Fees payable to the Company’s Auditors comprise:

(i) fees payable for the audit of parent company and consolidated financial statements £30,000 (2017: £30,000) and fees payable for the audit of the Company’s subsidiaries pursuant to legislation £157,000 (2017: £146,000).

(ii) Auditors’ remuneration for other services comprised £20,000 (2017: £20,000) in respect of an independent review of the half-yearly financial statements (Audit related assurance services), £nil (2017: £10,000) in respect of Radleigh audit file review (Non-audit services), £nil (2017: £408,000) in respect of Reporting Accountant services (Non-audit services) and £9,100 (2017: £8,000) in respect of iXBRL tagging (Taxation compliance services).

Current income tax payable in the Company is £nil (2017: payable £3m).

Information on the impact of future tax rate changes is included in note 11.

The Board decided to propose a final dividend of 19.0p per share in respect of 2018 (£70m (2017: 11.0p, £41m)). The dividend has not been provided for and there are no income tax consequences.

b. Number

The monthly average number of persons employed by the Group was:

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:

In addition, the Redrow Staff Pension scheme paid £15,246 (2017: £14,730) 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 80 to 95, 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.

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 15 November 2017 were granted to a limited number of Senior Executives. The scheme is discussed in greater detail within the Directors’ Remuneration Report.

The LTIP has been valued using the Black-Scholes pricing model.

* 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 15 November 2017 comprises £5.20 in respect of non-market based performance conditions.

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.

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.

* For nil-cost awards not subject to a market based condition, volatility and risk free rate are not applicable.

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.

Share options outstanding

The following share options were outstanding at 30 June 2018:

The total share options outstanding at 30 June 2018 under the LTIP, Deferred Bonus Incentive Plan, Company Share Option Plan and the Save As You Earn schemes represent 1.4% of the issued share capital (2017: 1.6%).

Movements in the year

The number and weighted average exercise prices of share options is as follows:

The weighted average share price at the date of exercise of share options exercised during the year was £6.21 (2017: £4.27).

The options outstanding at 30 June 2018 had a range of exercise prices of £nil to £4.90 (2017: £nil to £3.70) and a weighted average remaining contractual life of 5.5 years (2017: 5.6 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 £9m (2017: charge £7m).

1 In respect of pensions in excess of the guaranteed minimum pension earned prior to 30 June 2006.

2 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):

For male and female members:    SAPS CMI_2017 1.25% Long Term Trend (2017: SAPS CMI_2016 1.25% Long Term Trend)

The life expectancies implied by these tables for typical members are:

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.

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:

The defined benefit obligation can be approximately attributed to the scheme members as follows:

All benefits are vested at 30 June 2018 (unchanged from 30 June 2017).

The total amounts credited/(charged) against income in the year were as follows:

The amount included in the balance sheet arising from the (deficit)/surplus in respect of the Group’s defined benefit section is as follows:

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 126). All figures are before allowing for deferred tax.

b. Investments in joint ventures

(i) £4m of the loans to joint ventures are secured (2017: £27m). 

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

The principal subsidiary company is Redrow Homes Limited. All subsidiary companies are incorporated in Great Britain except Redrow Homes (Park Heights) Limited which is incorporated in Jersey. A full list of subsidiary undertakings as at 30 June 2018 is shown on page 132. 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) and (ii) 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

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 £nil (2017: £3m).

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.

Trade receivables due after more than one year are stated after an allowance of £7m has been made (2017: £8m) in respect of estimated irrecoverable amounts. This allowance is based on an estimate of default rates. £nil provision was made during the year (2017: £nil). £1m was utilised (2017: £1m). £nil provision was released during the year (2017: £nil). 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 £2m (2017: £1m), between two and five years are £6m (2017: £8m) and due in more than five years are £nil (2017: £2m). 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.

Amounts due from subsidiary companies are unsecured, repayable on demand and carry interest at a notional rate.

Inventories of £1,375m were expensed in the year (2017: £1,193m). Work in progress includes £2m (2017: £2m) in respect of part exchange properties. Land held for development in the sum of £229m is subject to a legal charge as security in respect of deferred consideration (2017: £168m).

Payments on account comprises £4m (2017: £27m) attributable to land and £69m (2017: £49m) 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 (2017: £nil). Of the net realisable value provision of £nil (2017: £8m), £nil (2017: £nil) is attributed to land and £nil (2017: £8m) 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.

Other financial liabilities are at amortised cost.

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.

The notional principal amounts in respect of the interest rate swaps together with their maturities are given in the table below:

For the year ended 30 June 2018, 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 (2017: £1m).

Maturities above include estimated interest payable to the maturity of the facilities.

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 2018.

At the year end, the Group and Company had £245m (2017: £275m) 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.

d. Maturity of trade and other payables

These represent current liabilities due within one year.

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:

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.

g. Fair values

At 30 June 2018 there is no material difference between the fair value of financial instruments and their carrying values in the balance sheet.

Amounts due to subsidiary companies are unsecured, repayable on demand and bear interest at a notional rate.

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.

Options granted to Directors and employees under the LTIP, the CSOP and the SAYE schemes are set out in note 7d.

Other reserves

Other reserves consists of a £7m Capital redemption reserve (2017: £7m) and a £1m Consolidation reserve (2017: £1m).

Undistributable reserves

Other reserves are not available for distribution.

* Includes dividends received from subsidiary companies.

Other reserves

Other reserves consists of a £7m Capital redemption reserve (2017: £7m).

Undistributable reserves

Other reserves are not available for distribution.