2017 Annual Report Plc Redrow Sense of Wellbeing
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Redrow plc Redrow Redrow plc Redrow House, St. David’s Park, Flintshire CH5 3RX 2017 Tel: 01244 520044 Fax: 01244 520720 ANNUAL REPORT Email: [email protected] Annual Report 2017 Annual Report 01 STRATEGIC REPORT STRATEGIC REDROW ANNUAL REPORT 2017 A Better Highlights Way to Live £1,660m £315m 70.2p £1,382m £250m 55.4p £1,150m £204m 44.5p GOVERNANCE REPORT GOVERNANCE 15 16 17 15 16 17 15 16 17 £1,660m £315m 70.2p Revenue Profit before tax Earnings per share +20% +26% +27% 17p 5,416 £1,099m 4,716 £967m STATEMENTS FINANCIAL 4,022 10p £635m 6p 15 16 17 15 16 17 15 16 17 Contents 17p 5,416 £1,099m Dividend per share Legal completions (inc. JV) Order book (inc. JV) SHAREHOLDER INFORMATION SHAREHOLDER STRATEGIC REPORT GOVERNANCE REPORT FINANCIAL STATEMENTS SHAREHOLDER 01 Highlights 61 Corporate Governance 108 Independent Auditors’ INFORMATION +70% +15% +14% 02 Our Investment Case Report Report 148 Corporate and 04 Our Strategy 62 Board of Directors 114 Consolidated Income Shareholder Statement Information 06 Our Business Model 68 Audit Committee Report 114 Statement of 149 Five Year Summary 08 A Better Way… 72 Nomination Committee Report Comprehensive Income 16 Our Markets 74 Sustainability 115 Balance Sheets Award highlights 20 Chairman’s Statement Committee Report 116 Statement of Changes 22 Chief Executive’s 76 Directors’ Remuneration in Equity Review Report 117 Statement of Cash Flows 26 Operating Review 98 Directors’ Report 118 Accounting Policies 48 Financial Review 104 Statement of Directors’ 123 Notes to the Financial 52 Risk Management Responsibilities Statements FIND MORE INFORMATION AT: 147 Glossary REDROWPLC.CO.UK COVER IMAGE: ROYAL WATERSIDE, PARK ROYAL, NORTH WEST LONDON 02 Redrow plc Annual Report 2017 03 STRATEGIC REPORT STRATEGIC STRATEGIC REPORT Our Investment Case Our benchmark Successful leadership team Redrow has a strong, experienced and 15% +75% for success successful leadership team and is of workforce on structured increase in employees committed to developing the next training programmes undertaking leadership generation of homebuilders. skills training in 2020 GOVERNANCE REPORT GOVERNANCE Excellent product range Creating Redrow has an excellent product range £983m c£2,200m c£430m which continues to evolve. private order book communities at record level (inc. JV) a key focus £1,660m £315m £1,382m £1,150m £250m Expertise in land buying Guidance £204m Guidance Redrow has the expertise and c5,400 plots 3,356 resources to ensure that the right land added to current opportunities are taken to deliver plots added 15 16 17 20 15 16 17 20 land bank targeted geographic expansion. from forward land to owned land bank Turnover Profit before tax STATEMENTS FINANCIAL Quality and customer service 89% 27 95.0p 26.0% By listening to and understanding our customer NHBC Pride in 25+% customers’ requirements, we continue to recommendation the Job awards evolve our product and customer service. 23.7% 22.8% We focus on quality, differentiation and 70.2p value for money for customers. 55.4p Placemaking 44.5p Guidance Guidance We focus on delivering high quality homes £163m 1,014 and creating community and physical committed to fund affordable homes delivered environments that help promote people’s improvements to local to our communities INFORMATION SHAREHOLDER sense of wellbeing. communities 15 16 17 20 15 16 17 20 EPS ROCE A strong and efficient balance sheet 27.7% 26.0% Redrow has net assets of over £1.2bn and a return on equity return on capital balance of equity and debt. The Group is employed focused on delivering superior levels of return on equity and return on capital employed from an efficient use of its capital base. 04 Redrow plc Annual Report 2017 05 STRATEGIC REPORT STRATEGIC STRATEGIC REPORT Our Strategy To create long-term sustainable value for all our stakeholders by delivering to our communities high quality homes and environments that provide a better way to live. MEASURE 2020 OBJECTIVES KEY PERFORMANCE INDICATORS COMMENT 2017 2016 We have a clearly defined growth strategy, to increase revenue, EPS EPS increasing to 95p REPORT GOVERNANCE profits and returns to shareholders by increasing outlets and legal • 70.2p 55.4p completions over the medium-term. DPS • DPS of 32p READ MORE ON 17p 10p PAGES 48 AND 49 GROW OUR Revenue • Revenue increasing to c£2.2bn £1,660m £1,382m BUSINESS READ MORE ON RESPONSIBLY Sales outlets • 150 outlets 132 128 PAGE 30 To ensure that we grow our business responsibly, we are focused READ MORE ON on managing all our resources efficiently and effectively. ROCE • ROCE of 25+% 26.0% 23.7% PAGES 48 AND 49 READ MORE ON Land bank years • Maintain land bank at c4 years 4.5 years 4.95 years PAGE 26 MANAGE OUR RESOURCES Waste diverted • >95% READ MORE ON EFFICIENTLY from landfill 95.4% 94.8% PAGE 36 FINANCIAL STATEMENTS FINANCIAL We are focused on creating high quality places to live by delivering well designed, well built, attractive homes whilst at the same time • Continued investment in Monies committed to £163m £142m enhancing the beneficial characteristics of the local landscape, local communities fund improvements to ecology and communal resources. READ MORE ON CREATE local communities PAGES 26 TO 29 BETTER PLACES • Affordable homes delivered 1,014 834 TO LIVE We are working hard to ensure we are well placed to deliver the 90% or more customer best possible customer service and customer experience as our • HBF 90% customer 88.9% 88.4% number of customers increases in line with our growth strategy. recommend rating recommend rating READ MORE ON PUT • Maintain an appropriate balance PAGES 44 TO 47 CUSTOMERS Private reservation rate in availability of product in the 0.68 0.70 FIRST (excluding PRS) right locations SHAREHOLDER INFORMATION SHAREHOLDER We are focused on developing the skills of our current team and ensuring we attract both experienced talent and new and enthusiastic young people into our business to underpin our growth objectives. Maintain level of trainees at 15% Number of trainees • 328 297 Our training centres, dedicated Learning and Development team and of an increasing workforce READ MORE ON VALUE AND PAGES 32, 34 AND 35 DEVELOP OUR innovative graduate and apprentice programmes play an important PEOPLE role in delivering our strategy. We are dedicated to maintaining the highest standards of health and safety as our business grows. We have again expanded our own Accident incident Accident incident rate by site in-house dedicated team of Health and Safety professionals to • 0.30 0.20 rate by site maintained at 0.3 or below READ MORE ON ensure that our teams on site are appropriately trained, supported PAGES 23 AND 37 and monitored. 06 Redrow plc Annual Report 2017 07 STRATEGIC REPORT STRATEGIC STRATEGIC REPORT Our Business Model Our strategy is achieved by channelling our resources through our strategic principles and ensuring these are embedded in our relationships with our primary stakeholders. Our Strategy REPORT GOVERNANCE GROW OUR MANAGE OUR CREATE BETTER PUT CUSTOMERS VALUE AND DEVELOP READ MORE ON BUSINESS RESPONSIBLY RESOURCES EFFICIENTLY PLACES TO LIVE FIRST OUR PEOPLE PAGES 4 AND 5 Our key resources We share value with our stakeholders and relationships What we do and how we do it and reinvest to deliver a better future Customers LAND, PLANNING & DESIGN Our customers are fundamental to our business and we take great care to research their needs, Resources listen to their feedback and respond with new homes where every detail is carefully considered. This enables us to create high quality homes and engenders loyalty and recommendation. FINANCIAL STATEMENTS FINANCIAL COMMERCIAL & SYSTEMS Communities We adopt a collaborative approach, engaging with community stakeholders to ensure our developments become sustainable communities and better places to live. Relationships CONSTRUCTION Suppliers & Subcontractors We work closely with experienced suppliers and subcontractors to deliver quality products and workmanship and to maintain a strong supply chain. SALES & MARKETING Risk Management Shareholders & Corporate Our Shareholders are the primary providers of financial resources enabling us to create Governance CUSTOMER SERVICE long-term sustainable value. We aim to provide a balance between capital growth and INFORMATION SHAREHOLDER dividend income to our Shareholders. Reinvestment Resources Our Our Our Our Financial Land Bank People Placemaking Resources 08 Redrow plc Annual Report 2017 09 STRATEGIC REPORT STRATEGIC A better way to REPORT GOVERNANCE live CREATING THRIVING COMMUNITIES At Redrow, we build more than just homes; we create thriving FINANCIAL STATEMENTS FINANCIAL communities. We are growing in both reputation and popularity by providing what modern homebuyers want, from their homes, from their neighbourhood and from their local environment. Redrow creates a better place to live by putting customer expectations at the heart of our home designs. Our creative and determined approach combines the best of town and country to create healthy, vibrant communities. Inside our homes we have enhanced our specification by making our ceilings higher, our doors and windows taller and increasing the floor space. Outside, we have created public open spaces, sports facilities, footpaths and cycleways and contributed £163m to local communities in the last year alone. What’s more, we are growing the scale of these ideas; leading the way in the garden village movement so that even our largest developments offer the same superb quality of life. INFORMATION SHAREHOLDER Our developments encourage a better way to live, connecting people to community and nature, enabling happier, healthier lifestyles. “We create networks of footpaths and cycleways to encourage families out into their community to enjoy precious time together in beautiful landscapes.” Matthew Pratt, Regional Chief Executive ASH GARDENS, BURCOTE PARK, TOWCESTER 10 Redrow plc Annual Report 2017 11 STRATEGIC REPORT STRATEGIC A better way to REPORT GOVERNANCE work VALUING PEOPLE At Redrow, we value both our own people and our partners when we FINANCIAL STATEMENTS FINANCIAL build homes and form communities.