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 2019 and of the position of the Company at the end of the financial year together with the financial statements, Auditors' Report and a description of the principal risks and uncertainties which the Company faces. The Strategic Report can be found on pages 1 to 37 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 38 to 86.

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 Annual General Meeting 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.

The Directors have pleasure in presenting to the shareholders their report and audited consolidated financial statements for the 12 months ended 30 June 2019.

Results, Dividends and Return of Cash

The Group made a profit after tax of £329m (2018: £308m). An interim dividend of 10.0p (2018: 9.0p) net per share was paid on 9 April 2019. In addition to the interim dividend, the Company returned 30p net per share on 16 April 2019 via a B Share Scheme.

The Board proposes to pay on 13 November 2019, subject to shareholder approval at the 2019 Annual General Meeting, a final dividend of 20.5p (2018: Final Dividend: 19.0p) net per share in respect of the year ended 30 June 2019 to shareholders on the Register as at the close of business on 20 September 2019. The Company’s dividend re-investment plan gives shareholders the opportunity to re-invest their dividends.

Annual General Meeting

Notice of the 2019 Annual General Meeting to be held on Wednesday, 6 November 2019 will be sent to shareholders separately. Members wishing to vote, but who cannot attend the meeting, 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.

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 38 to 86.

Directors

The Directors of the Company during the year to the date of this report, along with their meeting attendance, are listed on page 46. The current Directors are listed on pages 40 to 41 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 60 to 79.

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 John Tutte and Barbara Richmond, who stand for reappointment as Executive Directors, Matthew Pratt who stands for appointment as an Executive Director and Nick Hewson, Sir Michael Lyons and Vanda Murray who stand for reappointment 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 for John Tutte and Barbara Richmond and 6 months’ notice given by the Company for Matthew Pratt.

In accordance with the UK Corporate Governance Code, all of the Directors, will retire at the Annual General Meeting to be held on Wednesday, 6 November 2019 and, being eligible, offer themselves for re-appointment.

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 applicable English 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 issued share capital of 352,190,420 ordinary shares of 10.5 pence each. 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.

In March 2019, a Circular was published providing details of the return of capital to shareholders by way of a B Share Scheme. On 27 March 2019, at a General Meeting of the Company shareholders approved a return of capital of 30 pence per share, accompanied by a share capital consolidation whereby shareholders received 20 new ordinary shares of 10.5 pence each for every 21 existing ordinary shares of 10 pence held at 6pm on 5 April 2019.

In order to ensure that a whole number of new ordinary shares was created following the implementation of the share consolidation, 3 existing ordinary shares were issued by the Company to the Employee Benefit Trust on 29 March 2019. The total number of shares in issue at 6pm on 5 April 2019 was 369,799,941 ordinary shares of 10 pence each. Following the consolidation, the total number of shares in issue at the opening of markets on 8 April 2019 was 352,190,420 ordinary shares of 10.5 pence each.

369,799,941 newly created B shares of 0.1 pence each were allotted and issued on 8 April 2019. No application was made to the UK Listing Authority or to the London Stock Exchange for any of the B shares to be admitted to the Official List or to trading on the main market of the London Stock Exchange for listed securities or any other recognised exchange.

The B shares were purchased by Barclays on 9 April 2019 for the consideration of 30 pence per share. Following the purchase, the B shares were reclassified as Deferred shares and were immediately repurchased and cancelled by the Company.

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 £12,326,664.60 equivalent to approximately 33% of the Company’s issued share capital and up to a further aggregate nominal amount of £12,326,664.60 in connection with an offer by way of a rights issue. The authority was not exercised during the period ended 30 June 2019 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 Annual General Meeting.

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 Employee Benefit Trust, held 9,113,757 shares (2.59%) in the Company as at 30 June 2019 on trust for the benefit of employees of the Company. The voting rights attaching to the shares held by the 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 Employee Benefit Trust agreed to waive its right to the final dividend over 2.4m shares being part of its total shareholding.

Substantial Holdings in the Company

As at 30 June 2019, the Company has been advised of the following notifiable interests in its ordinary shares in accordance with Rule 5 of the Disclosure Guidance and Transparency Rules (the "DTRs"). 

* The Company was notified of these interests prior to the 20 for 21 share consolidation on 8 April 2019. The figure displayed in the post-consolidation column for these persons has been calculated by applying the 20:21 consolidation ratio to number of voting rights contained within their most recent notification to the Company under DTR 5.1. The figure displayed in the pre-consolidation column represents the number of voting rights last notified to the Company by the respective Shareholder in accordance with DTR 5.1.

^** St. James's Place plc notified that their interest had fallen below 3% of the voting rights on 17 July 2019.

In line with the relevant rules the table above does not include notifications received from investment firms where the interest has fallen below 5%, or from non-investment firms where the interest has fallen below 3%.

Other than as noted above, no changes in the above holdings had been notified.

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.

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 7,155 training days during the year ended 30 June 2019, 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.

This is assisted through the medium of regular management meetings, staff publications, its internal staff ‘Insight Magazine’ and ‘Engage’, 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. See page 48 for further details on the Company’s approach to employee engagement.

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.

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

 

During the year, the Company implemented a number of initiatives which the Board believes will further increase the diversity of our workforce. Some examples of these initiatives follow:

1. Redrow Women’s Network

As part of the Company’s commitment to diversity and narrowing the gender pay gap, in 2019 the first Redrow Woman’s Network was set up to inspire and support women across the Group. It is also a valuable feedback tool for the Company which allows the Board to understand the challenges that women face on their career path.

2. Redrow Educational Partnership

The Redrow Educational Partnership offers resources, support and work experience to schools across the country. The activities undertaken within this initiative aims to address stereotypes within the industry and highlight the wide spectrum of roles within the housebuilding industry.

3. Mentoring Scheme

One of the challenges which the Company is faced with is the progression of women through the business into senior roles. During the year, the Group implemented a mentoring scheme to ensure that all female trainees have the benefit of a mentor once they have completed their initial programme. Whilst it is appreciated that gender is just one of many diversity characteristics, the Board believes that this is a good starting point and, following a review of the success of the programme, it is expected that the scheme will be extended to wider employees.

4. Training

A number of our employees, including mentors within the mentor scheme, have attended training on unconscious bias and the importance of a diverse and inclusive workforce. Mentors are encouraged to discuss the importance of these issues with their mentees in order to embed the message early on in the careers of our workforce. The more openly that these issues are discussed, the easier it is to create a culture of diversity across the Group.

5. Enhanced Parental Leave

In September 2018, the Company introduced enhanced parental leave benefits for all employees which the Board believes will contribute to employee retention for both females and males.

6. Sponsorship and Membership

In 2019, the Company sponsored the Inspire Summit, an annual conference and exhibition exploring how to make the construction, engineering and housing sectors more diverse and inclusive. The Board believes that working with such events keeps the conversation about the importance of a diverse and inclusive workforce open and current.

During the year, the Company also became a member of WISE (Women in Science and Engineering), a Community Interest Company which provides support to employers, educators and training providers who are seeking to improve their gender balance, including engagement and advancement of women.

The Company is taking steps to create and sustain a diverse and inclusive culture across the Group and is committed to being proactive in working to attract and retain a more diverse workforce. 

Charitable and Political Donations

The Group made no political donations but paid £0.4m in charitable donations during the year, being £0.3m 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 £0.3m 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.

Greenhouse Gas Emissions

Greenhouse gas (“GHG”) emissions data for the period 1 July 2018 to 30 June 2019 are set out in the table below.

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.

Emissions have been calculated using the UK Government’s Greenhouse Gas Conversion Factors for Company Reporting. Reported Scope 2 emissions are calculated using the location-based method.

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. Further details and the independent assurance report can be found at redrowplc.co.uk/ building-responsibly/managing-our-resources-efficiently.

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 Sustainability Team, as these 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 2019 was £0.6m (2018: £0.6m).

Independent Auditors

In 2018, the Company commenced a tender process for the appointment of new Auditors. The tender process was supervised by the Audit Committee, who made a recommendation to the Board on the appointment of the replacement Auditor.

Following the conclusion of the formal tender process, the Company announced on 9 November 2018 that the Board had approved the proposed appointment of KPMG LLP as the Company’s Auditor for the financial year commencing 1 July 2019. The appointment remains subject to approval by shareholders at the Annual General Meeting to be held on 6 November 2019, and should the resolution be passed, the appointment will take effect from the conclusion of that meeting.

PricewaterhouseCoopers LLP were reappointed as the external Auditors by shareholders at the 2018 Annual General Meeting and will resign as Auditor following the conclusion of the 2019 Annual General Meeting.

Human Rights

The Board values and appreciates the contribution made by all employees at every level and is committed to protecting and respecting human rights. Each employee is treated fairly and equally and the Company has measures in place to ensure that the Group is free from discrimination. Throughout the Group there is a zero-tolerance approach to any form of harassment or bullying; forced or involuntary labour; and child labour in any form. The Board is invested in the development of employees and has put in place measures to protect both their physical and mental wellbeing. 

The Company embeds its commitments to the protection of human rights through its Human Rights Policy.

Supply Chain

The Company conducts its operations with respect to the interests and human rights of those employed in our supply chain. The Group works collaboratively with its supply chain to develop relationships based on honesty, openness, respect and fairness. In addition, the Group supports its supply chain by, among other things, improving their knowledge of sustainability through training and working with subcontractors to attract new entrants into the industry and supporting their training needs.

Due diligence is conducted on our supply chains to ensure that the values of the partners which we are working with are aligned with the Group’s commitments to high ethical business standards. The Company embeds these commitments and expectations through its policy, Partnering with our Supply Chain.

Qualifying Third Party Indemnity Provisions

During the course of the financial year ended 30 June 2019, qualifying third party indemnity provisions were in place. The Company agreed to indemnify the Directors, former Directors and the Company Secretary of the Company and Associated Companies (as defined in Section 256 of the Companies Act 2006), to the extent permitted by law and the Articles of Association, against any liability arising in connection with: any negligence, default, breach of duty or breach of trust by them; and their duties, powers or office, including in connection with the activities of the Company or Associated Company in its capacity as a trustee of an occupational pension scheme.

The above indemnity provisions remain in force at the date of this report. In addition, the Company maintains directors’ and officers’ insurance for each Director of the Company and its Associated Companies.

Provision of Information to Auditors

Each Director in office at the date the Directors’ report is approved, confirms 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) they have taken all of the steps that they ought to have taken as a Director in order to make themselves 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 28 to 29, the Group maintains adequate committed banking facilities. As stated in note 14 to the financial statements, at 30 June 2019, the Group had £170m 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 2020. 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 2019