Other Statutory Disclosures
The Companies Act 2006 (the “Act”) requires the Directors to present a fair review of the business during the 52 weeks to 28 June 2020 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 48 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 49 to 116.
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 52 weeks ended 28 June 2020.
Results, Dividends and Return of Cash
The Group made a profit after tax of £113m (2019: £329m). As announced on 24 March 2020, due to the uncertainty around the impact of the COVID-19 pandemic on the business, it was decided that the Company would cancel the 10.5p interim dividend which was due to be paid on 9 April 2020 to holders of ordinary shares on the register at the close of business on 6 March 2020. The Board is not recommending the payment of a final dividend for the year at the 2020 Annual General Meeting.
Annual General Meeting
Notice of the 2020 Annual General Meeting to be held on Friday, 6 November 2020 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 Directors of the Company during the year to the date of this report, along with their meeting attendance, are listed on page 59. The current Directors are listed on pages 50 to 51 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 78 to 100.
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 Matthew Pratt and Barbara Richmond, who stand for reappointment as Executive Directors; Nick Hewson and Sir Michael Lyons who stand for reappointment as Non-Executive Directors; and John Tutte and Nicky Dulieu who stand for 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 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 (the "Code"), all of the Directors will retire at the Annual General Meeting to be held on Friday, 6 November 2020 and, being eligible, offer themselves for reappointment, save for Vanda Murray who will be stepping down from the Board following the 2020 AGM.
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 a general meeting by at least three quarters of the votes cast.
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.
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 £12,326,664.70 (which is equivalent to approximately 33% of the Company’s issued share capital) and up to a further aggregate nominal amount of £12,326,664.70 in connection with an offer by way of a rights issue. The authority was not exercised during the period ended 28 June 2020 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, with 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 8,841,362 shares (2.51%) in the Company as at 28 June 2020 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.
Substantial Holdings in the Company
As at 28 June 2020, the Company had 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”).
Number of Ordinary Shares
||% of voting rights|
|Bridgemere Securities Limited||
* The Company was notified of this interest prior to the 20 for 21 share consolidation on 8 April 2019. The figure displayed as the number of shares held 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, at which time was 18,770,138.
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%.
The Company has not been notified of any changes to the above interests, or any other notifiable interests, since 28 June 2020.
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.
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 external auditors for the financial year commencing 1 July 2019. The appointment was subsequently approved by shareholders at the 2019 AGM, receiving 99.76% of votes in favour, with the appointment taking effect from 6 November 2019.
Qualifying Third Party Indemnity Provisions
During the course of the 52 weeks ended 28 June 2020, 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 Company's 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.
Environmental, Social and Governance Disclosures
Limiting the environmental impact of developments by building responsibly and creating thriving and desirable places to live are key parts of the Group’s strategy, and through the use of its design principles, the Company has ensured that social, environmental and economic aspects are incorporated into the communities delivered. Valuing people is also a key component of the Group’s strategy and this is executed by valuing and developing people and partners and inspiring the next generation to build.
In recognition of the Company’s sustainability performance, it was awarded a gold level status in the most recent NextGeneration Benchmark, which is an assessment and ranking of the sustainability performance of the UK’s 25 largest housebuilder, thereby retaining third place for the fourth year in a row.
The Board considers ESG matters as part of its regular risk assessment and the following sections seek to provide a deeper understanding of the work undertaken by the Company in relation to ESG matters.
Greenhouse Gas Emissions
Greenhouse gas (“GHG”) emissions data for the period 1 July 2019 to 28 June 2020 are set out in the table below:
Year (1 July 2019
to 28 June 2020)
(1 July 2018 to
30 June 2019)
Scope 1 activities:
|Direct emissions from combustion of fuels and business travel|
|Scope 2 activities:||
|Indirect emissions from purchased electricity and heat|
|(Scope 1 + Scope 2)|
|Total emissions per 100m² of build||
Notes to the Greenhouse Gas Emissions Data
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.
During the reporting period, the annual quantity of energy consumed by the company was 37,032,239 kWh. This figure is the aggregate of:
- the annual quantity of energy consumed from activities for which the company is responsible involving the combustion of gas;
- the annual quantity of energy consumed resulting from the purchase of electricity and heat by the company for its own use; and
- the annual quantity of energy consumed from activities for which the company is responsible, involving the consumption of fuel for the purposes of transport.
100% of the figures reported above relate to emissions and energy consumed solely in the United Kingdom.
The Company has taken several measures for the purpose of reducing greenhouse gas emissions and increasing the Company's energy efficiency:
- Almost 50% of our greenhouse gas emissions come from use of diesel on our sites and consequently we have been working to reduce this during the year. We are currently trialling a hybrid generator system with solar PV and a smart energy management system and will be looking to roll this out across all 130 construction sites following further testing. We are also currently investigating the efficacy of Hydrotreated Vegetable Oil (HVO) with our supply partners, as an alternative fuel for site plant and equipment which we anticipate would reduce net CO2 emissions by up to 90%.
- Following energy audits carried out at the beginning of the reporting year, we have identified a number of opportunities to improve the energy efficiency of our sales offices, show homes, sites and our divisional offices. These opportunities relate to lighting, heating and hot water and are now being actioned by the relevant departments. We are currently reviewing our policy for our show homes lighting and our strategy for our divisional offices energy management.
- We have also been working to reduce site and office gas and electricity consumption with new eco-cabins being now rolled-out to all new sites, providing: improved thermal insulation, double glazed windows with low u values, energy efficient LED lights with PIR activation, energy efficient heaters with thermal cut out and timers and energy efficient point of use hot taps.
We have used the GHG Reporting Protocol – Corporate Standard and the emissions have been calculated using the 2020 UK Government’s Greenhouse Gas Conversion Factors for Company Reporting. Reported Scope 2 emissions are calculated using the location-based method. The slight increase in normalised emissions is attributable to improved data collection, combined with a reduction in homes completed due to COVID-19 in 2020. We intend to set this as a new baseline year and set a new ambitious target going forward.
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/about-redrow/our-values/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 for the 52 weeks ended 28 June 2020 was £0.4m (2019: £0.6m).
Managing resources efficiently is a key principle underpinning one of the Company’s strategic themes of building responsibly. The following are key examples of the Company’s approach to managing its resources efficiently:
- Carbon - the Company continues to be an active Gold Leaf member of the UK Green Building Council and is working to reduce the carbon emissions from both its homes and operations. The Company is committed to extending its existing approach in order to deliver zero-carbon homes in the coming decade and has taken its first steps in this journey during the year, as further explained in the Strategic Report.
- Water - the homes produced by the Group have one of the lowest water use standards in the industry at 105 litres-per-person-per-day (lpppd), compared with a building regulation standard of 125 lpppd. The Company is committed to reducing the amount of water used in its operations and during the year, the water usage was 18.50 m3 per 100m2 of build.
- Waste - the Company is also committed to reducing waste from its operations and in 2020, waste generated was 8.97 tonnes per 100m2 of build. Where possible, we also ensure that any waste created is reused or recycled as appropriate and during the year, 97.4% of our waste was diverted from landfill.
For further details on the Company’s approach to managing its resources efficiently, please see pages 23 to 25 of the Strategic Report.
The Company is committed to sourcing sustainable materials in for use in its operations to contribute to its long-term sustainability. The following are key examples of the Company’s approach to sourcing such materials:
- Timber - the Company uses a large amount of timber in the construction of its homes and is committed to sourcing forest products from well-managed sources. In the 2019 calendar year, 99.9% of the forest products used by the Company were from verified and credibly certified sources.
- Other materials - the Company also uses supply chain mapping for other materials and products used in constructing its homes to allow it to work with supply partners to identify and avoid products deemed to be high risk in respect of environmental and social ethics.
For further details on the Company’s approach to sourcing sustainable materials, please see pages 19 to 21 of the Strategic Report.
During the year, the Company launched its industry-leading biodiversity strategy in partnership with The Wildlife Trusts to ensure that our developments enhance biodiversity and contribute to nature’s recovery and internal workshops have been running to equip our teams with the knowledge and skills to make a difference to nature.
For further details on the Company’s new biodiversity strategy, and action taken during the year for nature, please see pages 15 to 16 of the Strategic Report.
Following the recommendation of the Task Force on Climate-related Financial Disclosure (TCFD), it was decided that specific climate-related disclosures would be included within this Annual Report. Please see pages 111 to 115 for the TCFD disclosure table.
Social Impact Review
The Company seeks to make a meaningful social impact when building homes for our customers. A review was undertaken in 2020 to assess the social impact of our operations and the full report can be found on the Company’s website at redrowplc.co.uk.
SOCIAL VALUE CALCULATOR
In 2019, the Company received the NextGeneration Innovation Award, which is awarded to a homebuilder that has demonstrated initiatives that go far beyond the criteria used for the benchmark. The Group was recognised for its commitment to supporting healthy communities by developing a unique Social Value Calculator. The calculator presents a monetary value against individual outcomes over a 25-year period, being the typical length of a mortgage, and its assessment methods are consistent with the guidance advocated in HM Treasury’s Green Book on quantifying the social impact of its policies.
The Group’s ground-breaking work on researching the social value associated with multiple aspects of home building and community creation ensures it has a clearer, more holistic perspective on the impact of the placemaking decisions. It also allows the Company to take a more strategic approach to design and community planning and further the knowledge and perspective of the business on the features and characteristics of a new development which are most likely to make people happier and healthier.
The Company has developed a benchmarking scorecard of placemaking principles for designing sustainable communities, called the Redrow 8. The assessment criteria underpinning the Redrow 8 has been refined to reflect the key characteristics of well-designed places set out in the government guidance.
During the year, a placemaking e-learning module was launched for all staff in order to develop their knowledge of how key placemaking and urban design principles are to be applied to the communities served by the Company.
For further details on the Company’s approach to placemaking, please see pages 14 to 15 of the Strategic Report.
The Board believes that greater engagement with the workforce is essential to preserving long-term value. Valuing people is a fundamental part of the Group’s strategy and understanding the views of employees and actively encouraging their participation sits highly on the Board’s agenda. The Company engages with employees through the following means:
1. Designated workforce Non-Executive Director - in line with Provision 5 of the Code, Vanda Murray was appointed as the designated Non-Executive Director for workforce engagement in 2019. Board and Committee meetings are arranged throughout the year in different divisions across the country, with visits to different development sites arranged around the Board meetings. This has allowed Vanda Murray the opportunity to engage directly with the workforce, at both divisional offices and on sites, to obtain their views on a wide range of matters relating to life at Redrow. This is then fed back to the Board providing for an important mechanism for the Board to understand the views of the workforce. Following her retirement from the Board on 6 November 2020 after the AGM, Vanda Murray will be succeeded by Nicky Dulieu as the designated Non-Executive Director for workforce engagement.
2. Employee communication via the intranet, Engage - Engage is available for all employees of the Company and is the hub for sharing news and communications across the business. It encourages employees to actively participate and have a voice in decisions being made by the Company. This proved to be a vital communications tool during the COVID-19 pandemic as it allowed information to be shared instantly with all employees (whether still working or on furlough) so that we were able to keep each person in the loop and up to date with actions being taken by the business.
3. Employee engagement meetings - each divisional business and Group has a team of elected representatives who attends regular engagement meetings. These meetings keep employees up to date with Company news and employee health and wellbeing initiatives and enable the representatives to put forward the views and ideas of the department. Each employee has access to their engagement representative and has the opportunity to discuss matters arising from these meetings. All meeting materials and action plans following meetings are made available to all employees via Engage.
4. INsight survey - this survey is distributed annually to all employees and in the latest survey there was a 91% participation rate. The feedback from employees was anonymised.
Following the results, workshops were carried out with each team to discuss the findings and feedback was collated by the Engagement team. Resulting from the feedback, commitments and themes for the year were posted on Engage with regular progress reports posted on these.
Enhanced maternity and paternity leave, flexible working and enhanced flexible holidays are just a few examples of the changes made as a result of employee engagement through the INsight survey.
5. Direct communication channel to the Board - employees have the opportunity to email the Board and Executive Management Team to ask them any question relating to the business. Employees have the option to anonymise their name, division and job title. All questions asked are discussed at the next Board meeting and responses are posted on Engage for all employees to view.
The objective of this was to ensure that the Board is reachable at all levels across the business and to reinforce the culture of openness and transparency throughout the Group.
6. Promotion of share ownership through employee share plans - the Company supports employee share ownership at all levels as it directly aligns employee interests with those of shareholders. Share ownership encourages employees to take a wider view of the Group. Thinking like a shareholder, as well as an employee, provides for a deeper perspective and encourages the workforce to be more inquisitive as to whether they can individually and collectively improve to create even more shareholder value.
7. Division specific communications - 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. Each Division has a dedicated section on the intranet which is regularly updated to reflect matters directly affecting that part of the business.
8. Company performance communications - the Company’s intranet, Engage, is also used as a tool for communicating factors affecting the performance of the Company to employees to ensure that they understand how the business is performing in the current market. Additionally, the Executive Chairman circulates the results announcements and trading updates to all employees. Following the release of the interim and final results announcements, the Group Finance Director attends the Head Office and each Divisional office to make a presentation directly to employees to explain the results and strategy for the year.
The Board shall keep these engagement mechanisms under review so that they can be ensure they remain effective.
The Company recognises that the wellness of its employees is vital to the success of the business and has put in place a number of initiatives to focus on health and wellbeing, including:
1. Mental health first aiders - following the Company’s commitment to the Building Mental Health Charter, employees have received training on the area of mental health, including mandatory training for all Heads of Department, so that they can understand the importance of such health and be open to discussing this within their teams. There is also a mental health e-learning module which all employees were invited to participate in.
Further additional training was provided to a number of employees who volunteered to become mental health first aiders. There are currently over 200 employees who have been trained and equipped to act as mental health first aiders.
2. MyLife - this employee assistance programme is now made available to all employees, subcontractors and their families. The programme includes a free confidential advice helpline available 24/7 and provides advice and support through telephone counselling sessions for both personal and work-related problems.
The HR department has a dedicated team focusing on health and wellbeing to ensure that health remains a key priority and that the wellness initiatives in place are fit for purpose.
Diversity and Inclusion Policy
The Company recognises that its continued success depends upon its 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 it 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. This commitment continues throughout employment, ensuring that equal training, career development and promotion opportunities are available to all employees.
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
- Recruitment and Selection Policy
- Human Rights Policy
- Disciplinary and Grievance Policy and Procedures
The Company has in place 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 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. The Group has 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 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. Membership - 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 has taken 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.
Learning and Development
The Company places considerable importance on training and developing its people. Historically, training has primarily been delivered face-to-face at the Company’s in-house training facilities and supported through blended e-learning. During the COVID-19 lockdown, and in the time since, the Group has placed additional emphasis on its e-learning platform, ensuring all colleagues completed vital return-to-work training, in addition to refreshing core skills. Moving forward the Company will make more use of technology to deliver training through e-learning, webinars and interactive online sessions.
During the year, 5,925 training days were completed in total.
The Company, in partnership with Liverpool John Moores University and Coleg Cambria, established the UK’s first dedicated Housebuilding Degree. The three-year degree provides students with a full overview of housebuilding skills including quality, project management, health and safety, business skills and law. Learning is achieved through a blend of classroom activities, virtual learning, practical site visits and tutorials, meaning that learners are be able to combine their studies with working and earning. To date this has been used to upskill the Group’s existing workforce and the Board are pleased to welcome the first intake of sponsored degree students who will join the Group this Autumn post A Levels.
During the year, the Company recruited over 120 trainees, including 90 apprentices and 15% of our direct employees are trainees. Company apprentices receive first class training, both on site and at local colleges, and the Company partners with key suppliers to ensure that apprentices receive a comprehensive understanding of the wider aspects of their chosen field.
The Company is committed to assisting with tackling the problem of attracting young people to construction, and more specifically housebuilding, by analysing the barriers to entry-level recruitment into the sector and making recommendations to overcome these. For further details of the work undertaken in analysing the state of apprenticeships and construction careers in the UK, the 2020 Apprentice Report can be found on the Company’s website at redrowplc.co.uk.
Health, Safety and Environment
The Company is committed to quality and excellence therefore it follows that minimising risk to people, plant, products and the environment is inseparable from all of its other objectives. Health and safety has naturally become embedded into the culture of the Group, as it forms part of the overall duty of being an employee or supplier of the Group.
The Group seeks to achieve the highest health, safety and environmental standards as it significantly contributes to the overall performance of the business and protects both people and environment from harm. The Company operates an environmental management system that ensures that it manages environmental impacts in a systematic way and is certified by the British Standards Institute to the international standard ISO 14001:2015.
For further details on our approach to health and safety, see page 25 of the Strategic Report.
Charitable and Political Donations
The Company recognises the difference it can create through its presence as a national housebuilder by developing thriving communities through supporting the local community and charitable projects. The Company and its employees are actively involved in fundraising activities for our selected charitable partners.
Divisions annually select a local charity to support whereby its purpose is in alignment with one of the Group’s key priorities. This allows each part of the business to choose a charity meaningful to them in the communities in which they operate. In accordance with Company policy, the charity must be verified before any donations are made to it and a record is maintained of all charitable contributions made.
The Group paid £0.2m in charitable donations during the year, being £0.1m in respect of national charities and £0.1m in support of local charities.
The Company does not engage or support any form of political donations. No Group company or employee is permitted to make a political donation in the name of the Company and employees are cautioned to be extra vigilant to ensure that political contributions are not made in circumstances where gifts, hospitality or the actions of third parties are engaged in transactions on behalf of the Company. The Group made no political donations during the year.
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.
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.
As a partner of the Supply Chain School, the Group’s supply chain have access to thousands of online presentations, training modules, guidance documents and checklists and are regularly invited to attend workshops and briefings.
Due diligence is conducted on the Group’s 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.
For further details on our how the Company partners with its supply chain for sustainability, see pages 19 to 20 of the Strategic Report.
During the year, the Company continued to create thriving communities and committed £188m to the local communities served for the development of new schools, local shops, community and health centres as well as green spaces as part of the planning process. The Company is creating more than 1,600 acres of green space and communal areas on its current developments and during the year it created 22km of new cycling routes in and beyond its developments.
The Group is committed to providing high quality affordable homes for local people and has designed, built and delivered over 940 new affordable homes across its developments in England and Wales in partnership with Registered Providers.
For further details on our how the Company creates strong, connected communities, see pages 16 to 17 of the Strategic Report.
The Company’s purpose is to operate to create a better way for people to live and there is very much a customer focused culture across the Group.
During the year, based on a survey run by the Home Builders Federation, over 90% of customers polled said they would recommend a Redrow home to a friend, earning the Company a top five-star rating. The Company was also the first top ten housebuilder to join the Institute of Customers Services and was nominated for the Best Customer Satisfaction Strategy at the UK Customer Service Awards during the year.
Technology also plays a key part in the Company’s innovative customer service offering. Having launched the Red Site Managers Inspection iPad app in 2019, site and customer service managers use this system to ensure that identifying and rectifying potential issues during the build is a smooth process leading to a high quality end product. Customers also have access to the My Redrow app, which is an online members-only area for customers to personalise their home with finishes and upgrades.
‘Hard Hat tours’ are also conducted with customers during the pre-plaster stage of construction to show the care and attention to details that goes into building their home, and allows them to feel connected to their home even before it is built.
A summary of how the Board have had regard to the need to foster the Company’s business relationships with suppliers, customers and others, and the effect of this on the decisions taken by the Company, can be found within the Section 172(1) Statement on pages 32 to 37.
The Board remains committed to high standards of corporate governance. Details relating to the Company’s governance arrangements and compliance with the UK Corporate Governance Code are provided in the Corporate Governance Report on pages 49 to 100.
Code of Conduct
The Company has in place a Code of Conduct, which acts as a guide for employees to doing the right thing in business. It focuses on the values and behaviours deemed most important for the Group and seeks to guide employees in their good judgement to act in the Redrow way.
The Code of Conduct provides a number of decision-making tools to assist employees if faced with difficult decisions and sets out the Company’s policy on a number of key matters deemed integral to doing the right thing in business, including:
- Health, safety, and environment;
- Diversity and inclusion;
- Human rights;
- Supply chain and modern slavery;
- Integrity (comprising bribery, gifts and hospitality, tax evasion facilitation, conflicts of interest, share dealing and data and asset protection); and
- Charitable and political donations.
The Code of Conduct has been made available to all employees and is publicised on the Company’s intranet, Engage.
There is a Group commitment to ensuring that there is no modern slavery or human trafficking in any part of our business or supply chains. The Group has a policy in place reflecting its commitment to acting ethically and with integrity in all business relationships and to implementing and enforcing effective systems and controls to ensure slavery and human trafficking is not taking place anywhere in its supply chains.
There are a number of key initiatives in place to assist with the approach to ethical and responsible sourcing, including the following:
- All suppliers and manufacturers must submit a detailed Supplier Appraisal Assessment for approval as part of the pre-tender qualification process. The appraisal forms also track the country of manufacture allowing the Company to identify materials supplied by manufacturers with a high-risk profile.
- All supply partners must warrant that they shall comply, and will use their best endeavours to ensure that any subcontractor or party within their own supply chain shall at all times comply, with the Modern Slavery Act 2015.
- The Company’s Standard Purchase Order and Subcontractor Terms of Contract require trading partners to comply fully with the Modern Slavery Act 2015, with any breach resulting in the termination of all live contracts.
With temporary labour acknowledged as an area of high risk for modern slavery, Datum RPO were introduced at the start of July 2019 to manage all temporary labour requirement and processes. Alongside a number of system based checks for example right to work, health and safety conducted by Datum RPO, they also carry out physical checks and audits periodically to ensure temporary agency workers are legally complaint and there are no instances of modern slavery.
As a partner of the Supply Chain School, the Group’s workforce and supply chain have access to thousands of online presentations, training modules, guidance documents and checklists and are regularly invited to attend workshops and briefings. One of the key areas covered by the school is modern slavery, with online presentations, checklists, guidance documents and training modules accessed from their website.
In its partnership with the Supply Chain School, the Company has recently worked in collaboration with the school and other partners on further developing guidance materials to identify what a good due diligence systems look like.
For further details on the steps taken by the Group to ensure that modern slavery is not taking place in our business or supply chains, please see our Slavery and Human Trafficking Statement for the 2020 financial year, which is available to view at redrowplc.co.uk.
The Board regularly reviews the identity and key priorities of its stakeholders and the business strategy of the Group is shaped by the issues that matter to key stakeholders.
There is a section of the Company’s website, at redrowplc.co.uk, which is dedicated to stakeholder engagement, and includes identification of who the key stakeholders are, what the Company understands to be their priorities and how the Company has responded to those priorities. The following groups have been identified as the current key stakeholders of the Group:
- Our people;
- Government regulators;
- Local communities;
- Non-Governmental Organisations and society;
- Planning authorities; and
- Supply chain.
The Section 172(1) Statement of the Group, explaining how the Directors have engaged with the stakeholders outlined in that section of the Companies Act 2006, can be found on pages 32 to 37 of the Strategic Report.
Anti-Bribery and Corruption
The Company has a zero tolerance approach to bribery or corruption of any form and there is a widely publicised formal policy in place dealing with this, which is available to all employees.
The Company has a principle-based system for bribery prevention, which comprises the following six principles:
- maintenance of bribery risk assessments within our sector;
- top level commitment of the unacceptability of bribery which is engrained in our culture;
- proper due diligence with people we do business with and seeking reciprocal anti-bribery agreements;
- clear policies and procedures applicable to all employees and business partners;
- effective implementation by embedding anti-bribery within internal controls, recruitment, remuneration policies, operations, communications and training; and
- monitoring and reviewing through auditing and financial controls which are sensitive to bribery.
Further details of the company’s Anti-Bribery and Corruption policy, and work undertaken to prevent bribery taking place within the business, can be found in the Audit Committee Report on page 69.
PROVISION OF INFORMATION TO AUDITORS
Each Director in office at the date the Directors’ report is approved, confirms that:
- 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 external auditors are unaware; and
- 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 external auditors are aware of that information.
In considering whether it is appropriate to prepare these financial statements on a going concern basis, the Directors have conducted a detailed going concern review, considering the Group’s liquidity and banking covenant compliance.
Following the review, details of which can be found within the Basis of Preparation section of Accounting Policies on page 130, the Directors consider that the Group has adequate resources in place for the forecast period and have therefore adopted the going concern basis of accounting in preparing these financial statements.
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES (TCFD)
In addition to reporting and disclosing our environmental and sustainability performance throughout this report, this year we have also included specific climate-related disclosures following the TCFD’s recommendations and structured this around its key four thematic areas.
|Governance||Disclose the organisation’s governance around climate-related risks and opportunities|
|Describe the Board’s oversight of climate-related risks and opportunities.||
The Placemaking and Sustainability Committee develops and monitors the Company’s approach to environmental, social and economic issues. The Committee also reviews and approves the setting of performance objectives and targets and monitors progress against these. The Committee reports to the Main Board which has ultimate responsibility for sustainability and climate-related matters. The Health, Safety and Environment Management Committee also develops and monitors the Company’s approach to environmental sustainability matters and regularly reviews the objectives and effective operation of the ISO 14001 Environmental Management System (EMS).
The composition of the Main Board can be seen on pages 50 to 51 and the members of the Placemaking and Sustainability Committee can be seen on page 75, with representatives from other disciplines within the business invited to attend the meetings as necessary.
|Describe management’s role in assessing and managing climate-related risks and opportunities.||The Group Development Director briefs the Placemaking and Sustainability Committee on sustainability and climate change matters, supported by the in-house sustainability team who provide expertise in developing the sustainability strategy, environmental and sustainability policies and identifying areas of improvement. The Group Development Director also chairs a monthly Sustainability meeting with Directors of departments across the business, including the Group Design and Technical Director, Group Commercial Director, Group Customer and Marketing Director, Group HR Director, Group Masterplanning Director, Group HS&E Director and Construction Director. These meetings ensure that climate and sustainability-related issues are understood across the functions of the business and responsibility for assessing and managing risks and opportunities is shared with the appropriate teams.|
|Strategy||Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning where such information is material.|
|Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.||The business has identified the following climate-related risks and opportunities:|
- Disruption to build programme and delivery chain from flooding and storm damage
- Increased requirements for surface water management impacting on margins and insurance
- Extreme weather events affecting productivity in offices and sites
- Risk of overheating of homes and apartments due to increase in outside temperatures
- Droughts exacerbating water scarcity
- Failure to be proactive in identifying opportunities for energy efficient products and materials
- Failure to ensure sustainable procurement routes
- Risk that the supply chain fails to supply materials/technologies required to tackle climate change
- Failure to reduce operational environmental impacts (e.g. Greenhouse Gas emissions)
- Increased energy and fuel prices for Redrow’s operations
- Failure to implement current and emerging regulations adequately
- Not meeting customer expectations in the use of environmentally friendly materials and products
- Potential litigation from customers for failing to meet regulations and adequately plan for physical risks
- Increased awareness and demand from our customers for homes adaptable to climate change issues
- Innovation and research opportunities for lower carbon design and the use of innovative products
- Focus on identifying and implementing initiatives for climate change adaptation
- Focus on our supply chain resilience, the use of materials with lower embodied carbon and materials that come from recycled and ethical sources
- Use of renewable energy on our operations
|Describe the impact of climate-related risks and opportunities on the organisation’s business, strategy, and financial planning.||The business has identified the following climate-related risks and opportunities that can impact our strategy and financial planning:|
- Direct regulations arising from UK Government and regional government setting out policies to minimise carbon dioxide emissions and achieve zero carbon homes
- Climate change impacts such as increased temperatures, water shortages and flood risk may result in the need to redesign aspects of our product which may result in increased costs, sourcing and adoption of new technologies
- An increase in extreme weather events may impact on supply chain continuity and construction activities, limiting production
- Changing climate may reduce the availability of land on which the business can build and may cause disruption to construction programme
- Building materials becoming unavailable or limited and hence more expensive which will impact our operations, build programme and financial planning
- Insufficient development of innovative products and technologies can limit our plans to delivering homes with climate resilient measures taken into account during their design
- Increasing regulatory standards bring customer benefits and subsequent marketing benefits - energy efficiency of new homes is becoming more important to our customers as the cost of energy continues to rise
- Focusing on the development of lower-emission homes and the provision of low-carbon lifestyles in the communities we build
- Focusing on increasing green travel options in the developments we create, providing us with marketing benefits and higher customer satisfaction
- Ability to respond to and pre-empt consumer demand in the area of low-carbon products and sustainable communities, placing us in a better competitive position and therefore increasing revenues
- An increased focus on meeting business targets relating to carbon, energy, waste and water as part of our strategy to Building Responsibly means we are realising opportunities to contribute to environmental improvements as well as reducing our operating costs.
|Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.||Our business strategy and objectives have been developed by several key means:|
|1. Stakeholder engagement and materiality assessment - whereby key stakeholders were consulted on issues such as energy efficiency and low carbon (homes), flood risks, biodiversity, water efficiency. These issues were then prioritised according to their impact/potential impact.|
|2. Risk and opportunities processes - as outlined in section below|
|The resulting strategy has three business principles, each of which encompasses issues relating to climate change:|
- Developing Thriving Communities (including objectives such as placemaking and biodiversity)
- Building Responsibly (including objectives such as responsible sourcing of materials and carbon reduction)
- Valuing People (including objectives and targets relating to climate-related and sustainability training)
|We currently evaluate the climate-related risks to Redrow through our existing risk evaluation and management systems. This includes an examination of impacts and likelihood of occurrence to give us opportunity to examine different scenarios, but is not formal scenario analysis. We are reviewing our approach to climate risk management, in particular in our examination of science based targets and expect to be using more formal scenario analysis for climate related risks in the next two years.|
|Risk Management||Disclose how the organisation identifies, assesses, and manages climate-related risks.|
|Describe the organisation’s processes for identifying and assessing climate-related risks.||A comprehensive risk register is maintained at Group level covering all aspects and disciplines within the business. Climate change risks are covered in a specific section which is read in context with other sections. For each risk there are Prevent Controls and Detect controls in place and each section is owned by a member of the Executive Management Team responsible for review and monitoring.|
|Newly identified risks are added when encountered and a six monthly review is held. At a divisional level, issues with potential to impact the divisional operational performance, are reported monthly on a site-by site basis at the divisional board meeting.|
|Sustainability and climate change risks are also identified and assessed within the Group's specific sustainability risk matrix, which is aligned with the main group risk register. This forms part of our Environmental Management System, which is externally certified to ISO14001:2015.|
|Redrow’s in-house Technical, Commercial and Sustainability teams continuously monitor developments in regulation and legislation and engage at high level within the industry to maintain currency and to provide input to policy direction. This information is fed back to the Main Board in monthly reports. Appropriate solutions to meet sustainability requirements are identified, evaluated and where appropriate, employed in future-proofing product specifications.|
|Describe the organisation’s processes for managing climate-related risks.||The development and implementation of a robust sustainability strategy in the business ensures we recognise and address key climate-related risks and opportunities. Managing impacts from changing weather patterns is done in various ways, including:|
- Monitoring frequency, location and severity of extreme weather events, insurance market response and regulatory change in response to extreme weather events
- We have appropriate insurance cover in place, especially for flood risk
- We regularly review policies and procedures for considering flood risk when procuring land or planning a development
- We obtain professional advice on risk reduction measures for our product design
- We continually review materials suppliers to secure supply from alternative sources if necessary
|Appropriate action plans are fed into the business process, shaping and informing a number of Company policies which are published on our website and are available to staff and customers. Policy decisions are communicated back to divisional Managing Directors for immediate implementation. The impacts can be relevant in the short term, for instance in dealing with unique site specific requirements imposed through planning conditions and equally important for long term strategy development for future business.|
|Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management||All risks and opportunities which are identified as being pertinent to the business, including climate change and sustainability issues are reported through the monthly cycle of management reporting to the Executive Management Team, quarterly to the Main Board and quarterly to the Placemaking and Sustainability Committee. Reports captured include those from divisional Board meetings and from specialist disciplines within the business located at the Head Office such as Sustainability, Commercial, Financial, Health and Safety, Human Resources, Sales & Marketing and Technical.|
|Metric and Targets||Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.|
|Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.||Throughout this report we disclose a range of metrics that relate key themes of our Sustainability Strategy: energy, carbon, waste, water and biodiversity. These include:|
- Scope 1 and 2 emissions
- Total emissions per 100m2 build
- Total energy consumed by source
- Waste generated per 100m2 build
- % of waste diverted from landfill
- % of forest products used in our homes from verified and credibly certified sources
- % of materials and subcontractor sourced locally
- % of homes with domestic recycling facilities
- Water usage per 100m2 build
|Disclose Scope 1, Scope 2, and if appropriate, Scope 3 GHG emissions, and the related risks||Greenhouse Gas Emissions data for Scope 1 and 2 are detailed in page 104 of this report. This disclosure includes all of the emission sources required under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 and is reported in line with the Greenhouse Gas (GHG) Protocol: A Corporate Accounting and Reporting Standard.|
|Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets||
We are committed to reducing our environmental impact and we aim to continually reduce the energy and water consumption, carbon emissions and waste generated from our operations and to become environmentally and net-positive.
Our targets are shown below (set with 2017 as the baseline year):
- Reduction of the carbon intensity of our construction operations and offices by 10% by 2022
- Reduction of the water intensity of our construction operations and offices by 5% by 2022
- 95% + of construction waste diverted from landfill
- Reduction of our construction waste intensity by 10% by 2022
In addition, we are currently considering our methodology to calculate our Scope 3 emissions and our approach to Science Based Targets.
By order of the Board
Registered no: 2877315
15 September 2020