philanthropy.

ROLE: He is responsible for the 
operational management of 
the Group, the implementing of 
strategic plans and reporting on 
these to the Board. 

STRENGTHS AND SKILLS:  
John Tutte joined the Board 
of Redrow in July 2002. In 
September 2009 he was 
promoted to Group Managing 
Director and in July 2014 became 
Group Chief Executive.

John qualified in civil engineering 
and has amassed more than 35 
years’ experience within the 
industry, having previously held 
the position as Chief Executive of 
Wilson Connolly plc.

John was appointed to the board 
of the Home Builders Federation 
in February 2015. He is also a 
Chairman of the Home Building 
Skills Partnership – an initiative 
between the HBF and CITB 
to attract and develop a more 
diverse skilled workforce for the 
industry and its supply chain.

ROLE: She is responsible for 
the financial management of the 
Group in its broadest sense. 

STRENGTHS AND SKILLS: 
Barbara Richmond joined the 
Board of Redrow in January 
2010, bringing with her a proven 
track record, with over 20 years’ 
experience as Group Finance 
Director at a number of UK listed 
companies including Inchcape 
plc, Croda International PLC and 
Whessoe plc.

She has a strong background in 
both manufacturing and retail 
as well as having completed a 
number of major acquisitions and 
disposals throughout her career.

Barbara was appointed a Non-
Executive Director of Lonza Group 
Ltd with effect from 16 April 2014.

Barbara is a Fellow of the Institute 
of Chartered Accountants in 
England and Wales and a graduate 
of the University of Manchester.

ROLE: He is responsible for 
governance structures and 
mechanisms, corporate conduct 
within the Company’s regulatory 
environment and circulars to 
shareholders and is the primary 
source of advice on the conduct 
of the business.

Graham is Company Secretary to 
the Main Board and Secretary to 
all Committees.

STRENGTHS AND SKILLS: 
Graham Cope joined Redrow as 
Head of Legal in November 2002 
and was appointed Company 
Secretary two months later. He 
has over 20 years’ experience in 
the housebuilding sector, either 
working in-house or for clients in 
private practice.

Graham qualified as a solicitor 
in 1989 and is a member of the 
Law Society.

ROLE: The Non-Executive Directors are members of the Board but do not form part of the Executive 
Management team. They have responsibility to constructively challenge and contribute to the 
development of strategy, scrutinise the performance of management, satisfy themselves that financial 
information is accurate and that financial controls and systems of risk management are robust and are 
responsible for determining appropriate levels of remuneration of the Executive Management team.

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SIR MICHAEL LYONS (67)
NON-EXECUTIVE DIRECTOR

DEBBIE HEWITT (54)
SENIOR INDEPENDENT DIRECTOR

LIZ PEACE (64)
NON-EXECUTIVE DIRECTOR

STRENGTHS AND SKILLS:  
Sir Michael joined the Redrow 
Board in January 2015. He 
recently chaired the Lyons 
Housing Commission to produce 
a road map for increasing house 
building in this country. 

He is also Chairman of the English 
Cities Fund, which undertakes 
large scale urban regeneration 
schemes in a number of places 
and is Chairman of SQW Group 
and a strategic adviser to CBRE. 

Prior to this, following a long 
and distinguished career in 
local government, Sir Michael 
completed a four year term as 
Chairman of the BBC and has 
held a range of non-executive 
positions across the three sectors.

STRENGTHS AND SKILLS: 
Debbie joined the Redrow Board 
in August 2009. She has a wealth 
of board experience in executive 
and non-executive roles. 

She is currently the Non-
Executive Chairman of Moss  
Bros plc, The Restaurant Group 
plc and White Stuff.

She is also Non-Executive  
Director of NCC plc, BGL and 
Domestic & General, and Visa 
Europe Limited.

Debbie has an MBA from Bath 
University, is a fellow of the 
Chartered Institute of Personnel 
and Development and was 
awarded an MBE in 2011 for 
services to business and the 
public sector.

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NICK HEWSON (59)
NON-EXECUTIVE DIRECTOR

VANDA MURRAY (56)
NON-EXECUTIVE DIRECTOR

STRENGTHS AND SKILLS:  
Nick joined the Redrow Board 
in December 2012. His business 
career to date has been spent 
mainly in the property industry, 
from commercial to residential.

Nick is the Chairman of 
Supermarket Income REIT and a 
Non-Executive Director of Croma 
Security Solutions Group Plc.

Nick is a Fellow of the Institute of 
Chartered Accountants in England 
and Wales and has a degree in 
Law from Cambridge University.

The Board appointed Vanda 
Murray with effect from  
1 August 2017. Vanda has 
substantial Non-Executive 
Director and Remuneration 
Committee experience. She is 
Chairman of Fenner plc and holds 
non-executive roles with Bunzl 
plc, Manchester Airports Group 
and Just Childcare Ltd. She is also 
Pro-Chancellor at Manchester 
Metropolitan University and a 
Board member of the Manchester 
Growth Company. She has also 
previously held non-executive 
directorships at Carillion plc, 
Exova plc and Microgen plc. 

Vanda was awarded an OBE in 
2001 for services to business and 
to exports.

STRENGTHS AND SKILLS:  
Liz joined the Redrow Board  
in September 2014. She spent  
13 years as the CEO of the  
British Property Federation and 
also had a long and distinguished 
career in the Civil Service. 

She is currently a non executive 
director at The Howard de 
Walden Estate and non 
executive chairman of the 
Shadow Government Property 
Agency and of the Mayor of 
London’s Old Oak and Park Royal 
Development Corporation. She is 
also the chairman of the property 
industry’s charity, LandAid, and of 
the Architectural Heritage Fund 
and the Centre for London.

Liz was awarded a CBE in the 
2008 New Year’s Honours List.

Liz retired from the Board on 
31 August 2017.

BOARD EXPERIENCE:

Finance

Property

Operational 

Sustainability

COMMITTEE MEMBERSHIP:

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Audit Committee

Nomination Committee 

Remuneration Committee

Sustainability Committee

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Redrow plc Annual Report 2017 
 
 
 
64 

GOVERNANCE REPORT 
Corporate Governance continued

“The Board is committed to complying with corporate governance 
guidelines and to maintaining high standards of corporate governance.”

MAIN BOARD

Senior Independent Director 
Independent Non-Executive Directors

Chairman 
Group Chief Executive 
Group Finance Director 
Company Secretary 
Group Regional Chief Executives 
Group Human Resources Director 
Group Sales & Marketing Director 
Group Development Director

NON - E XECUTIVE  
TE AM

E XECUTIVE 
MANAG EM ENT 
TE AM

INTRODUCTION 
This report sets out the Company’s compliance with 
the UK Corporate Governance Code (the “Code”) 
issued by the Financial Reporting Council  
(www.frc.org.uk) and describes how the governance 
framework is applied by the Company.

The Directors have considered the contents and 
requirements of the Code and confirm that 
throughout the year ended 30 June 2017, other than 
as set out in the Annual Report, the Company has 
been compliant with the provisions of the Code. 

THE BOARD
The Board comprises a Chairman, two further 
Executive Directors and four Independent  
Non-Executive Directors. 

Steve Morgan, as Chairman, is responsible for 
leadership of the Board and ensuring its 
effectiveness on all aspects of its role. The role of 
John Tutte, as Group Chief Executive, ensures that 
there is a clear division of responsibilities at the 
head of the Company between the running of the 
Board and the operational responsibility for the 
running of the Company’s business as required by 
the Code. This balanced approach also ensures no 
one individual has unfettered powers of decision. 

The governance structure is set out in the 
diagram above. 

The Company Secretary acts as secretary to the 
Board and its Committees and his appointment and 
removal is a matter for the Board as a whole. The 
Company Secretary is a Member of the Executive 
Management Team and all Directors have access to 
his advice and services. In certain circumstances, 
Board Committees and individual Directors may 
wish to take independent professional advice in 
connection with their responsibilities and duties, 
and, in this regard, the Company will meet the 
reasonable costs and expenses incurred. Where 
appropriate, the Board delegates decisions to the 
Executive Management Team and other relevant 
management bodies.

BOARD MEETINGS 
The Board meets regularly and frequently, not less 
than six times during the year and maintains a close 
dialogue, as appropriate, between meetings. Board 
meetings are held at Head Office or Divisional 
Offices when visits are frequently made to a 
selection of developments accompanied by the 
local Management Team. Board papers are 
distributed in advance of the meetings to allow 
adequate time for review and preparation and 
include key strategic, operational and financial 
information. Attendance by individual Directors 
at Board meetings is set out on page 65.

BOARD BALANCE AND INDEPENDENCE
The Board considers that it is of a size and has a 
balance of skills, knowledge and experience that is 
appropriate for its business. The Executive Team 
provides the Board with an appropriate view of the 
detail of the business and the benefit of their 
significant collective experience of the UK house 
building industry and that enables it to discharge 
their respective duties and responsibilities 
effectively. The Non-Executive Directors bring a 
wealth of experience and understanding from 
outside the Company which enables them to 
challenge and help develop proposals on the 
Company’s strategy. All Non-Executive Directors 
holding office during the year ended 30 June 2017 
are considered to be independent.

Details of the Directors’ respective experience is set 
out in their biographical profiles on pages 62 to 63.

Under the Code, at least half the Board, excluding 
a Non-Executive Chairman, should comprise 
Non-Executive Directors determined by the Board 
to be independent. The Board currently comprises 
three Executive Directors, including a Chairman, 
and four Independent Non-Executive Directors in 
compliance with the Code.

The Board considers that each Director is able to 
allocate sufficient time to the Company to discharge 
their responsibilities effectively. 

RELATIONSHIP AGREEMENT
The Company is party to a Relationship Agreement 
with Bridgemere Securities Limited and Steve 
Morgan, which regulates the relationship between 
the parties and complies with the requirements of 
the Listing Rules, including Listing Rule 9.2.2AR(2)(a) 
and Listing Rule 6.1.4DR. In accordance with the 
requirements of Listing Rule 9.8.4R(14), the Board 
confirms that the Company complied with the 

independence provisions set out in the Relationship 
Agreement during the period under review, and, so 
far as the Company is aware, Bridgemere Securities 
Limited, Steve Morgan and their associates 
complied with the independence provisions set out 
in the Relationship Agreement during the period 
under review.

BOARD PERFORMANCE EVALUATION AND 
PROFESSIONAL DEVELOPMENT
The Board undertook an internal formal evaluation of 
its own performance during the year ended 30 June 
2017. This started with a questionnaire designed to 
assess performance and ongoing effectiveness across 
key areas in the year ended 30 June 2017 and to 
maintain visibility and progress during the financial 
year. Following the completion of the questionnaire, a 
report was presented to the Board and discussed and, 
as a result, the Board considers that it continues to 
operate effectively with meetings to facilitate and 
debate decision making. 

The evaluation also considered succession 
planning for the Executive Team and the Non-
Executive Directors. 

The Board recognises that a structured appraisal 
process and good training are important 
requirements across the Group. The Board receives 
regular presentations and briefings from those 
responsible for key Group disciplines. In addition, 
the Board maintains close working relationships 
with Divisional Management Teams. 

All Directors undertake a comprehensive induction 
programme following their first appointment.

The programme for the Non-Executive Directors 
is specifically designed to encompass the full 
breadth of the business and includes visits to 
operating businesses. 

TABLE OF ATTENDANCE

Name

Steve Morgan 

John Tutte 

Role

Chairman 

Group Chief Executive

Barbara Richmond

Group Finance Director

Debbie Hewitt

Nick Hewson

Liz Peace

Senior Independent Director

Non-Executive Director

Non-Executive Director

Sir Michael Lyons

Non-Executive Director

Attendance at Meetings 

6/6

6/6

6/6

6/6

6/6

6/6

5/6

All details for the Directors are provided on pages 62 to 63.

Details of internal control and risk management processes are included in the Audit Committee report on pages 68 to 71.

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Redrow plc Annual Report 2017 
 
 
 
 
66 

GOVERNANCE REPORT 
Corporate Governance continued

During the year the formal appraisals of the Group 
Chief Executive and the Group Finance Director 
were undertaken by the Chairman

•  approval of corporate acquisitions or disposals, 

significant land purchases or contracts; 

•  changes to the size, structure and composition  

All Independent Non-Executive Directors had an 
annual appraisal conducted by the Senior 
Independent Director. 

COMMITTEES 
The Board is supported by Audit, Nomination, 
Remuneration and Sustainability Committees and 
their memberships, roles and activities are set out  
in separate reports; the Audit Committee report  
can be found on pages 68 to 71; the Nomination 
Committee report on pages 72 to 73; the 
Remuneration Committee report on pages 76 to 97 
and the Sustainability Committee report can be 
found on pages 74 to 75.

Each Committee has terms of reference approved 
by the Board and the Minutes of the Committee 
meetings are circulated, and the Committee 
Chairmen provide reports, to the Board. 

The Audit Committee is chaired by Nick Hewson, 
the Remuneration and the Nomination Committees 
are chaired by Debbie Hewitt and the Sustainability 
Committee was chaired by Liz Peace. Following Liz 
Peace’s retirement from the Board on 31 August 
2017 Sir Michael Lyons became Chair of the 
Sustainability Committee.

The Board completed a performance evaluation of 
its Committees during the financial year ended  
30 June 2017 and it was concluded they were 
contributing and functioning effectively and were 
complying with their terms of reference. 

GOVERNANCE AT WORK IN THE BUSINESS 
The Board aims to meet governance best practice 
where it fits with the Company’s business. 

The Board has a formal schedule of matters 
reserved specifically for its decisions. The matters 
reserved include:

•  approval of Redrow’s long term objectives 

and strategy;

•  approval of the Annual Report and Accounts, 

preliminary and half-yearly financial statements, 
interim management statements, trading updates 
and the recommendation of dividends; 

•  approval of any significant changes in accounting 

policies or practices; any changes relating to 
capital structure; approval of treasury policies; 

•  ensuring the maintenance of a sound system of 

internal control and risk management; 

of the Board; 

•  approval of significant policies, including 
Redrow’s Health and Safety policy; and

•  review of overall corporate governance 

arrangements.

The Chairman is primarily responsible for:

•  effective working of the Board;

•  taking a leading role in determining the  
Board’s composition and structure; and 

•  ensuring that effective communications are 

maintained with shareholders.

The Chief Executive is responsible for:

•  operational management of the Group;

•  implementing strategic plans; and 

•  reporting on these to the Board

Debbie Hewitt, the Senior Independent Director 
supports the Chairman in ensuring the Board is 
effective and that constructive relations are 
maintained. In addition to acting as a Senior 
Independent Director in which capacity she leads 
the annual performance evaluation of the Chairman, 
she also provides an additional point of contact 
for shareholders. 

The Company has Directors’ and Officers’ insurance 
in place which insures Directors against certain 
liabilities, including legal costs.

APPOINTMENTS AND RE-ELECTIONS  
TO THE BOARD
The Nomination Committee has recommended the 
re-appointment of the Executive and Non-Executive 
Directors. The Nomination Committee report can be 
found on pages 72 and 73. 

Under the Company’s Articles of Association, all 
Directors are subject to re-election at their first 
General meeting after appointment. The Board 
having been informed of the conditions of the Code 
on election and re-election, including that there 
should be a formal, rigorous and transparent 
procedure for the appointment of new directors to 
the Board, and that re-election is subject to 
continued satisfactory performance, has decided 
that all Directors, with the exception of Liz Peace, 
will be submitting themselves for re-election at the 
Annual General Meeting. 

Liz Peace retired from the Board on 31 August 2017 
and was replaced by Vanda Murray who submits 
herself for election at the AGM. The Board has 
satisfied itself that all Directors who will be 
submitting themselves for re-election continue to 
perform satisfactorily. Details of appropriate Annual 
General Meeting Resolutions will be found in the 
Notice of Annual General Meeting which will be  
sent to shareholders separately.

CAPITAL STRUCTURE
The information of the capital structure of the 
Company is included in the Directors’ report on 
page 100.

DIVERSITY 
The principle of boardroom diversity is strongly 
supported by the Board. It is the Board’s policy that 
appointments to the Board will always be based on 
merit, so that the Board has the right individuals in 
place, and recognises that diversity is an important 
consideration as part of the selective criteria used 
to assess candidates to achieve a balanced Board.

The table below sets out the current position of the 
Company on a gender basis.

Main Board

Executive  
Management Team

Female

Male

3 (43%)

4 (57%)

2 (18%)

9 (82%)

Direct reports to Executive 
Management Team

12 (32%)

26 (68%)

SHAREHOLDER ENGAGEMENT
The Company announces its financial results 
half-yearly, and, immediately following their 
publication, undertakes formal presentations to 
equity analysts. These presentations are available 
on the Company’s website. 

During the year ended 30 June 2017, the Chairman, 
the Group Chief Executive and the Group Finance 
Director, together with the Senior Independent 
Director, also held a number of meetings with 
significant shareholders and subsequently briefed 
the Board on issues discussed at these meetings. 

Following the full year and half-yearly results’ 
announcement in September 2016 and February 2017, 
the Chairman, Group Chief Executive and Group 
Finance Director met current and potential significant 
shareholders. This included visits to London, the 
United States of America and Canada and feedback 
from these meetings was independently collated and 
disseminated to the Board.

The Annual General Meeting takes place at a venue 
close to the Company’s Head Office. All Directors 
attended the Annual General Meeting on 9 November 
2016. Shareholders are encouraged to attend the 2017 
Annual General Meeting, which represents an 
opportunity for all shareholders attending to ask 
questions formally during the meeting and informally 
afterwards to the Company’s Directors. 

Formal notification of the 2017 Annual General 
Meeting is sent to Shareholders at least 21 working 
days in advance. 

Redrow employees  
at June 2017

711 (32%)

1,479 (68%)

Redrow’s website, redrowplc.co.uk, gives access to 
current financial and corporate information.

GRAHAM COPE
Company Secretary 

4 September 2017

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Redrow plc Annual Report 2017 
 
 
 
 
68 

GOVERNANCE REPORT
Audit Committee Report

“The Committee’s principal responsibilities lie in reviewing the Group’s 
financial reporting, overseeing the appointment and work of the external 
Auditors and reviewing Redrow’s internal control processes.”

NICK HEWSON 
Chairman of the 
Audit Committee

COMMITTEE MEMBERSHIP AND MEETINGS
The four Members of the Committee are Independent 
Non-Executive Directors. Nick Hewson is Chairman  
of the Committee and is a Fellow of the Institute of 
Chartered Accountants in England and Wales. 
Biographies of the Members of the Committee  
can be found on pages 62 to 63.

The Board believes that Nick Hewson has the 
requisite financial qualifications and experience  
to chair the Committee and the balance of the 
Committee has the appropriate level of experience  
to fulfil its Terms of Reference and the requirements  
of the Corporate Governance Code.

The Group Finance Director and Finance Director 
– Group Services attend meetings by invitation and  
both were present at all the meetings in the year 
ended 30 June 2017. The external Auditors, 
PricewaterhouseCoopers LLP (“PwC”), and the 
Finance Director (Operations) who has the 
responsibility for Internal Audit of the Company,  
were also in attendance at all meetings.

Table of Attendance

Name

Role 

Nick Hewson 

Chairman

Debbie Hewitt

Liz Peace

Member

Member

Sir Michael Lyons

Member

Attendance  
at Meetings 

3/3

3/3

3/3

2/3

The Committee met three times in the year ended 
30 June 2017 and a summary of the principal 
activities of the Committee are listed below.

Detailed papers and information were circulated 
sufficiently in advance of meetings to allow proper 
consideration of the matters for discussion. The 
Committee has also had the opportunity to meet 
separately with the external Auditors and Internal 
Audit following the final audit and the review of the 
year ended 30 June 2017 financial statements. No 
matters of concern were raised within these 
discussions. The Committee Chairman has also met 
with the Engagement Partner of the external Auditors 
and the Finance Director (Operations) to discuss 
Internal Audit matters. The Group Company 
Secretary acts as Secretary to the Committee.

RESPONSIBILITIES AND TERMS  
OF REFERENCE
The key responsibilities of the Committee are:

•  monitoring the integrity of the financial statements 
of the accompanying reports to the shareholders 
and Corporate Governance Statements including 
reviewing the findings of external Auditors;

•  reviewing and monitoring the effectiveness of 
systems for internal control, financial reporting 
and risk management;

•  reviewing and overseeing the effectiveness of 

Internal Audit;

•  making recommendations to the Board in relation 

to the appointment and removal of external 
Auditors and approving the remuneration and 
terms of engagement;  

•  reviewing and monitoring the external Audit 

process and independent activity of the Auditors 
as well as the nature and scope of the external 
Audit and its effectiveness;

•  reviewing the Company’s procedures for 

detecting fraud and the adequacy of its systems 
and controls for the prevention of bribery; and

•  reviewing the Company’s procedures for  

raising concerns. 

The Committee’s Terms of Reference are available 
on the Company’s website (redrowplc.co.uk).

AUDIT COMMITTEE REPORTING  
ON SIGNIFICANT ISSUES
The primary areas of judgement which were 
considered by the Committee and how these were 
addressed is set out below.

VALUATION OF INVENTORY
The Committee receives a paper prepared by 
management at each reporting date outlining the 
approach taken by management to assess the net 
realisable value of inventories together with details 
of sites with significant areas of judgement and any 
forward land against which provisions have been 
made. The Group Finance Director and Finance 
Director – Group Services attend meetings by 
invitation to answer any questions the Committee 
may have.

The Committee also annually reviews the internal controls that are in place and reviews the findings of PwC’s testing of 
controls and processes for estimating as well as the adequacy of disclosures that management propose to be made in 
financial statements.

DEFINED BENEFIT PENSION SCHEME VALUATION
The Committee receives details of the IAS 19R – Employee Benefits valuations carried out at each reporting date for 
management by the actuary who advises the Company and the underlying assumptions. A sensitivity analysis is also provided 
for its consideration. The Committee also receives details of the triennial independent scheme valuation report prepared by the 
Scheme Actuary and reviews key judgement areas made including relevant actuarial advice that has been received. In addition 
the Committee also reviews the findings of PwC’s testing of pension scheme assets and liabilities.

MAIN ACTIVITIES DURING THE YEAR 
The Committee followed a programme which is structured around the annual reporting cycle and received reports from Internal 
Audit, the external Audit and management. 

The principal activities undertaken were as follows:

September 2016 A review of the full year 2016 results including the Annual Report and a report from the external Auditors; and 

Consideration of the Group risk assessment process, viability statement and a going concern review.

February 2017

A review of the 2017 half-yearly accounts and going concern including a report from the external Auditors;

A review of the Terms of Reference of the Committee;

A review of the proposed external Audit strategy for 2017 and associated fees;

A review of the effectiveness of the external Audit process;

A review of the independence and objectivity of the external Auditors; and 

A review of the Committee’s effectiveness.

June 2017

A review of the appropriateness of the Group’s accounting policies;

A review of the Risk Register;

A review of the Group’s Whistleblowing Policy;

A review of the Group’s Anti-Bribery Policy;

A review of internal controls across the whole business; 

An update on Internal Audit, its strategy and a review of the Internal Audit timetable for 2018; and

Further discussions regarding the future tendering of the external Audit in compliance with the Order 
of the Competition and Markets Authority.

Undertook a Performance Evaluation of the Committee.

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September 2017 A review of the full year 2017 results, including the Annual Report and a report from the external Auditors; and 

Consideration of the Group risk assessment process, viability statement and a going concern review.

AUDIT INDEPENDENCE
PwC were appointed Auditors in 1999 having succeeded Coopers & Lybrand who were appointed in 1987. The current Audit 
Partner from PwC commenced his tenure following the conclusion of the year ended 30 June 2015 audit.

At its meeting in February 2017 the committee considered whether to retain PwC as auditor and concluded that, in view of the 
quality of service provided and the cost effectiveness of the work carried out, it would be appropriate to retain them. The 
Committee confirms that there were no contractual obligations that acted to restrict the Committee’s choice of external Auditors.

Following the Order of the Competition and Markets Authority in relation to FTSE 350 companies which will require the Company to 
change its statutory auditor for the June 2021 audit at the latest, the Committee has had further discussions regarding its future 
policy, strategy and timing for tendering of the external Audit. The Committee will keep the performance of the Auditors under 
review and will have completed a tender to have new auditors in place for the year ending 30 June 2021, or earlier.

The Committee has a formal policy in respect of the work of the external Auditors. The purpose of this policy is to ensure that the 
Auditor’s objectivity and independence is maintained by ensuring both that the nature of any non-audit work undertaken and the 
level of fees paid does not compromise the Auditor’s position. 

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Redrow plc Annual Report 2017 
 
 
 
70 

GOVERNANCE REPORT
Audit Committee Report continued

Appointments in respect of non-audit work require 
the prior approval of the Committee within an 
established budget. In addition, no work can be 
undertaken by the external Auditors in any area 
where there is any identifiable risk that the work of 
an individual within the external Audit firm or the 
external Audit firm generally could conflict or 
compromise the quality, objectivity or 
independence of any audit or compliance  
work undertaken for the Group.

The external Auditors are not indemnified by the 
Company nor has the Company purchased liability 
insurance for them.

Details of fees paid to PwC are disclosed on page 123.

INTERNAL CONTROLS
The Board of Directors recognises its overall 
responsibility for the Group’s system of internal 
control and for monitoring its effectiveness. There is 
an ongoing process for identifying, evaluating and 
managing significant risks. However, in reviewing the 
effectiveness of internal control, any internal control 
system can only provide reasonable but not absolute 
assurance against material misstatement or loss. 

Key business activities, including finance, land 
acquisition, product design, and procurement and 
information technology are controlled by the 
Executive Directors. All activity is organised within a 
defined structure with formal lines of responsibility, 
designated authority levels and a structured 
reporting framework. A formalised reporting 
structure is established within Redrow. The 
Executive Directors, the Company Secretary, 
Regional Chief Executives, Group Human Resources 
Director, Group Sales and Marketing Director, Group 
Communications Director and Group Development 
Director (“the Executive Management Team”) meet 
monthly to discuss the Group’s key issues, risks and 
opportunities. The Divisions also hold monthly 
board meetings which are attended on a rotational 
basis by the Executive Directors.

The key features of the Group’s internal controls are 
as follows:

•  defined authorisation levels exist over key areas 
such as land purchase, the placing of orders and 
contracts and staff recruitment;

•  a comprehensive prioritised Risk Register which  

is regularly reviewed and presented to the  
Audit Committee;

•  the Group’s management information systems 
provide weekly updates on key statistics and 

information in respect of sales and production and 
the content of these weekly reports is regularly 
reviewed to ensure it remains appropriate;

•  Redrow has an in-house Health and Safety 

Department and places great emphasis on the 
importance of health and safety and environment 
management. The department works closely with 
the Divisions to ensure that training is provided to 
employees and subcontractors. Best practice is 
shared and appropriate actions are taken to 
comply with health and safety best practice and 
legislation throughout the organisation;

•  the Board requires each Director in its operating 
divisions to complete an annual statement on 
Corporate Governance and related party 
transactions. The statement is designed to 
provide assurance that Group policies and 
procedures are being implemented and complied 
with in all material respects; 

•  in addition, key functional Directors complete a 

Principal Controls Self-Assessment Questionnaire 
which is reviewed by the Board to assist in 
improvements in the control framework;

•  a weekly business report (WBR) comprising sales 
funnel information, gross margins and order book 
is produced for the Group, each Division and each 
site and circulated across the Group;

•  a monthly reporting pack is circulated in advance 
and reviewed at each of the Main, Executive and 
Divisional Board meetings. Annual budgets are 
set, with actual performance compared against 
the annual budget;

•  preparation and regular updates of Strategic Plans; 

•  a policy and procedures manual which covers all 
the significant aspects of the Group’s operations 
and describes the systems and controls that are 
to be applied; and 

•  daily statements of a reconciled cash position 
identifying significant payments are prepared, 
rolling cash flow forecasts are prepared and 
forecast banking covenant compliance are tested.

Throughout the year, the Committee has carried out 
assessments of internal control by considering 
documentation from the Executive Directors and the 
internal audit function as well as taking into 
consideration events since the year end. The 
internal controls extended to the financial reporting 
process and the preparation of consolidated 
accounts. The basis for the preparation of 
consolidated accounts has been undertaken in 
accordance with the Company’s Accounting policies 
as set out on pages 118 to 122.

The Committee therefore confirms that it is satisfied 
that the system of controls has been in operation 
throughout the financial year and up to the date of 
this report.

RISK REGISTER
The Group formally reviews its prioritised Risk 
Register every year. The updated and reviewed Risk 
Register is then discussed and approved by the 
Committee. In addition, the Executive Board, 
through its regular meetings, reviews key areas of 
risk on an ongoing basis and considers whether the 
internal controls identified in relation to those risks 
remain appropriate. 

INSURANCE
The Board has appointed an experienced broker to 
advise on and co-ordinate all insurance matters 
across the Group and they liaise closely with 
appropriate Redrow personnel at Head Office and 
within the Divisions and report directly to the Group 
Finance Director.

RISK MANAGEMENT AND INTERNAL AUDIT
The Group’s Risk Register defines controls as prevent 
or detect and identifies owners for each high level 
risk. Feedback on the risks and controls is actively 
encouraged and is facilitated by links on the Group’s 
intranet to ensure the risks listed remain relevant and 
accurate. The Register itself is regularly maintained 
and is reviewed by the Committee annually. 

The Internal Audit strategy is discussed with PwC 
and discussed and agreed with the Committee. 
Suggested control improvements and any control 
weaknesses identified are followed up as 
appropriate. The cornerstone of the Internal Audit 
work undertaken is the Business Process Reviews. 
A risk-based programme was designed based on 
the Risk Register. The Business Process Review 
programme looks to provide assurance to the 
Group, by testing internal controls and reviewing 
specific risks, as well as seeking out best practice 
and sharing it across the Group and identifying 
business process improvements. Committee 
Members receive an Executive Summary of each 
Business Process Review report and these reports 
are then discussed at the next Committee meeting. 
In addition the Committee at its meetings reviews 
the progress made by the relevant Division, 
following the completion of a Business Process 
Review, against the internal audit process.

The Company has introduced a new business 
planning process whereby each land transaction, 
following completion of the development, is tested 
against its original appraisal to ascertain its 
performance and to improve cash flow forecasting. 
These Post Completion Reports are provided to the 
Committee and are discussed at each meeting. 

WHISTLEBLOWING
The Group has a widely publicised Whistleblowing 
Policy which enables employees and other 
stakeholders to raise concerns in confidence. The 
Committee has arranged to receive reports on all 
occasions when such issues are raised under this 
policy. The Whistleblowing Policy is formally 
reviewed and approved each year by the Committee.

BRIBERY ACT
Following the introduction of the Bribery Act 2010 
the Company put in place a policy on bribery and 
corruption for all employees to strictly adhere to. 
The Company Secretary ensures that the policy is 
complied with, updates the policy, procedures and 
company code of practice as and when required 
and provides regular reports to the Committee.  
The Bribery Act policy is formally reviewed and 
approved each year by the Committee.

Training is given to all staff to highlight the various 
forms of bribery and all new staff attend an 
induction course at the commencement of their 
employment which includes a section relating to 
bribery and the implication on individuals and the 
company of an act of bribery either given or 
received. Every year, through its new internal 
e-learning facility, each employee will be required  
to complete a mandatory compliance test which 
reminds each employee of their obligations.

PERFORMANCE EVALUATION 
The Committee completed a performance 
evaluation during the financial year by the members 
of the Committee and those who regularly attend  
by invitation, including the External Auditor, 
completing a self-assessment questionnaire and a 
report compiled by the Group Company Secretary 
from the results was presented to the Committee 
and discussed. The Committee was found to be 
effective and it was concluded that the Committee 
had fulfilled its remit and had in place appropriate 
Terms of Reference. 

NICK HEWSON 
Chairman of the Audit Committee

4 September 2017

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Redrow plc Annual Report 2017 
 
 
 
72 

GOVERNANCE REPORT
Nomination Committee Report

“The Committee reviews the size, structure, balance and composition of the 
Board, oversees Board and Senior Executive succession planning and 
identifies and nominates for approval candidates to fill Board vacancies.” 

DEBBIE HEWITT 
Chairman of the 
Nomination 
Committee

COMMITTEE MEMBERSHIP AND MEETINGS
All Members of the Committee are Independent 
Non-Executive Directors with Debbie Hewitt, the 
Senior Independent Director being Chair of the 
Committee. The other Members of the Committee 
during the period ending 30 June 2017 were Nick 
Hewson, Liz Peace and Sir Michael Lyons. The 
biographies of the Members of the Committee  
can be found at pages 62 to 63.

Table of Attendance

Name

Role 

Debbie Hewitt

Chairman 

Nick Hewson

Liz Peace

Member

Member

Sir Michael Lyons

Member

Attendance  
at Meetings 

2/2

2/2

0/2

2/2

The Committee met two times during the year ended 
30 June 2017. For all meetings, papers were circulated 
sufficiently in advance to allow proper consideration of 
all matters for discussion. The Group Company 
Secretary acts as Secretary to the Committee. Liz 
Peace did not attend the Committee meetings due  
to her conflict of interest, as a new Non-Executive 
Director was being discussed, but her apologies  
were noted.

RESPONSIBILITIES AND TERMS  
OF REFERENCE
The key responsibilities of the Committee are:

•   reviewing the structure, size and composition  
of the Board (including skills, knowledge and 
experience) and making recommendations for 
further recruitment to the Board or proposing 
changes to the existing Board;

•  reviewing the leadership needs of the Company, 
both executive and non-executive, ensuring 
appropriate succession planning for directors  
and other senior executives within the business;

•   leading the process for Board appointments 

ensuring they are conducted on merit and against 
objective criteria;

•   making recommendations to the Board, including 
on appointment of Executive and Non-Executive 
Directors to the Board, the re-appointment of 
Directors, the re-election of Directors at the 
Annual General Meeting and the membership  
of the Audit, Nomination, Remuneration and 
Sustainability Committees;

•   ensuring that a formal structured and tailored 
induction programme is undertaken by any  
newly appointed member of the Board;

•   reviewing annually the time required from the 

Non-Executive Directors;

•   satisfying itself with regard to succession 

planning for the Board and senior management, 
taking into account the challenges and 
opportunities facing the Company and future 
skills and expertise needed on the Board 
including development and training; and

•   ensuring suitable candidates for the Board are 
identified through an appropriate recruitment 
process, giving due regard to the benefits of 
diversity, including gender and ethnicity, and 
recommended for appointment. 

The Committee’s Terms of Reference are published 
on the Group’s website (redrowplc.co.uk).

MAIN ACTIVITIES DURING THE YEAR 
During the year to 30 June 2017 the Committee 
undertook the following activities:

•  a review of the structure, size and composition  

of the Board;

•   a review of executive succession. The Committee 
concluded that the present Board balance and 
composition remains appropriate but that it will  
be kept under review;

•   undertook the recruitment process for the 

appointment of a new Non-Executive Director;

•   recommended that the Directors stand for 

re-election at the 2017 Annual General Meeting  
in accordance with UK Corporate Governance 
Code; and

•   reviewed the Committee’s Terms of Reference.

The Directors were not present and did not vote 
when their individual proposals were discussed.

SUCCESSION
The Board considers that succession planning of the 
Board and its Committees is extremely important 
and believes that it currently has a good balance 
and diversity among its Non-Executive Directors 
with each of them having relevant skills derived 
from serving in a range of executive and  
non-executive positions over many years. 

The Committee decided that it needed to plan  
for the long term succession of Non-Executive 
Directors, recognising best practice which advises 
that Non-Executive Directors should ideally hold a 
Board position for no longer than nine years and 
also to plan for the succession of the Chair of the 
Remuneration Committee where best practice 
requires the Chair of this Committee to sit on the 
Committee for a year prior to taking up the Chair role.

During the year, the Committee appointed Stark 
Brooks Associates Limited, an executive search 
consultancy, to assist in the recruitment of a new 
Non-Executive Director. Stark Brooks knows the 
Company well, having over the years assisted the 
Company in a limited number of appointments at 
senior level in the business, below Board level. The 
Committee notes that Stark Brooks is a related party 
to the Company as the Chairman’s wife holds more 
than ten per cent of Stark Brooks shares and she is 
the Executive Chair of the group. The setting of 
fees, which were externally benchmarked, was 
handled independently by the Committee.

Following an extensive due diligence process,  
the Board appointed Vanda Murray with effect from 
1 August 2017. Vanda Murray has substantial 
Non-Executive Director and Remuneration 
Committee experience. She is Chairman of Fenner 
plc and holds non-executive roles with Bunzl plc, 
Manchester Airports Group and Just Childcare Ltd. 
She is also Pro-Chancellor at Manchester 
Metropolitan University and a Board member of  
The Manchester Growth Company. She has also 
previously held non-executive directorships at 
Carillion plc, Exova plc and Microgen plc. 

Debbie Hewitt will complete nine years as a 
Non-Executive Director of the Company on  
19 August 2018 and will retire from the Board  
during 2018. The Company will seek to appoint  
a new Non-Executive Director during the course  
of the financial year to replace her.

DIVERSITY
The principle of boardroom diversity is strongly 
supported and recognised by the Board. It is the 
Board’s policy that appointments to the Board will 
always be based on merit, so that the Board has the 
right individuals in place, and recognises that diversity 
is seen as an important consideration as part of the 
selective criteria used to assess candidates to achieve 
a balanced Board. Current female representation on 
the Board is 43%.

The Board believes in the benefits of cognitive 
diversity, from a wide range of complementary skills. 
The Committee will continue to aspire to maintain a 
diverse Board with recruitment and selection of 
talented individuals and with a broad range of 
appropriate skills, irrespective of gender.

The Group Human Resources Director attends the 
monthly Executive Management Team meetings and 
provides a monthly people report which provides key 
statistics on Group employees as well as providing 
updates on employee engagement and recruitment. 
She reports to the Nomination Committee at least 
twice a year to update on progress.

PERFORMANCE EVALUATION 
The Committee members completed a performance 
evaluation during the financial year and a report was 
presented by the Secretary to the Committee and 
discussed. The Committee was found to be 
effective and it was concluded that the Committee 
had fulfilled its remit and had in place appropriate 
Terms of Reference. 

The 2017 Board evaluation recognised that further 
work was required for long term succession 
planning of the Board and senior management. In 
addition to the changes that have already been 
undertaken the priorities for the coming year are to 
oversee the Executive development of the next 
line of reports to the Group Chief Executive, 
ensuring that there is robust executive succession 
planning in place and also to oversee the change 
in Non-Executive Directors, ensuring the 
Chairmanship and membership of the various 
Committees are properly constituted. 

DEBBIE HEWITT
Chairman of the Nomination Committee 

4 September 2017

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Redrow plc Annual Report 2017 
 
 
 
74 

GOVERNANCE REPORT
Sustainability Committee Report

“The Committee ensures that the Group lives up to high environmental and 
place-making standards and delivers on its commitment to create socially 
and economically sustainable communities.”

•  to have regard to the Company’s involvement in 
the community, and the Company’s policy on 
charitable donations and activities; and

•  to have regard to the Company’s developments 
in customer engagement and service to ensure 
its values are upheld.

•  approved research and the production of a 

subsequent report entitled ‘Creating Britain’s  
New Communities’, to raise awareness of the 
importance of creating sustainable and thriving 
communities to consumers, the wider industry 
and Government;

LIZ PEACE
Chairman of the 
Sustainability 
Committee

COMMITTEE MEMBERSHIP AND MEETINGS
The Members of the Committee during the 
Financial Year comprised Liz Peace, who was Chair 
of the Committee and Nick Hewson, Independent 
Non-Executive Director, Warren Thompson, 
Northern & Central Regional Chief Executive, 
Robert MacDiarmid, Group Research and 
Sustainability Director, and Karen Jones, Group 
Human Resources Director.

Liz Peace retired from the Board on 31 August 2017 
and was replaced by Sir Michael Lyons on  
1 September 2017 as Chair of the Committee.

Matthew Pratt stood down as a Member during the 
course of the year ended 30 June 2017 and was 
replaced by Warren Thompson.

The Committee was on 1 September 2017 renamed 
the Placemaking and Sustainability Committee.

Table of Attendance

Name

Liz Peace

Nick Hewson

Matthew Pratt

Role 

Chairman 

Member

Member

Warren Thompson Member

Robert MacDiarmid Member

Karen Jones 

Member

Attendance  
at Meetings 

3/3

3/3

2/2

1/1

3/3

3/3

The Committee met three times during the year 
ended 30 June 2017. For all meetings, papers were 
circulated sufficiently in advance to allow proper 
consideration of all matters for discussion. The 
Group Company Secretary acts as Secretary to  
the Committee.

RESPONSIBILITIES AND TERMS  
OF REFERENCE
The key responsibilities of the Committee are:

•  to develop and monitor the Company’s approach 
to sustainability and to review and approve the 
sustainability targets proposed by management;

•  to assess the impact of the Company operations 
on the environment and communities affected  
by its activities, including the consideration  
of policies to enhance the benefits of those 
activities and mitigate any negative impact  
of those activities;

•  to have regard to environmental corporate social 
responsibility and community issues, including 
environmental management systems, waste 
management systems, recycling and energy 
management;

•  to ensure that the Group Sustainability Director 

produces in advance of each meeting a 
sustainability performance scorecard to assist  
the Committee to more clearly evaluate the 
relationship between the sustainability initiatives 
in place, or being considered, and the related 
performance levels being achieved;

•  to ensure that the Company supports its people on 
a learning and development pathway to deliver 
high quality products and services and to ensure 
that there is sufficient encouragement and support 
given to Company employees so that they can 
realise their capability to contribute to the social, 
environment and economic health of our 
communities and having regard to the promoting 
and maintaining the highest degree of physical, 
mental and social well-being in the workplace;

•  to ensure that the Company continues to be an 
employer of choice in the industry, valuing and 
respecting its diversity; providing both advantage, 
and equality of opportunity in recruitment, 
development, recognition and reward;

•  to review the Company’s policies and reporting 

with regard to personnel recruitment, development 
and succession planning to ensure a sustainable 
and engaged workforce;

•  approved the Company’s involvement in a 

programme with Young Enterprise, a leading 
charity that empowers young people to harness 
their personal and business skills. The goal of 
the programme, which will reach approximately 
900 young people, is to raise the profile of 
housebuilding and highlight the range of career 
choices within the industry; and

•  endorsed the Company becoming partners in the 
Supply Chain Sustainability School, which is an 
award-winning initiative providing free learning 
and development support to our supply chain 
partners to address sustainability issues. 

PERFORMANCE EVALUATION 
The Committee members completed a performance 
evaluation during the financial year and a report  
was presented by the Secretary to the Committee 
and discussed. The Committee was found to be 
effective and it was concluded that the Committee 
had fulfilled its remit and had in place appropriate 
Terms of Reference. 

GRAHAM COPE
Secretary to the Committee  
for and on behalf of the Sustainability Committee 

4 September 2017

The Committee regularly reviews its Terms of 
Reference; these were last reviewed in May 2017 
and are published on the Group’s website  
(redrowplc.co.uk).

MAIN ACTIVITIES DURING THE YEAR 
During the year ended 30 June 2017 the principal 
activities of the Committee were as follows:

•  evaluated the deployment of a reporting platform 
which is enabling more efficient and effective 
sustainability data collection and reporting across 
the Company;

•  monitored the transition of the Company’s 

environmental management system from BS8555 
to BS EN ISO 14001:2015;

•  monitored the work being undertaken across the 
Company as part of the Pathfinder programme, 
where employees volunteer on projects 
addressing health and wellbeing, community 
support and biodiversity;

•  supported a series of workshops which brought 
together the design and planning teams across 
the Company. The purpose of which was to 
develop a set of design principles that better 
articulated our proven approach to Placemaking; 

•  monitored and reviewed the Company’s 

response to environmental legislation and 
regulation, ensuring the appropriate risk 
mitigation controls were being implemented, 
monitored and evaluated; 

•  monitored the suitability of internal and external 

communication of sustainability related activities. 
Methods of communication included internal 
magazines, Companywide briefings and updates 
to the Company’s website;

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Redrow plc Annual Report 2017 
 
 
 
76 

GOVERNANCE REPORT
Directors’ Remuneration Report

“I am pleased to present the Directors’ Remuneration Report for the  
year ended 30 June 2017.”

DEBBIE HEWITT
Chairman of the 
Remuneration 
Committee

Our current Directors’ Remuneration Policy was 
approved by shareholders at our Annual General 
Meeting (AGM) in 2014. We will therefore be seeking 
shareholder approval for our new Remuneration 
Policy (set out on pages 79 to 86 of this report) at 
the AGM on 9 November 2017.

The Annual Remuneration Report (pages 86 to 97) 
provides details on the remuneration we paid in 
respect of 2017 and our approach going forward. 
It will be submitted to an advisory shareholder vote 
at the 2017 AGM.

POLICY REVIEW 
Since the Policy was last approved in 2014, the 
business has grown, more than doubling revenue, 
PBT, market capitalisation and introducing a 
progressive dividend policy and as a result, 
outperforming peers in our industry. 

As part of this review, the Remuneration Committee 
has taken the opportunity to benchmark the 
remuneration framework of our Executive Directors 
and to update the Policy, to ensure it reflects our 
growth strategy and developments in best practice. 
We have consulted fully on this with shareholders 
and with various shareholder advisory groups.

The Remuneration Committee concluded that overall, 
the current principles of Executive remuneration have 
been successful in driving the exceptional 
performance that the business has delivered and 
therefore no material changes to our underlying 
remuneration principles are proposed. However, we 
are proposing to make the following adjustments to 
our approach, to align with best practice and to 
support our growth plans, including the need to 
retain and strengthen our leadership team and  
more closely align them to our shareholders:

•  Introduce a minimum two year post-vesting 

holding period for the LTIP, which will continue  
to apply post employment;

•  Increase the required shareholding guideline from 
100% to 200% of base salary. Executives will be 
required to retain all vested LTIP and deferred 
bonus shares until they have attained the 
minimum shareholding guideline;

•  Increase the maximum LTIP award to 150% of 
base salary for the CEO and CFO, which will 
continue to be subject to stretching EPS and 
ROCE targets. The additional award of 50% of 
salary will only apply in respect of the highest 
level of targets set. i.e. our threshold and 
intermediate vesting points will remain at 20%  
and 60% of salary;

•  Improve the disclosure of our bonus targets. We 

will continue to fully disclose annual bonus targets 
on a retrospective basis, but will do so in the year 
in which payment is made rather than on a 
delayed basis; and

•  Finally, the Committee has concluded that this 
would be appropriate timing to remove the 
variable pay elements from the Chairman’s 
package and consequently Steve Morgan will not 
be invited to participate in the 2017/2018 annual 
bonus scheme or granted an LTIP in 2017.

During the review, the Committee also considered 
the current policy on pensions in the context of the 
stated views of some leading investors on the 
issue of pension provision for senior executives 
compared to the wider employee base. The 
Committee believes that the current pension 
provision at Redrow is not excessive when 
compared to market practice nor to internal 
relativities and therefore no change to the Policy 
is required. The Committee will keep practice  
and expectations under review in this area.

Under the new Policy, maximum LTIP awards will 
increase from 100% to 150% of salary. The Committee 
recognises the concerns investors have around 
increases to quantum, but considers the proposed 
award size reasonable and appropriate for our 
business in the context of our current benchmarking 
and our ambitious growth plans. The Committee 
considers market data as a point of reference in 
assessing market competitiveness, but does not 
seek to “match the median” of any particular market. 
However, the Committee noted that the previous 
combined annual bonus and LTIP opportunity (200% 
of salary) positioned Redrow in the lowest 10% of the 
FTSE 250, while the business is positioned within the 
upper half of that group. The Committee also noted 

that the incentive opportunity was significantly lower 
than in similarly sized housebuilding peers (and will 
remain lower even after the increase to LTIP levels). 
The Committee considered it most appropriate to 
address this via an increase to the LTIP, rather than 
the annual bonus, so that the increase was 
delivered in long-term and performance-related 
shares which, it considers, are most aligned to 
shareholders’ interests.

We remain committed to an open and transparent 
dialogue with our shareholders on the subject of 
executive remuneration and accordingly in 
developing the revised Policy, we engaged with a 
number of major shareholders and shareholder 
advisory groups and their feedback was taken into 
account by the Committee in finalising the proposed 
policy changes. We shared those changes with all of 
those that we consulted with and we received 
strong support for our proposals from those 
shareholders that engaged with us.

OUR PHILOSOPHY – ALIGNING REWARD 
WITH PERFORMANCE
Our Remuneration strategy remains unchanged – it is 
designed to reflect the needs of a UK based, capital 
intensive house builder, with ambitious growth plans. 
We make long-term investments, which are 
differentiated by the constant innovation and quality 
of our product. Successfully acquiring land, achieving 
planning consent, opening outlets, building quality 
homes and selling and handing them over on time, 
are all critical success factors and feature as part of 
our management incentive programmes.

We adopt clear, simple and market competitive 
remuneration arrangements. The alignment of 
executive remuneration with the objectives of our 
shareholders has been the principal focus, ensuring 
remuneration structures are fully attuned to the 
business strategy. We aim to balance the short, 
medium and long term components of our 
remuneration, to ensure that we motivate and retain 
our executives and keep them focused on 
delivering long term, sustainable growth. The annual 
bonus encourages performance in key areas of 
strategic focus for the business and the Long Term 
Incentive Plan (LTIP) reflects our market related 
growth and return ambitions.

Based on these principles, our remuneration framework going forward (which is reflected in the 
Remuneration Policy on pages 79 to 86) includes the following components:

Fixed Components

Proposed Variable Components 

Salary

Benefits Pension

Annual Bonus

LTIP

Market competitive

Maximum 100% of salary

Maximum 150% of salary

– 

 Reflect nature of  
role, and skills  
and experience

– 

– 

– 

– 

 Balanced scorecard of key  
performance measures –  
for example, PBT, ROCE,  
land bank, outlet openings

 Full and immediate retrospective 
disclosure of targets

 50% deferred into shares 
–  half vest after one year  
and half after two years

 Cash and shares subject  
to clawback for five years  
following payment / vesting

– 

– 

– 

 Based on stretching long-term 
EPS and ROCE targets

 Subject to clawback for five  
years following vesting

 Subject to an additional  
holding period of two years 
following vesting (including 
post-employment)

Shareholding guidelines

200% of salary to be built up over five years from appointment

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78 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

2017 OUTCOMES – AN  
OUTSTANDING YEAR
As described in detail on pages 1 to 57 of this 
Annual Report, 2017 was another outstanding year 
for Redrow, which saw:

•  Record profit before tax of £315m, up 26%

•  Revenue of £1.7bn, up 20%

•  Earnings per share increasing to 70.2p

•  ROCE increasing to 26.0%

•  Closing private order book increasing to £915m

•  Dividend up 70% to 17p

The alignment between performance and reward 
which underpins our executive remuneration 
framework, is reflected in the outcomes for the 
annual bonus and LTIP:

•  Based on exceptional performance, with the 

targets for maximum payment exceeded for all 
four of the annual bonus measures (PBT, ROCE, 
land bank, order book), the Committee 
determined that the annual bonus should pay 
out at the maximum level of 100% of salary for all 
of the Executive Directors. 50% of this will be 
paid in shares and half of these will be deferred 
for a period of one year and the remaining half 
deferred for two years; and

•  EPS of 70.2p and ROCE of 26.0% in 2017 were 

both significantly above the targets for maximum 
vesting of 63.6p and 22.0%, respectively. The 
Committee therefore determined that the 2014 LTIP 
award should vest in full on 8 September 2017.

As per the Policy review outlined above, reflecting 
investor feedback on our previous approach of 
retrospectively disclosing on a delayed basis, our 
policy going forward will be to disclose annual bonus 
targets in the year to which the payment relates, 
subject to the Committee being comfortable that the 
targets are no longer commercially sensitive. This 
new approach applies immediately and the 2017 
targets are disclosed on pages 88 to 90 (as well as 
the previously undisclosed 2015 and 2016 targets). 

The Committee is aware that the annual bonus and 
LTIP have vested at maximum levels for four 
consecutive years. This reflects the consistently 
exceptional performance of the business over 
these recent periods, in terms of strategic 
execution, financial performance and the returns 
delivered to shareholders, on an absolute and 
relative basis. We have and will continue to, set 
very stretching target ranges for our incentive 
awards. Shareholders will note from our disclosure 
that the targets set were stretching and reflected 

outperformance in market terms for financial 
returns and for the strategic objectives of a quality 
land bank and strong order book.

REMUNERATION DECISIONS FOR 2018
The Committee has decided to award salary 
increases to the Chairman, Group Chief Executive 
and Group Finance Director of 2.5%, effective from  
1 July 2017. The average increase for all other 
employees across the business was 3.3%.

The annual bonus and LTIP will operate in line with 
the new Policy, subject to shareholder approval. 
The annual bonus will continue to be based on a 
balanced scorecard of performance measures – 
PBT, ROCE, a measure based on the number of 
outlets opened and land acquired. The EPS and 
ROCE target ranges for the 2017 LTIP award are set 
out on page 87 of this report. It is intended that 
targets will be disclosed next year in line with our 
new approach. 

Further, following the feedback we received from 
our independent shareholders during the 
consultation on our new policy, the Committee has 
concluded that this would be appropriate timing to 
remove the variable pay elements from the 
Chairman’s package and consequently Steve 
Morgan will not be invited to participate in the 
2017/2018 annual bonus scheme nor granted an 
LTIP in 2017.

SHAREHOLDER ENGAGEMENT
We remain committed to an ongoing and 
transparent dialogue with our shareholders on the 
issue of executive remuneration. As explained 
above, in developing our proposed policy, we 
engaged with a number of our major shareholders 
and shareholder advisory groups and their 
feedback was taken into account by the Committee 
in finalising the policy. 

Last year, 99.78% of votes cast were in favour of the 
Remuneration Report. We look forward to receiving 
your continued support on our approach to 
remuneration policy and practice at this year’s 
Annual General Meeting.

DEBBIE HEWITT
Chairman of the Remuneration Committee

This report has been prepared in accordance with the  
UK Corporate Governance Code, the relevant provisions  
of the Listing Rules and Schedule 8 of the Large and 
Medium-sized Companies and Groups (Accounts and  
Reports) (Amendment) Regulations 2013.

THE REMUNERATION POLICY
This Remuneration Policy, determined by the Redrow Remuneration Committee (“the Committee”), will be 
effective following shareholder approval at the 2017 Annual General Meeting.

Changes to the Remuneration Policy
The Remuneration Committee concluded that overall the current principles of Executive remuneration have 
been successful in driving the exceptional performance that the business has delivered and therefore no 
material changes to our underlying remuneration principles are proposed. However, we are proposing to 
make a number of adjustments to our approach, to align with best practice and to support our growth 
plans, including the need to retain and strengthen our leadership team and more closely align them to 
our shareholders.

The key changes between this Policy and the previous policy, which was approved at the 2014 AGM,  
are as follows:

•  The introduction of a two-year post-vesting holding period for the LTIP, applying to awards granted from 
2017. The post-vesting holding period will continue to apply in the event of cessation of a “good leaver”;

•  The Executive shareholding guidelines have been increased from 100% of salary to 200% of salary. 

Executives will be expected to retain all LTIP and deferred bonus shares on a net of tax basis until they 
meet their guideline;

•  To reflect the increased size and scale of the business the normal LTIP award granted in respect of a 

financial year will be increased to 150% of base salary; and

•  To remove the award of variable incentives from the Chairman’s package.

In addition to the changes set out above a number of minor changes have been made to the Policy that do 
not affect its scope. 

Performance 
framework

N/A

Future Policy Table for Executive Directors 

Component

Purpose/link  
to strategy

Operation

Maximum

Base  
Salary

To provide a market 
competitive element 
of fixed remuneration 
to attract and retain 
leaders of the required 
calibre to deliver the 
strategy.

Salaries are determined by 
the Committee taking into 
account all relevant factors 
such as: the size and 
complexity of the Company, 
the scope and 
responsibilities of the role, 
the skills and experience of 
the individual, and 
performance in role.

The Committee’s 
assessment of the 
competitive market 
positioning of base salaries 
is based on consideration of 
market data from UK 
companies of similar size 
and complexity, and 
companies in the house-
building sector.

Salaries are normally 
reviewed annually, with any 
changes effective at the 
start of the financial year.

There is no prescribed 
maximum salary. Any salary 
increases will normally be in 
line with those of the wider 
workforce.

The Committee has 
discretion to award larger 
increases where it considers 
this appropriate, such as to 
reflect (for example):

– 

– 

– 

– 

 a significant change in 
the size and complexity 
of the Company;

 an increase in scope 
and responsibility of the 
role, or a change in role;

 an Executive Director 
being moved to market 
positioning over time; 
and

 an Executive Director 
falling below 
competitive market 
positioning.

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Redrow plc Annual Report 2017 
 
 
 
80 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

Future Policy Table for Executive Directors continued

Operation

Maximum

Performance 
framework

N/A

Benefit provision, for which 
there is no prescribed 
monetary maximum, is set at 
an appropriate level for the 
specific nature and location 
of the role.

Participation in all employee 
share plans is subject to 
statutory limits.

Component

Benefits

Purpose/link  
to strategy

To provide a market 
competitive benefits 
package to support 
the Director in fulfilling 
their role.

Pension

To provide a market 
competitive element 
of fixed remuneration 
for retirement 
planning.

Benefits may include: a 
company car (or equivalent 
cash allowance), private 
medical insurance, 
permanent health 
insurance, fixed term group 
income protection and a 
death in service benefit, 
and where appropriate any 
tax payable thereon.

Executive Directors may also 
participate in all-employee 
share plans on the same 
basis as other employees.

The Committee has 
discretion to include, where 
it considers it appropriate to 
do so, other benefits to 
reflect specific individual 
circumstances, such as 
housing, relocation, travel, 
or other expatriate 
allowances.

Individuals are eligible to 
participate in the Company’s 
Defined Contribution (DC) 
pension scheme or receive a 
pension allowance cash 
supplement.

Executive Directors who are 
members of the Company’s 
Defined Benefit (DB) 
pension scheme will 
continue to receive benefits 
under the terms of that 
scheme. There will be no 
new entrants or accrual of 
future benefits under the DB 
scheme.

N/A

The maximum DC 
contribution/cash 
supplement (in respect of a 
financial year) is 20% of base 
salary.

Component

Purpose/link  
to strategy

Operation

Maximum

Performance framework

Annual 
Bonus

A variable pay 
opportunity 
which motivates 
and rewards 
annual 
performance 
and delivery of 
the strategy on 
an annual basis.

Deferral aligns 
reward with 
long term value 
of Redrow 
shares.

Long Term 
Incentive 
Plan (LTIP)

Designed to 
motivate and 
reward 
long-term 
performance 
and delivery of 
the strategy, 
and provide 
alignment with 
Redrow 
shareholders.

100% of salary.

The maximum 
award which 
may be granted 
in respect of a 
financial year 
will normally not 
exceed 150% of 
salary.

However, in 
exceptional 
circumstances 
only, the 
Committee may 
make awards of 
up to 200% of 
salary.

The Committee determines participation 
levels each year. Targets are set by the 
Committee at the start of the relevant 
financial year and are assessed 
following the year end.

A portion (currently 50%) of any bonus 
earned will be deferred into Redrow 
shares, which are awarded in the form of 
nil-cost options which vest after a period 
set by the Committee. Currently, half of 
the deferred shares vests after one year 
and half after two years, subject to 
continued employment.

Following exercise of a vested deferred 
share award, participants will be entitled 
to receive an amount equal to the 
aggregate of any dividends which they 
would have been entitled to receive as a 
shareholder during the period between 
the grant and satisfaction of the award.

In future years, the Committee retains 
the discretion to change the deferred 
amount and/or lengthen the deferral 
period.

Where appropriate, the Committee may 
determine that deferral is in the form of 
an equivalent cash award (which in all 
other respects mirrors the terms of the 
deferred share awards).

Clawback provisions apply to both the 
cash and deferred elements.

Awards may be made under the Redrow 
plc 2014 Long Term Incentive Plan (LTIP).

Awards are normally in the form of 
nil-cost options. The Committee may 
also determine that awards are made in 
the form of conditional share awards or 
as an equivalent cash award (which in all 
other respects mirrors the terms of the 
LTIP).

Awards normally vest subject to the 
satisfaction of performance conditions 
measured over a period of at least three 
years. Vested award will normally be 
subject to an additional holding period  
of two years.

Clawback provisions apply.

Awards may incorporate the right to 
receive (in cash or shares) the aggregate 
value of dividends paid on vested shares 
between the vesting date and the date 
on which the awards are released 
following the holding period, on such 
basis as the Committee may determine, 
which may assume the reinvestment of 
these dividends in shares on a 
cumulative basis.

Performance is assessed against 
key financial and operational 
performance measures linked to the 
delivery of the strategy and 
shareholder value determined each 
year by the Committee.

The current performance measures 
are:

– 

– 

– 

– 

 25% based on profit before tax 
(PBT);

 25% based on return on capital 
employed (ROCE);

 25% based on land bank; and

 25% based on outlet openings

The Committee retains discretion to 
adjust the measures and/or 
weightings in future years to reflect 
prevailing financial, strategic and 
operational objectives of the 
business or of the individual. 
However, a minimum of 50% of the 
total will always be based on key 
financial measures.

No bonus will be payable for 
performance below threshold levels 
set by the Committee.

The Committee has discretion to 
adjust the level of pay out if the 
outcome from a formulaic 
assessment does not appropriately 
reflect underlying business 
performance.

The LTIP is based on performance 
measures aligned to the creation of 
long-term shareholder value, 
measured over a performance 
period of at least three years. The 
current performance measures are:

– 

– 

 50% based on earnings per 
share (EPS); and

 50% based on return on capital 
employed (ROCE)

For threshold performance, 20% of  
salary would normally vest.

The Committee retains discretion to 
include additional or alternative 
financial performance measures 
and/or adjust the weightings in 
future years to reflect prevailing 
strategic or operational objectives 
of the business aligned with 
shareholder value creation.

Performance conditions applicable 
to LTIP awards may be amended if 
an event occurs which causes the 
Committee to consider that an 
amended performance condition 
would be more appropriate and not 
materially less difficult to satisfy.

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82 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

Future Policy Table for Executive Directors 
continued
The Committee reserves the right to make any 
remuneration payments and payments for loss of 
office (including exercising any discretions available 
to it in connection with such payments) 
notwithstanding that they are not in line with the 
Remuneration Policy set out above where the terms 
of the payment were agreed (i) before 10 November 
2014 (the date the Company’s first shareholder-
approved Remuneration Policy came into effect); (ii) 
before the Remuneration Policy set out above came 
into effect, provided that the terms of the payment 
were consistent with the shareholder-approved 
Remuneration Policy in force at the time they were 
agreed; or (iii) at a time when the relevant individual 
was not a director of the Company and, in the opinion 
of the Committee, the payment was not in 
consideration for the individual becoming a director 
of the Company. For these purposes “payments” 
includes the Committee agreeing awards of variable 
remuneration and, in relation to an award over 
shares, the terms of the payment are “agreed”  
at the time the award is granted.

The Committee may make minor amendments to 
the Remuneration Policy (for regulatory, exchange 
control, tax or administrative purposes or to take 
account of a change in legislation) without obtaining 
shareholder approval.

Choice of performance measures 
and target setting
For the annual bonus and LTIP, performance 
measures are chosen which help to drive and 
reward the achievement of the Group’s strategy and 
also provide alignment between employees and 
shareholders. The Committee reviews measures 
each year to ensure they remain appropriate and 
reflect the future strategic direction of the Group.

Targets for each performance measure are set by 
the Committee with reference to internal plans and 
external expectations. Performance is measured on 
a ‘sliding scale’ so that incentive payouts increase 
pro-rata for levels of performance in between the 
threshold and maximum performance targets.

Differences in pay policy for employees  
and Executive Directors
The principles applied to the remuneration of 
Executive Directors are essentially the same as 
those for the Company. The difference between pay 
for Executive Directors and employees is that for 
Executive Directors the variable pay element forms 
a greater proportion of the overall package and the 
total remuneration opportunity is higher to reflect 
the increased responsibility of the role.

While remuneration practices vary across the full 
employee population, they are based on the same 
broad principles which underpin the policy for 
Executive Directors set out above. For example:

•  Remuneration packages should be sufficient to 
attract and retain the calibre of talent necessary 
to deliver the strategy for shareholders;

•  A significant number of Group employees are 
eligible to participate in bonus or incentive 
arrangements designed to drive a shared 
responsibility for delivering performance for 
shareholders;

•  Redrow operates a number of share incentive 

plans to encourage employee share ownership 
and align employees with the interests of 
shareholders. The deferred bonus plan is 
cascaded to senior management. All employees 
are entitled to participate in the Save As You Earn 
(SAYE) share option plan under which employees 
are granted options and encouraged to save in 
order to invest in Company shares; and

•  All employees are eligible to participate in the 

defined contribution pension scheme.

Executive shareholding guidelines
Under the proposed shareholding guidelines going 
forward, Executive Directors are expected to build 
and retain a shareholding in the Group at least 
equivalent to 200% of base salary. Until the 
shareholding guideline has been met Executives will 
be required to retain all deferred bonus shares and 
LTIP shares on a net of tax basis. 

Clawback
For awards under the annual bonus plan (including 
deferred share awards) made in respect of the 2015 
financial year onwards and awards under the 2014 
LTIP, the Committee has discretion to claw back 
awards in the event of a material misstatement of 
the Company’s audited financial results or 
employee misconduct.

In such circumstances, at any time prior to the fifth 
anniversary of the payment of any cash bonus or 
vesting of a deferred bonus/ LTIP award, the 
Committee has discretion to:

•  reduce, cancel or impose further conditions on 
outstanding deferred bonus/LTIP awards; or

•  require the participant to repay (in cash or shares) 
some or all of the value delivered from a deferred 
bonus/LTIP awards; and/or

•  require the participant to repay some or all of any 

cash bonus received.

Where a charitable donation has been made in 
accordance with the Remuneration Policy, see  
page 86, clawback will not apply.

For deferred bonus plan awards granted prior  
to the 2015 financial year, if a participant’s gross 
misconduct has resulted in the material 
misstatement of the Group accounts (or the 
accounts of one of its members), any unexercised 
awards will lapse immediately and the participant 
will forfeit any shares previously acquired under 
awards made under that plan.

Corporate events
Unvested awards under the deferred bonus plan 
and LTIP will normally vest early in the event of a 
takeover or winding-up of the Company and, in the 
case of the deferred bonus plan, if the Company 
goes into administration or a voluntary 
arrangement is proposed with its creditors. In 
these circumstances, deferred bonus awards vest 
in full and LTIP awards vest taking into account the 
relevant performance conditions and, unless the 
Committee determines otherwise, time pro rating 
to reflect the proportion of the performance period 
that has elapsed. Awards may also be rolled over 
for equivalent awards in a different company.

If the Company is or is likely to be affected by a 
demerger, special dividend, delisting or other event 
which in the Committee’s opinion, may affect the 
current or future value of the Company’s shares, the 

Committee may allow some or all of the awards to 
vest. The extent to which LTIP awards vest in these 
circumstances will be calculated on the same basis 
as set out above for a takeover.

The terms of awards may be (a) in the event of any 
variation of the Company’s share capital, delisting, 
special dividend or distribution, demerger or other 
event which may in the Committee’s opinion, affect 
the current or future value of the Company’s shares, 
adjusted or (b) amended in accordance with the 
plan rules.

Illustration of Remuneration Policy
The charts below illustrate the potential value of the 
remuneration packages for the Executive Directors 
under the following scenarios (no share price 
growth is assumed):

•  Minimum – reflects fixed pay only (base salary 
and pension contributions as at 1 July 2017 and 
benefits included using the disclosed values for 
the year ended 30 June 2017, except for the 
Chairman, where it reflects his proposed ongoing 
position of no variable incentives);

•  Target – reflects fixed pay, target bonus (50% of 
salary) and LTIP awards vesting at threshold  
(i.e. 20% of salary); and

•  Maximum – reflects fixed pay, maximum bonus 
(100% of salary) and maximum LTIP awards, 
assuming the proposed Policy is approved  
(i.e. 150% of salary for the CEO and FD).

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KEY

Fixed pay

Bonus

LTIP

Group Chief Executive
John Tutte

Group Finance Director
Barbara Richmond

Chairman
Steve Morgan

£’000

2,500

2,000

1,500

1,000

500

0

£2,173

40%

£1,124

27%

10%

26%

64%

33%

£716

100%

Minimum

Target

Maximum

£’000

2,500

2,000

1,500

1,000

500

0

£’000

2,500

2,000

1,500

1,000

500

£530

100%

£530

100%

£530

100%

£1,237

40%

£643

10%
26%

64%

27%

33%

£412

100%

Minimum

Target

Maximum

0

Minimum

Target

Maximum

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84 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

Approach to remuneration for recruitment of a new Executive Director
On the appointment of any new Executive Director, the Committee would seek to offer a remuneration 
package which can secure an individual with the necessary skills and experience to lead the business and 
deliver the strategy. 

Executive Directors would be appointed within the remuneration framework set out in the Policy Table for 
Executive Directors. Salaries would typically be set at an appropriately market competitive level to reflect 
skills and experience, although, if appropriate, the Committee may set salaries towards the lower end of the 
market range to allow future salary progression to reflect performance in the role. In accordance with the 
Policy Table, the Committee also has discretion to include other benefits such as housing or relocation 
benefits, if relevant to reflect specific individual circumstances. The maximum level of variable remuneration 
which may be awarded (excluding any compensatory awards referred to below) would be as set out in the 
Policy Table.

Where an individual forfeits outstanding incentive awards with a previous employer, the Committee may  
offer compensatory awards to facilitate recruitment. These awards would be in such form as the Committee 
considers appropriate, taking into account all relevant factors including the form, expected value, anticipated 
vesting and timing of the forfeited awards. The value of any compensatory awards would be no higher, in the 
opinion of the Committee, than the value forfeited. While cash may be included in the recruitment package  
to reflect the forfeiture of cash-based incentive awards, the Committee does not envisage that substantial 
“golden hello” cash payments would be offered.

Any share awards referred to in this section will be granted as far as possible under the Company’s 
existing share plans. Share awards may be granted under the Company’s LTIP in excess of the limits set 
out in the Policy Table above to provide compensatory buyout awards only (which may be subject to any 
performance conditions the Committee considers appropriate), in accordance with the terms above. If 
necessary, awards may be granted outside of these plans as currently permitted under the Listing Rules, 
but within the limits set out in this section.

The remuneration package for a newly appointed Non-Executive Director would normally be in line with 
the structure set out in the Policy Table for Non-Executive Directors.

Service contracts
The service agreements of the Executive Directors are rolling contracts which were entered into on the 
dates shown in the table below:

Name

Contract date

Notice period from the Director

Notice period from the Company

Steve Morgan

John Tutte

01/01/11

01/07/14

Barbara Richmond

18/01/10

6 months

12 months

6 months

6 months

12 months

12 months

The service agreements provide for formal notice to be served to terminate the agreement, by either the 
Company or the Executive Director, with the required period of notice shown in the table. The agreements 
and letters of appointment do not include any provisions for pre-determined compensation for early 
termination. The Committee may terminate service agreements immediately by making a payment in lieu of 
notice consisting of base salary, benefits and pension for the unexpired period of notice. At the discretion 
of the Committee, this payment may be made as instalments over the period, subject to a duty to mitigate, 
or as a lump sum.

For future appointments, it is the Committee’s policy that notice periods will normally be 6 months from 
both the Director and the Company initially and thereafter, 12 months from both the Director and the 
Company, and that payments in lieu of notice will comprise no more than base salary, benefits and pension 
only over the unexpired period of notice.

The Non-Executive Directors’ terms of appointment are detailed in formal letters of appointment as shown in 
the table below. Each appointment is for a fixed initial period of three years although this term is terminable 
upon either party giving three months’ notice.

Name

Position

Date of initial appointment Current date of appointment

Debbie Hewitt

Senior Independent Director

21/08/09

Nick Hewson

Non-Executive

Liz Peace

Non-Executive

Sir Michael Lyons

Non-Executive

Vanda Murray

Non-Executive

01/12/12

01/09/14

06/01/15

01/08/17

19/08/15

01/12/15

01/09/14

06/01/15

01/08/17

On 3 July 2017, the Company announced that Liz Peace will retire from the Board at the end of her current 
appointment on 31 August 2017 following her appointment as Chairman of the Old Oak Common 
Development Corporation. No payments were made to Liz Peace as a result of her retirement from the 
Board. It also announced the appointment of Vanda Murray as a Non-Executive Director. She joined the 
Board on 1 August 2017.

Policy on payments following Directors’ termination of service
On termination of a Director’s contract, the Committee’s objective is to agree an outcome which is in the 
best interests of the Company and its shareholders, taking into account the specific circumstances and 
performance of the individual, as well as any relevant contractual obligations and incentive plan rules.

As described in the section above, contractual payments in lieu of notice would be limited to salary and 
contractual benefits and may be made in instalments subject to mitigation.

The Committee has discretion to make a payment under the annual bonus in respect of the year of leaving 
where an individual is designated a “good leaver” (as described below). In such circumstances, the 
maximum bonus opportunity would normally be reduced pro-rata to reflect the portion of the year served. 
Any payment would remain subject to performance against the original targets and, if practicable, would be 
assessed and paid (in cash) as part of the normal year end assessment process.

Outstanding awards under the deferred bonus plan and the LTIP would be treated in accordance with the 
relevant plan rules. Under these rules, if the participant leaves as a “good leaver”, then the treatment of 
outstanding awards will be as follows:

•  Deferred bonus: Nil-cost options will be exercisable for a period of six months following the date of 

cessation. Options will be exercisable in full unless (for awards made in respect of 2015 and subsequent 
financial years other than in the case of death) the Committee exercises discretion to reduce the awards 
pro-rata to reflect the extent to which the vesting period had elapsed at the date of cessation; and

•  LTIP: Awards will normally continue to the original vesting date although the Committee may determine 
that awards vest following cessation. Where a holding period applies, awards will normally continue to 
be subject to that holding period following cessation. Unless the Committee determines otherwise, 
awards will be reduced pro-rata to reflect the extent to which the performance period has elapsed at the 
date of cessation. The Committee will decide the extent to which the award vests in these 
circumstances, taking account of the extent to which the performance condition is satisfied. If an 
individual dies, their LTIP awards will normally vest shortly following their death and their LTIP awards will 
only be time pro-rated if the Committee considers it appropriate.

Circumstances in which a participant will be considered a “good leaver” are: death, ill-health, injury, 
disability, redundancy, retirement or the sale of the individual’s employing company or business outside of 
the Group.

Where an individual leaves the Company for any other reason, deferred bonus and unvested LTIP awards 
will lapse.

The Committee retains discretion to make additional exit payments where such payments are made in 
good faith in discharge of an existing legal obligation (or by way of damages for breach of such an 
obligation) or by way of settlement or compromise of any claim arising in connection with the termination of 
a director’s office or employment or for any fees for outplacement assistance and/or the director’s legal 
and/or professional advice fees in connection with their cessation of office or employment. The details and 
rationale for any such payments would be disclosed in the Annual Remuneration Report.

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86 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

Policy Table for the Non-Executive Directors

Component

Approach of the Company

Non-Executive fees

Fees are determined by the Board excluding the Non-Executive Directors.  
The fee encompasses a basic fee and supplementary fees for serving on a  
Board Committee or acting as Senior Independent Director. It may also include 
supplementary fees for undertaking duties or making a time commitment to 
Company business beyond the Non-Executive Director’s normal role.

Expenses incurred in respect of the performance of duties for the Company may be 
reimbursed or paid for by the Company, including any tax due on such payments.

The fees payable to the Non-Executive Directors will not exceed the limit set out in 
the Company’s Articles of Association and will be set at a level which reflects skills, 
experience, time commitment and appropriate market data.

The Non-Executive Directors do not participate in any bonus or incentive plan, nor do they receive any 
benefits nor participate in any pension arrangements. 

Consideration of conditions elsewhere in the Company
When setting the Remuneration Policy for Executive Directors, the Committee has regard to the pay and 
employment conditions of employees within the Company. The Committee did not consult directly with 
employees when formulating the Remuneration Policy for Executive Directors. The Committee considers 
salary increases within the business but does not formally consider any other comparison metric.

Consideration of shareholder views
The Committee engaged with all independent shareholders with a shareholding of 0.35% of the 
company and above (16 Institutions) and 3 shareholder advisory groups, on the development of this 
Remuneration Policy. Views expressed during this engagement were taken into account by the 
Committee in finalising the proposals. The Committee subsequently informed all of those consulted  
of planned changes as a result of the consultation and the final proposed Policy.

Charitable donations
Where an individual waives any current or future right or entitlement to a remuneration payment or other 
benefit which he would otherwise be eligible to receive under any of the components set out in this 
Remuneration Policy, the Committee may determine that a charitable donation, which is, in its opinion, 
equivalent to the value of that payment or benefit, may be made by the Company.

ANNUAL REMUNERATION REPORT
STATEMENT OF IMPLEMENTATION FOR 2018
This section summarises how the Committee intends to operate the Remuneration Policy for the year ending 
June 2018. 

Salary
The Committee’s policy on salary increases, as set out in the Remuneration Policy, is that they should 
normally be in line with increases for employees within the business. This approach has been applied 
consistently by the Committee over a number of years.

The average increase for all Redrow employees on 1 July 2017 was 3.3%. The Committee decided to award 
base salary increases for the Executive Directors of 2.5%, effective 1 July 2017, as follows:

£’000

Steve Morgan

John Tutte

Barbara Richmond

2018

499

583

330

2017

Change

487

569

322

2.5%

2.5%

2.5%

Annual bonus
For 2018, the annual bonus will operate on the same basis as for 2017, assessed using the same balanced 
scorecard of measures as shown on page 89. 

In line with the new disclosure policy, it is the current intention that the targets will be disclosed in the FY 
2018 Annual Remuneration Report provided the Committee is comfortable they are no longer 
commercially sensitive.

Following the recent shareholder consultation, the Committee has concluded that this is appropriate timing 
to remove the variable pay elements from the Chairman’s package and consequently, Steve Morgan will 
not be invited to participate in the 2017/2018 annual bonus scheme. 

LTIP awards to be granted during 2018
Subject to shareholder approval of the new Remuneration Policy, LTIP awards in the 2018 financial year will 
be made at the level of 150% of salary and will be subject to the following stretching EPS and ROCE 
performance targets, measured over the three year period ending in 2020:

Award vesting level as % of salary (for each component) 

EPS for 2020

ROCE for 2020

Nil

10%

30%

75%

Below 80.4p

Below 24.2%

80.4p

90.4p

24.2%

25.7%

104.4p or above

27.2% or above

Vesting between the points above is on a sliding scale basis

In line with the new Policy, these awards will be subject to an additional two year post-vesting holding period. 

Following the recent shareholder consultation, the Committee has concluded that this is appropriate timing 
to remove the variable pay elements from the Chairman’s package and consequently, Steve Morgan will 
not be granted an LTIP in 2017. 

NON-EXECUTIVE DIRECTOR FEES
The Board undertook a review of Non-Executive Directors’ fees which had not been reviewed since 2013. 
The base fee for a Non-Executive Director will increase to £55k p.a. from 1 August 2017. In line with current 
practice the Company will pay an additional fee of £10k p.a. to Committee Chairs and an additional fee of 
£10k p.a. to the Senior Independent Director.

OUTCOMES IN RESPECT OF 2017
The tables below set out the remuneration for the Directors in respect of 2017. Further discussion of each of 
the components is set out on the pages which follow. Where indicated, these disclosures have been audited.

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88 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

SINGLE TOTAL FIGURE OF REMUNERATION TABLE (AUDITED)
The remuneration of the Executive Directors in respect of 2017 is shown in the table below (with the prior 
year comparative):

Salary

Benefits(ii)

Annual  
bonus(iii)

LTIP(iv)

Pensions (v)

Total

£’000

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

2017

2016

Steve Morgan(i)

15

15

John Tutte

569

555

Barbara 
Richmond

322

314

31

16

16

36

16

–

–

–

–

569

555

1,057

679

–

114

–

46

51

111 2,325

1,916

16

322

314

597

456

64

63

1,321

1,163

(i) 

 Steve Morgan draws a nominal salary of £15k per annum which he donates via Payroll Giving to The Steve Morgan 
Foundation, a UK registered charity of which Steve Morgan is a trustee.

 The Company also made a donation to The Steve Morgan Foundation of £716k in respect of 2017 (2016: £698k). This 
donation amount is made up of a notional salary of £472k (being the balance of Steve Morgan’s notional salary of £487k  
less the £15k nominal salary) and £244k (being an amount in respect of the cash annual bonus which Steve Morgan waived 
his entitlement to). The notional cash bonus represents half of the total bonus for 2017, calculated using the notional salary  
of £487k and a bonus percentage of 100% of maximum, equivalent to that earned by John Tutte and Barbara Richmond.

 The remaining half of Steve Morgan’s 2017 bonus amount (£244k) is deferred into cash awards over notional Redrow shares, 
and will become exercisable as described in footnote (iv) below. Steve Morgan’s 2014 LTIP award, also structured as a cash 
award over notional Redrow shares, will vest in full on 8 September 2017 based on performance to the 2017 financial year 
(as described in the section below). The value of this award (calculated using the average share price over the last  
three months of 2017 in accordance with footnote (v) below) is £904k (2016: £748k).

 Further details on the donation to The Steve Morgan Foundation are given in the Directors’ Report on page 101 and in  
note 22 to the financial statements.

(ii)  Benefits include a fully expensed company car (or equivalent cash allowance) and private health insurance.

(iii) 

(iv) 

 Annual bonus represents the full value of the bonus awarded in respect of the relevant financial year. Half of the bonus is 
deferred into Redrow shares, which vests in two tranches of 50% each, on the first and second anniversaries of the grant 
date, subject to continued employment. For Steve Morgan, deferral is in the form of cash awards over notional Redrow 
shares. Details of performance targets are set out below.

 LTIP represents the value of the LTIP award which vests in respect of a performance period ending in the relevant financial 
year. The 2017 column includes the value of the 2014 LTIP award which will vest in full on 8 September 2017, using the 
average share price over the last three months of 2017. The 2016 column includes the vested value of the 2013 LTIP award 
(which vested at 100% of maximum), based on the share price on the date of vesting (24 September 2016).

(v)  Pension includes the value of the cash allowance paid to John Tutte and Barbara Richmond in respect of the relevant year.

The fees of the Non-Executive Directors in respect of 2017 are shown in the table below (with the prior 
year comparative).

£’000

Debbie Hewitt

Nick Hewson

Liz Peace 

Sir Michael Lyons 

Fees

2017

2016

70

45

45

45

70

45

45

45

Annual bonus
The maximum bonus opportunity for the Executive Directors during 2017 continued to be 100% of salary,  
in line with the Remuneration Policy. This was based on the achievement of stretching targets under a 
balanced scorecard of four key performance measures. The scorecard combines measures which 
represent an appropriate balance between ‘backward looking’ financial performance (PBT and ROCE)  
and ‘forward looking’ strategic and operational measures (land bank and outlet openings) which support 
shareholder value creation over the medium to long-term.

% of bonus opportunity

Rationale

PBT

ROCE

Land bank

Outlets opened

30%

30%

20%

20%

A fundamental measure of annual profitability

A measure of how effectively we use our capital base

Measures the foundation for our future growth

A fundamental indicator of future growth

As described in detail on pages 1 to 57 of this Annual Report, 2017 was another outstanding year for 
Redrow. As a result of the targets for maximum payment being exceeded for all four of the measures, the 
Committee determined that the bonus should pay out at the maximum level, resulting in bonus awards to 
the Executive Directors as shown in the Single Total Figure of Remuneration on page 88.

Reflecting investor feedback on our previous approach of retrospectively disclosing on a delayed basis, our 
policy going forward will be to disclose annual bonus targets in the year to which the payment relates, subject 
to the Committee being comfortable that the targets are no longer commercially sensitive. We have decided 
to introduce this principle immediately and the 2017 targets are disclosed in the following table:

% of bonus 
opportunity

Threshold payout 
(10% of maximum)

Target payout 
(50% maximum)

Maximum  
payout

Actual 2017 
performance

2017 Target Range

PBT

ROCE

GDV of land 
acquired

Outlets opened 
in year

Total

30%

30%

20%

20%

100%

£273m

20.2%

£293m

21.8%

£313m

23.4%

£315m

26.0%

£1.4bn

£1.5bn

£1.6bn

£1.7bn

44

47

50

56

For completeness, the previously undisclosed targets for 2015 and 2016 are disclosed below:

% of bonus 
opportunity

Threshold payout 
(10% of maximum)

Target payout 
 (50% maximum)

Maximum  
payout

Actual 2016 
performance

2016 Target Range

25%

25%

25%

25%

100%

£215m

17.6%

£1,325m

£620m

£230m

19.4%

£245m

21.0%

£250m

24.2%

£1,475m

£1,575m

£2,500m

£650m

£680m

£807m

% of bonus 
opportunity

Threshold payout 
(10% of maximum)

Target payout  

(50% maximum)

Maximum 
payout

Actual 2015 
performance

2015 Target Range

25%

25%

25%

25%

100%

£168m

17.2%

£180m

19.0%

£192m

20.8%

£204m

22.8%

Based on Gross Development Value  
of land purchased in the year

£1.6bn GDV

£441.m

£463m

£485m

£524m

PBT

ROCE

GDV of land 
acquired

Order book

Total

PBT

ROCE

GDV of land 
acquired

Order book

Total

Payout (% of 
total bonus 
opportunity)

30%

30%

20%

20%

100%

Payout (% of 
total bonus 
opportunity)

25%

25%

25%

25%

100%

Payout (% of 
total bonus 
opportunity)

25%

25%

25%

25%

100%

Executive Directors are required to defer 50% of any bonus earned into shares, half of which will vest after 
one year and the remaining half after two years, subject to continued employment and clawback. Steve 
Morgan’s notional cash award is subject to the same deferral schedule. Clawback provisions for both the 
cash and deferred share elements will apply.

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90 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

Long Term Incentive Plan (LTIP)
The LTIP is designed to motivate and reward long-term performance and delivery of the strategy and 
provide alignment with Redrow shareholders. In 2017, annual awards were made at the level of 100% of 
salary, in line with the prevailing policy. 

The vesting of LTIP awards is based on performance of EPS and ROCE, pre-exceptional, with 50% relating 
to performance of each measure.

The Committee believes that these two measures are transparent, are easy to understand, track and 
communicate, are cost effective to measure and fundamentally aligned to the strategic ambitions that have 
been communicated to the market:

•  EPS ensures that the team delivers strong ‘bottom line’ profitability and growth for shareholders; and

•  ROCE provides balance by requiring that profit is delivered efficiently from a capital perspective.

The Remuneration Committee has discretion to adjust the number of shares vesting from the award if it 
considers that performance in the metrics above is not sufficiently reflective of the general growth created 
by the market.

Steve Morgan’s awards under the LTIP are receivable in cash but in all other respects mirror the terms and 
conditions of the LTIP awarded to the other Executive Directors.

The sections below summarise details of the LTIP awards which vested in respect of 2017 (2014 awards) 
and which were granted during the 2017 financial year. 

LTIP awards vesting in respect of 2017
The LTIP awards granted in September 2014 were based on performance over the three year performance 
period ending in 2017. Based on performance against the EPS and ROCE targets set when the award was 
granted, summarised in the table below, the Committee determined that the 2014 LTIP awards will vest in 
full on 8 September 2017. The value of these vested awards is included in the 2017 LTIP column of the 
Single Total Figure of Remuneration on page 88.

Award vesting level (for each component)

Nil

10%

30%

50%

Vesting between the points above is on a sliding scale basis

Actual performance

Vesting (% of total award)

EPS for 2017

ROCE for 2017

Below 52p

Below 17.7%

52p

57.8p

 17.7%

 20%

63.6p or above

 22% or above

70.2p

 50%

26.0%

 50%

LTIP awards granted during 2017
The LTIP awards granted in September 2016 will vest in September 2019 based on performance over the 
three year performance period ending in 2019 as follows:

Award vesting level (for each component)

Nil

10%

30%

50%

Vesting between the points above is on a sliding scale basis

EPS for 2019

ROCE for 2019

Below 74.1p

 Below 21.0%

74.1p

82.4p

21.0%

23.0%

90.6p or above

25.0% or above

SCHEME INTERESTS AWARDED DURING 2017 (AUDITED)
The following table sets out details of LTIP awards to Executive Directors during the 2017 financial year.

Executive Director

Type of interest

Basis of award

Face value

Threshold 
vesting (% of 
maximum)

End of 
performance 
period

Steve Morgan

LTIP (cash)

100% of salary

John Tutte

Barbara Richmond

LTIP

LTIP

100% of salary

100% of salary

£487k

£569k

£322k

20%

20%

20%

30-Jun-19

30-Jun-19

30-Jun-19

Awards to John Tutte and Barbara Richmond are made in the form of nil-cost options. As described above, 
awards to Steve Morgan are made in the form of cash which in all other respects mirror the terms of the 
awards to other directors.

The face value has been calculated using the average share price used to determine the number of shares 
awarded, being 409.7p (the average, over the three days to the date of grant, 12 September 2016).

Shareholding guidelines and share interests
Under the previous shareholding guidelines, Executive Directors were expected to build and retain a 
shareholding in the Group at least equivalent to 100% of base salary which will increase to 200% in 2018. 
Until the shareholding guideline has been met, Executives will be required to retain all deferred bonus 
shares and LTIP shares on a net of tax basis. As shown in the table below, all Executive Directors currently 
meet this guideline. Non-Executive Directors are not subject to a shareholding guideline.

STATEMENT OF SHAREHOLDING AND SCHEME INTERESTS (AUDITED)
The following table sets out the shareholding (including connected persons) of the Directors in the 
Company as at 30 June 2017 and current interests in long-term incentives. 

Executive Directors

Steve Morgan

John Tutte

Barbara Richmond

Non-Executive Directors

Debbie Hewitt

Nick Hewson

Liz Peace

Sir Michael Lyons

Number of shares 
beneficially held  
at 30 June 2017

Shareholding 
 as % of salary

Guideline met?

Yes

Yes

Yes

107,386,045

119,877%

615%

730%

643,469

431,466

30,687

20,500

3,400

3,000

Shareholding as a percentage of salary is calculated using the shareholding and base salary as at 1 July 2017 
and the average share price for the final quarter of 2017.

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92 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

STATEMENT OF SHAREHOLDING AND SCHEME INTERESTS (AUDITED) CONTINUED
The table below provides details of the interests of the Executive Directors in incentive awards during the year.

Awards 
held at  

1 July 2016

Share Price 
on Grant
 £

Grant  
Date

Award 
Vested

Awards 
granted in 
year

Awards 
Exercised 
in year

Awards 
held at  
30 June 
2017

Exercise 
Price 
£

• 

(i) 

 All scheme interests held by Steve Morgan are receivable in cash on terms which in all other respects mirror those for other 
Executive Directors.

 The performance conditions attached to 2013 LTIP awards are EPS and ROCE over the three year performance period to 
2016. As disclosed in the 2016 Directors’ Remuneration Report, the awards vested in full on 24 September 2016.

(ii) 

 The performance conditions attached to the 2014 LTIP awards are disclosed on page 90. This award will vest in full on 
8 September 2017.

John Tutte

SAYE 2015

LTIP 2012

LTIP 2013

LTIP 2014

LTIP 2015

LTIP 2016

8,163

30/10/14

246,164

23/10/12

166,316

24/09/13

189,474

08/09/14

112,348

14/09/15

2.76

1.54

2.37

2.85

4.94

–

12/09/16

4.097

DEF BONUS 2012

62,459

23/10/12

DEF BONUS 2013

66,526

24/09/13

DEF BONUS 2014

71,053

08/09/14

DEF BONUS 2015

54,656

14/09/15

1.54

2.37

2.85

4.94

 –

246,164

166,316

 –

 –

 –

62,459

66,526

71,053

27,328

 –

 –

 –

 –

 –

138,882

 –

 –

 –

 –

From

To

(iii)  The performance conditions attached to the 2015 LTIP awards were disclosed in the 2016 Directors’ Remuneration Report.

(iv)  The performance conditions attached to the 2016 LTIP awards are shown on page 90.

 –

8,163

2.21

01/01/18

01/07/18

(v)  There are no further performance conditions attached to the exercise of the deferred bonus awards.

(246,164) 

(166,316) 

 –

 –

 –

 –

 –

189,474

112,348

138,882

(62,459) 

(66,526) 

(71,053) 

 –

 –

 –

23/10/15

22/10/22

24/09/16

24/09/23

08/09/17 08/09/24

14/09/18

14/09/25

12/09/19

12/09/26

23/10/13

22/10/22

24/09/14

24/09/23

08/09/15 08/09/24

(27,328) 

27,328

14/09/16

14/09/25

(vi) 

 Between 1 July 2017 and 4 September 2017 (being the latest practicable date prior to the posting of this report), there were 
no further changes to the directors’ interests set out in the Statement of shareholding and scheme interests above.

Pension
John Tutte is a deferred member of the Redrow Staff Pension Scheme (now closed to future accrual) and 
details of entitlements under this plan are set out below. He also receives a pension allowance supplement 
of 20% of salary. Barbara Richmond receives a pension allowance supplement equivalent to 20% of salary. 
The value of these cash supplements is included in the pension column of the Single Total Figure of 
Remuneration Table on page 88. John Tutte and Barbara Richmond are also covered by fixed term group 
income protection and death in service benefit.

DEF BONUS 2016

–

12/09/16

4.097

–

67,732

 –

67,732

12/09/17

12/09/26

Steve Morgan is a pensioner member of the Redrow Staff Pension Scheme. 

TOTAL PENSION ENTITLEMENTS (AUDITED)
Details of the Executive Directors’ pension entitlements under the defined benefit section of the Redrow 
Staff Pension Scheme are as follows:

Director

Normal retirement date

Accrued benefit  
at 30 June 2017
£

Benefits paid to 
Director during period 
up to 30 June 2017
£

John Tutte

24 June 2021

53,991

Nil

Defined Benefit accrued 
during period up to  

30 June 2017
£

Nil

The normal retirement date shows the date at which the director can retire without actuarial reduction. No 
additional benefit is available on early retirement.

The accrued pension shown above is the amount of pension entitlement that would be paid each year on 
retirement on the normal retirement date, based on service to 29 February 2012. The Scheme closed the 
accrual of future benefits with effect from 1 March 2012.

977,159

639,846

206,614

(639,846) 

543,927

Barbara Richmond

SAYE 2014

SAYE 2015

LTIP 2011

LTIP 2012

LTIP 2013

LTIP 2014

LTIP 2015

LTIP 2016

4,545

11/11/13

4,081

30/10/14

159,889

21/09/11

164,322

23/10/12

111,579

24/09/13

107,018

08/09/14

63,462

14/09/15

2.48

2.76

1.10

1.54

2.37

2.85

4.94

–

12/09/16

4.097

DEF BONUS 2012

41,693

23/10/12

DEF BONUS 2013

44,632

24/09/13

DEF BONUS 2014

47,719

08/09/14

DEF BONUS 2015

30,870

14/09/15

1.54

2.37

2.85

4.94

 –

 –

159,889

164,322

111,579

 –

 –

 –

41,693

44,632

47,719

15,435

 –

 –

 –

 –

 –

 –

 –

78,472

 –

 –

 –

 –

(4,545) 

 –

(159,889) 

(164,322) 

(111,579) 

 –

 –

 –

(41,693) 

(44,632) 

(47,719) 

 –

4,081

 –

 –

 –

107,018 

63,462 

78,472 

 –

 –

 –

1.98

2.21

01/01/17

01/07/17

01/01/18

01/07/18

21/09/14

20/09/21

23/10/15

22/10/22

24/09/16

24/09/23

08/09/17 08/09/24

14/09/18

14/09/25

12/09/19

12/09/26

23/10/13

22/10/22

24/09/14

24/09/23

08/09/15 08/09/24

(15,435) 

15,435

14/09/16

14/09/25

DEF BONUS 2016

–

12/09/16

4.097

–

38,260

 –

38,260

12/09/17

12/09/26

779,810

585,269

116,732

(589,814) 

306,728

Steve Morgan*

LTIP 2010

LTIP 2011

LTIP 2012

LTIP 2013

LTIP 2014

LTIP 2015

LTIP 2016

78,625

18/02/11

367,012

21/09/11

271,739

23/10/12

183,158

24/09/13

162,105

08/09/14

96,154

14/09/15

1.30

1.10

1.54

2.37

2.85

4.94

–

12/09/16

4.097

DEF BONUS 2012

137,897

23/10/12

DEF BONUS 2013

73,263

24/09/13

DEF BONUS 2014

78,246

08/09/14

DEF BONUS 2015

46,761

14/09/15

1.54

2.37

2.85

4.94

78,625

367,012

271,739

183,158

 –

 –

 –

137,897

73,263

78,246

23,380

 –

 –

 –

 –

 –

 –

118,867

 –

 –

 –

 –

DEF BONUS 2016

–

12/09/16

4.097

–

57,969

1,494,960

1,213,320

176,836

 –

 –

 –

 –

 –

 –

 –

 –

 –

 –

 –

 –

 –

78,625

367,012

271,739

183,158

162,105

96,154

118,867 

137,897

73,263

78,246

46,761

57,969

1,671,796

18/02/14

19/04/21

21/09/14

20/09/21

23/10/15

22/10/22

24/09/16

24/09/23

08/09/17 08/09/24

14/09/18

14/09/25

12/09/19

12/09/26

23/10/13

22/10/22

24/09/14

24/09/23

08/09/15 08/09/24

14/09/16

14/09/25

12/09/17

12/09/26

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Redrow plc Annual Report 2017 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
94 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

SUPPORTING DISCLOSURES AND ADDITIONAL CONTEXT
Percentage change in remuneration of Group Chief Executive
The table below shows the percentage change in the salary, benefits and annual bonus of the Group Chief 
Executive and of all Redrow employees who qualify for participation in the Company’s bonus and benefits 
plans between 2016 and 2017.

Salary

Benefits

Annual bonus

Group Chief 
Executive

All Redrow 
employees

2.5%

Nil%

2.5%

3.6%

-3.8%

-1.9%

Relative importance of spend on pay
The table below shows total employee remuneration and distributions to shareholders, in respect of 2017 
and 2016 (and the difference between the two).

£m

Total employee remuneration 

Distributions to shareholders

2017

120

63

2016

Change (%)

100

37

+20%

+70%

Total employee remuneration represents amounts included in note 7a to the accounts in respect of wages, 
social security, pension and incentive costs for all Group employees. Distributions to shareholders include 
the total dividend in respect of each financial year (see note 5 to the financial statements). This represents 
17 pence per share in respect of 2017 compared to 10 pence per share in respect of 2016.

Performance graph and table
The chart below shows the TSR of Redrow in the seven year period to 30 June 2017 against the TSR of  
the FTSE 250 and FTSE Small Cap. TSR refers to share price growth with re-invested dividends. The 
Committee believes the FTSE 250 and FTSE Small Cap indices are the most appropriate indices against 
which the TSR of Redrow should be measured.

400 

350 

300 

250

200 

150

100 

50

2009

2010

2011

2012

2013

2014

2015

2016

2017

Redrow

FTSE 250

FTSE Small Cap

The table below provides remuneration data for the Chairman/Group Chief Executive (as applicable) for 
each of the eight financial years over the equivalent period.

2010

2011

2012

2013

2014

2015

2016

2017

Name

Steve 
Morgan

Steve 
Morgan

Steve 
Morgan

Steve 
Morgan

Steve 
Morgan

John 
Tutte

John 
Tutte

John 
Tutte

Remuneration/donations*

£592k

£582k

£855k

£1,050k £1,922k £2,355k £1,916k

£2,325k

Bonus (% of Maximum)

52%

LTIP vesting (% of Maximum) 0%

50%

0%

100%

0%

80%

19%

100%

100%

100%

100%

100%

100%

100%

100%

* 

 For Steve Morgan, this value includes the nominal salary and benefits disclosed in the Single Total Figure of Remuneration 
Table as well as Company donations to The Steve Morgan Foundation, a UK registered charity of which Steve Morgan is a 
trustee, reflecting notional salary and waived annual cash bonus in respect of the relevant year, as disclosed in the footnotes 
to the Single Total Figure of Remuneration Table and in the Directors’ Report on page 101 and in note 22 to the financial 
statements. It also includes the value of deferred bonus and vested LTIP cash awards in respect of each relevant year 
(calculated in accordance with the methodology applicable to the Single Total Figure of Remuneration Table).

External non-executive directorships held by Executive Directors 
It is the Committee’s policy that, with the approval of the Board, Executive Directors may hold one  
non-executive directorship at another company in order to broaden their knowledge and experience  
to the benefit of the Company. The Executive Director may retain any fee received for these duties.

Barbara Richmond is a non-executive director of Lonza Group Ltd and in line with the committee’s policy, 
she is entitled to retain the fees from this appointment. She received fees of £170k during 2017 (£148k 
during 2016).

Consideration of directors’ remuneration – Remuneration Committee and advisors
The Remuneration Committee is comprised solely of Non-Executive Directors and comprises Debbie Hewitt 
as Chairman, Nick Hewson, Liz Peace and Sir Michael Lyons. As noted on page 63, Liz Peace stepped down 
from the Committee on 31 August 2017 and Vanda Murray joined the Committee on 1 August 2017.

The Committee has agreed Terms of Reference detailing its authority and responsibilities. The Terms of 
Reference of the Committee are kept under regular review and are published on the Group’s website 
and include:

•  determining the Remuneration Policy in respect of the Executive Directors and the Company secretary 
(together ‘the Senior Executives’), taking into account the context of the Company’s overall approach to 
remuneration for all employees and within this Policy determining the total individual package of each 
Senior Executive;

•  determining performance targets and the extent of their achievement for both annual and long-term 

incentive awards operated by the Company affecting Senior Executives; and

•  monitoring and approving the level and structure of remuneration of the Managing Directors immediately 

below the Senior Executives.

The Committee meets as often as is required but at least twice per year. The Committee met five times 
during the course of the financial year ended 30 June 2017 and details of Committee attendance are set 
out in the table below.

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Redrow plc Annual Report 2017 
 
 
 
96 

GOVERNANCE REPORT
Directors’ Remuneration Report continued

Table of Attendance

Name

Debbie Hewitt

Nick Hewson

Liz Peace

Sir Michael Lyons

Role

Chairman

Member

Member

Member

Attendance at Meetings

5/5

5/5

5/5

5/5

The Committee retained Deloitte LLP as independent advisor to the Committee during the year. Deloitte 
LLP was originally appointed by the Committee in 2010 following a selection process undertaken by the 
Committee. Deloitte LLP is a member of the Remuneration Consultants Group and as such voluntarily 
operates under the Code of Conduct in relation to executive remuneration consulting in the UK. The 
Committee is comfortable that the Deloitte LLP engagement partner and team that provide remuneration 
advice to the Committee do not have connections with Redrow plc that may impair their objectivity and 
independence. The fees charged by Deloitte LLP for the provision of independent advice to the Committee 
during 2017 were £25k. Deloitte LLP also provides the Company with tax advisory services but does not 
have any other connection with the Company.

Statement of voting at Annual General Meeting
At the Annual General Meeting held on 9 November 2016, votes cast by proxy and at the meeting in 
respect of directors’ remuneration report are shown in the table.

Resolution

No.

%

No.

%

votes cast

Votes For

Votes Against

Total  

Votes 
 withheld

Approval of 
Remuneration Report 
for year ended  
30 June 2016

By order of the Board

319,777,364

99.78

704,392

0.22

320,481,756

2,555,752

DEBBIE HEWITT
Chairman of the Remuneration Committee

4 September 2017

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LANCASTER MEWS, YORK

Redrow plc Annual Report 2017 
 
 
 
98 

GOVERNANCE REPORT
Directors’ Report

OTHER STATUTORY DISCLOSURES
The Companies Act 2006 (“the Act”) requires the 
directors to present a fair review of the business 
during the year to 30 June 2017 and of the position 
of the Company at the end of the financial year 
together with the financial statements, auditor’s 
report and a description of the principal risks and 
uncertainties which the Company faces. The 
strategic report can be found on pages 1 to 57 of the 
Annual Report. The FCA’s Disclosure Guidance and 
Transparency Rules require certain information to 
be included which can be found in the Corporate 
Governance Report on pages 61 to 105.

There were no significant events since the balance 
sheet date. An indication of likely future 
developments in the business of the Company and 
details of the Company’s use of financial 
instruments for risk management purposes are 
included in the strategic report.

The corporate governance report and the strategic 
report, together with the notice of AGM including 
the explanatory notes and sections of the annual 
report incorporated by reference, form part of the 
directors’ report which is presented in accordance 
with, and with reliance upon, applicable English 
company law. The liabilities of the directors in 
connection with this report shall be limited as 
provided by English Law.

The table opposite sets out where key information 
can be found in the Annual Report.

Subject

Page Reference

See note 5 of the financial 
statements on page 124

See note 17 of the financial 
statements on page 143

Dividends

Capital 
Structure 
(details of the 
issued share 
capital)

Directors

• See page 62 to 63 detailing  

the Directors who served during 
the year.

• Biographical details of the 

Directors of the Company who are 
seeking election and re-election 
at the 2017 AGM are set out on 
pages 62 to 63.

• Details of Director’ interests, 
including interests in the 
Company’s shares, are disclosed 
in the Directors’ Remuneration 
report on page 91.

Details of the Company’s 
employment policies may be  
found in the Directors’ Report on 
page 101.

Details of the shares held by the 
Trust may be found in the Directors’ 
Report on page 100.

Details of the Company’s approach 
to diversity and ESG disclosures 
can be found in the Directors’ 
Report on pages 98 to 103.

Details of the Company’s LTIP are set 
out in note 7d of the consolidated 
financial statements on pages 126 to 
129 and the Directors’ Remuneration 
Report on pages 76 to 97.

All disclosures on the Company’s 
greenhouse gas emissions, as 
required to be disclosed under 
Schedule 7 of The Large and 
Medium-sized Companies and 
Groups (Accounts and Reports) 
Regulations 2008 (pursuant to the 
Act, Strategic Report and directors’ 
report Regulations 2013), are 
contained in the Directors’ Report 
on page 102.

Employment 
Policies

The Redrow 
Employee 
Benefit Trust 
(“the Trust”)

Environmental, 
social and 
governance 
(ESG) 
disclosures

Redrow plc 
Long Term 
Incentive Plan 
(LTIP)

Greenhouse 
gas emissions

The Directors have pleasure in presenting to the 
shareholders their report and audited consolidated 
financial statements for the 12 months ended  
30 June 2017.

RESULTS AND DIVIDENDS
The Group made a profit after tax of £315m  
(2016: £250m). An interim dividend of 6.0p (2016: 
4.0p) net per share was paid on 05 May 2017. The 
Board proposes to pay on 14 November 2017, 
subject to shareholder approval at the 2017  
Annual General Meeting, a final dividend of 11.0p  
(2016: Final Dividend: 6.0p) net per share in respect 
of the year ended 30 June 2017 to shareholders on 
the Register as at the close of business on  
22 September 2017. The Company’s dividend 
re-investment plan gives shareholders the 
opportunity to re-invest their dividends.

ANNUAL GENERAL MEETING
Notice of the 2017 Annual General Meeting to be 
held on Thursday, 9 November 2017 will be sent to 
shareholders separately. Members wishing to vote 
should return forms of proxy to the Company’s 
Registrar not less than 48 hours before the time for 
holding the meeting. The formal notice convening 
the Annual General Meeting, together with 
explanatory notes, will be found in a separate 
circular which will be sent to shareholders 
separately and will be available on the Company’s 
website. Shareholders will also find with the Notice 
of Annual General Meeting a form of proxy for use  
in connection with the meeting. 

The Board noted that Resolution 14 relating to the 
approval of the terms of the waiver received a vote 
of 61.69% in favour at the 2016 Annual General 
Meeting. The Board values and respects the views 
of shareholders. The Board consulted with a number 
of shareholders and proxy advisor bodies prior to 
the 2016 Annual General Meeting to discuss their 
concerns relating to the waiver. The Board 
continues to take its responsibility to engage with 
shareholders seriously and assessed the feedback 
it received to inform future consultations.

CORPORATE GOVERNANCE
The Board remains committed to high standards  
of corporate governance; details relating to the 
Company’s compliance with the UK Corporate 
Governance Code are given in the Corporate 
Governance Report on pages 61 to 67.

DIRECTORS
The Directors of the Company during the year to the 
date of signing and the current Directors are listed 
on pages 62 to 63 together with their biographical 
details.

Details of Directors pay, service contracts, and 
Directors interests in the ordinary shares of the 
Company, are included in the Directors’ 
Remuneration Report on pages 76 to 97. 

Formal appraisals of the Executive Directors were 
undertaken during the financial year. All the 
Non-Executive Directors underwent an annual 
appraisal conducted by the Senior Independent 
Non-Executive Director. The Board confirms that 
Steve Morgan, John Tutte and Barbara Richmond, 
who stand for re-appointment as Executive 
Directors and Debbie Hewitt, Nick Hewson and Sir 
Michael Lyons who stand for re-appointment as 
Non-Executive Directors, continue to be effective 
and demonstrate the appropriate commitment to 
their roles. 

The Executive Directors have formal service 
agreements and termination of their employment 
may be effective by 12 months’ notice given by the 
Company, except for Steve Morgan where the 
notice period is six months.

In accordance with the UK Corporate Governance 
Code, all the Directors, with the exception of Liz 
Peace, will retire at the Annual General Meeting to 
be held on Thursday, 9 November 2017, and, being 
eligible, offer themselves for re-appointment. Liz 
Peace retired from the Board on 31 August 2017 and 
was replaced by Vanda Murray who submits herself 
for election at the AGM.

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Redrow plc Annual Report 2017 
 
 
 
100 

GOVERNANCE REPORT
Directors’ Report continued

DIRECTORS INTERESTS
Related party transactions are disclosed in  
note 22 to the Financial Statements. A summary  
of remuneration provided to key management 
personnel is provided in note 7c.

POWERS OF THE DIRECTORS
Subject to the Company’s Articles of Association, 
UK legislation and any of the directions given by 
Special Resolution, the business of the Company is 
managed by the Board, which may exercise all the 
powers of the Company. Directors have been 
authorised to allot and issue shares by way of 
Resolutions of the Company passed at its Annual 
General Meeting. 

The rules in relation to the appointment and 
replacement of Directors are as set out in the 
Company’s Articles of Association and UK company 
law. The Articles of Association can only be 
amended, or new Articles adopted, by a resolution 
passed by shareholders in general meeting by at 
least three quarters of the votes cast. 

CAPITAL STRUCTURE
The Company has an authorised share capital of 
480,000,000 ordinary shares of 10p each of which 
369,799,938 have been issued. The Company has 
one class of ordinary shares which carry ordinary 
rights to dividends (subject to the Company’s 
Articles of Association). Each share carries the right 
to one vote at general meetings of the Company in 
respect of resolutions which are taken on a poll.

No person has any special rights of control over the 
Company’s share capital and all issued shares are 
fully paid.

Authority was given to the Directors at last year’s 
Annual General Meeting to allot unissued shares up 
to an aggregate nominal amount of £12,326,665 
equivalent to approximately 33% of the Company’s 
issued share capital and up to a further aggregate 
nominal amount of £12,326,665 in connection with 
an offer by way of a rights issue. The authority was 
not exercised during the period ending 30 June 
2017 or prior to the date of this Report. The 
Company has no current intention of exercising the 
authority but nevertheless as this authority expires 
at the forthcoming Annual General Meeting the 
Directors will be seeking new authorities as set out 
in the Notice of Meeting.

Authority was given to the Directors at last year’s 
Annual General Meeting to make market purchases 
of the Company’s ordinary shares up to an 
aggregate nominal value of £3,697,999.30. This 
authority will expire at the Annual General Meeting, 
and no such purchases were made during the 
financial year ended 30 June 2017.

VOTING AND TRANSFER OF SHARES
The Company’s Articles of Association do not 
contain any specific restrictions on the size of a 
shareholder’s holding or on the transfer of shares.

The Company is not aware of any agreements 
between shareholders that may result in restrictions 
on the transfer of securities and/or voting rights.

The Company’s Articles of Association do not 
contain and the Company is not aware of any 
restrictions on voting rights, including any 
limitations on voting rights of holders of a given 
percentage or number of votes, deadlines for 
exercising voting rights and arrangements by 
which the Company’s co-operation, financial rights 
carried by securities are held by a person other 
than the holder of the securities.

Zedra Trust Company (Guernsey) Limited, as trustee 
of the Company’s Employee Benefit Trust, held 
9,148,119 shares (2.5%) in the Company as at 30 June 
2017 on trust for the benefit of employees of the 
Company. The voting rights attaching to the shares 
held by the Company’s Employee Benefit Trust are 
exercisable by the Trustee and there are no 
restrictions on the exercise of the voting of, or 
acceptance of any offer relating to those shares. The 
Trust agreed to waive its right to the final dividend 
over 3.1m shares being part of its total shareholding.

SUBSTANTIAL HOLDINGS IN THE COMPANY
As at 30 June 2017, the Company has been advised 
of the following notifiable interests of 3% or more in 
its ordinary shares:

Bridgemere Securities Limited

107,386,045 29.04%

The Steve Morgan Foundation

38,900,000 10.52%

Vidacos Nomineus/HSBC

18,770,138 5.076%

Schroders plc

FIL Limited

BlackRock Inc

18,359,023  4.965%

17,343,977

4.69%

15,277,577

4.13%

The persons set out in the table above have notified 
the Company pursuant to Rule 5 of the Disclosure 
and Transparency Rules of their interests in the 
ordinary share capital of the Company.

At 4 September 2017, no change in these holdings 
had been notified, nor, according to the registrar of 
members, did any other shareholder at that date 
have a notifiable holding of issued share capital.

This is assisted through the medium of regular 
management meetings, staff publications, its internal 
staff ‘Insight Magazine’ and the Redrow intranet. 
Employees are consulted on a regular basis so that 
employee views may be taken into account when 
decisions are made that may affect their interests.

Employee share ownership is encouraged through 
savings related schemes.

CHANGE OF CONTROL
The Company’s banking facilities require repayment 
in the event of a change of control. In addition the 
Company’s employee share incentive schemes 
contain provisions, whereby, upon a change of 
control, outstanding options and awards would  
vest and become exercisable by the relevant 
employees, subject to the rules of the schemes.

DIVERSITY AND INCLUSION POLICY
The Company recognises that our continued success 
depends upon our ability to recruit the right people, 
retain them and help them to reach their full potential.

The Company believes that attracting a diverse 
range of skills and abilities will enable us to meet 
the challenge of the growing skills gap in the sector.

There are no agreements between the Company 
and its directors or employees providing for 
compensation for loss of office or employment 
in event of a takeover bid. 

EMPLOYEES 
The Company’s employment policies do not 
discriminate between employees or potential 
employees on the grounds of gender, sexual 
orientation, age, colour, creed, ethnic origin, 
religious beliefs, pregnancy or maternity or trade 
union membership. It is Company policy to give full 
and fair consideration to applications for 
employment by, and the employment and training 
needs of, disabled persons (and in the case of 
employment needs, persons who become disabled 
whilst employed by the Company) where 
requirements may be adequately covered by these 
persons and to comply with any current legislation 
with regard to disabled persons.

The Company places considerable importance on 
the provision of training and development of its 
employees through training@redrow. Training is 
administered at a purpose built in-house training 
facility at Tamworth. Training@redrow completed 
6,193 training days during the year ended 30 June 
2017, including those which support the Company’s 
induction process.

The Directors recognise the importance of good 
communications with employees. The Divisions are 
encouraged to make their employees aware of the 
financial and economic factors affecting their 
respective Divisions and the Company as a whole. 

The Company is firmly committed to giving  
every potential recruit and employee the same 
opportunities irrespective of their gender, race, 
ethnic or national origin, disability, age, sexuality, 
religious belief, marital status or social class.

As such the Company opposes all forms of unlawful 
or unjust discrimination and requires all colleagues 
to comply with legislation in this area and strive for 
best practice.

The Company embeds this through awareness and 
training in the following policies:

•  Diversity and Inclusion Policy

•  Employee Policy

•  Recruitment and Selection Policy

•  Disciplinary and Grievance Policy and Procedures

CHARITABLE AND POLITICAL DONATIONS
The Group made no political donations but paid 
£0.9m in charitable donations during the year, being 
£0.8m in respect of national charities and £0.1m in 
support of local charities. The Company and its 
employees are actively involved in fundraising 
activities for specific charities. The Company made 
a £0.7m donation during the year to The Steve 
Morgan Foundation, a UK registered charity of 
which Steve Morgan is a Trustee. This is included 
within the charitable donations in respect of national 
charities noted above. 

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Redrow plc Annual Report 2017 
 
 
 
102 

GOVERNANCE REPORT
Directors’ Report continued

GREENHOUSE GAS EMISSIONS
Greenhouse gas (“GHG”) emissions data for the period 1 July 2016 to 30 June 2017 are set out in the table below.

Emissions from:

Scope 1 activities:

• Combustion of fuel at our offices and sites
• Business use of Redrow-owned and leased vehicles

Scope 2 activities:

• All purchased electricity

Total Greenhouse Gas Emissions:

• (Scope 1 + Scope 2)

Our preferred intensity ratio: 

Current  
Reporting Year
(1 July 16 to  
30 June 17)

Comparison 
Year
(1 July 15 to  
30 June 16)

Units

11,128

10,607

tonnes of CO2e

2,956

2,814

tonnes of CO2e

14,084

13,421

tonnes of CO2e

Total Greenhouse Gas emissions relative to build:

2.50

2.61

tonnes of CO2e per 100m2 of build

RESEARCH AND DEVELOPMENT
The Company has a centralised Product 
Development Team charged with identifying and 
evaluating new construction techniques and 
products. In addition, the Company has a 
centralised Environmental and Sustainability Team, 
of which issues play a prominent role in the 
Company’s activities. The Company recognises its 
responsibilities to the community as a whole and 
has adopted an environment strategy which is a 
core part of the Company’s objectives. 

The charge to the income statement in respect  
of research and development in the year ended  
30 June 2017 was £0.6m (2016: £0.4m).

METHODOLOGY
This disclosure includes all of the emission sources 
required under the Companies Act 2006 (Strategic 
Report and Directors’ Report) Regulations 2013. 
These sources fall within our consolidated financial 
statement and we do not have responsibility for any 
emission sources that are not included in our 
consolidated statement.

This inventory of greenhouse gas emissions has 
been verified by SGS to a limited level of assurance, 
in accordance with ISO 14064-3:2006, as meeting 
the requirements of the Greenhouse Gas Protocol – 
A Corporate Accounting and Reporting Standard. 
Emissions have been calculated using the UK 
Government’s GHG Conversion Factors for Company 
Reporting: 2015, 2016 and 2017 respectively.

INDEPENDENT AUDITORS
A resolution to reappoint PricewaterhouseCoopers 
LLP as external Auditors will be proposed at  
the Annual General Meeting on Thursday,  
9 November 2017.

PROVISION OF INFORMATION  
TO AUDITORS:
In the case of each Director in office at the date the 
Directors report is approved, confirm that:

(a)  so far as the Director is aware, there is no 

relevant audit information (as defined in section 
418(3) of the Companies Act 2006) of which the 
Company’s Auditors are unaware; and 

(b)  he has taken all of the steps that he ought to 
have taken as a Director in order to make 
himself aware of any such relevant audit 
information and to establish that the Company’s 
Auditors are aware of that information.

GOING CONCERN
The Directors have acknowledged the guidance on 
going concern and financial reporting published by 
the Financial Reporting Council in October 2009.

As explained in the Financial Review on pages 48 
to 51, the Group maintains adequate committed 
banking facilities. As stated in note 14 to the  
financial statements, at 30 June 2017, the Group  
had £275m of undrawn committed borrowing 
facilities available. 

After making appropriate enquiries, the Directors 
consider they have a reasonable expectation for 
stating that the Group and the Company have 
adequate resources to continue trading for the 
foreseeable future. These enquiries consisted of a 
detailed review of the Group’s financial forecast for 
the period to 31 December 2018. The forecasts take 
into account current market trends with reasonable 
judgements and estimates applied to arrive at future 
cash flow estimates. As part of the review, the 
Group analysed its forecast covenant compliance 
over this period linked to its banking facility, arriving 
at an assessment of the headroom evident between 
the forecast covenant test outturn and the outturn 
necessary to achieve covenant compliance. The 
review confirmed headroom within both financial 
covenants and facilities.

Accordingly, they continue to adopt the going 
concern basis in preparing the financial statements.

By order of the Board

GRAHAM COPE
Company Secretary  
Redrow plc

Registered no: 2877315

4 September 2017

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Redrow plc Annual Report 2017 
 
 
 
104 

GOVERNANCE REPORT
Statement of Directors’ Responsibilities

The Directors of Redrow plc as at the date of this 
statement are: 

Steve Morgan 

Chairman

John Tutte 

Group Chief Executive

Barbara Richmond 

Group Finance Director

Debbie Hewitt 

 Senior Independent  
Non-Executive Director

Nick Hewson  

Non-Executive Director

Sir Michael Lyons 

Non-Executive Director

Vanda Murray 

Non-Executive Director

By order of the Board

GRAHAM COPE
Company Secretary 

4 September 2017

Redrow plc 
Redrow House 
St. David’s Park 
Flintshire 
CH5 3RX 

The Directors are responsible for preparing the 
Annual Report, the Directors’ Remuneration Report 
and the financial statements in accordance with 
applicable law and regulations.

Company law requires the Directors to prepare 
financial statements for each Financial Year. Under 
that law, the Directors have prepared the Group and 
parent company financial statements in accordance 
with International Financial Reporting Standards 
(IFRS) as adopted by the European Union (EU). 
Under company law, the Directors must not approve 
the financial statements unless they are satisfied 
that they give a true and fair view of the state of 
affairs of the Group and the Company and of the 
profit and loss of the Group for that period. In 
preparing these financial statements, the Directors 
are required to: 

•  select suitable accounting policies and then  

apply them consistently;

•  make judgements and accounting estimates that 

are reasonable and prudent;

•  state whether applicable IFRS as adopted by the 
European Union have been followed, subject to 
any material departures disclosed and explained 
in the financial statements; and 

•  prepare the financial statements on the going 

concern basis unless it is inappropriate to presume 
that the Company will continue in business.

The Directors are responsible for keeping adequate 
accounting records that are sufficient to show and 
explain the Company’s transactions and disclose 
with reasonable accuracy at any time the financial 
position of the Company and the Group and enable 
them to ensure that the financial statements and the 
Directors’ Remuneration Report comply with the 
Companies Act 2006, and, as regards the Group 
financial statements, Article 4 of the IAS Regulation. 
They are also responsible for safeguarding the 
assets of the Company and the Group and hence for 
taking reasonable steps for the prevention and 
detection of fraud and other irregularities.

In preparing the Group financial statements, 
International Accounting Standard 1 requires  
that Directors:

•  properly select and apply accounting policies;

•  present information, including accounting policies, 

in a manner that provides relevant, reliable, 
comparable and understandable information;

•  provide additional disclosures when compliance 

with the specific requirements in IFRSs are 
insufficient to enable users to understand the 
impact of particular transactions, other events and 
conditions on the entity’s financial position and 
financial performance; and 

•  make an assessment of the Company’s ability to 

continue as a going concern.

The Directors are responsible for the maintenance 
and integrity of the Company’s website. Legislation 
in the United Kingdom governing the preparation 
and dissemination of financial statements may differ 
from legislation in other jurisdictions.

RESPONSIBILITY STATEMENT
Each of the Directors, whose names and functions 
are listed below confirms that, to the best of  
their knowledge:

•  the Group financial statements, which have 
been prepared in accordance with IFRS as 
adopted by the EU, give a true and fair view 
of the assets, liabilities, financial position and 
profit of the Group; 

•  the Strategic Report contained on pages 1 to 57 
includes a fair review of the development and 
performance of the business and the position of 
the Group, together with a description of the 
principal risks and uncertainties that it faces; and 

•  that the Annual Report, taken as a whole, is fair, 
balanced and understandable and provides the 
information necessary for shareholders to assess 
the Company’s position and performance, 
business model and strategy.

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Redrow plc Annual Report 2017 
 
 
 
106 

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REGENCY MANOR, WEST DERBY, LIVERPOOL

Redrow plc Annual Report 2017 
 
 
 
108 

FINANCIAL STATEMENTS
Independent Auditors’ Report
To the Members of Redrow plc

Basis for opinion
We conducted our audit in accordance with International 
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.  
Our responsibilities under ISAs (UK) are further described in the 
Auditors’ responsibilities for the audit of the financial statements 
section of our report. We believe that the audit evidence we 
have obtained is sufficient and appropriate to provide a basis  
for our opinion.

Independence
We remained independent of the Group in accordance with the 
ethical requirements that are relevant to our audit of the financial 
statements in the UK, which includes the FRC’s Ethical Standard 
as applicable to listed public interest entities, and we have 
fulfilled our other ethical responsibilities in accordance with 
these requirements.

To the best of our knowledge and belief, we declare that 
non-audit services prohibited by the FRC’s Ethical Standard 
were not provided to the group or the company.

Other than those disclosed in note 2 to the financial statements, 
we have provided no non-audit services to the Group or the 
Company in the period from 1 July 2016 to 30 June 2017.

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
In our opinion, Redrow plc’s Group financial statements and 
company financial statements (the “financial statements”):

•  give a true and fair view of the state of the Group’s and of  

the Company’s affairs as at 30 June 2017 and of the Group’s 
profit and the Group’s and the Company’s cash flows for the 
year then ended;

•  have been properly prepared in accordance with IFRSs as 

adopted by the European Union and as applied in accordance 
with the provisions of the Companies Act 2006; and

•  have been prepared in accordance with the requirements  
of the Companies Act 2006 and, as regards the Group 
financial statements, Article 4 of the IAS Regulation.

We have audited the financial statements, included within the 
Annual Report, which comprise: 

•  the Group and Company Balance Sheets as at 30 June 2017; 

•  the Consolidated Income Statement and Group and 
Company Statement of Comprehensive Income;

•  the Group and Company Statements of Cash Flows;

•  the Group and Company Statements of Changes in Equity 

for the year then ended;

•  the accounting policies; and

•  the notes to the financial statements.

Our opinion is consistent with our reporting to the 
Audit Committee.

OUR AUDIT APPROACH
Overview

Materiality

•  15.75 million (2016: £12.5 million) – Group financial statements.

•  Based on 5% of profit before tax.

•  £4.9 million (2016: £3.8 million) – Company financial statements.

•  Based on 1% of total assets.

Audit scope

•  Three financially significant companies in the Group.

Key audit 
matters

•  Valuation of inventory.

•  Valuation of pension scheme deficit (Group and parent).

The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial 
statements. In particular, we looked at where the Directors made subjective judgements, for example in respect of significant 
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all  
of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was 
evidence of bias by the Directors that represented a risk of material misstatement due to fraud.  

Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the 
financial statements of the current period and include the most significant assessed risks of material misstatement (whether or 
not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the 
allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we 
make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, 
and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all 
risks identified by our audit.  

Key audit matter

How our audit addressed the key audit matter

Valuation of inventory
See the Accounting Policies for the Directors’ 
disclosures of related accounting policies and key 
accounting estimates. See note 13 for the detailed 
disclosures on the inventory provision.

The Group holds inventory in the form of land for 
development, work in progress and showhomes with 
a carrying value of £2,119m, net of provisions. 

The carrying value of inventory is determined by 
reference to a number of assumptions and 
judgements, which are subject to levels of 
estimation.  These include regular updates to site 
appraisals for latest sales prices and costs to 
complete, the availability of mortgage financing for 
customers, the availability of Government schemes 
aiding first-time buyers, and assessments of the 
likelihood of obtaining planning permission on land 
held for development. 

Changes in any of these key judgements could lead to 
a material change in the carrying value of inventory.

Valuation of pension scheme deficit
See the Accounting Policies for the Directors’ 
disclosures of related accounting policies and key 
accounting estimates. See note 7 for the detailed 
disclosures on the pension scheme deficit.

 The Group operates a defined benefit pension 
scheme with a net deficit of £2 million at the year end. 
This deficit is derived from assets with a gross value 
of £128 million less the present value of obligations of 
£130 million, both of which are significant in the 
context of the overall balance sheet and the results of 
the Group.

The valuation of this net deficit is dependent on the 
application of significant judgements in the actuarial 
assumptions, in particular discount rates, future Retail 
Price Index (‘RPI’) inflation and mortality rates, and on 
the expected returns on investments.

Unfavourable changes in any of the key actuarial 
assumptions could lead to a material movement in the 
calculated net position.

We reviewed management’s forecasts to identify any non-
profitable sites, assessing management’s assumptions relating to 
these sites and ensuring adequate provisions were included for 
them. We compared forecast sales prices to actual prices 
achieved post year-end and assessed the accuracy of 
management’s historical forecasts by comparing net realisable 
values recognised in the prior year with actual sales prices 
achieved in the current year.

We tested management’s controls over the process for estimating 
the expected remaining build costs, including the budgeting and 
review processes. 

We also inspected evidence of the Board’s review of divisional 
management’s forecast sales prices. We did not identify any 
significant deficiencies of control in this process. 

For significant sites that have not yet been developed, we 
considered the latest stage of planning applications and assessed 
the accuracy of management’s historical estimates by comparing 
previous estimated impairments to actual outturns achieved. We 
did not identify any material differences between management’s 
estimations and actual results achieved. 

No material differences were identified from our testing performed.

We obtained and read the actuarial report that was prepared by  
an independent firm of actuaries and used by the Directors in 
estimating the value of the Group’s deficit in respect of the scheme.

We tested the completeness and accuracy of the pension scheme 
membership data provided to management’s actuary on which the 
pension deficit is calculated, comparing the data to the underlying 
payroll systems. We noted no material exceptions from our testing.

We challenged the key assumptions used in that actuarial valuation, 
being the discount rate, future RPI inflation, mortality rates and 
expected returns on investments by comparing them to internally-
generated typical ranges used for such assumptions, taking into 
account the industry in which the Group operates and other specific 
characteristics of this pension scheme. The actuarial assumptions 
were within the typical ranges for similar pension schemes.

The pension scheme assets are invested in a mixture of pooled 
funds, individual equities, government and corporate bonds and 
cash. We obtained independent confirmations of the existence 
and valuation of all of the scheme assets from the external 
investment managers and tested the valuations of a sample of 
these assets by agreeing them to valuations obtained from 
independent third party sources.

No material differences were identified from our testing performed.

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Redrow plc Annual Report 2017 
 
 
 
110 

FINANCIAL STATEMENTS
Independent Auditors’ Report continued
To the Members of Redrow plc

How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial 
statements as a whole, taking into account the structure of the Group and the Company, the accounting processes and controls, 
and the industry in which they operate.

The Group comprises one principal trading company and a number of smaller subsidiaries and joint ventures, all of which are 
based in the UK.

We performed audits of the three financially significant companies in the Group. This gave us the evidence we needed for our 
opinion on the Group financial statements. All work was performed by the Group engagement team.

Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. 
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent 
of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of 
misstatements, both individually and in aggregate on the financial statements as a whole. 

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Overall materiality

How we determined it

Rationale for benchmark applied

Group financial statements

Company financial statements

£15.75 million (2016: £12.5 million).

£4.9 million (2016: £3.8 million).

5% of profit before tax.

1% of total assets.

We believe that profit before tax is the 
primary measure used by the 
shareholders in assessing the 
performance of the group, and is a 
generally accepted auditing benchmark.

We believe that total assets is the 
primary measure used by the 
shareholders in assessing the position  
of the Holding Company, and is a 
generally accepted auditing benchmark.

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. 
The range of materiality allocated across components was between £1.6 million and £15 million. Certain components were 
audited to a local statutory audit materiality that was also less than our overall group materiality.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.8 million 
(Group audit) (2016: £0.5 million) and £0.2 million (Company audit) (2016: £0.2 million) as well as misstatements below those 
amounts that, in our view, warranted reporting for qualitative reasons.

Going concern
In accordance with ISAs (UK) we report as follows:

Reporting obligation

Outcome

We are required to report if we have anything material to add or draw attention to 
in respect of the directors’ statement in the financial statements about whether 
the Directors considered it appropriate to adopt the going concern basis of 
accounting in preparing the financial statements and the Directors’ identification 
of any material uncertainties to the Group’s and the Company’s ability to continue 
as a going concern over a period of at least twelve months from the date of 
approval of the financial statements.

We have nothing material to add or 
to draw attention to. However, 
because not all future events or 
conditions can be predicted, this 
statement is not a guarantee as to 
the Group’s and Company’s ability 
to continue as a going concern.

We are required to report if the directors’ statement relating to Going Concern  
in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our 
knowledge obtained in the audit.

We have nothing to report.

Reporting on other information 
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ 
report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover 
the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in 
this report, any form of assurance thereon. 

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider 
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or 
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are 
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material 
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement 
of this other information, we are required to report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic Report, Directors’ Report and Corporate Governance Statement, we also considered whether the 
disclosures required by the UK Companies Act 2006 have been included.  

Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006,  
(CA06), ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and 
matters as described below (required by ISAs (UK) unless otherwise stated).

Strategic Report and Directors’ Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and 
Directors’ Report for the year ended 30 June 2017 is consistent with the financial statements and has been prepared in 
accordance with applicable legal requirements. (CA06)

In light of the knowledge and understanding of the Group and Parent Company and their environment obtained in the 
course of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)

Corporate Governance Statement

In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance 
Statement (on pages 70 to 71) about internal controls and risk management systems in relation to financial reporting 
processes and (on page 100) about share capital structures in compliance with rules 7.2.5 and 7.2.6 of the Disclosure 
Guidance and Transparency Rules sourcebook of the FCA (“DTR”) is consistent with the financial statements and has been 
prepared in accordance with applicable legal requirements. (CA06)

In light of the knowledge and understanding of the Group and Parent Company and their environment obtained in the 
course of the audit, we did not identify any material misstatements in this information. (CA06)

In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance 
Statement (on pages 61 to 67) with respect to the Company’s corporate governance code and practices and about its 
administrative, management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the 
DTR. (CA06)

We have nothing to report arising from our responsibility to report if a corporate governance statement has not been 
prepared by the Company. (CA06)

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Redrow plc Annual Report 2017 
 
 
 
112 

FINANCIAL STATEMENTS
Independent Auditors’ Report continued
To the Members of Redrow plc

The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or 
liquidity of the Group

We have nothing material to add or draw attention to regarding:

•  The Directors’ confirmation on page 104 of the Annual Report that they have carried out a robust assessment of the 

principal risks facing the Group, including those that would threaten its business model, future performance, solvency  
or liquidity.

•  The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.

•  The Directors’ explanation on page 104 of the Annual Report as to how they have assessed the prospects of the Group, 

over what period they have done so and why they consider that period to be appropriate, and their statement as to 
whether they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities  
as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary 
qualifications or assumptions.

We have nothing to report having performed a review of the Directors’ statement that they have carried out a robust 
assessment of the principal risks facing the Group and statement in relation to the longer-term viability of the Group. Our 
review was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ 
process supporting their statements; checking that the statements are in alignment with the relevant provisions of the UK 
Corporate Governance Code (the “Code”); and considering whether the statements are consistent with the knowledge and 
understanding of the Group and Company and their environment obtained in the course of the audit. (Listing Rules)

Other Code Provisions

We have nothing to report in respect of our responsibility to report when: 

•  The statement given by the directors, on page 104, that they consider the Annual Report taken as a whole to be fair, 
balanced and understandable, and provides the information necessary for the members to assess the group’s and 
company’s position and performance, business model and strategy is materially inconsistent with our knowledge of the 
group and company obtained in the course of performing our audit.

•  The section of the Annual Report on page 68 describing the work of the Audit Committee does not appropriately 

address matters communicated by us to the Audit Committee.

•  The directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure 

from a relevant provision of the Code specified, under the Listing Rules, for review by the auditors.

Directors’ Remuneration

In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with 
the Companies Act 2006. (CA06)

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the 
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view.  
The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial 
statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to 
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of 
accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic 
alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material 
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance 
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a 
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or 
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these 
financial statements. 

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:  
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with 
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume 
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save 
where expressly agreed by our prior consent in writing.

OTHER REQUIRED REPORTING
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:

•  we have not received all the information and explanations we require for our audit; or

•  adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received 

from branches not visited by us; or

•  certain disclosures of Directors’ remuneration specified by law are not made; or

•  the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in 

agreement with the accounting records and returns. 

We have no exceptions to report arising from this responsibility.

Appointment
Following the recommendation of the audit committee, we were appointed by the directors in 1987 to audit the financial 
statements for the period ended 30 June 1987 and subsequent financial periods. The period of total uninterrupted engagement 
is 31 years, covering the years ended 30 June 1987 to 30 June 2017.

ARIF AHMAD
(Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP 
Chartered Accountants and Statutory Auditors 
Manchester

4 September 2017

113

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Redrow plc Annual Report 2017 
 
 
 
114 

FINANCIAL STATEMENTS
Consolidated Income Statement
For the 12 months ended 30 June

Revenue

Cost of sales

Gross profit

Administrative expenses

Operating profit

Financial income

Financial costs

Net financing costs

Share of profit of joint ventures after interest and taxation

Profit before tax

Income tax expense

Profit for the year

Earnings per share – basic

 – diluted

Note

2

3

3

10

4

6

6

2017
£m

 1,660 

(1,255)

 405 

(83)

 322 

4

(12)

(8)

1

315

(62)

253

2016
£m

1,382

(1,048)

334

(73)

261

3

(14)

(11)

–

250

(50)

200

70.2p

70.0p

55.4p

55.2p

FINANCIAL STATEMENTS
Statement of Comprehensive Income
For the 12 months ended 30 June

Group

Company

Note

Profit for the year

Other comprehensive (expense)/income

Items that will not be reclassified to profit or loss

Remeasurements of post employment benefit obligations

7e

Deferred tax on actuarial losses/(gains) taken directly to equity

Other comprehensive (expense)/income for the year net of tax

2017 
£m

253

(8)

1

(7)

2016
 £m

200

8

(2)

6

Total comprehensive income for the year

18

246

206

2017 
£m

51

(8)

1

(7)

44

2016
 £m

201

8

(2)

6

207

FINANCIAL STATEMENTS
Balance Sheets
As at 30 June

Assets

Intangible assets

Property, plant and equipment

Investments

Deferred tax assets

Retirement benefit surplus

Trade and other receivables

Total non-current assets

Inventories

Trade and other receivables

Cash and cash equivalents

Total current assets

Total assets

Equity

Retained earnings at 1 July 2016

Profit for the year

Other comprehensive (expense)/income for the year

Dividend Paid

Movement in LTIP/SAYE

Retained earnings

Share capital

Share premium account

Other reserves

Total equity

Liabilities

Bank loans

Trade and other payables

Deferred tax liabilities

Retirement benefit obligations

Long-term provisions

Total non-current liabilities

Bank overdrafts and loans

Trade and other payables

Current income tax liabilities

Total current liabilities

Total liabilities

Total equity and liabilities

Group

Company

Note

2017 
£m

Restated
2016
 £m

2017 
£m

2016
 £m

8

9

10

11

7

12

13

12

14

18

17

18

18

14

15

11

7

16

14

15

2

16

27

5

–

11

61

2,043

35

62

2,140

2,201

937

253

(7)

(44)

(8)

1,131

37

59

8

2

17

25

5

6

12

67

1,903

36

135

2,074

2,141

769

200

6

(30)

(8)

937

37

59

8

1,235

1,041

90

197

3

2

8

300

45

585

36

666

966

2,201

230

156

2

–

7

395

44

631

30

705

1,100

2,141

–

–

–

3

–

–

3

–

945

61

1,006

1,009

701

51

(7)

(44)

–

701

37

59

7

804

90

–

–

2

–

92

83

27

3

113

205

1,009

–

 –

–

2

6

–

8

–

918

134

1,052

1,060

524

201

6

(30)

–

701

37

59

7

804

230

–

–

–

–

230

–

25

1

26

256

1,060

The financial statements on pages 114 to 146 were approved by the Board of Directors on 4 September 2017 and were signed on 
its behalf by:

STEVE MORGAN 
Director   

BARBARA RICHMOND
Director

Redrow plc Registered Number 2877315

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Redrow plc Annual Report 2017 
 
 
 
 
116 

FINANCIAL STATEMENTS
Statement of Changes in Equity
For the 12 months ended 30 June

FINANCIAL STATEMENTS
Statement of Cash Flows
For the 12 months ended 30 June

Group

Company

Group

Company

Profit for the year

Other comprehensive (expense)/income for the year

Total comprehensive income relating to the year (net)

Dividend paid

Movement in LTIP/SAYE

Net increase in equity

Opening equity

Closing equity

Note

18

18

2017
 £m

253

(7)

246

(44)

(8)

194

1,041

1,235

2016
 £m

200

6

206

(30)

(8)

168

873

1,041

2017 
£m

51

(7)

44

(44)

–

–

804

804

2016 
£m

201

6

207

(30)

–

177

627

804

The above items are presented net of tax where appropriate. See note 4 and note 11 for information on income tax and deferred  
tax expense. 

As permitted by Section 408 of the Companies Act 2006, the Income Statement of Redrow plc is not presented as a part of these 
financial statements.

The consolidated profit on ordinary activities after taxation for the financial year, excluding intra-Group dividends, is made up 
as follows:

Holding company

Subsidiary companies

2017 
£m

5

248

253

2016 
£m

12

188

200

Note

Cash flows from operating activities

Operating profit/(loss) 

Depreciation and amortisation

Adjustment for non-cash items

Operating profit/(loss) before changes in working capital and provisions

Decrease in trade and other receivables

Increase in inventories

Increase in trade and other payables

Increase in provisions

Cash inflow generated from operations

Interest paid

Tax paid

Net cash inflow from operating activities

Cash flows from investing activities

Acquisition of software, property, plant and equipment

Interest received

Net payments to joint ventures – continuing operations

Net cash (outflow)/inflow from investing activities

Cash flows from financing activities

Issue of bank borrowings

Repayment of bank borrowings

Purchase of own shares

Dividend paid

Net cash (outflow)/inflow from financing activities

(Decrease)/increase in net cash and cash equivalents

Net cash and cash equivalents at the beginning of the year

Net cash and cash equivalents at the end of the year

19

2017
 £m

322

2

(5)

319

6

(140)

3

1

189

(5)

(56)

128

(1)

–

(1)

(2)

90

(230)

(16)

(44)

(200)

(74)

91

17

2016
 £m

261

1

(5)

257

7

(373)

239

–

130

(6)

(46)

78

(6)

–

(11)

(17)

230

(150)

(16)

(30)

34

95

(4)

91

2017
 £m

2016
 £m

(3)

–

–

(3)

19

–

2

–

18

(3)

–

15

–

13

–

13

90

(230)

–

(44)

(184)

(156)

134

(22)

(2)

–

–

(2)

11

–

3

–

12

(5)

–

7

–

21

–

21

230

(150)

–

(30)

50

78

56

134

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Redrow plc Annual Report 2017 
 
 
 
118 

FINANCIAL STATEMENTS
Accounting Policies

Both the consolidated and Company financial statements have 
been prepared in accordance with International Financial 
Reporting Standards (IFRS) as adopted by the European Union 
(EU) and effective at 30 June 2017, and in accordance with IFRS 
Interpretations Committee interpretations and the Companies 
Act 2006 as it applies to companies reporting under IFRS and 
Article 4 of the IAS Regulation and in accordance with the 
historical cost convention as modified by the revaluation of 
derivative financial instruments.

The preparation of financial statements in conformity with IFRS 
requires the use of estimates and assumptions that affect the 
reported amounts of assets and liabilities at the balance sheet 
date and the reported amounts of revenue and expenses 
during the reporting period. Whilst these estimates are based 
on management’s best knowledge of the amount, event or 
actions, actual results ultimately may differ from those 
estimates (refer to note 1).

The financial statements have been prepared on a going 
concern basis.

Redrow plc is a public listed company, listed on the London 
Stock Exchange and domiciled in the UK.

The principal accounting policies have been applied 
consistently in the periods presented apart from the change in 
accounting policy in respect of Forward land. This change in 
accounting policy to initially recognise expenditure relating to 
forward land options and conditional contracts in inventory at 
cost has given rise to the restatement outlined in the table 
below together with a reclassification of customer deposits:

Land for development

Payments on account (within inventories)

Customer deposits (within trade payables)

Current income tax liabilities 

Retained earnings

Restated
2016
£m

Original
2016 
£m

1,282

1,215

(33)

(65)

30

937

(61)

–

24

913

The principal accounting policies are outlined below:

BASIS OF CONSOLIDATION
The consolidated financial statements incorporate the financial 
statements of Redrow plc and all its subsidiaries, together with 
the Group’s share of the results and share of net assets of 
jointly controlled entities i.e. the financial statements of Redrow 
plc and entities controlled by Redrow plc (and its subsidiaries). 
Control is achieved where Redrow plc has the power to govern 
the financial and operating policies of an entity. Redrow plc’s 
accounting reference date is 30 June. Consistent with the 
normal monthly reporting process, the actual date to which 
the balance sheet has been drawn up is 2 July 2017 (2016: 
26 June 2016). For ease of reference, all references to the  
year or 12 months and financial position are for the year  
ended 30 June and as at 30 June.

The Group has taken advantage of the exemption provided 
under Section 408 of the Companies Act 2006 not to present 
Redrow plc’s Company income statement. The profit for the 
financial year is dealt with in the statement of changes 
in equity.

a. Subsidiaries
Subsidiaries are all entities over which the Group has control. 
The Group controls an entity when the Group is exposed to,  
or has rights to, variable returns from its involvement with the 
entity and has the ability to affect those returns through its 
power over the entity. Subsidiaries are fully consolidated from 
the date on which control is transferred to the Group. They are 
deconsolidated from the date that control ceases. Identifiable 
assets acquired and liabilities and contingent liabilities 
assumed in a business combination are measured at their  
fair value at the date of acquisition. Any excess of the cost  
of acquisition over the fair value of the Group’s share of the 
identifiable net assets represents goodwill. Goodwill is subject 
to an annual impairment review, with any reduction in value 
being taken straight to the income statement. Adjustments are 
made as necessary to the financial statements of subsidiaries 
to ensure consistency with the policies adopted by the Group.

All inter-company transactions and balances between Group 
companies are eliminated on consolidation.

b. Interests in joint ventures
The Group applies IFRS 11 to all joint arrangements. Under IFRS 
11 investments in joint arrangements are classified as either 
joint operations or joint ventures depending on the contractual 
rights and obligations of each investor. Redrow plc has 
assessed the nature of its joint arrangements and determined 
them to be joint ventures. Joint ventures are accounted for 
using the equity method.

Under the equity method of accounting, interests in joint 
ventures are initially recognised at cost and adjusted thereafter 
to recognise the Group’s share of the post-acquisition profits or 
losses and movements in other comprehensive income. When 
the Group’s share of losses in a joint venture equals or exceeds 
its interests in the joint ventures, the Group does not recognise 
further losses, unless it has incurred obligations or made 
payments on behalf of the joint ventures.

Unrealised gains on transactions between the Group and 
its joint ventures are eliminated to the extent of the Group’s 
interest in the joint ventures. Unrealised losses are also 
eliminated unless the transaction provides evidence of an 
impairment of the asset transferred.

REVENUE AND PROFIT RECOGNITION
Revenue represents the fair value received and receivable 
in respect of the sale of residential housing and land and of 
commercial land and developments net of value added tax  
and discounts. This is recognised on legal completion.

In respect of social housing, the Group enters into contracts for 
the sale of social housing either at an agreed price or at a 
discount to open market value. Payment for these properties is 
made by the purchaser, either on legal completion of the unit 
or, in certain circumstances on a staged basis. Revenues in all 
cases are recognised on the legal completion of the built home. 

Profit is recognised on legal completion.

SEGMENTAL REPORTING
The main operation of the Group is focused on housebuilding.

As it operates entirely within the United Kingdom, the Group 
has only one business and geographic segment. This is 
consistent with the information provided for internal reporting 
purposes to the Chief Operating Decision Maker (the Board). 
The Group has no key customers.

EXCEPTIONAL ITEMS
Exceptional items are those which in the opinion of the  
Board, are material by size or nature, non-recurring and  
of such significance that they require separate disclosure.

NET FINANCING COSTS
Interest income is recognised on a time apportioned basis by 
reference to the principal outstanding and the effective interest 
rate. Interest costs are recognised in the income statement on 
an accruals basis in the period in which they are incurred.

INCOME AND DEFERRED TAX
Income tax comprises current tax and deferred tax.

INTANGIBLE ASSETS – COMPUTER SOFTWARE
Acquired computer software licences are capitalised on the 
basis of costs incurred to bring to use the specific software and 
are amortised over their estimated useful lives of three years, 
charged to administrative expenses. These are reviewed for 
impairment whenever events or changes in circumstances 
indicate that the carrying values may not be recoverable.

PROPERTY, PLANT AND EQUIPMENT
Freehold property comprises offices or other buildings held  
for administrative purposes. Freehold property is shown at  
cost less the subsequent depreciation of buildings. 

All other property, plant and equipment is stated at historic  
cost less depreciation. Historic cost includes any costs directly 
attributable to bringing the assets to the location and condition 
necessary for them to be capable of operating in the manner 
intended by management.

Land is not depreciated. Depreciation on other assets is 
charged so as to write off the cost of assets to their residual 
values over their estimated useful lives, on a straight line basis 
as follows:

Buildings within freehold property
Plant and machinery
Fixtures and fittings

50 years
5–10 years
3–5 years

The assets’ useful lives are reviewed and adjusted if 
appropriate at each balance sheet date.

Current tax is based on taxable profits for the year and any 
appropriate adjustment to tax payable in respect of prior years. 
Taxable profit differs from profit before tax as shown in the 
income statement as it excludes income or expenditure items 
which are never chargeable or allowable for tax or which are 
chargeable or deductible in other accounting periods.

These are reviewed for impairment whenever events or 
changes in circumstances indicate that the carrying values may 
not be recoverable.

The gain or loss arising on the disposal of an asset represents 
the difference between the sales proceeds and the carrying 
amount of the asset and is recognised in the income statement.

Deferred tax is provided in full, using the balance sheet liability 
method, on temporary differences arising between the carrying 
amounts of assets and liabilities in the consolidated financial 
statements and the corresponding tax bases used in the 
calculation of taxable profit.

Deferred tax assets are recognised to the extent that it is 
probable that taxable profits will be available against which 
deductible temporary differences can be utilised. Deferred tax 
liabilities are recognised for all temporary differences. Deferred 
tax is calculated at the rates enacted at the balance sheet date.

Deferred tax is credited or charged in the income statement, 
consolidated statement of comprehensive income, or retained 
earnings as appropriate.

INVESTMENT IN SUBSIDIARY COMPANIES
In the parent company books, the investment in its subsidiaries 
is held at cost less any impairment.

LEASES
Leases in which substantially all of the risks and rewards of 
ownership are retained by the lessor are classified as 
operating leases. Rentals payable under operating leases are 
charged to work in progress or income on a straight line basis 
over the term of the relevant lease.

119

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Redrow plc Annual Report 2017 
 
 
 
120 

FINANCIAL STATEMENTS
Accounting Policies continued

INVENTORIES
Inventories are stated at the lower of cost and net realisable 
value less cash on account (which represents payments made 
against work in progress, excluding private customer deposits).

Cost comprises land and associated acquisition costs, direct 
materials and subcontract work, other direct costs and those 
overheads (based on normal operating capacity) that have 
been incurred in bringing the inventories to their present 
location and condition, excluding borrowing costs. These 
include infrastructure and development costs such 
as roads and sewers, including contributions to other 
community benefits such as schools, medical centres  
and community centres.

Total land costs are allocated to the private housing on a 
development as, in the case of amenity land and social housing 
land, neither has sufficient contribution from sales of the 
precise area of the land to cover the land costs and are a 
planning requirement of the development. 

Provisions are established to write down land where the 
estimated net sales proceeds less costs to complete exceed 
the current carrying value. Adjustments to the provisions will 
be required where selling prices or costs to complete change.

Net realisable value for land was assessed by estimating 
selling prices and cost (including sales and marketing 
expenses), taking into account current market conditions.

This net realisable value provision will be closely monitored  
for adequacy and appropriateness as regards under and over 
provision to reflect circumstances at future balance sheet 
dates. Any material change to the underlying provision will 
be reflected through cost of sales as an exceptional item.

will receive on retirement. It is funded through payments to 
trustee administered funds, determined by actuarial valuations 
carried out on at least a triennial basis. A defined contribution 
plan is a pension plan under which the Group pays agreed 
contributions into a separate fund for each employee and any 
subsequent pension payable to a specific employee is 
determined by the amount accumulated in their individual fund. 
The GPP is also a type of defined contribution plan.

The asset/(liability) recognised in the balance sheet in respect 
of the defined benefit section of the scheme is the present 
value of the defined benefit obligation at the balance sheet 
date, less the fair value of plan assets. The defined benefit 
obligation is determined using the projected unit credit method 
on an annual basis by an independent scheme actuary.

Actuarial gains and losses arising from experience 
adjustments and changes in actuarial assumptions are 
charged or credited to equity as they arise in full via the 
statement of comprehensive income.

Scheme service costs are charged to cost of sales and 
administrative expenses as appropriate and scheme finance 
costs are included in net financing costs. Past service costs  
are recognised immediately in income.

In respect of the defined contribution section of the Scheme 
and the GPP, contributions are recognised as an employee 
benefit expense when they are due. The Group has no further 
payment obligations in respect of the above once the 
contributions have been paid.

b. Bonus plans
The Group recognises a liability and an expense for bonuses 
where contractually obliged.

FORWARD LAND
Expenditure relating to forward land options, conditional 
contracts and land owned without planning is initially 
recognised in inventory at cost. It is reviewed regularly for 
impairment.

c. Share-based payments
Equity settled share-based payments are measured at fair 
value on the date of grant and expensed on a straight line 
basis over the vesting period, based on the Group’s estimate 
of shares that will eventually vest.

EMPLOYEE BENEFITS
a. Pension obligation
The Group operates two pension schemes for its staff. The 
Redrow Staff Pension Scheme (the ‘Scheme’) closed to the 
accrual of new benefits with effect from 1 March 2012, with new 
benefits now being provided via the Redrow Group Personal 
Pension Plan (the ‘GPP’). The Scheme is externally invested and 
comprises two sections: a defined benefit section and a defined 
contribution section. A defined benefit plan is a pension plan 
which defines an amount of pension benefit that an employee 

d. Termination benefits
Termination benefits are payable when employment is 
terminated by the Group before normal retirement date by 
redundancy. These benefits are recognised by the Group in 
the period in which it becomes demonstrably committed to 
terminating the employment of current employees according 
to a detailed formal plan without possibility of withdrawal.

FINANCIAL INSTRUMENTS
a. Land creditors
Deferred payments arising from land creditors are held at 
discounted present value using the effective interest method, 
in accordance with IAS 39. The difference between the fair 
value and the nominal value is amortised over the deferment 
period via financing costs.

The interest rate applied is an equivalent loan rate available  
on the date of the land purchase.

b. Derivative financial instruments and hedge 
accounting
Derivative financial instruments are initially recorded at fair 
value and the fair value is remeasured to fair value at each 
reporting date.

The Group’s use of financial derivatives is governed by an 
interest rate risk management framework adopted by the 
Board which sets parameters to ensure an appropriate level  
of hedging is maintained to manage interest rate risk in  
respect of borrowings.

The policy prohibits any trading in derivative financial 
instruments or their use for speculative purposes.

The effective portion of changes in the fair value of derivative 
financial instruments which are designated and which qualify 
as cash flow hedges are recognised directly in equity in a 
hedge reserve. The gains or losses relating to the ineffective 
portion are recognised in the income statement immediately 
they arise.

c. Loans and receivables
Loans and receivables are non-derivative financial assets  
with fixed or determinable payments that are not quoted in  
an active market. They are included in current assets, except 
for maturities greater than 12 months after the balance sheet 
date which are classified as non-current assets. Loans and 
receivables include ‘trade receivables’ and ‘other receivables’ 
and cash and cash equivalents in the balance sheet.

Trade receivables are held at discounted present value less 
any impairment. The amount is then increased to settlement 
value over the settlement period via financing income.

d. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call 
deposits. Bank overdrafts that are repayable on demand, 
forming an integral part of the Group’s cash management  
are included as a component of cash and cash equivalents  
for the purpose of the statement of cash flows.

e. Borrowings and trade payables
Interest bearing borrowings and trade payables are recorded 
when the proceeds are received, net of transaction costs 
incurred and subsequently at amortised cost. Any difference 

between the proceeds, net of transaction costs and the 
redemption value is recognised in the income statement  
over the period of the borrowings.

f. Deposits
New property deposits from private customers are held within 
Trade and Other payables until the legal completion of the 
related property or the rescission of the sale contract. 

ONEROUS CONTRACTS
Onerous contracts are contracts in which the unavoidable 
costs in meeting the obligations under the contract exceed the 
economic benefits expected to be received under it. Provision 
is made to reflect management’s best current estimate of the 
least net cost of either fulfilling or exiting the contract.

SHARE CAPITAL
Ordinary shares are classed as equity.

DIVIDEND DISTRIBUTION
Dividend distribution to the Company’s shareholders is 
recognised as a liability in the Group’s financial statements 
in the period in which the dividends are declared.

IMPACT OF NEW STANDARDS AND 
INTERPRETATIONS
a) New and amended standards adopted by the 
Group. The following new standards and amendments 
to standards are mandatory for the first time for the 
financial year beginning 1 July 2016:
•  Amendment to IFRS 11, ‘Joint arrangements’ on acquisition of 

an interest in a joint operation

•  Amendment to IAS 16, ‘Property, plant and equipment’ and 

IAS 38, ‘Intangible assets’, on depreciation and amortisation 

•  Amendments to IAS 27, ‘Separate financial statements’ on 

the equity method 

•  Amendment to IAS 1, ‘Presentation of financial statements’  

on the disclosure initiative

•  Annual improvements 2014. These set of amendments 

impact four standards:

 – IFRS 5, ‘Non-current assets held for sale and discontinued 

operations’ regarding methods of disposal.

 – IFRS 7, ‘Financial instruments: Disclosures’, (with 
consequential amendments to IFRS 1) regarding 
servicing contracts.

 – IAS 19, ‘Employee benefits’ regarding discount rates.

 – IAS 34, ‘Interim financial reporting’ regarding disclosure  

of information.

•  The implementation of these standards has not had a 
material impact on the Group financial statements.

121

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Redrow plc Annual Report 2017 
 
 
 
122 

FINANCIAL STATEMENTS
Accounting Policies continued

IMPACT OF NEW STANDARDS AND 
INTERPRETATIONS CONTINUED
b) The following new standards and amendments  
to standards have been issued but are not effective 
for the financial year beginning 1 July 2016 and have 
not been early adopted:
•  IFRS 15 ‘Revenue from contracts with customers’. IFRS 15, 
‘Revenue from contracts with customers’ is a converged 
standard from the IASB and FASB on revenue recognition. 
The standard will improve the financial reporting of revenue 
and improve comparability of the top line in financial 
statements globally. It is more prescriptive in terms of what 
should be included within revenue than IAS 18 ‘Revenue’. 
Published May 2014, effective date: annual periods 
beginning on or after 1 January 2018. The Group does  
not expect the implementation of this standard to have  
a material impact on profit.

•  Amendment to IFRS 15, ‘Revenue from contracts with 

customers’. Published April 2016, effective date: Annual 
periods beginning on or after 1 January 2018.

•  IFRS 9 ‘Financial instruments’. This standard replaces the 
guidance in IAS 39. Published July 2014, effective date: 
annual periods beginning on or after 1 January 2018. 

•  IFRS 16 ‘Leases’. This standard replaces the current guidance 

in IAS 17 and is a far-reaching change in accounting by 
lessees in particular. Under IAS 17, lessees were required to 
make a distinction between a finance lease (on balance 
sheet) and an operating lease (off balance sheet). IFRS 16 
now requires lessees to recognise a lease liability reflecting 
future lease payments and a ‘right-of-use asset’ for virtually 
all lease contracts. The IASB has included an optional 
exemption for certain short-term leases and leases of 
low-value assets; however, this exemption can only be 
applied by lessees. For lessors, the accounting stays almost 
the same. However, as the IASB has updated the guidance 
on the definition of a lease (as well as the guidance on the 
combination and separation of contracts), lessors will also be 
affected by the new standard. At the very least, the new 
accounting model for lessees is expected to impact 
negotiations between lessors and lessees. Under IFRS 16, a 
contract is, or contains, a lease if the contract conveys the 
right to control the use of an identified asset for a period of 
time in exchange for consideration. Published January 2016, 
effective Annual periods beginning on or after 1 January 
2019 with earlier application permitted if IFRS 15, ‘Revenue 
from Contracts with Customers’, is also applied. The Group 
has a number of operating leases, mainly in relation to cars 
and some office properties, with the net impact on profit not 
expected to be significant.

FINANCIAL STATEMENTS
Notes to the Financial Statements

1. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including 
expectations of future events that are believed to be reasonable under the circumstances. Management considers the key 
sources of estimation uncertainty and critical accounting judgements relate to:

Carrying value of inventories
The Group carries inventories at the lower of cost and net realisable value less cash on account.

Due to the nature of development timescales, it is routinely necessary to estimate costs to complete and future revenues and to 
allocate non-unit specific development costs between units legally completing in the current financial year and in future periods. 
A full review of the net realisable value of inventories was undertaken by the Group as at 30 June 2017. Reasonably foreseeable 
changes in the assumptions used would not have a significant impact on the net realisable value.

Pensions
The Group has utilised assumptions including a rate of return on assets, mortality assumptions and a discount rate having been 
advised by its actuary. To the extent that such assumed rates are different from what actually transpires, the retirement benefit 
obligations of the Group would change.

The primary risks the Group is exposed to by the defined benefit pension scheme are the movement in corporate bond yields, 
the market’s long-term expectations for inflation and movement in mortality rates. The scheme closed to future accrual with 
effect from 1 March 2012.

2. OPERATING PROFIT

Operating profit is stated after charging:

Inventories expensed in the year

Depreciation

Operating leases – plant and machinery

– other

Research and development expenditure

Auditors’ remuneration – fees payable to the Company’s Auditors for audit services (i)

 – fees payable to the Company’s Auditors for other services (ii)

Fees payable to the Company’s Auditors comprise:

Note

13

9

2017 
£m

2016 
£m

1,193

992

2

3

1

1

–

–

1

2

1

1

–

–

(i) 

 fees payable for the audit of parent company and consolidated financial statements £30,000 (2016: £30,000) and fees 
payable for the audit of the Company’s subsidiaries pursuant to legislation £146,000 (2016: £145,000).

(ii)  

 Auditors’ remuneration for other services comprised £20,000 (2016: £20,000) in respect of an independent review of the half-
yearly financial statements (Audit related assurance services), £10,000 (2016: £nil) in respect of Radleigh audit file review 
(Non-audit services), £408,000 (2016: £nil) in respect of Reporting Accountant services (Non-audit services) and £8,000 
(2016: £8,000) in respect of iXBRL tagging (Taxation compliance services).

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Redrow plc Annual Report 2017 
 
 
 
124 

3. NET FINANCING COSTS

Interest payable on bank loans

Imputed interest on deferred land creditors

Financial costs

Other interest receivable

Financial income

Net financing costs

4. INCOME TAX EXPENSE

Current tax charge

UK Corporation Tax

Deferred tax

Origination and reversal of temporary differences

Total income tax charge income statement

Reconciliation of tax charge for the year

Profit before tax

Tax calculated at UK Corporation Tax rate

Tax charge for the year

Deferred tax recognised directly in equity

Relating to pension scheme

Current income tax payable in the Company is £3m (2016: payable £1m).

5. DIVIDENDS
The following dividends were paid by the Group:

Prior year final dividend per share of 6.0p (2016: 4.0p); Current year interim dividend per share of 
6.0p (2016: 4.0p)

2017
£m

2016 
£m

(6)

(6)

(12)

4

4

(8)

(8)

(6)

(14)

3

3

(11)

2017
£m

2016 
£m

62

–

62

315

62

62

1

1

2017
£m

44

44

51

(1)

50

250

50

50

(2)

(2)

2016
£m

30

30

6. EARNINGS PER ORDINARY SHARE
The basic earnings per share calculation for the year ended 30 June 2017 is based on the weighted average number of shares 
in issue during the period of 361m (2016: 361m) excluding those held in trust under the Redrow Long Term Incentive Plan 
(9m shares (2016: 9m shares)), which are treated as cancelled.

Diluted earnings per share has been calculated after adjusting the weighted average number of shares in issue for all potentially 
dilutive shares held under unexercised options.

For the 12 months ended 30 June 2017

Basic earnings per share

Effect of share options and SAYE

Diluted earnings per share

For the 12 months ended 30 June 2016

Basic earnings per share

Effect of share options and SAYE

Diluted earnings per share

7. EMPLOYEES
a. Cost (including Directors)

Wages and salaries

Social security costs

Other pension costs

Share-based payments

b. Number
The monthly average number of persons employed by the Group was:

Earnings 
£m

Number  
of shares  
millions

Per share  

pence

253

–

253

361

2

363

70.2

(0.2)

70.0

Earnings 
£m

Number  
of shares 
millions

Per share  

pence

200

–

200

361

1

362

55.4

(0.2)

55.2

Group

Company

2017
£m

92

13

8

7

120

2016 
£m

77

11

7

5

100

2017
£m

2016 
£m

3

2

–

2

7

3

1

–

1

5

Group

Company

2017 
Number

2016 
Number

2017 
Number

2016 
Number

860

1,270

2,130

778

1,088

1,866

9

–

9

9

–

9

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The Board decided to propose a final dividend of 11.0p per share in respect of 2017 (£41m (2016: 6.0p, £22m)). The dividend has 
not been provided for and there are no income tax consequences.

Directors and administrative staff

Other personnel

FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
126 

7. EMPLOYEES CONTINUED
c. Key management remuneration
Key management personnel, as defined under IAS 24 ‘Related party disclosures’, are identified as the Executive Management 
Team and the Non-Executive Directors.

Summary key management remuneration is as follows:

Salaries and short-term employee benefits

Share-based payments

2017
£m

5

2

7

2016 
£m

4

2

6

In addition, the Redrow Staff Pension scheme paid £14,730 (2016: £14,541) to The Steve Morgan Foundation on behalf of Steve 
Morgan in his capacity as an active Scheme pensioner.

Detailed disclosure of Directors’ emoluments and interests in shares are included in the Directors’ Remuneration Report on 
pages 76 to 97, which form part of these financial statements.

d. Share-based payments

Save As You Earn Share Option scheme (SAYE)
The Redrow plc SAYE scheme is open to all employees and share options can be exercised either three or five years after the 
date of grant, depending on the length of the savings contract. The SAYE schemes are not subject to performance conditions.

The SAYE schemes have been valued using the Black-Scholes pricing model.

Options granted during the year

Date of grant

Fair value at measurement date

Share price

Exercise price

Option life (contract length)

Expected dividend yield

Risk free interest rate

2017

1,073,997

2016 

679,476

1 January 2017

1 January 2016

£1.51

£4.00

£3.20

£1.75

£4.63

£3.70

3/5 years

3/5 years

4.43%

1.5%

2.1%

1.5%

The expected volatility on SAYE schemes is based on the historic volatility of the Group’s share price over periods equal to 
the length of the savings contract.

Long Term Incentive scheme (LTIP)
Except in specified circumstances, options granted under the scheme are exercisable between three and ten years after the 
date of grant.

Options granted under the LTIP on 12 September 2016 were granted to a limited number of Senior Executives. The scheme is 
discussed in greater detail within the Directors’ Remuneration Report.

7. EMPLOYEES CONTINUED
d. Share-based payments continued
The LTIP has been valued using the Black-Scholes pricing model.

Options granted during the year

Date of grant

Fair value at the measurement date

Share price

Exercise price

Expected volatility

Option life

Expected dividend yield

Risk free interest rate

2017

334,953

2016

175,810

12 September 2016 14 September 2015

£3.56

£4.08

£0.00

N/A†

3 years

4.43%

N/A†

£4.65

£4.95

£0.00

N/A†

3 years

2.1%

N/A†

† 

For nil-cost awards not subject to a market based condition, volatility and risk free rate are not applicable.

The fair value at the measurement date of the LTIP granted on 12 September 2016 comprises £3.56 in respect of non-market 
based performance conditions.

The fair value at the measurement date of the LTIP granted on 14 September 2015 comprises £4.65 in respect of non-market 
based performance conditions.

Deferred Bonus Incentive (DBI)
Grants under the DBI were limited to Senior Management. Except in specified circumstances options granted under the scheme 
are exercisable between one and ten years after the date of grant for Tranche 1 and between two and ten years after the date of 
grant for Tranche 2 and are not subject to performance conditions.

The DBI has been valued using the Black-Scholes pricing model.

Options granted during the year

2017
Tranche 1

705,703

2017 
Tranche 2

705,845

2016
Tranche 1

471,023

2016 
Tranche 2

471,136

Date of grant

12 September 2016 12 September 2016 14 September 2015 14 September 2015

Fair value at the measurement date

Share price

Exercise price

Expected volatility

Option life

Expected dividend yield

Risk free interest rate

£3.94

£4.08

£0.00

N/A†

1 year

3.50%

N/A†

£3.77

£4.08

£0.00

N/A†

2 years

3.93%

N/A†

£4.87

£4.95

£0.00

N/A†

1 year

1.7%

N/A†

£4.75

£4.95

£0.00

N/A†

2 years

2.1%

N/A†

† 

For nil-cost awards not subject to a market based condition, volatility and risk free rate are not applicable.

Company Share Option Plan (CSOP)
Grants under the CSOP were limited to Senior Management. Except in specified circumstances, options granted to those other 
than the Executive Directors are exercisable between three and ten years after the date of grant and are not subject to 
performance conditions. 

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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
128 

7. EMPLOYEES CONTINUED
d. Share-based payments continued
Share options outstanding
The following share options were outstanding at 30 June 2017:

7. EMPLOYEES CONTINUED
d. Share-based payments continued
Movements in the year
The number and weighted average exercise prices of share options is as follows:

Type of scheme

Long Term Share Incentive 2011

Long Term Share Incentive 2012

Long Term Share Incentive 2013

Long Term Share Incentive 2014

Long Term Share Incentive 2015

Long Term Share Incentive 2016

Deferred Bonus Incentive 2012 – Tranche 1

Deferred Bonus Incentive 2012 – Tranche 2

Deferred Bonus Incentive 2013 – Tranche 1

Deferred Bonus Incentive 2013 – Tranche 2

Date of grant

Number  
of options 
2017

Number  
of options  

2016

Exercise 
 price

21 September 2011

–

23 October 2012

134,271

159,889

544,757

24 September 2013

90,947

368,842

8 September 2014

14 September 2015

377,194

175,810

12 September 2016

334,953

23 October 2012

23 October 2012

24 September 2013

24 September 2013

13,212

13,212

23,205

43,206

377,194

175,810

–

16,130

122,981

99,984

159,490

Deferred Bonus Incentive 2014 – Tranche 1

8 September 2014

103,850

278,849

Deferred Bonus Incentive 2014 – Tranche 2

8 September 2014

154,024

505,847

Deferred Bonus Incentive 2015 – Tranche 1

14 September 2015

157,181

428,506

Deferred Bonus Incentive 2015 – Tranche 2

14 September 2015

393,355

428,603

Deferred Bonus Incentive 2016 – Tranche 1

Deferred Bonus Incentive 2016 – Tranche 2

Company Share Option Plan

Save As You Earn

Save As You Earn

Save As You Earn

Save As You Earn

Save As You Earn

Save As You Earn

Save As You Earn

12 September 2016

652,818

12 September 2016

652,939

–

–

21 November 2008

77,935

95,920

1 January 2010

1 January 2011

1 January 2012

1 January 2014

–

21,514

49,175

154,711

1 January 2015

890,421

1,836

21,514

202,317

772,612

982,351

1 January 2016

445,196

638,482

1 January 2017

1,006,056

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

£1.25

£1.42

£0.98

£0.95

£1.98

£2.21

£3.70

£3.20

The total share options outstanding at 30 June 2017 under the LTIP, Deferred Bonus Incentive Plan, Company Share Option Plan 
and the Save As You Earn schemes represent 1.6% of the issued share capital (2016: 1.7%).

Long Term Share Incentive scheme:

Outstanding at the beginning of the year

Lapsed during the year

Exercised during the year

Granted during the year

Outstanding at the end of the year

Exercisable at the end of the year

Deferred Bonus Incentive scheme:

Outstanding at the beginning of the year

Lapsed during the year

Exercised during the year

Granted during the year

Outstanding at the end of the year

Exercisable at the end of the year

Company Share Option Plan:

Outstanding at the beginning of the year

Lapsed during the year

Exercised during the year

Outstanding at the end of the year

Exercisable at the end of the year

Save As You Earn scheme:

Outstanding at the beginning of the year

Lapsed during the year

Exercised during the year

Granted during the year

Outstanding at the end of the year

Exercisable at the end of the year

Number 
 of options 
2017

Weighted  
average 
 exercise price 
2017

Number 
 of options 
2016

Weighted  
average 
 exercise price 
 2016

1,626,492

–

(848,270) 

334,953

1,113,175

225,218

2,040,389

(155,045)

(1,089,890)

1,411,548

2,207,002

507,890

95,920

–

(17,985)

77,935

77,935

2,619,112

(357,184)

(768,852)

1,073,997

2,567,073

6,448

–

–

–

–

–

–

–

–

–

–

–

–

–

£1.25

–

£1.25

£1.25

£1.25

£2.39

£3.20

£1.78

£3.20

£2.81

£2.51

1,450,682

–

–

175,810

1,626,492

704,646

1,921,610

(61,617)

(761,763)

942,159

2,040,389

677,434

161,865

–

(65,945)

95,920

95,920

2,419,327

(274,917)

(204,774)

679,476

2,619,112

–

–

–

–

–

–

–

–

–

–

–

–

–

£1.25

–

£1.25

£1.25

£1.25

£1.91

£1.77

£1.10

£3.70

£2.39

–

The weighted average share price at the date of exercise of share options exercised during the year was £4.27 (2016: £4.40).

The options outstanding at 30 June 2017 had a range of exercise prices of £nil to £3.70 (2016: £nil to £3.70) and a weighted 
average remaining contractual life of 5.6 years (2016: 5.5 years).

The expected life used in the models has been adjusted, based on best estimates, to reflect exercise restrictions and 
behavioural considerations.

The charge to income in relation to equity settled share-based payments in the year is £7m (2016: charge £5m).

129

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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
130 

7. EMPLOYEES CONTINUED
e. Retirement benefit schemes
The Redrow Staff Pension Scheme (the ‘Scheme’) comprises two sections: a funded, self-administered, defined benefit section 
and a funded defined contribution section. The defined benefit section was closed to all new entrants from July 2006, having 
been closed to all but a limited number of agreed new entrants from October 2001. Both sections of the Scheme were closed to 
future accrual with effect from 1 March 2012.

The total pension charge for the year was £16m (2016: credit of £1m). A charge of £8m related to the defined benefit section of the 
Scheme (2016: credit of £8m), with £nil being charged to the income statement (2016: charge of £nil) and a charge of £8m to the 
statement of comprehensive income (2016: credit of £8m). The charge arising from the defined contribution section was £8m 
(2016: £7m).

Triennial valuation
A full independent triennial actuarial valuation of the defined benefit section of the Scheme was undertaken at 1 July 2014 using 
the Projected Unit Method. In the opinion of the Actuary, there was a deficit of £20m in the defined benefit section of the 
Scheme, based on the Trustees’ technical provisions assumptions with the Scheme’s assets representing 82% of the Scheme’s 
technical provisions. As at 1 July 2014 the value of the defined benefit section of the Scheme’s assets was £92m. The previous 
triennial valuation was undertaken as at 1 July 2011 and reported a deficit of £10m.

Defined benefit scheme – IAS 19R valuation
Redrow recognises all actuarial gains and losses for its defined benefit plan in the period in which they occur, outside the income 
statement, in the statement of comprehensive income.

This disclosure relates to the defined benefit section of the Scheme. The Scheme’s assets are held separately from the assets of 
Redrow and are administered by the trustees and managed professionally.

The latest formal actuarial valuation of the defined benefit section was carried out at 1 July 2014. This valuation has been updated  
to 30 June 2017 by a qualified actuary for the purposes of these financial statements.

The Group agreed a recovery plan for the 1 July 2014 actuarial valuation: it agreed to contribute £1.1m per annum to the Scheme 
from 1 July 2014 to 30 June 2020 and £1.5m per annum from 1 July 2020 to 30 June 2026. During the 2017 financial year, the 
Group agreed to increase its contributions to £3.0m per annum from 1 January 2018. As a result, the Group expects to contribute 
£2.1m to the Scheme in the year ending 30 June 2018. 

The major financial assumptions used in arriving at the IAS 19R valuation were:

Long-term rate of increase in pensionable salaries

Rate of increase of benefits in payment (lesser of 5% per annum and RPI)1

Rate of increase of benefits in payment (lesser of 2.5% per annum and RPI)2

Discount rate

Inflation assumption – RPI

 – CPI

2017

n/a

3.1%

2.2%

2.6%

3.2%

2.2%

2016

n/a

2.8%

2.0%

3.0%

2.8%

1.8%

1 

2 

In respect of pensions in excess of the guaranteed minimum pension earned prior to 30 June 2006.

 In respect of pensions in excess of the guaranteed minimum pension earned after 30 June 2006. Other pension increases are valued in a  
consistent manner.

The mortality tables used in the actuarial valuation were as follows (which make allowance for projected further improvements  
in mortality): 

7. EMPLOYEES CONTINUED
e. Retirement benefit schemes continued
The total assets, the split between the major asset classes in the Scheme, the present value of the Schemes’ liabilities and  
the amounts recognised in the balance sheet are shown below:

Group and Company

2017
£m

2017
£m

Quoted  
market price in 
active market

No quoted  
market price in 
active market

2016
£m

2016
£m

2017 
£m
Total

Quoted  
market price in 
active market

No quoted  
market price in 
active market

Equities

Debt instruments

Other

Cash

Insurance policies

Total market value of assets

Present value of obligations

(Deficit)/surplus in the Scheme

44

59

14

6

–

123

–

–

3

–

2

5

44

59

17

6

2

128

(130)

(2)

33

64

9

9

–

115

The defined benefit obligation can be approximately attributed to the scheme members as follows:

Deferred members

Pensioner members

All benefits are vested at 30 June 2017 (unchanged from 30 June 2016).

The total amounts (charged)/credited against income in the year were as follows:

2

–

3

–

2

7

2017
%

75

25

100

2016 
£m
Total

35

64

12

9

2

122

(116)

6

2016
%

73

27

100

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Amounts included within the income statement:

Administrative expenses

Scheme administration expenses

Net interest on defined benefit liability

Amounts recognised in the statement of comprehensive income:

Return on scheme assets excluding interest income

Actuarial gains arising from changes in demographic assumptions

Actuarial losses arising from changes in financial assumptions

Group and Company

2017 
£m

2016 
£m

–

–

–

8

3

(19)

–

(8)

(8)

–

–

–

18

1

(11)

–

8

8

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For male and female members: 

SAPS CMI_2016 1.25% Long Term Trend (2016: SAPS CMI_2015 1.25% Long Term Trend)

Actuarial gains arising from experience adjustments

The life expectancies implied by these tables for typical members are:

Pensioner currently aged 65:  
Future pensioner when aged 65: 

Male 22.1 years (2016: Male 22.2 years) 
Male 23.1 years (2016: Male 23.5 years) 

Female 24.0 years (2016: Female 24.2 years) 
Female 25.1 years (2016: Female 25.7 years)

It has been assumed that the majority of members will commute part of their pension in return for a tax free cash sum on retirement.

FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
132 

7. EMPLOYEES CONTINUED
e. Retirement benefit schemes continued
The amount included in the balance sheet arising from the (deficit)/surplus in respect of the Group’s defined benefit section is  
as follows:

7. EMPLOYEES CONTINUED
e. Retirement benefit schemes continued
Sensitivity of key assumptions
The table below gives a broad indication of the impact on the IAS 19R numbers to changes in assumptions and experience (away 
from the assumptions shown on page 130). All figures are before allowing for deferred tax.

Balance sheet (deficit)/surplus

At start of year

Amounts (charged)/credited against statement of comprehensive income

Employer contributions paid

At end of year

Changes in the present value of the defined benefit obligation:

At start of year

Interest expense

Benefit payments

Actuarial (gains) arising from changes in demographic assumptions

Actuarial losses arising from changes in financial assumptions

Actuarial gains arising from experience adjustments

At end of year

Changes in the fair value of the Scheme’s assets:

At start of year

Interest income

Return on scheme assets excluding interest income

Scheme administration expenses

Normal employer contributions

Benefit payments

At end of year

Group and Company

2017 
£m

2016 
£m

6

(8)

–

(2)

(3)

8

1

6

116

106

4

(6)

(3)

19

–

130

122

4

8

–

–

(6)

128

4

(4)

(1)

11

–

116

103

4

18

–

1

(4)

122

Item

Present value of defined benefit obligation (£m)

Discount rate -25 basis points

Discount rate +25 basis points

Price inflation rate -25 basis points

Price inflation rate +25 basis points

Post-retirement mortality assumption -1 year age adjustment

Weighted average duration of defined benefit obligation (in years)

Discount rate -25 basis points

Discount rate +25 basis points

8. INTANGIBLE ASSETS 

Group

Cost

At 1 July 2015

Additions

At 30 June 2016

Additions

At 30 June 2017

Accumulated amortisation

At 1 July 2015

Charge

At 30 June 2016

Charge

At 30 June 2017

Net book value

At 30 June 2017

At 30 June 2016

At 30 June 2015

Approximate impact 
2017 

Approximate impact
2016

137.7

123.2

123.4

137.5

134.3

22.40

22.11

123.1

110.2

110.3

122.9

119.7

22.39

21.89

Goodwill 
£m

Software 
£m

Total
 £m

1

–

1

–

1

–

–

–

–

–

1

1

1

2

–

2

–

2

1

–

1

–

1

1

1

1

3

–

3

–

3

1

–

1

–

1

2

2

2

133

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A
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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
134 

9. PROPERTY, PLANT AND EQUIPMENT
Group

Cost

At 1 July 2015

Additions

Disposals

At 30 June 2016

Additions

At 30 June 2017

Accumulated depreciation

At 1 July 2015

Charge

Disposals

At 30 June 2016

Charge

At 30 June 2017

Net book value

At 30 June 2017

At 30 June 2016

At 30 June 2015

10. INVESTMENTS
a. Investments

Joint ventures

Freehold  
property 
£m

Plant and  
machinery 
£m

Fixtures  

and fittings
 £m

Total 
£m

14

3

–

17

–

17

3

–

–

3

1

4

13

14

11

3

–

–

3

–

3

3

–

–

3

–

3

–

–

–

5

3

(1)

7

1

8

4

1

(1)

4

1

5

3

3

1

22

6

(1)

27

1

28

10

1

(1)

10

2

12

16

17

12

Group

Company

2017
£m

27

27

2016
£m

25

25

2017 
£m

–

–

2016 
£m

–

–

10. INVESTMENTS CONTINUED
b. Investments in joint ventures

Share of joint venture net assets:

Current assets

Current liabilities

Non-current liabilities

Net (liabilities)

Loans from Group companies(i)

Share of post-tax profits from joint ventures:

Revenue

Cost of sales

Gross profit

Administrative expenses

Operating profit

Finance costs

Profit before tax

Taxation

Group

Company

2017 
£m

2016 
£m

2017 
£m

2016 
£m

29

(7)

(22)

–

27

27

17

(15)

2

–

2

(1)

1

–

1

24

(6)

(19)

(1)

26

25

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(i) 

£27m of the loans to joint ventures are secured (2016: £26m).

The Group’s joint venture investments are:

•  its 50% shareholding in the ordinary share capital of Menta Redrow Limited and Menta Redrow (II) Limited, both companies 
incorporated in Great Britain with a 30 June year end. Menta Redrow Limited and Menta Redrow (II) Limited were formed to 
pursue redevelopment opportunities in Croydon.

c. Investments in subsidiary undertakings

At 1 July 2016 and 30 June 2017

Company 
£m

–

The principal subsidiary company is Redrow Homes Limited. All subsidiary companies are incorporated in Great Britain except 
Redrow Homes (Park Heights) Limited and Blue Capital (Jersey) Limited which are incorporated in Jersey. A full list of 
subsidiary undertakings as at 30 June 2017 is shown on page 136. The capital of all the subsidiary companies, consisting of 
ordinary shares, is wholly owned by HB (HDG) Limited which in turn is wholly and directly owned by Redrow plc.

All the subsidiaries registered office is Redrow House, St David’s Park, Flintshire, CH5 3RX apart from those marked (i), (ii) and 
(iii) whose registered offices are as follows:

(i) 

c/o TLT LLP, 140 West George Street, Glasgow, G2 2HG

(ii) 

13 Castle Street, St. Helier, Jersey, JE4 5UT

(iii)  44 Esplanade, St. Helier, Jersey, JE4 9WG

135

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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
136 

10. INVESTMENTS CONTINUED
c. Investments in subsidiary undertakings continued
Subsidiaries

Name

HB (HDG) Limited

Redrow Homes Limited

Harrow Estates plc

Redrow Real Estate Limited

Redrow Regeneration plc

Redmira Limited

HB (NW) Limited

HB (LCS) Limited (i)

HB (MID) Limited

HB (SW) Limited

HB (SWA) Limited

HB (Y) Limited

HB (ESTN) Limited

HB (WM) Limited

HB (SM) Limited

HB (SN) Limited

HB (WC) Limited

HB (WX) Limited

HB (EM) Limited

HB (CD) Limited

HB (GRPS) Limited

HB (CPTS) Limited

HB (SE) Limited

HB (CSCT) Limited (i)

HB (SC) Limited (i)

HB (1995) Limited (i)

Company 
Number

Name

1990709

Redrow Homes (London) Limited

1990710

St David’s Park Limited

6825371

PB0311 Limited

3996541

Debut Freeholds Limited

5405272

Tay Homes (Western) Limited

7587765

Tay Homes (Northern) Limited

1189328

Tay Homes (Midlands) Limited

SC38052

Tay Homes (North West) Limited

2469449

3522335

Redrow Homes (Park Heights) Limited (ii)

Blue Capital (Jersey) Limited (iii)

2230870

Redrow Construction Limited

2293006

Poche Interior Design Limited

4017345

Redrow (Shareplan) Limited

3379746

Imagelines Limited

3522321

Cadmoore Limited

537405

Redrow (Sudbury) Limited

4984069

The Waterford Park Company Limited

1940936

The Waterford Park Company (Balmoral) Limited

2827161

HB (Herne Bay No 1) Limited

2034733

HB (Herne Bay No 2) Limited

2898913

Redrow Homes East Midlands Limited

1079513

Radleigh Construction Limited

3988594

Radleigh Homes Limited

SC231364

Radbourne Edge (Holdings) Limited

SC74732

Redrow Langley Limited

SC155021

Radleigh (Hackwood) Limited

Company 
Number

7472674

2479183

7577839

4638403

2806562

2708575

2183136

2189721

66240

110509

1375826

2169473

3520984

3520986

3977222

4558070

5429823

6047122

7743649

9163243

4219459

4219460

4210633

8737345

7306461

8131049

Redrow Homes (Wallyford) Limited (i)

SC205159

11. DEFERRED TAX ASSETS AND LIABILITIES
The following are the deferred tax assets and liabilities recognised by the Group and the movements thereon during the current 
and prior year:

Employee  
benefits 
 £m

Imputed  
interest  
£m

Share-based  
payment 
 £m

Short-term  
temporary  
differences 
 £m

Losses  
carried 
 forward 
 £m

Total  
£m

Deferred tax assets

At 1 July 2015

Credit to income

Charge to equity

At 30 June 2016

Credit to income

Charge to equity

At 30 June 2017

1

–

(1)

–

–

–

–

3

–

–

3

–

–

3

–

–

–

–

–

–

–

1

1

–

2

–

–

2

–

–

–

–

–

–

–

5

1

(1)

5

–

–

5

137

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11. DEFERRED TAX ASSETS AND LIABILITIES CONTINUED

Deferred tax liabilities

At 1 July 2015

Credit to income

Charge to equity

At 30 June 2016

Arising on acquisition

Credit to equity

At 30 June 2017

Employee  
benefits  
£m

Imputed 
 interest  
£m

Share- based  
payment  
£m

Short-term  
temporary 
 differences  
£m

Losses 
 carried  
forward 
 £m

 Total  
£m

–

–

(1)  

(1)

–  

1

–

–

–

–

–

–

–

–

–

–

–

–

–

–

–

(1)

–

–

(1)

(2)

–

(3)

–

–

–

–

–

–

–

(1)

–

(1)

(2)

(2)

1

(3)

The Group has no material unrecognised deferred tax assets. The deferred tax balances in the Company relate to a deferred tax 
asset arising on retirement benefit obligations of £3m (2016: £2m).

A Corporation Tax rate of 20% from 1 April 2016 was substantively enacted on 2 July 2013. Changes to reduce the Corporation 
Tax rate to 19% from 1 April 2017 and to 18% from 1 April 2020 were substantively enacted on 26 October 2015. A further change 
to reduce the rate to 17% from 1 April 2020 was substantively enacted on 6 September 2016. Deferred tax balances have been 
valued at 19%. The overall effect of these changes, if they had applied to the deferred tax balance at the balance sheet date, 
would not be significant to the Group.

12. TRADE AND OTHER RECEIVABLES

Non-current assets

Trade receivables (net) 

Current assets

Trade receivables (net)

Amounts due from subsidiary companies

Other receivables

Prepayments and accrued income

Group

Company

2017
£m

2016 
£m

2017
£m

2016 
£m

11

11

10

–

21

4

35

12

12

11

–

21

4

36

–

–

–

945

–

–

945

–

–

–

918

–

–

918

Trade receivables due after more than one year are stated after an allowance of £8m has been made (2016: £9m) in respect of 
estimated irrecoverable amounts. This allowance is based on an estimate of default rates. £nil provision was made during the year 
(2016: £nil). £1m was utilised (2016: £1m). £nil provision was released during the year (2016: £3m). It is not considered that a material 
amount of current asset trade receivables are overdue for payment.

Trade and other receivables due between one and two years are £1m (2016: £nil), between two and five years are £8m (2016: 
£9m) and due in more than five years are £2m (2016: £3m). The Group holds a charge over the underlying assets. At the balance 
sheet date, there is no material difference between the fair value of trade and other receivables and their carrying values as 
shown in the balance sheet.

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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
138 

13. INVENTORIES

Land for development

Work in progress

Stock of showhomes

Payments on account

Group

Company

2017
£m

1,339

723

57

2,119

(76)

2,043

Restated 
2016 
£m

1,282

600

54

1,936

(33)

1,903

2017
£m

2016 
£m

–

–

–

–

–

–

–

–

–

–

–

–

Inventories of £1,193m net of £11m net realisable value provision utilisation, were expensed in the year (2016: £992m net of £9m 
net realisable value provision utilisation). Work in progress includes £2m (2016: £3m) in respect of part exchange properties. Land 
held for development in the sum of £168m is subject to a legal charge as security in respect of deferred consideration 
(2016: £232m).

Payments on account comprises £27m (2016: £20m) attributable to land and £49m (2016: £13m) attributable to work in progress.

The carrying value of undeveloped land where net realisable value has been determined on the basis of a sale of land in its 
current state is £nil (2016: £nil). Of the net realisable value provision of £8m (2016: £19m), £nil (2016: £9m) is attributed to land  
and £8m (2016: £10m) is attributed to work in progress.

As discussed in note 1, the Group considers the carrying value of inventories to be a critical accounting judgement.

Details of the restatement in respect of the change in Forward land accounting policy can be found in Accounting Polices on  
page 118.

The net realisable value provision movement is analysed below:

As at 1 July 2016

Utilised during the year

Created during the year

Released during the year

As at 30 June 2017

Total 
£m

19

(11)

1

(1)

8

The net realisable value provision relates to land with residential planning consent.

The net realisable value provisions of £1m and £1m created and released in the year are the result of our review at the balance 
sheet date in the context of prevailing market conditions and the re-assessment of selling prices and costs. They represent the 
creation of additional provisions against sites acquired pre June 2009 and the reduction of provisions already in place against 
such sites as required.

14. FINANCIAL RISK MANAGEMENT
The Group’s financial instruments comprise cash and cash equivalents, bank loans and overdrafts, derivative financial 
instruments and various items included within trade receivables and trade payables which arise during the normal course  
of business.

The tables below provide a summary of financial assets and liabilities by category.

The accounting policies for financial instruments have been applied to the following items: 

14. FINANCIAL RISK MANAGEMENT CONTINUED
The Group

Assets per the balance sheet

Non-current trade and other receivables

Current trade and other receivables

Cash and cash equivalents

Liabilities per the balance sheet

Bank loans and overdrafts

Trade payables and other payables including customer deposits

Land creditors

Other financial liabilities are at amortised cost.

The Company

Assets per the balance sheet

Cash and cash equivalents

Amounts due from subsidiary companies

Liabilities per the balance sheet

Bank loans and overdrafts

Amounts owed to subsidiary companies

2017
Loans and  
receivables 
£m

2016 
Loans and  
receivables
 £m

11

31

62

104

12

32

135

179

2017 
Other  
financial  
liabilities 
£m

2016 
Other 
 financial  
liabilities 
£m

135

359

351

845

274

356

378

1,008

2017
 Loans and 
receivables
 £m

2016 
Loans and 
receivables
 £m

61

945

1,006

134

918

1,052

2017 
Other 
financial 
liabilities 
£m

2016
 Other 
financial 
liabilities 
£m

173

14

187

230

14

244

The Group’s activities expose it to a variety of financial risks.

Financial risk management is conducted centrally using policies approved by the Board. Market risk is negligible due to the 
Group’s limited exposure to equity securities (some limited exposure arises through the Redrow Staff Pension Scheme’s 
investment portfolio) and the associated price risk. Its foreign exchange exposure is negligible given the nature of the Group’s 
business and its exclusive UK activities.

139

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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
140 

14. FINANCIAL RISK MANAGEMENT CONTINUED
a. Liquidity risk and interest rate risk
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations as they fall due. Liquidity 
risks are managed through the regular review of cash forecasts and by maintaining adequate committed banking facilities to ensure 
appropriate headroom.

At 30 June 2017, the Group had total unsecured bank borrowing facilities of £368m, representing £365m committed facilities 
and £3m uncommitted facilities.

The Group’s cash surpluses arise from short-term timing differences. As a consequence the Group does not consider it bears 
significant risk of changes to income and cash flows as a result of movements on interest rates on its interest bearing assets.

The Group is exposed to interest rate risk as it borrows money at floating rates. The Group’s interest rate risk arises primarily from 
long-term borrowings. In order to manage its interest rate risk, the Group from time to time enters into simple risk management 
products, almost exclusively interest rate swaps. All interest rate swaps are sterling denominated. The swaps are arranged so as 
to match with those of the underlying borrowings to which they relate. There was no ineffectiveness to be recorded in respect of 
these cash flow hedges in 2017 or 2016.

The following table shows the profile of interest bearing debt together with its effective interest rates, after taking account of 
interest rate swaps as at the balance sheet date and the periods in which they will reprice:

Effective 
interest 
rate
%

2.0

2.3

2017

Zero  
to one 
year 
£m

45

–

45

Total
 £m

45

90

135

One 
 to two 
years
 £m

Two  
to five 
years 
£m

 Effective 
interest 
rate 
%

–

–

–

–

90

90

2.0

2.3

2016

Zero  
to one 
year
 £m

44

–

44

Total 
£m

44

230

274

One  
to two  
years
 £m

–

–

–

Two 
 to five 
years
 £m

–

230

230

Bank overdraft

Bank loans –  
floating rate

The notional principal amounts in respect of the interest rate swaps together with their maturities are given in the table below:

2017

2016

Balance at  
30 June 
£m

–

–

Zero  
to one  
year 
£m

–

–

One  
to two  
years 
£m

–

–

For the year ended 30 June 2017, it is estimated that for any incremental general increase of 1% in interest rates applying for the 
full year the decrease in the Group’s profit before tax would be £1m (2016: £3m).

b. Maturity of bank loans and borrowings
The maturity of bank loans and borrowings is as below:

The Group

Due within one year

Due between one and two years

Due between two and five years

2017

2016

Bank  
overdraft
 £m

Bank  
loans
 £m

Bank  
overdraft
 £m

45

–

–

45

–

–

95

95

44

–

–

44

Bank  
loans
 £m

–

–

247

247

Maturities above include estimated interest payable to the maturity of the facilities.

14. FINANCIAL RISK MANAGEMENT CONTINUED
b. Maturity of bank loans and borrowings continued
The Company

Due within one year

Due between one and two years

Due between two and five years

2017

2016

Bank  
overdraft 
£m

Bank  
loans 
£m

Bank  
overdraft 
£m

83

–

–

83

–

–

95

95

–

–

–

–

Bank  
loans 
£m

–

–

247

247

Maturities above include estimated interest payable to the maturity of the facilities.

The Company was fully compliant with its banking covenants as at 30 June 2017.

At the year end, the Group and Company had £275m (2016: £135m) of undrawn committed bank facilities available.

There is no material difference between the fair value of the bank overdrafts and bank loans and their carrying values as shown in 
the balance sheet.

c. Amounts due in respect of development land
The Group’s policy permits land purchases to be made on deferred payment terms. In accordance with IAS 39, the deferred 
creditor is recorded at fair value and nominal value is amortised over the deferment period via financing costs, increasing the 
land creditor to its full cash settlement value on the payment date.

The interest rate used for each deferred payment is an equivalent loan rate available on the date of land purchase, as applicable 
to a loan lasting for a comparable period of time to that deferment.

The maturity profile of the total contracted cash payments in respect of amounts due in respect of land creditors at the 
balance sheet date is as follows:

Balance  
at 30 June 
£m

351

378

Total  
contracted  
cash  
payment 
£m

359

386

Due  
less than  
one year 
£m

154

222

Due 
 between  
one and 
 two years 
£m 

Due  
between  
two and  
five years 
£m

103

83

102

81

2017

2016

d. Maturity of trade and other payables
These represent current liabilities due within one year.

141

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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
142 

14. FINANCIAL RISK MANAGEMENT CONTINUED
e. Credit risk
Credit risk arises from cash and cash equivalents, including call deposits with banks and financial institutions, derivative  
financial instruments and trade receivables. It represents the risk of financial loss where counterparties are unable to meet  
their obligations.

Credit risk is managed centrally in respect of cash and cash equivalents and derivative financial instruments. In respect of 
placing deposits with banks and financial institutions and funds, individual risk limits are approved by the Board. The table below 
shows the cash and cash equivalents as at the balance sheet date:

Held at Banks with at least an A- credit rating per Standard & Poor

Group

Company

2017
£m

62

62

2016
£m

135

135

2017 
£m

61

61

2016 
£m

134

134

No credit limits were exceeded during the reporting year or subsequently and the Group does not anticipate any losses from 
non-performance by these counterparties.

There is no specific concentration of credit risk in respect of home sales as the exposure is spread over a number of customers. 
In respect of trade receivables, the amounts presented in the balance sheet are stated after adjusting for any doubtful 
receivables, based on the judgement of the Group’s management through using both previous experience and knowledge of the 
current position of any more substantial receivables.

f. Capital management
The Group defines total capital as equity plus net debt where net debt is calculated as total borrowings less cash and cash 
equivalents.

The Group monitors capital on the basis of the level of returns achieved on its capital base and, with respect to its financing 
structure, the gearing ratio. This is defined as net debt divided by equity.

The Group’s objective in managing capital is to safeguard its ability to continue as a going concern in order to deliver value to its 
Shareholders and other stakeholders. The Group operates within policies outlined by the Board in order to maintain an 
appropriate funding structure. The Board keeps the Group’s capital structure under review.

The total capital levels and gearing ratios as at 30 June 2017 and 30 June 2016 are as follows:

15. TRADE AND OTHER PAYABLES

Non-current liabilities

Amounts due in respect of development land 

Current liabilities

Trade payables

Amounts due in respect of development land

Customer deposits

Amounts owed to subsidiary companies

Other payables

Other taxation and social security

Accruals and deferred income

16. LONG-TERM PROVISIONS
The Group

At 1 July 2016

Provisions created during the year

Provisions released during the year

Provisions utilised during the year

At 30 June 2017

Group

Company

2017
 £m

197

197

289

154

64

–

6

3

69

585

2016
 £m

2017
 £m

2016
 £m

156

156

286

222

65

–

5

3

50

631

–

–

–

–

–

14

–

–

13

27

–

–

–

–

–

14

–

–

11

25

Onerous  
contracts 
£m

Other
 £m

Total 
£m

2

–

–

–

2

5

2

–

(1)

6

7

2

–

(1)

8

Provisions relate to onerous contracts (in place at June 2009 and viewed as onerous) and maintenance and sundry remedial 
costs in respect of development activities, which it is assessed will be utilised within four years.

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Total borrowings

Less cash and cash equivalents

Net debt

Equity

Total capital

Gearing ratio

2017
 £m

135

(62)

73

1,235

1,308

6%

2016
 £m

274

(135)

139

1,041

1,180

13%

17. SHARE CAPITAL

Authorised

480,000,000 ordinary shares of 10p each (2016: 480,000,000) 

Issued and fully paid

g. Fair values
At 30 June 2017 there is no material difference between the fair value of financial instruments and their carrying values in the 
balance sheet.

As at 1 July 2016 and 30 June 2017

2017 
£m

2016 
£m

48

37

48

37

Number of ordinary 
shares of 10p each

369,799,938

Options granted to Directors and employees under the LTIP, the CSOP and the SAYE schemes are set out in note 7d.

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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
144 

18. SHARE CAPITAL, SHARE PREMIUM ACCOUNT AND RESERVES
The Group

19. MOVEMENT IN NET (DEBT)/CASH
The Group

At 1 July 2015

Total comprehensive income

Dividends paid

Movement in respect of LTIP/SAYE

At 30 June 2016

Total comprehensive income

Dividends paid

Movement in respect of LTIP/SAYE

At 30 June 2017

Share  
capital
 £m

Share  
premium 
account
 £m

 Other  
reserves 
£m

 Retained 
 earnings
 £m

37

–

–

–

37

–

–

–

37

59

–

–

–

59

–

–

–

59

8

–

–

–

8

–

–

–

8

769

206

(30)

(8)

937

246

(44)

(8)

1,131

Other reserves
Other reserves consists of a £7m Capital redemption reserve (2016: £7m) and a £1m Consolidation reserve (2016: £1m).

Undistributable reserves
Other reserves are not available for distribution.

The Company

At 1 July 2015

Total comprehensive income†

Dividends paid

At 30 June 2016

Total comprehensive income†

Dividends paid

At 30 June 2017

† Includes dividends received from subsidiary companies.

Other reserves
Other reserves consists of a £7m Capital redemption reserve (2016: £7m).

Undistributable reserves
Other reserves are not available for distribution.

Share  
capital 
£m

Share 
 premium  
account
 £m

Other 
 reserves 
£m

Retained 
 earnings
£m

37

–

–

37

–

–

37

59

–

–

59

–

–

59

7

–

–

7

–

–

7

524

207

(30)

701

44

(44)

701

Cash and cash equivalents

Bank overdrafts

Net cash and cash equivalents

Bank loans

Net debt

The Company

Cash and cash equivalents

Bank overdrafts

Net cash and cash equivalents

Bank loans

Net debt

20. OPERATING LEASE COMMITMENTS

Within one year 

Within two to five years 

Later than five years

At
 1 July 2016 
£m

 Cash flow 
£m

At 
30 June 2017
 £m

135

(44)

91

(230)

(139)

(73)

(1)

(74)

140

66

62

(45)

17

(90)

(73)

At
 1 July 2016 
£m

 Cash flow 
£m

At 
30 June 2017
 £m

134

–

134

(230)

(96)

(73)

(83)

(156)

140

(16)

2017
 £m

3

5

1

61

(83)

(22)

(90)

(112)

2016 
£m

3

4

2

21. CONTINGENT LIABILITIES
The Company has guaranteed the bank borrowings of its subsidiaries. Performance bonds, financial guarantees in respect of 
certain deferred land creditors and other building or performance guarantees have been entered into in the normal course of 
business. Management estimate that the bonds and guarantees amount to £99m (2016: £84m) at the year end and consider the 
possibility of a cash outflow in settlement to be remote.

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FINANCIAL STATEMENTSNotes to the Financial Statements continuedRedrow plc Annual Report 2017 
 
 
 
146 

FINANCIAL STATEMENTS
Notes to the Financial Statements continued

FINANCIAL STATEMENTS
Glossary

22. RELATED PARTY TRANSACTIONS
Within the definition of IAS 24 ‘Related party disclosures’, the Board and key management personnel are related parties. Detailed 
disclosure of the remuneration of the Board is given in the Directors’ Remuneration Report on pages 76 to 97. A summary of 
remuneration provided to key management personnel is provided in note 7c.

In addition, related party transactions were carried out with parties related to Steve Morgan during the year totalling £0.8m 
(Company £0.8m), primarily relating to the donation to The Steve Morgan Foundation as described in the Directors’ Remuneration 
Report on page 88 and services provided by Harrow Estates plc on an arm’s length basis under promotional agreements forming 
part of the acquisition of the Harrow business.

As at 30 June 2017, an amount of £nil was due to Harrow Estates plc under normal trading terms.

There have been no other material transactions with key management personnel. There is no other difference between 
transactions with key management personnel of the Company and the Group.

The Company funds the operating companies through both equity investment and loans at commercial rates of interest. In 
addition, the Company provides its subsidiaries with the services of Senior Management, for which a recharge is made to those 
subsidiary companies based upon utilisation of services.

The amount outstanding from subsidiary undertakings at 30 June 2017 was £945m (2016: £918m). The amount owed to 
subsidiary undertakings at 30 June 2017 was £14m (2016: £14m).

The Company provided the Group’s defined benefit pension scheme, as detailed in note 7e. Expected service costs were 
charged to the operating businesses at cost. There is no contractual arrangement or stated policy relating to the charge. 
Experience and actuarial gains are recognised in the Company, via the statement of comprehensive income.

The Group did not undertake any transactions with Menta Redrow Limited and Menta Redrow (II) Limited joint ventures. The 
Group’s loans to its joint ventures are disclosed in note 10.

DPS
Dividend Per Share

Forward Land
Land which is owned or controlled by Redrow, 
generally under option, which is being promoted  
through the planning system in order to ultimately  
achieve a residential planning consent

HBF
Home Builders Federation

NHBC
National House Building Council 

PRS
Private Rented Sector

SDLT

Stamp Duty Land Tax

HOW KEY PERFORMANCE  
INDICATOR MEASURES ARE CALCULATED:
Land bank years
No. of plots in owned land bank at 30 June divided by  
no. of legal completions in financial year

Sales outlets 
No. of sales outlets open at 30 June

Private reservation rate
No. of private reservations per week in financial  
year divided by average no. of sales outlets

Revenue
Revenue per consolidated income statement

Number of trainees
No. of trainees at 30 June

HBF customer satisfaction rating
Independent HBF customer satisfaction rating score

Accident incident rate by site
No. of notifiable accidents in financial year divided by  
average no. of sites

Return on capital employed (ROCE)
Operating profit before exceptional items adjusted for joint  
ventures as a percentage of opening and closing capital 
employed

Return on equity (ROE)
Profit before tax before exceptional items adjusted for joint  
ventures as a percentage of opening and closing net assets

Earnings per share (EPS)
Profit attributable to ordinary equity shareholders (excluding  
exceptional items and deferred tax rate changes) divided by  
the weighted average no. of ordinary shares in issue during  
the financial year

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Redrow plc Annual Report 2017 
 
 
 
148 

SHAREHOLDER INFORMATION
Corporate and Shareholder Information

SHAREHOLDER DISCOUNTS
The Company offers a discount of 1% to Shareholders off the 
purchase price of a new Redrow home. In order to qualify  
for the discount a purchaser must hold a minimum of 2,500 
ordinary shares in Redrow plc for a minimum of 12 months  
prior to the date of reservation, subject to a cap of £5,000.

GROUP CONTACTS 
Officers and advisers

Company Secretary 
Graham Cope

Details of our current developments are available on our 
website: www.redrow.co.uk 

Registered Office
Redrow House 
St. David’s Park 
Flintshire 
CH5 3RX 
Registered Number 2877315

Registrars
Computershare Investor Services PLC 
The Pavilions 
Bridgwater Road 
Bristol 
BS99 6ZZ

Stockbrokers
Barclays 
5 The North Colonnade 
Canary Wharf 
London  
E14 4BB

Peel Hunt  
Moor House 
120 London Wall 
London 
EC2Y 5ET

Independent Auditors
PricewaterhouseCoopers LLP 
Chartered Accountants and Statutory Auditors 
101 Barbirolli Square 
Lower Mosley Street 
Manchester 
M2 3PW

Solicitors
Slaughter and May 
One Bunhill Row 
London  
EC1Y 8YY

Financial Public Relations Consultants
Instinctif Partners
65 Gresham Street
London
EC2V 7NQ

SHAREHOLDER INFORMATION
Five Year Summary
12 months ended 30 June

Revenue

Operating profit before exceptional items

Operating profit before exceptional items  
as a percentage of turnover

Profit before tax

Net assets

Net debt

2013*  
£m

605

73

12.1%

69

609

(91)

2014 
£m

864

138

2015 
£m

1,150

213

2016†  
£m

1,382

261

15.9%

18.5%

18.9%

133

696

(172)

204

873†

(154)

250

1,041

(139)

Gearing – net debt as a percentage of capital and reserves

14.9%

24.8%

17.6%†

13.3%

Return on capital employed – operating profit before 
exceptional items adjusted for joint ventures as a 
percentage of opening and closing capital employed

Return on equity

Number of legal completions

Earnings per ordinary share

Dividends paid per ordinary share

Net assets per ordinary share

* Restated to reflect the application of IAS 19R – Employee Benefits.

† Restated to reflect change in accounting policy.

12.2%

12.3%

2,827

14.6p

–

165.0p

18.0%

20.5%

3,597

28.3p

2.0p

188.1p

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2017  
£m

1,660

322

19.4%

315

1,235

(73)

5.9%

26.0%

27.7%

5,319

70.2p

12.0p

22.8%

26.4%

4,022

44.5p

4.0p

23.7%

26.1%

4,716

55.4p

8.0p

236.1p†

281.5p

334.0p

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Redrow plc Annual Report 2017 
 
 
 
Redrow plc
Redrow House, St. David’s Park, Flintshire CH5 3RX
Tel: 01244 520044 Fax: 01244 520720
Email: groupservices@redrow.co.uk

2017
ANNUAL REPORT

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