Redrow PLC — Annual Report 2010

Jun 30, 2010

ANNUAL REPORT & ACCOUNTS

2010

REDROW plc: Company No. 2877315 Redrow House, St. David's Park, Flintshire CH5 3RX Telephone: 01244 520044 Facsimile: 01244 520720

E-mail: groupservices@redrow.co.uk

www.redrow.co.uk

Contents

About Redrow

Introduction	1
Redrow at a glance	2
Redrow online	4

Business review

Chairman's statement
Operating review	9
Financial review	16
Key performance indicators	19
Risks	20
Corporate responsibility review	21

Directors & Board reports

Board of Directors and Senior management	26
Corporate Governance	28
Audit Committee report	32
Nomination Committee report	34
Corporate Responsibility Committee report	35
Directors' Remuneration report	36
Directors' report	44
Statement of Directors' responsibilities	48

Financial information

Independent Auditors' report	49
Financial statements	50
Consolidated income statement	50
Consolidated statement of comprehensive income	50
Balance sheets	51
Reconciliation of movement in equity	52
Cash flow statements	53
Accounting policies	54
Notes to the financial statements	58

Notice of AGM and Approval of Rule 9 Waiver

Notice of AGM	82
Approval of Rule 9 Waiver	87
Letter from the Senior Independent Director	87
Background	87
Additional information	89
Information incorporated by reference	94
Definitions	95

Miscellaneous information

Corporate & shareholder information
Glossary	98
Five year summary	99

Board

Introduction

"We build our business and homes with pride: "

• ⁿ Focusing on differentiation and value for money for customers
• ⁿ Focusing on shareholder value
• ⁿ Focusing on delivering family homes with a traditional appearance designed for modern living

2010 Key figures

	2010	2009
	£m	£m
Revenue	396.9	301.8
Operating profit/(loss) from continuing operations pre-exceptional item	12.7	(22.4)
Profit/(loss) before taxation from continuing operations pre-exceptional item	0.7	(44.2)
Profit/(loss) before taxation from continuing operations	0.7	(140.8)
Net assets	435.9	293.5
	Pence	Pence
Earnings/(loss) per share for continuing operations pre-exceptional item	0.2	(14.7)
Earnings/(loss) per share from continuing operations	0.2	(47.9)

Redrow at a glance

Redrow has strong, committed and enthusiastic teams operating from each of the 9 regional offices.

Key Strengths

• n Strong, experienced and successful management team
• n New Heritage Collection
• n Strength in land buying in both greenfield and strategic land opportunities
• n High customer satisfaction
• n Strong health & safety record

Redrow Group

	2010	2009
Revenue	£396.9m	£301.8m
Average selling price	£149,300	£137,400
Forward sales	1,065	1,147

Current land bank

1	Redrow Homes Scotland
2	Redrow Homes Lancashire
3	Redrow Homes Yorkshire
4	Redrow plc & Redrow Homes NW
5	Redrow Homes Midlands
6	Redrow Homes South Midlands
7	Redrow Homes South West
8	Redrow Homes South Wales
9	Redrow Homes Eastern

The New Heritage Collection

aunched in February 2010, The New Heritage Collection comprises traditional looking family homes influenced by the architecture of the Arts & Crafts movement, which is also evident in many of the so-called 'character' homes of later periods, especially the 1920s and 30s. Inside, however, our homes have been brought right up to date with convivial, open plan living spaces to suit modern family life and an exceptional specification. L

Already available at c.20 locations across the UK, with c.50 fully furnished show homes open for viewing, The New Heritage Collection has been hugely popular with our customers and has succeeded in making our homes stand out above the competition.

Redrow online

Redrow continues to lead the way, not only in product development and customer service but also in the way our homes and our business are marketed.

Redrow TV includes:

• ⁿ Video footage of New Heritage Collection showhomes
• ⁿ Films showcasing our developments and their locations
• ⁿ Easy to follow video guides on the schemes available to help customers purchase their new home
• ⁿ Weekly news bulletins from around the country

Whilst returning to our core values of quality, tradition and superior styling with The New Heritage Collection, we have embraced modern technology to communicate with our customers, stakeholders and other audiences. This is demonstrated by our investment in new-look consumer and corporate websites and the new medium of Redrow TV.

Redrow TV is our own exclusive online film library, believed to be a first for the UK housing industry. It is dedicated to all things Redrow, keeping customers up to date with the latest news, products and development films.

Accessed via the internet, with a direct link from our website, Redrow TV is available wherever users get broadband – at home, at work, even on their mobile phone.

Since its launch in February 2010, we have invested heavily in video footage to promote our showhomes, developments and the areas in which they are located, as well as films explaining different elements of the home buying process and the help available from Redrow.We offer weekly news bulletins tailored for different parts of the country as well as a national round-up.

Audience figures are growing steadily and Redrow TV has been shortlisted in the 'Best Marketing Initiative' category of the 2010 Housebuilder Awards, which recognise innovation and excellence in the industry.Winners will be announced in October.

Our consumer and corporate websites have both undergone major transformations and improvements over the last 12 months, to make them cleaner and fresher, with better use of photography, more user-friendly and easier to navigate.

We have also introduced a special micro site (www.newheritagecollection.co.uk) to promote our New Heritage Collection, which reflects the look and feel of our Arts & Crafts influenced new homes.Visitors to this micro site can view our TV commercial and be inspired by images and floorplans of our homes, whose exteriors are based on time honoured designs of years gone by.

There is an easy link through to our main consumer website (www.redrow.co.uk) to find the locations where these beautiful new homes are being built.

Our consumer and corporate websites have both undergone major transformations and improvements over the last 12 months.

Redrow website updates include:

• ⁿ Cleaner, fresher pages that are easy to navigate
• ⁿ Better use of photography and other imagery
• ⁿ Quick and easy search facilities
• ⁿ Different websites for different audiences – but a strong feeling of 'family'

Searching for a new Redrow home via our consumer website is easy. Home buyers can search by postcode, city, county or development name; they can choose to search from New Heritage Collection developments only or from Redrow's entire product range; and they can fine-tune their search to include number of bedrooms and price range. Results can be displayed on a map or by a list view and, if we don't have a development in their immediate search area, we will show them their nearest Redrow locations and display its distance away in miles

Once they have identified appropriate developments, customers can view individual house designs, including images and floorplans, site layouts, a development overview and guide to the area.Where appropriate they can also view video footage and 360o walkthroughs. Everything is designed to provide the customer with all the information they need at their fingertips and inspire them to visit the development of their choice.

At the same time, our corporate website (www.redrowplc.co.uk) has also been refreshed and updated to provide a clean, concise dialogue with our investors, business partners, media and potential

employees. Up-to-date share price information is available at a glance and users can subscribe to receive regular alerts including trading updates, board changes and acquisitions or disposals.

Our Corporate Responsibility brochure is also available online as a micro site (www.redrowcr.co.uk) – demonstrating our commitment to sustainability, investing in our staff, looking after customers, trading ethically, protecting our heritage whilst building new communities and playing an active role in the communities in which we operate.

By embracing new technology and online applications in this comprehensive and integrated way we are ensuring that the Redrow brand, our philosophy and our modus operandi are promoted professionally and creatively to the widest possible audience.

• ⁿ www.redrow.co.uk
• ⁿ www.redrow.tv
• ⁿ www.redrowcr.co.uk
• ⁿ www.redrowplc.co.uk
• ⁿ www.newheritagecollection.co.uk

Chairman's statement

ⁿ Steve Morgan Chairman

This is the first full year since my return to Redrow and I am pleased to report that the business has made significant progress and is in the best shape it has been for some time. There have been major changes in the overall direction of the business, including both the management team and structure, product and Group finances, all of which I will comment on below.

Financial Results

In the financial year ended 30 June 2010 Group Revenue increased 31.5% to £396.9m (2009: £301.8m). This was due to both a 22% increase in legal completions to 2,587 homes (2009: 2,113) and an 8.7% increase in our average selling price to £149,300 (2009: £137,400).

Gross margin rose to 10.5% from 1.8% in 2009 as a result of mix changes, increased average selling prices and increased volumes. Operating expenses rose slightly during the year as we selectively invested resources in the expansion of the business.

The operating profit for the year was £12.7m, compared to an operating loss before exceptionals of £22.4m and £119.0m after exceptionals in the prior year.We delivered a pre-tax profit of £0.7m in 2010, compared to the 2009 loss of £140.8m.

Putting the Group's finances back on a sound footing was a fundamental requirement on my return to the business and the successful £150m Rights Issue in October 2009 achieved this. Net debt at the end of June 2010 stood at £47.1m, compared to £214.6m in the prior year, due to both the Rights Issue and tighter control of cash.As a

result, the Group's year end gearing stood at 11% compared to 73% in June 2009.

No dividend is being declared for the year in line with the Board's stated policy of only paying a dividend once the Group has an appropriate level of earnings cover.

Structure

There have been a number of management changes during the period which led to much simpler and more direct communications between the regional businesses and the Group. The Regional Chairmen posts, together with their infrastructure, have been scrapped and John Tutte, who has been with Redrow since 2002, was appointed Group Managing Director, responsible for day-to-day operations.

I am also pleased to welcome Barbara Richmond, who joined the Board in January 2010 as Group Finance Director. Under Barbara's direction the costing and reporting procedures are being substantially simplified and modernised.

The new, more streamlined, management team is working well and I believe contains the right balance of skill and experience to steer the successful progression of the Group.

During the year, three regional offices in the North West, Yorkshire and South Midlands were re-opened following their closure in 2008. In total Redrow now has nine operational businesses which will provide the infrastructure for substantial further growth.

The New Heritage Collection

One of the principle highlights of the year was the successful launch of the New Heritage Collection in February 2010. The New Heritage Collection of predominantly family homes draws its inspiration from the Arts & Crafts movement and re-introduces real character and "kerb appeal" back into our product.

The New Heritage Collection now features in over 30% of our outlets and it will be incorporated in the vast majority of newly acquired sites. The average selling price for the new range during the year was £180,000, 15% higher than the previous product range.

The New Heritage Collection is proving to be extremely popular, both increasing market share in the localities where it has been introduced and margins on the sites where it is incorporated. However it had little financial impact during the year as there were only 67 legal completions. This is set to change significantly during the current year when around 40% of legal completions will be the new product.

Sales and Market Conditions

The housing market continued its recovery during the first half of the financial year and remained steady during the second half.As a result of both the improved market conditions and the change in strategy, we increased our legal completions by 22% year-on-year to 2,587 homes (2009: 2,113).

Weekly sales rates have also grown, averaging 0.58 per outlet in the year, compared to 0.4 in 2009.We do however continue to be constrained by a low number of sales outlets, primarily caused by persistent planning delays. It is a key objective of the current financial year to increase the number of outlets, which stood at 74 at the end of June.

Like for like selling prices increased by 3% during the first half of the financial year. Sales prices in the second half and indeed the calendar year to date, have been stable. Sales per outlet in the second half were comfortably ahead of the previous year.We entered the current period with like for like private sales 18% ahead at £106m.

At the beginning of the financial year we still had significant capital tied up in completed properties from the old Debut and In the City ranges, mainly large apartment schemes. It was important to increase sales momentum on these developments, at appropriate prices, in order to re-employ the capital on new sites.We legally completed 441 of these homes in the 2010 financial year and as I write around 160 remain for sale.

The cancellation rate remained fairly consistent through the year at 17%. Once again the overwhelming cause of cancellations was the chronic shortage of suitable mortgage product, combined with the persistent and ongoing issue of down valuations by valuers acting for the mortgage lenders.Although there has been a marginal improvement in recent months, the issues remain.

I am particularly concerned with the plight of first time buyers, who, unless assisted by their parents, are forced into saving upwards of 20% of the value of their first home by way of deposit, which compares to an historic first time buyer deposit of around 6%. Until this issue is resolved it will remain the major constraint to the full recovery of the UK housing market with overall transactions set to continue at the current historically low levels.

A healthy housing market is necessary for the UK economy as it generates substantial economic activity, helps mobility of labour and increases Government revenues through taxes and stamp duty. Market improvement cannot be achieved without the first time buyer stimulating the chain and I strongly urge the Government to intervene, possibly by way of an insurance indemnity scheme to enable lenders to provide up to 90-95% mortgages once again to first time buyers, or at the very least, provide a first time buyer tax break.

Young people need help to get onto the housing ladder one way or another and it is a sad reflection of our society that the average age of an unassisted first time buyer is now 37 years old, with the latest report from the National Housing Federation suggesting that this will increase to 43 for today's 21 year olds.

Land and Planning

A total of 3,281 plots were acquired during the year, which was heavily weighted towards second half purchases following the re-engagement of land teams in our regional businesses.As a result of legal completions, replans and the sale of a site which no longer met our corporate objectives, the current land bank stands at 13,170 plots, little change from last year, with the forward land bank standing at circa 22,000 plots.

The length of time taken to obtain planning permission has become the principal obstacle to the adequate supply of new homes in the UK. I have long been critical of the unwieldy and grossly over-bureaucratic planning system, which has become surrounded by so much red tape that the sheer volume of paper accompanying planning applications often requires submission by delivery van.

It has now become the norm that more people are involved in the preparation of the countless reports required to accompany planning applications than are employed on site building the houses. Indeed Redrow, as the fifth largest house builder in the UK by volume, last year spent more money on planning and planning related fees than it did on bricks.

One of the first acts of the new Coalition Government was to abolish Regional Housing Targets in preparation for its 'Localism' agenda and what is trailed to be a period of radical change to the planning system. If the proposed changes bring a speedier process and reduced bureaucracy they will be welcomed by all.

Unfortunately at a time when the industry is crying out for certainty and is desperate for more outlets, the

Chairman's statement

Government has yet to announce the details.As there has been little in the way of transitional guidance, planning is currently in a state of limbo, with many local authorities using this vacuum to slow down even further, often refusing to process applications.

Harrow Estates

The acquisition of the Harrow business in October 2009 brought with it a strong management team, expert in the purchasing, remediating and replanning of brownfield sites. Since the acquisition Harrow has purchased two additional sites and the business is actively pursuing further land opportunities.

The five sites Harrow owned when it was acquired by Redrow are all now in production and progress is being made on a pipeline of option sites.

Redrow Commercial Developments has now been absorbed into the Harrow team and as such Harrow has taken responsibility for all commercial property within the Group.

People

The last year in Redrow has been one of monumental change within the business, together with some incredibly challenging trading conditions. The considerable advances which have been made could not have been achieved without the dedication and commitment of all of the members of the Redrow team. I would like to express my sincere gratitude to all of them for their efforts in helping return Redrow once again to be one of the leading builders in the sector.

In September 2009 Colin Lewis, who was the Western Regional Chairman, resigned from the business following the Group reorganisation. In December 2009 David Arnold resigned as Group Finance Director and was replaced in January 2010 by Barbara Richmond. I would like to thank both Colin and David for their efforts over the years.

We continue to regard Health and Safety as key to our business and this has again been recognised as we received a gold RoSPA for the fifth year running.

Outlook

We remain in a period of tough economic conditions and uncertainty. The new Coalition Government has announced a programme of considerable spending cuts and tax increases which will have a negative impact on everybody in the UK. The housing market has seen a reduction in the volume of transactions since the election, both as a result of the economic uncertainty and the lack of available mortgage finance.

In volume terms Redrow has seen a small reduction in the number of reservations in the first ten weeks of our financial year. This has been offset however by the increase in average selling price as a result of the growing influence of The New Heritage Collection. Overall like for like sales in the year to date are marginally ahead of the same period last year.

Redrow is in good shape with a low level of gearing, a strong and more streamlined management team, improving margins and an excellent new product. Short of a collapse of market conditions from those we have experienced to date, I expect the Group to make further progress during the current year.

Steve Morgan Chairman

Operating review

ⁿ John Tutte Group Managing Director

Introduction

The past year has been one of considerable change on the operating side of the business.We have introduced our new product, re-opened offices, strengthened and restructured our management teams, embarked upon an ambitious land buying programme, integrated Harrow Estates into the Group and doubled build output in response to an improved sales market.

Our regional teams have coped enthusiastically with the changes and are now well placed to respond to the demands of growing the business in a challenging environment.

Sales Market

The financial year started strongly with an opening order book of 600 private units compared to 492 units the year before. Reservations in July and August were better than anticipated and there was little evidence of a seasonal downturn. In the autumn year-on-year reservations remained ahead but were only marginally better than the

Legal completions

levels seen during the summer. This remained the case for the balance of the financial year with the exception of a few weeks affected by Christmas and the bad weather that followed. The Group recorded 2,211 private reservations in the year an increase of 22% on the previous year. The cancellation rate in the year was 17% which was lower than the level experienced in previous years.We closed the year with a private order book of 597 units, in line with the previous year in terms of volume but ahead by 18% in revenue due to a higher average selling price of £177,200. Social housing reservations declined as a consequence of fewer new outlets coming through and the social order book reduced from 547 units to 468. Since the year end we have seen a seasonal downturn in the market in contrast to our experience last year.

The Group delivered 2,587 legal completions in the year including 373 social units.

Private order book by volume

We started the year with 75 selling outlets and ended the year with 74. In the period we opened 23 new outlets and closed 24. Our private sales rate per outlet was 0.58 per week helped by relatively strong performances from our three City apartment schemes in Birmingham and Barking. We ended the year with 225 unsold stock units on these schemes. On these and other apartment schemes we have successfully re-focused our sales strategies away from the investor market towards owner-occupiers.We also made good progress on our planned disposal of the remaining Debut units and ended the year with just 23 units on two sites.We continue to closely monitor stock and work in progress levels across all of our developments striking a balance between controlling capital employed and having an appropriate level of stock to support changing market conditions.

The average selling price for the year of plots legally completed was £149,300 compared to £137,400 in the previous year. The second half average selling price was 5% ahead of the first half largely due to mix. Prices moved in line with published housing indices during the first few months of the year and then remained fairly flat with some small increases secured in the spring. Prices on The New Heritage Collection were generally more resilient.

Operating review

Trading in the north relied more upon incentives such as Home-Buy Direct (HBD) than the south. The Group secured 13% of its reservations using HBD and has been allocated a further 430 HBD units under Kickstart 2; the Group has only limited exposure to shared equity, other than HBD, and has tightly controlled part exchange. The Group has also secured £2.9m of gap funding on its Devonport project under the Kickstart 2 scheme. The funds will be used to facilitate further infrastructure necessary to bring forward the next phases of the project.

The availability of mortgage funds was a constraint on the industry during the year and particularly affected firsttime-buyers and those with small deposits. Net mortgage lending remains at historically low levels and lenders continue to be cautious; surveyors also remain hesitant and we continue to experience down valuations.

Land

The regional land teams were increased during the autumn of 2009 which coincided with more opportunities at

realistic prices coming to the market. Including 584 plots acquired as part of the Harrow Estates acquisition, the Group acquired 3,281 plots in the year across 31 sites of which 1,462 plots were held under contract. Of those plots acquired, 338 were transferred from the Forward Land portfolio. The year end current land bank closed at 13,170 plots in line with the opening position after taking into account a reduction of 654 plots as a result of selling one site that no longer matched our strategy, and a review of plots under contract.We were particularly strong on acquiring land in the Midlands where our strategic need to replace low priced apartments with family housing has been most acute.

All the plots acquired in the year will be developed with The New Heritage Collection product and are in the main planned for two storey housing.

At Moston, in Manchester, the Group entered a joint venture with Manchester City Council to develop six previously cleared sites with over 400 two storey family

ⁿ Launch weekend at Heritage Gardens, Tipton; a site acquired as part of the Harrow business acquisition during the year.

ⁿ Barking Central, London.

houses. The first site is now well underway and the response from local home buyers has been very encouraging.

Forward Land remains an important source of land for the Group. During the year we acquired a further 3,095 plots including 1,100 plots as part of the Harrow Estates acquisition. The Forward Land portfolio was reviewed in light of emerging planning policy and reduced by 3,657 to close at 21,900 a net 900 plot reduction on the opening position. The Group has enjoyed some planning success with its Forward Land portfolio, and subject to agreeing satisfactory draw-down terms, expects the Forward Land portfolio to make a strong contribution to the current land bank in 2010/2011.

Product

The New Heritage Collection was launched in February and is now being built on over 30% of sites. In the coming year the New Heritage Collection is expected to account for over 40% of output.

The launch was accompanied by new marketing material that reflects the spirit of the new collection. The web site was also completely revamped and is an increasingly essential sales and marketing tool for attracting customers to our sites; the new web site has had over 400,000 unique visitors since it was launched in February.

We have also launched Redrow TV; the first housebuilder to do so. Redrow TV is a broadband based TV channel that runs news bulletins and provides information on our

developments and product; Redrow TV can be accessed through the web site.

The New Heritage Collection returns the business to its successful roots of building family housing, housing that is traditional in its appearance but internally planned and specified with modern day living in mind. The external elevations are reminiscent of the Arts & Crafts movement which can generally be found in the best parts of most towns. Internally space is arranged around family living and the specification is high. Kitchens are functional and attractive with built-in bookcases and integrated appliances. Bathrooms have clean lines with contemporary sanitaryware.

The New Heritage Collection has been meticulously designed in response to market research with particular attention paid to the smallest details. The New Heritage Collection is as much aimed at those looking to buy in the second-hand market as those that prefer new.

The New Heritage Collection currently consists of 40 house types ranging from one bed apartments to large six bedroom detached houses. Despite a higher internal and external specification, increased costs have been mitigated by expanding Group deals, limiting the range of materials used and achieving more efficient build. The overriding objective has been to ensure that perceived value significantly outweighs cost.

Board

Alongside the quality of the design of the product sits the quality of build and the level of service we give to our customers.A record number of 14 of our site managers have gained NHBC Pride in the Job Awards in the past year and go forward to the next round.We have also achieved record levels of customer satisfaction as measured by an external source carrying out monthly telephone surveys. Across the year 92% of our customers were satisfied or very satisfied with their new home and 96% would recommend us to a friend; it is pleasing to note our results improved as we progressed through the year.We received a 4 star rating in the nationally published Home Builders Federation survey.

Delivering our product responsibly and safely is fundamental to our business, and it is reassuring to report our focus on this area has for the fifth year running been recognised by a Gold Award from RoSPA.

Harrow Estates

Harrow was acquired in October 2009 and was quickly integrated into the business. Harrow specialises in adding value to land through the planning and where appropriate, remediation process and has particular skills in cleaning up contaminated brownfield land. It also uses its master planning skills to promote greenfield land. Harrow will be both an additional source of land for the Group as well as a source of profit through land trading.

Equivalent units built

Harrow acquired c.500 plots on 2 sites in the year and has made good progress on the options under its control, in particular, the large site in Cambridge has gained planning permission for around 300 units and decontamination works are well underway.

Harrow also now oversees all the commercial development activities in the Group and successfully disposed of 4 properties and 3 parcels of land during the year.

People

Central to our business are our people.After two very difficult years when we had to drastically reduce our workforce it is encouraging to report we have been

recruiting at all levels in the business.At the end of June we employed 840 people, an increase of over 20% on the previous year. It is also even more satisfying to report that many of those that have joined us are returning to the Group.

We re-opened our offices in Yorkshire, North West and South Midlands in the year to regain much of the geographical coverage we lost in the downturn.We now operate from nine regional offices and cover most of the stronger housing markets in the country; there remains scope however to further expand in the South East, South, South West and Midlands and we will look to do so when the time is right.

Board

Whilst we have expanded the business at the divisional level, we have streamlined the overall organisational structure by removing a regional tier of management. The divisions now report directly into Group. This has improved lines of communications and simplified the decision-making process.As a consequence the divisional teams are now more responsible and accountable for the day-to-day operation of their businesses. Group departments that service and support the divisions are represented on the Executive Board and meet monthly.

We have continued to develop our people through training during the year and have delivered 1,324 training days to our employees, and in addition we have provided a significant level of training to our subcontractors. This

training ranged from induction programmes on joining, to management training and on-site Health and Safety training. It is pleasing to report that 7 of our site managers studied for and passed NVQ level 4 during the year. We have resumed recruiting trade apprentices and expect an intake of 50 new apprentices to commence this month. Finally we are planning to reintroduce our graduate training programme next year.

John Tutte Group Managing Director

Financial review

ⁿ Barbara Richmond Group Finance Director

Profit before tax and earnings per share

The Group generated turnover of £396.9m in the year ended 30 June 2010 (2009: £301.8m).

	396.9	301.8
Commercial	2.0	8.1
Land sales	8.7	3.4
Residential	386.2	290.3
Revenue (£m)	2010	2009

This reflected a 22% rise in residential legal completions to 2,587 (2009: 2,113) and a 9% increase in average selling prices to £149,300 (2009: £137,400).

The Group delivered an operating profit of £12.7m (2009: loss £22.4m pre-exceptional items) representing a 3.2% operating margin.Whilst margins were below historic norms due to the effect of selling plots of land acquired before the downturn, this is a welcome return to profitability at the operating level and is testament to the impact of the impetus to the business generated by the response to the new management team and the success of initiatives put in place to drive the business forward which include significant investment in brand and product.

Following the successful £150.3m Rights Issue, net financing costs at £12.0m were £9.6m lower than the previous year.

The Group generated a profit before tax of £0.7m (2009: loss £44.2m pre-exceptional items). Basic earnings per share were 0.2p (2009: 14.7p loss pre-exceptional items).

Tax

As a consequence of tax losses brought forward from 2009, the Group paid no corporation tax in the year (2009: £40.4m refund of corporation tax previously paid).

The Group's tax rate for the year was 28.0% and the expected effective rate for the financial year ending 30 June 2011 is 27.75%.

A deferred tax asset of £77.2m, primarily in relation to pre tax losses is carried at 28.0% at 30 June 2010 for use against future profits and is considered to be fully recoverable. The Finance Bill received Royal Assent on 20 July 2010 and as a consequence the corporation tax rate will fall to 27.0% from 1 April 2011. The carrying value of the deferred tax asset at 30 June 2010 based on a 27.0% rate would be £74.4m.

Dividends

No dividends have been proposed in respect of the financial year ended 30 June 2010.

Rights Issue

In the first half of the financial year, the Group successfully completed a 13 for 14 Rights Issue of 148,586,495 new shares at 105 pence per new share. This generated £150.3m of funds net of expenses of £5.7m of which £14.9m has been credited to Share capital and £135.4m to Retained earnings.

In conjunction with this, the Group completed the acquisition of the Harrow Estates business (see note 22).

Balance Sheet

Net assets at June 2010 were £435.9m (2009: £293.5m), an increase of 49% due primarily to the Rights Issue.

Capital employed reduced by £25.1m to £483.0m as a result of careful management of inventory.

Equivalent units of work in progress

Our investment in land and work in progress pre net realisable value (NRV) provision reduced by £89.1m reflecting the further progress made in reducing the number of stock plots held. This was partly offset by our targeted investment in the land market in the year which saw over 3,200 new plots (including Harrow) purchased and contracted and terms agreed on a further c.1,100 plots with over 40% of these contracted post year end.

During 2010 £62.4m of the NRV provision was utilised against legal completions.As a consequence, at 30 June 2010, the NRV provision against land and work in progress was £256.9m (2009: £319.4m) with £233.6m against land and £23.3m against work in progress. In addition, £39.2m of provision was released in the year relating to Type 1 plots and £39.1m of provision created in the year, with £21.8m relating to Type 1 plots and £17.3m relating to Type 2 plots.

In 2010 we have reclassified a significant number of plots from our Type 2 land category to the Type 1 land category to reflect operational decisions taken to develop land we previously expected to sell undeveloped. In determining the basis for the provision at 30 June 2010 we took cognizance of the increase in our average selling price during the year.A significant element of the price increase was due to the change in mix. This, together with the continued uncertainty of future house price movements, lead us to conclude the basis of provisioning we used at the end of the 2009 financial year remained appropriate for 2010.

The net realisable value provisions will continue to be reviewed at future reporting dates to assess their appropriateness in the context of prevailing market conditions and the re-assessment of net realisable value and costs.

Non-current trade debtors increased by £1.1m during the year to £7.1m due to our use of the HomeBuy Direct scheme to facilitate first time buyer purchases.

Land creditors reduced by £15.8m to £37.6m in the year in line with the scheduled settlement of a number of significant land creditors.

Cashflow and Net Debt

Net debt reduced by £167.5m to £47.1m during the year, with gearing reducing from 73% at June 2009 to 11% at June 2010.

The cash generated from operations was £50.0m (2009: £12.1m outflow).

In June 2010, the Group via its Employee Benefit Trust completed the purchase of 4.22m of its own shares at a cost of £5.2m to fund its share option schemes, thus avoiding dilution for existing shareholders.

In addition, as a consequence of shares in the whole of the housebuilding sector, including ourselves, trading at a significant discount to net asset value we are proposing a resolution at the forthcoming AGM to enable the Board to buy back up to 10% of the Company's share capital either as treasury stock or for cancellation.

Plot costing and margin measurement

With effect from the financial year ending June 2011 the Group has changed its methodology for plot costing and margin measurement. The changes are as follows:

• ⁿ When a site is acquired the cost of the land is allocated over the private plots only. Social plots will carry no land value. This is because social plots are part of the 'cost' of acquiring those private plots for development.
• ⁿ Build cost is calculated on the basis of house type.
• ⁿ Gross profit on each plot and house type is therefore measured on the full cost of the specific plot.

Previously the margins on all plots (both private and social) on a site were equalled and thus all reported the same margin rather than reflecting their true individual profitability.

The change has been made to improve the accuracy of internal profit reporting and management information.

The average cost per plot for private owned plots on the above basis at 30 June 2009 was £29,300.With the acquisition of new land and completions in the year, the equivalent plot cost at 30 June 2010 was £31,200.

The Group has a partnership development in Moston, Manchester where it does not own the land but builds and sells the houses in conjunction with Manchester City Council. These particular plots have no land value in our balance sheet and have therefore been excluded in the above calculation.

Financing and Treasury Management

Redrow is a UK based housebuilder and therefore the main focus of its financial risk management surrounds the management of liquidity and interest rate risk. Financial management is conducted centrally using policies approved by the Board.

Financial review

(i) Liquidity and facilities

Liquidity risks are managed through the regular preparation and review of cashflow forecasts and by maintaining appropriate committed banking facilities to ensure adequate headroom.

It is considered appropriate that the Group maintains relationships with a number of banks. The current syndicate comprises five banks.

During the year, in conjunction with the Rights Issue, the Group agreed with its banking syndicate to amend the terms of the existing syndicated facility agreement including a reduction in the total facility size to £250.0m from £450.0m. The £250.0m is made available as a revolving credit facility for utilisation by the Group up to and including 30 September 2011.

In addition to the committed facilities, the Group also has further uncommitted bank facilities which are used to assist in day-to-day cash management.

Facilities are kept under review and the Group maintains regular contact with its banks and other financial institutions to ensure that it remains attuned to new developments and that its facilities remain appropriate to strategic and operational objectives and market conditions.

(ii) Interest rate risk

The Group is exposed to interest rate risk as it borrows money at floating rates. Its interest rate risk arises primarily from long term borrowings. In order to manage this risk, the Group enters into simple risk management products, notably interest rate swaps.All interest rate swaps are sterling denominated and are not used for speculative or trading purposes.

Pensions

The Group provides funded defined benefit pension arrangements and funded defined contribution arrangements. The defined benefits section of the pension scheme is closed to new entrants and from 1 July 2009 increases in pensionable salary are limited to the lower of base salary increases, increases in inflation or 2.5% for defined benefit members.

As at 30 June 2010, the Group financial statements showed a £4.4m deficit (2009: £2.8m surplus) in respect of the defined benefits section of the pension scheme, as calculated in accordance with IAS19.

Barbara Richmond

Group Finance Director

Key performance indicators (KPIs)

Financial

KPI		Relevance to Redrow		How we measure it	2010	2009
	n Earnings per share (EPS)	Redrow regards growth in Earnings per Share as an important objective for our shareholders	n	Profit attributable to ordinary equity shareholders divided by the weighted average number of ordinary shares in	0.2p (basic) 0.2p	(14.7p)* (basic) (47.9p)
n	Return on	We monitor how effectively we use our	n	issue during the period Operating profit pre-exceptional item,	1.5%	(2.9%)
	capital employed (ROCE)	capital base with the objective of delivering ROCE in excess of our comparable cost of capital		adjusted for joint ventures, as a percentage of the average of opening and closing capital employed pre-exceptional item
n	Operating margin	We regard this as an important measure of the quality of our financial returns	n	Operating profit as a percentage of revenue	3.2%	(7.4%)*
n	Forward sales	The level of forward sales provides a measure of the activity in future periods that is pre-sold	n	The number of homes reserved or exchanged at the end of the period that are due to legally complete in the future	1,065	1,147
n	Net cash from operating activities	We monitor how effective our operations have been in generating cash	n	Cash generated from operations after deducting net interest and tax	£40.2m	£10.1m

* From continuing operations pre-exceptional items.

Non-Financial

KPI	Relevance to Redrow	How we measure it	2010	2009
n Land	The land bank is the foundation for our future business performance	The number of plots owned with a n planning consent	11,600	12,500
		The number of plots controlled under n contract generally awaiting the grant of a satisfactory planning consent	1,570	630
		The forward land bank is the sum of plots n controlled, (generally under option), or owned without a planning consent being promoted through the planning system	21,900	22,800
n Product	We aim to build our homes well and therefore monitor construction quality	The average number of reportable n items per NHBC inspection	0.26	0.29
n People	Redrow looks to be regarded as an employer of choice in the industry and therefore we monitor our staff turnover	Number of staff leaving through n resignation or dismissal, excluding redundancy, as a proportion of total staff	6.1%	9.4%
	We take our responsibility for Health & Safety very seriously and therefore monitor potential and actual incidents	A measurement of the accident potential n rate based on internal procedural non compliance occurrences identified by Redrow's Health & Safety team across the Group on inspecting sites	2	1
Customers n	We aim to provide our customers with a home they are proud of and to deliver improving levels of customer service	The percentage of customers who are n satisfied with their overall purchase experience including the quality of their	92%	89%
	that enhance our reputation in the marketplace	home The percentage of customers who would n recommend Redrow to a friend	96%	94%

Risks

Risk	Description	How we manage our risks
Housing n market conditions	The conditions within the UK housing market are fundamental to Redrow's business performance. The availability of mortgage finance and the extent of down valuations are key issues in the current environment	Close monitoring of, and proactive management response n to, lead indicators of the housing market Regional spread of operations diversifies risk to local n markets Proactive approach to the management of the mortgage n valuation process
Land n procurement	The timing of future land purchases and the ability to purchase land suitable for our product are fundamental to the Group's future performance	Close monitoring of market conditions by experienced n management team Strong and knowledgeable land, planning and technical n teams with good local knowledge
Appropriateness n of product and marketing	The failure to design and build a desirable product for our customers at the right cost could lead to relative underperformance in our business	Our product is kept under constant review to ensure it is n appropriate for the market The product mix on the new sites is extensively considered n by management and if appropriate, adjusted to market conditions Design is an integral element of our business n
Planning and n regulatory environment	The inability to obtain detailed planning consents and the timeliness of consents on key sites may adversely impact upon anticipated production	Strong planning and technical teams with good local n knowledge Well prepared, high quality planning submissions addressing n local concerns and demonstrating good design Broad spread of developments going through the planning n system at any one time
Liquidity and n funding	The group requires appropriate facilities for its short term liquidity and long term funding needs	Bank facilities with appropriate covenants and headroom n for a range of market conditions Regular contact and communication with shareholders and n relationship banks Regular updates of strategic plans including profitability and n cash flow projections Capital structure regularly reviewed n
Attracting and n retaining staff	The loss of key staff and/or our failure to attract high quality employees will inhibit Redrow's ability to achieve its business objectives	Remuneration packages are benchmarked at local and n national levels to ensure that they are competitive In-house training centre provides a central focus for training n activities across all disciplines Structured training programmes include apprentice schemes n
Health and n safety/ environment	A significant Health and Safety or environmental incident or general deterioration in standards could put people and/or the environment at risk as well as damaging Redrow's reputation	Dedicated Health and Safety team operates across the n Group to ensure appropriate standards are applied with regular on site inspections and audits Group has established an Environmental Management n System and has introduced a site Environmental audit process All staff receive appropriate training through our in-house n programme
Key supplier or n subcontractor failure	The failure of a key supplier or subcontractor to perform due to financial failure or contraction of production capability could disrupt Redrow's ability to deliver homes on programme	Use of suppliers and subcontractors with strong track record n and reputation Close monitoring of supplier and subcontractor performance n through six monthly assessment of performance and financial strength
Fraud/ n uninsured losses	A significant fraud or uninsured loss could damage the financial performance of the business	Systems, policies and procedures designed to segregate n duties and minimise opportunity for fraud Regular management reporting and challenge n Internal Audit reviews n Regular review of insurance programme n

Corporate responsibility review

Health & Safety

The Health & Safety of our employees, subcontractors, customers and the general public carries the highest priority in our organisation.We strive to ensure compliance with all legislation and endeavour to adopt best practice in all our activities

We are extremely proud to have received a Gold Award from the Royal Society for the Prevention of Accidents (RoSPA) for the fifth consecutive year and also a Gold Medal Award to mark the achievement of five consecutive Gold Awards. The RoSPA Occupational Health and Safety Award is widely recognised within the industry as one of the most prestigious Health and Safety awards and encourages organisations to develop robust health and safety management systems to embed health and safety within the culture of an organisation.

Compared to 08/09, construction activity on our sites increased by over 100%.Against this significant increase in activity, the total number of reportable accidents under the requirements of the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations increased by 2 to 14.

As in 08/09, no Improvement Notices were received from the Health and Safety Executive but disappointingly, one Prohibition Notice was received (08/09: nil), the first received in five years. Swift action was taken to rectify the situation and the subcontractor concerned has been removed from our approved subcontractor tender list.

Climate Change and the Environment

The housebuilding sector has an important role to play in helping to reduce the UK's carbon emissions. Redrow is committed to being proactive and engaging with Government and various industry working parties and policy groups and has responded and contributed to the plethora of consultations published during the year.

Redrow is a member of Next Generation, an organisation launched in 2006 with the objective of encouraging best practice within the residential development sector. It is overseen by a high profile Executive Committee representing investors, the Homes and Communities Agency and WWF-UK and undertakes an annual benchmarking exercise of the UK's leading housebuilders based on a range of sustainability criteria.

ⁿ Dave Ford, one of Redrow's Health & Safety Managers receiving the RoSPA Gold Medal.

Corporate responsibility review

Supplier Partners

An effective and efficient construction supply chain is vital to the success of the business.Within Redrow this embraces merchants, distributors and manufacturers together with our subcontractors who form a valued and crucial part of the chain.

Strong relationships and cooperation are fundamental in the development of a successful supply chain. By selecting and working with like-minded partners we have developed an efficient supply chain that is aligned to Redrow's core values.

The companies identified here represent only a small proportion of the partners we work with to achieve success.

Waste Management

Site waste management has been one of the key areas we have focused upon in our review of our corporate responsibility objectives and targets.We have worked with 'Reconomy' our nominated waste specialist to strengthen our waste management systems and reporting and have improved the consistency of approach across all our sites. This has led to a 5% improvement in our average monthly recycling rate and have set a benchmark going forward equivalent to BRE 'Good Practice' standards.

Delivering Sustainable Development

The past year has seen an increase in the number of sites coming through the planning process which have sustainable energy requirements. Our in-house sustainability team, supported by selected specialist environmental consultants, have engaged positively with local authorities to explore site potential and to arrive at environmentally and commercially viable solutions.

In 09/10, c.10% of our legal completions were built to Code Level 3 standards, employing a variety of renewable technologies to complement improvements made to the performance of the building fabric.

A number of our developments feature a proportion of homes designed to embrace the sustainable development principles of Building for Life, the national standard for well-designed homes and neighbourhoods. Five of these schemes also incorporate the 16 design criteria demanded by Lifetime Homes to support the changing needs of families encountered at different stages of life.

The quality of the community environment we provide is further enhanced by our contribution of green space and community facilities. Redrow, together with our development partners in some instances, have provided over 11.6 hectares of play areas and public open space, much of which has been improved to create wildlife friendly environments and to encourage biodiversity.

Supporting our staff

Redrow remains fully committed to supporting our staff and enabling them to meet their full potential with over 1,300 training days delivered to full time staff.

Redrow has fully supported the Major Home Builders efforts to ensure that the workforce on site is fully qualified through the CITB - ConstructionSkills initiative resulting in 99% of our staff holding a ConstructionSkills

ⁿ Shaun Johnson, Site Manager at Saxon Court development in Yorkshire receives his sixth NHBC Pride in the Job Award.

Corporate responsibility review

Certificate Scheme card, the highest level within the Major Home Builders Group.

Other achievements include:

• ⁿ 23 staff achieving NVQs
• ⁿ 14 site managers earning NHBC 'Pride in the Job' awards in recognition of the quality of their work
• ⁿ Recruiting c.50 additional apprentices, increasing the total number of apprentices at Redrow to c.70
• ⁿ Re-opening our graduate programme with 8 undergraduates recruited to complete their one year industrial placements with Redrow

Redrow in the Community

Redrow has always understood that our role in the provision of sustainable local communities extends beyond the delivery of quality, affordable homes and spaces.We recognise the need to design places that create neighbourhoods where people will want to live and work and we actively engage with local communities to achieve this goal.

This interaction can range from seeking residents' opinions and input on design proposals via locally organised pre-planning consultation events, through participation in the Considerate Constructors Scheme to limit nuisance to neighbours during the construction phase, to providing extensive facilities and making significant financial contributions that benefit the local community. Our support isn't just limited to large scale contributions however, and we regard it as equally important to support societies, charities, schools and clubs at grass roots level.

A number of initiatives have taken place across the UK this year, exemplifying this kind of interaction.

At Tiddy Brook Meadows in Tavistock, Devon, furniture from a showhome was donated to tenants of the West Devon Homes Housing Association, providing them with items, which, perhaps, they would not otherwise have been able to afford.

At Buckley in North Wales, Redrow sponsored and assisted in running two fundraising events for Buckley Town Junior Football Club's annual summer football festival. Some 80 teams of six to fourteen-year-olds from across the North

ⁿ Redrow presents a cheque for £2,000 to Buckley Town Junior Football Club.

ⁿ The children of Bowmandale Primary School, Barton-upon-Humber with the Redrow hot air balloon.

West took part in the football festival. The money raised will enable the team to buy new kit for all of the players and provide further training for 50 coaches.

Meanwhile, Redrow's very own hot air balloon toured the country visiting local primary schools near our developments. This helped to bring the curriculum alive by enabling school children to meet the pilot and learn all about the history and science of this fascinating pastime.

Board of Directors & Senior management

ⁿ Left to right, Paul Hampden Smith, Graham Cope, Alan Jackson, Debbie Hewitt, John Tutte, Steve Morgan and Barbara Richmond at Cwm Calon, Caerphilly.

1 Steve Morgan, 57

Chairman

Steve Morgan founded Redrow in 1974 and led the business from a small civil engineering contractor to become one of the UK's leading home builders. He floated the Company in 1994 and eventually stepped down as Chairman in November 2000, returning to the helm in March 2009.

Steve is also Chairman of the Bridgemere Group of Companies, which includes Wolverhampton Wanderers, Carden Leisure and Trinity Aviation. Steve is a Fellow of the Chartered Institute of Building and holds four Honorary Degrees. He was awarded an OBE in 1992.

A

2 Alan Jackson, 66

Non-Executive Deputy Chairman and Senior Independent Director

Alan Jackson joined the Redrow Board in August 2009. He has a wealth of experience in executive and non-executive roles and is currently the Non-Executive Chairman of The Restaurant Group plc and Charles Wells Limited. He is also a Non-Executive Director of Playtech plc.

Chairman of the Corporate Responsibility Committee Chairman of the Nomination Committee A, B, C, D, E

3 John Tutte, 54

Group Managing Director

John Tutte joined the Board of Redrow in July 2002. In September 2009 he was promoted to Group Managing Director. He qualified in civil engineering and has amassed more than 30 years' experience within the industry, having previously held the position as Chief Executive of Wilson Connolly plc.

A

4 Barbara Richmond, 50

Group Finance Director

Barbara joined the Board of Redrow in January 2010. Bringing with her a proven track record, with over a decade of experience as Group Finance Director at a number of UK listed companies including Inchcape plc, Croda International PLC and Whessoe plc. She has a strong background in both manufacturing and retail as well as having completed a number of major acquisitions and disposals throughout her career. She is a Fellow of the Institute of Chartered Accountants in England and Wales and a graduate of the University of Manchester.

A

5 Debbie Hewitt, 47

Non-Executive Director

Debbie joined the Redrow Board in August 2009. She has a wealth of experience in executive and non-executive roles. She is currently the Non-Executive Chairman of Moss Bros plc and Non-Executive Director of Mouchel plc, HR Owen plc, Luminar plc, NCC plc and Domestic and General. Chairman of the Remuneration Committee A, B, C, E

6 Paul Hampden Smith, 49 Non-Executive Director

Appointed to the Redrow Board in August 2009. Paul Hampden Smith is a Fellow of the Institute of Chartered Accountants. He has been Group Finance Director of Travis Perkins plc since 1996 and was previously Chairman of the Audit Committee at DX Services plc and Polestar UK Limited. Chairman of the Audit Committee A, B, C, E

7 Graham Cope, 46

Company Secretary

Graham Cope joined Redrow as Head of Legal in November 2002 and was appointed Company Secretary two months later. He has over 20 years' experience in the housebuilding sector, either working in-house or for clients in private practice. He qualified as a Solicitor in 1989 and is a member of the Law Society.

About Redrow

Committee members key

• A Main Board member
• B Member of the Remuneration Committee
• C Member of the Audit Committee
• D Member of the Corporate Responsibility Committee
• E Member of the Nomination Committee

Corporate Governance statement

Governance Framework

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

The Financial Reporting Council introduced in June 2010 a new governance code entitled 'The UK Corporate Governance Code' ("the New Code") which replaces the Combined Code published in June 2008 ("the Code"). The New Code applies to accounting periods beginning on or after 29 June 2010. This statement, unless specifically stated, refers to the Code, and the Company sets out details below of how it has applied the principles of good governance as set out in Section 1 of the Code.

The Directors have considered the contents and requirements of the Code and believe that throughout the year ended 30 June 2010 the Company has been substantially compliant.Within this section on corporate governance, the Directors have specifically identified those provisions with which the Company does not comply with the Code together with the reasons behind this.

The Board

Composition of the Board

Following the Board changes on 19 August 2009 outlined in the 2009 Annual Report and Accounts, the Board comprised an Executive Chairman, three further Executive Directors and three independent Non-Executive Directors.

On 14 September 2009, Colin Lewis resigned as an Executive Director.

On 18 January 2010, Barbara Richmond was appointed as an Executive Director.

On 31 March 2010, David Arnold resigned as an Executive Director.

The Board now comprises an Executive Chairman, two further Executive Directors and three independent Non-Executive Directors.

A summary of the composition of the Board and its committees during the year is set out in Table 1.

On 14 September 2009 John Tutte was appointed Group Managing Director and as a result there is a clear division of responsibilities at the head of the Company between the running of the Board and the operational responsibility for the running of the Company's business as required by the Code. In addition as Steve Morgan is Executive Chairman, a Non-Executive Deputy Chairman and Senior Independent Director, was appointed so strengthening the independence of the Board. The Board had previously consulted with leading shareholders and obtained their support for this structure which allowed Steve Morgan to bring his extensive knowledge and experience of the UK housebuilding industry to Redrow and ensure sufficient continuity of the Board and its practices to serve the interests of all shareholders.

Table 1 - List of Directors holding office during the year ended 30 June 2010

		Number
		of years
		on board in					Corporate
	Position	most recent appointment	Independent	Audit Committee	Remuneration Committee	Nomination Committee	Responsibility Committee
Executive Directors
Steve Morgan	Chairman (i)	1
John Tutte	Group Managing Director	8
Barbara Richmond
(appointed 18/1/2010)	Group Finance Director	-
Colin Lewis (resigned 14/9/2009)	Regional Chairman	8
David Arnold (resigned 31/3/2010)	Group Finance Director	7
Non-Executive Directors
Alan Jackson	Non-Executive Deputy
(appointed 19/08/2009)	Chairman and Senior
	Independent Director	-			44 4	Chairman	Chairman
Debbie Hewitt (appointed 19/08/2009) Non-Executive Director		-			44 Chairman	4
Paul Hampden Smith
(appointed 19/08/2009)	Non-Executive Director	-		4 Chairman		44
Malcolm King (resigned 19/08/2009)	Non-Executive Director	5			44 Chairman4
Bob Bennett (resigned 19/08/2009)	Non-Executive Director	2			4 Chairman 44
Denise Jagger (resigned 19/08/2009)	Non-Executive Director	2			44 44Chairman

(i) Steve Morgan is the founder of Redrow and rejoined the Board on 23 March 2009, after an absence of over 8 years, and became Chairman on 1 July 2009.

All Non-Executive Directors holding office during the year ended 30 June 2010 were considered to be independent.

The Company Secretary acts as secretary to the Board and its Committees and his appointment and removal is a matter for the Board as a whole. The Company Secretary is a member of the Group Senior Management team and all Directors have access to his advice and services. In certain circumstances, Board Committees and individual Directors may wish to take independent professional advice in connection with their responsibilities and duties and, in this regard, the Company will meet the reasonable costs and expenses incurred.

Board responsibilities and processes

The Board met regularly and frequently, no less than six times during the year and maintains a close dialogue as appropriate between meetings. Board meetings are held at Head Office and periodically at divisional offices when visits are frequently made to a selection of developments accompanied by the local management team. Board papers are distributed in advance of the meetings to allow adequate time for review and preparation and include key strategic, operational and financial information. Attendance by individual directors at Board and Committee meetings held during the year ended 30 June 2010 is set out in Table 2.

The Board has a formal schedule of matters reserved specifically for its decision.

The matters reserved include:

• ⁿ Approval of Redrow's long term objectives and strategy;
• ⁿ Approval of the Annual Report and Accounts, preliminary and half-yearly financial statements, interim management statements, trading updates and the recommendation of dividends;
• ⁿ Approval of any significant changes in accounting policies or practices;
• ⁿ Any changes relating to capital structure;
• ⁿ Approval of treasury policies;
• ⁿ Ensuring the maintenance of a sound system of internal control and risk management;
• ⁿ Approval of corporate acquisitions or disposals, significant land purchases or contracts;
• ⁿ Changes to the size, structure and composition of the Board;
• ⁿ Approval of significant policies, including Redrow's health & safety policy; and
• ⁿ Review of overall corporate governance arrangements.

Details of internal control and risk management processes are included in the Audit Committee report on pages 32 to 33.

Board balance and independence

The Board considers that it is of a size and has a balance of skills, knowledge and experience that is appropriate for its business. The Executive team provides the Board with an appropriate view of the detail of the business and the benefit of their significant collective experience of the UK house building industry. The Non-Executive Directors bring a depth of experience and understanding from outside the Group.

Details of the Directors' respective experience is set out in their profiles on page 27.

Under the Code, at least half the Board, excluding a Non-Executive Chairman, should comprise independent Non-Executive Directors. This was not the case for part of the year whilst Board appointments were changing. The Board currently comprises three Executive and three Non-Executive Directors, in compliance with the Code, and this has been the composition of the Board for the majority of the year.

Table 1 on page 28 provides a summary of the Company's assessment of the independence of the Directors.

No Executive Director served as a Non-Executive Director elsewhere during the year. Company policy permits full time Executive Directors to hold one Non-Executive directorship, subject to the consent of the Board. Steve Morgan has other business interests as outlined on page 27.

Appointments and re-elections to the Board The Board has a Nomination Committee whose terms of reference include making recommendations to the Board on the appointment of Executive and Non-Executive Directors. The Nomination Committee report can be found on page 34.

Under the Company's Articles of Association, all Directors are subject to re-election at their first general meeting after appointment. For those who are not subject to such obligations at this year's AGM the Board decided to comply with the provisions of the New Code on re-election and accordingly all Directors will be submitting themselves for re-election. The Board's policy on the term of appointment for a Non-Executive Director is that it is not normally expected that a Non-Executive Director will serve more than six years.

Professional development and performance evaluation

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

All Directors undertake a comprehensive induction programme following their first appointment. The programme for Non-Executive Directors is specifically designed to encompass the full breadth of business and includes visits to operating subsidiaries.

Corporate Governance statement

Table 2 - Attendance record of Directors at meetings during the year ended 30 June 2010

	Board	Audit Committee	Remuneration Committee	Nomination Committee	Corporate Responsibility Committee
Total number of meetings in the year ended 30 June 2010	11	4	5	4	1
Executive Directors
Steve Morgan	11/11
John Tutte	11/11
Barbara Richmond (i)	4/4
Colin Lewis (ii)	2/3
David Arnold (iii)	7/8
Non-Executive Directors
Alan Jackson (iv)	9/9	4/4	4/4	2/2	1/1
Debbie Hewitt (iv)	8/9	3/4	4/4	2/2
Paul Hampden Smith (iv)	8/9	4/4	4/4	2/2
Malcolm King (v)	2/2	0/0	1/1	1/2
Bob Bennett (v)	1/2	0/0	1/1	2/2
Denise Jagger (v)	2/2	0/0	1/1	2/2

(i) Appointed on 18 January 2010

(ii) Resigned on 14 September 2009

(iii) Resigned on 31 March 2010

(iv) Appointed on 19 August 2009

(v) Resigned on 19 August 2009

During the year, formal appraisals of the Group Managing Director and Group Finance Director were undertaken by the Chairman.

All independent Non-Executive Directors had an annual appraisal conducted by the Non-Executive Deputy Chairman. The Board undertakes a formal annual review of it own effectiveness. For the year ended June 2010, this was undertaken using a formal questionnaire completed by each Director and the responses were considered collectively by the Board.

Directors' remuneration

The Board has a Remuneration Committee whose terms of reference include the review of Main Board remuneration policy and agreement of the terms of employment and the granting of bonuses, share options or share incentive plans relating to the Group's Senior Management.

The Remuneration report can be found on pages 36 to 43.

Capital Structure

Information on the capital structure of the Company is included in the Directors' report on page 46.

Relations with Shareholders

The Group announces its financial results half-yearly and

immediately following their publication undertakes formal presentations to equity analysts. These presentations are available on the Company's website. In addition, the Group published an Interim Management Statement in November 2009 and May 2010.

Following the full year and half-yearly results' announcements in September 2009 and February 2010, the Chairman, Group Managing Director and Group Finance Director met current or potential significant Shareholders. This embraced visits to London and feedback from these meetings is independently collated and disseminated to the Board.

During the year ended June 2010, the Chairman and the Senior Independent Director also held a number of meetings with significant Shareholders. The Group also hosted a site visit for Sector Analysts.

The Annual General Meeting (AGM) takes place at a venue close to the Group's Head Office.All Directors attended the AGM on 4 November 2009. The AGM represents an opportunity for all Shareholders attending to table questions formally during the meeting and informally afterwards to the Company's Directors.

Formal notification of the AGM, through the Annual Report and Accounts, is sent to Shareholders at least 20 working days in

Corporate Governance structure

advance. It is Company policy to propose a separate resolution at the AGM on each substantive issue including the opportunity to approve the Remuneration report.

Redrow's website, www.redrow.co.uk, gives access to current financial and corporate information.

Audit Committee

Current Members of the Audit Committee

• ⁿ Paul Hampden Smith, Chairman (pictured)
• ⁿ Alan Jackson
• ⁿ Debbie Hewitt

The Audit Committee's principal responsibilities lie in reviewing the Group's financial reporting, overseeing the appointment and work of the external Auditors and reviewing Redrow's internal control processes. The terms of reference of the Committee, which are in compliance with the Combined Code, are kept under review.

All the members of the Committee are independent and the Board believes the Committee has the appropriate level of expertise to fulfil its terms of reference.

The Committee held four meetings during the financial year ended June 2010 and holds further meetings as appropriate. The Group Finance Director was invited and attended each meeting as did the external Auditors. On each occasion the Committee had the opportunity to meet the external Auditors without any Executive Director being present.

The Committee receives regular updates on changes to accounting standards and best practice in financial reporting and corporate governance. The Committee invites other individuals to attend the meetings to provide technical support and advice as appropriate. In addition, individual members are encouraged to attend external seminars and courses on areas relevant to their membership of the Committee.

The Audit Committee addressed a wide variety of issues in its meetings, including:

• 1. Reviews of the 2009/10 half-yearly and full year 2009/10 results including the Annual Report and Accounts;
• 1. Reviews of the results of the 2008/09 external audit and the results of the half-yearly review of the results for the six months to December 2009, together with a review of the 2009/10 external audit plan and associated fees;
• 1. A review of the appropriateness of the Group's accounting policies;
• 1. A review of the independence and objectivity of the external Auditors;
• 1. A review of the effectiveness of the external audit process;
• 1. A review of the effectiveness and structure of Internal Audit;
• 1. A review of Internal Audit programmes of work. Committee members receive an Executive summary of each internal audit report;
• 1. Consideration of the Group risk assessment process and a going concern review;
• 1. A review of internal controls across the whole business; and
• 1. A review of the Group's Whistleblowing policy.

The Group has a widely publicised whistleblowing policy which enables employees and other stakeholders e.g subcontractors, to raise concerns in confidence. The Audit Committee has arranged to receive reports on all occasions when such issues are raised under this policy.

Due to the current members of the Audit Committee being appointed on 19 August 2009, the Audit Committee considered it inappropriate to undertake a review of Audit Committee effectiveness until they had experienced a full Audit Committee cycle.As a result, a review of Audit Committee effectiveness will take place at the 4 November 2010 meeting.

Audit Independence

PricewaterhouseCoopers LLP ("PwC") were appointed Auditors in 2003 having succeeded PricewaterhouseCoopers who were appointed in 1987. The current audit partner was first appointed in respect of the financial year ended June 2005. Given the significant change in composition of the Board of Directors since 30 June 2009, subsequent to the finalisation of the Financial Statements for the year ended 30 June 2009 the Audit Committee requested and PwC agreed to an extension to the tenure of the audit partner. Consequently the audit partner scheduled to rotate off following the conclusion of the 30 June 2009 audit has continued to act as audit partner for one further year, the year ended 30 June 2010, in order to provide continuity and support the maintenance of the audit quality. The Audit Committee have approved the appointment of the new Audit Partner from PwC who is due to start his position following the conclusion of the 30 June 2010 audit.

The Audit Committee has a formal policy in respect of the work of the external Auditors. The purpose of this policy is to ensure that the Auditor's objectivity and independence is maintained by ensuring both that the nature of any non-audit work undertaken and the level of fees paid does not compromise the Auditor's position.Appointments in respect of non-audit work require the prior approval of the Audit Committee within an established budget. In addition, no work can be undertaken by the external Auditors in any area where there is any identifiable risk that the work of an individual within the external audit firm or the external audit firm generally could conflict or compromise the quality, objectivity or independence of any audit or compliance work undertaken for the Group.

During the year ended 30 June 2010, the Company undertook a Rights Issue and PwC were engaged by the Company to provide the report on working capital required as part of this process. The external Auditors are not indemnified by the Company nor has the Company purchased liability insurance for them.

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

• ⁿ Defined authorisation levels exist over key areas such as land purchase, the placing of orders and contracts and staff recruitment;
• ⁿ A comprehensive prioritised risk register which is regularly reviewed;
• ⁿ The Group's management information systems provide weekly updates on key statistics and information in respect of sales and production and the content of these weekly reports is regularly reviewed to ensure it remains appropriate;
• ⁿ Redrow has an in-house health and safety department and places great emphasis on the importance of health and safety and environmental management. The department works closely with the operating companies to ensure that training is provided to employees and subcontractors, best practice is shared and appropriate actions are taken to comply with heath and safety best practice and legislation throughout the organisation;
• ⁿ The Board requires each Director in its operating subsidiaries to complete an annual statement on Corporate Governance and related party transactions. The statement is designed to provide assurance that Group policies and procedures are being implemented and complied with in all material respects. In addition, key functional directors complete a Principal Controls Self Assessment Questionnaire which is reviewed by the Board to assist in improvements in the control framework;
• ⁿ A monthly reporting pack is circulated in advance and reviewed at each of the Main, Executive and subsidiary board meetings which includes consolidated or subsidiary management accounts as appropriate.Annual budgets are set and forecasts prepared, with actual performance compared against the annual budget and updated forecasts;
• ⁿ The financial reporting process includes control and reconciliation processes which ensure there is an audit trail between the Group's underlying financial reporting systems and the Group's financial statements;
• ⁿ A policy and procedures manual which covers all the significant aspects of the Group's operations and describes the systems and controls that are to be applied; and
• ⁿ Daily statements of a reconciled cash position identifying significant payments are prepared, 13 week rolling cashflow forecasts are prepared and forecast banking covenant compliance is regularly tested.

Internal Controls

The Board of Directors recognises its overall responsibility for the Group's system of internal control and for monitoring its effectiveness. There is an ongoing process, which has been in place for the whole year, for identifying, evaluating and managing significant risks. However, in reviewing the effectiveness of internal control, such systems can only provide reasonable but not absolute assurance against material misstatement or loss.

Key business activities including finance, land acquisition, product design, procurement and information technology are controlled by the Executive Directors.All activity is organised within a defined structure with formal lines of responsibility, designated authority levels and a structured reporting framework.

A formalised reporting structure is established within Redrow. The Executive Directors, the Company Secretary and functional heads of department meet monthly to discuss the Group's key issues, risks and opportunities. The operating companies hold monthly board meetings which are attended on a rotational basis by the Executive Directors.

The Group formally reviews its prioritised risk register. In addition, the Executive Board, through its regular meetings, reviews key areas of risk on an ongoing basis and considers whether the internal controls identified in relation to those risks remain appropriate.

Insurance, Risk Management and Internal Audit

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

Redrow has a fully embedded risk management process.A risk register with risks appropriately ranked is maintained and is regularly reviewed and updated using a leading accredited external risk management software tool. The risk register is formally considered by the Board at least once per annum.

During the year internal audit work was outsourced to RSM Tenon, Chartered Accountants, who carried out a broad programme of internal audit work using a risk based approach. RSM Tenon provided a designated Audit Manager to ensure a consistent quality of internal audit work whilst being able to use staff having the appropriate level of experience and qualification for the particular audit programmes undertaken. RSM Tenon have the facility to have direct access to the Chairman of the Audit Committee. Day to day accountability lies directly to the Group Finance Director.

The internal audit strategy is discussed and agreed with the Audit Committee and PwC. Suggested control improvements and any control weaknesses identified are followed up as appropriate.

During the year, the Group reviewed the effectiveness and structure of its internal audit processes.As a result, the Group decided it was now appropriate going forward for internal audit to be provided by internal resources to take advantage of industry specific knowledge and experience and for this to be supplemented by external resources where specialist expertise is required e.g I.T.

Paul Hampden Smith

Chairman of the Audit Committee 8 September 2010

Nomination Committee report

Current Members of the Nomination Committee

• ⁿ Alan Jackson, Chairman (pictured)
• ⁿ Paul Hampden Smith
• ⁿ Debbie Hewitt

The Nomination Committee's terms of reference are kept under regular review being last amended in June 2010 and are published on the Group's website.

The Committee has met twice during the year ended 30 June 2010 following the appointment of Alan Jackson as Chairman on 19 August 2009 and the publication of the 2009 Annual Report and Accounts and met twice prior to this. Its principal business can be summarised as follows:

• 1. To consider the structure of the Main Board and the proposal to streamline the Executive with the introduction of a Group Managing Director replacing the Regional Chairmen roles;
• 1. To consider the appointment of John Tutte as Group Managing Director. The Board considered the merits of the appointment and the qualities and experience of the individual concerned and resolved to recommend the appointment to the Board;
• 1. To consider the proposed re-election of Steve Morgan as Chairman (acting in an executive capacity) at the AGM on 4 November 2010 and after due consideration to recommend his re-election to the Board;
• 1. To consider the proposed re-election of John Tutte as an Executive Director at the AGM on 4 November 2010 and after due consideration to recommend his re-election to the Board;
• 1. To consider the proposed re-election of Barbara Richmond as an Executive Director at the AGM on 4 November 2010 and after due consideration to recommend her re-election to the Board;
• 1. To consider the proposed re-election of Alan Jackson as Non-Executive Deputy Chairman and Senior Independent Director at the AGM on 4 November 2010 and after due consideration to recommend his re-election to the Board;
• 1. To consider the proposed re-election of Debbie Hewitt as Non-Executive Director at the AGM on 4 November 2010 and after due consideration to recommend her re-election to the Board; and
• 1. To consider the proposed re-election of Paul Hampden Smith as Non-Executive Director at the AGM on 4 November 2010 and after due consideration to recommend his re-election to the Board.

Alan Jackson

Chairman of the Nomination Committee 8 September 2010

Corporate Responsibility Committee report

The Corporate Responsibility Committee's terms of reference are kept under regular review being last amended in February 2010 and are published on the Group's website.

The Committee met once during the year ended 30 June 2010 and its principal business can be summarised as follows:

• 1. Review of the terms of reference of the Committee;
• 1. Update on carbon foot printing and carbon emissions trading;
• 1. Update on the Green Team initiatives set up in the individual subsidiaries and at Group and their work to date;
• 1. Review of external environmental benchmarking reporting;
• 1. Review of site waste management and water consumption procedures;
• 1. Briefing on Government Energy Consultations.

The Corporate responsibility review on pages 21 to 25 provides further information on areas of work monitored by the Committee.

Alan Jackson

Chairman of the Corporate Responsibility Committee 8 September 2010

Current Members of the

Corporate Responsibility Committee

• ⁿ Alan Jackson, Chairman (pictured)
• ⁿ Nigel Smith Redrow Research and Sustainability Director

Directors' Remuneration report

The Committee meets as often as is required but at least twice per year. The Committee met five times during the course of the financial year ended 30 June 2010.

The Committee has consulted Deloitte LLP on a range of issues during the year. Deloitte LLP also provides the Company with advice on taxation matters but do not have any other connection with the Company.

Executive Remuneration at a Glance

Components of reward

Fixed component	Basic salary Benefits in kind Pension & retirement benefits
Variable component	Cash bonuses Long Term Share Incentive Plan ("LTSIP") Save as You Earn Option Scheme ("SAYE")

Current Members of the Remuneration Committee

• ⁿ Debbie Hewitt, Chairman (pictured)
• ⁿ Alan Jackson
• ⁿ Paul Hampden Smith

This report has been prepared in accordance with the requirements of Schedule 8 to the Accounting Regulations under the Companies Act 2006 and The Listing Rules. The Financial Reporting Council introduced in June 2010 a new governance code entitled 'The UK Corporate Governance Code' ("the New Code") which replaces the Combined Code published in June 2008 ("the Code"). The New Code applies to accounting periods beginning on or after 29 June 2010, this report, unless specifically stated, refers to the Code, and describes how the Board has applied the principles relating to Directors' remuneration in the Code.As required by the Companies Act 2006, a resolution to approve this report will be put to Shareholders for approval at the Annual General Meeting to be held on 4 November 2010.

Remuneration Committee

The Remuneration Committee is comprised solely of Non-Executive Directors. From 19 August 2009, the Remuneration Committee comprised Debbie Hewitt as Chairman, Alan Jackson and Paul Hampden Smith. Details of Committee attendance has been set out on page 30.

The Committee has agreed terms of reference detailing its authority and responsibilities. The terms of reference of the Committee are kept under regular review and are published on the Group's website. These include:

• ⁿ determining and agreeing with the Board the framework for the Remuneration of the Chairman, the Executive Directors and the Company Secretary and determining within this framework the total individual remuneration package of each Executive Director including the Chairman and the Company Secretary;
• ⁿ determining the targets for performance related pay schemes in respect of each Executive Director including the Chairman and the Company Secretary;
• ⁿ monitoring the structure and level of remuneration for Managing Directors or equivalent staff within the Group.

Remuneration Policy

The Committee aims to ensure that the Group provides competitive but cost effective remuneration packages at all levels in order to reward, retain and motivate staff who are expected to meet high levels of performance as well as ensuring our remuneration is competitive in the market in which we operate and attracts a high calibre of employee.

The Remuneration Committee recognises the importance of aligning shareholders and employee interests to create shareholder value. In addition to their remuneration package, all employees are entitled to participate in the Save As You Earn (SAYE) scheme under which employees are granted options and encouraged to save in order to invest in Company shares.

Consistent with this policy, the remuneration packages awarded to the Company's Directors are intended to reward Directors for their current achievements whilst also encouraging a focus on the medium and long term strategy and performance of the Company. Remuneration packages are designed to ensure that the interests of Shareholders and the Group's Senior Management are aligned and incorporate an appropriate level of performance related remuneration with important operational and strategic elements.A significant proportion of remuneration is expected to be performance related based upon fair but challenging quantitative and qualitative targets which are determined by the Remuneration Committee. Those elements which are performance related are set out in further detail below.

The performance related elements under each Executive Director's remuneration package have clearly defined criteria that link rewards to business performance in the short, medium and long term. The Committee considers that in framing its

remuneration policy it has given full consideration to the provisions of Section 1 and Schedule A of the Code.

Executive Management

The Executive Directors consist of Steve Morgan who is Executive Chairman, John Tutte who became Group Managing Director on 14 September 2009 and Barbara Richmond who was appointed Group Finance Director on 18 January 2010 during the year. Colin Lewis was made redundant on 14 September 2009 and David Arnold resigned on 31 March 2010.

Elements of the Remuneration Package

The main components of the remuneration package provided to an Executive Director are as follows:

(i) Basic salary

Salaries are reviewed as appropriate and at least once per annum. Following his promotion to Group Managing Director on 14 September 2009 John Tutte's salary increased by £75,000 to £375,000 per annum.

Barbara Richmond joined the Group on a base salary of £250,000 which was £50,000 less than her predecessor. This reflects the Remuneration Committee's change of approach to increase the emphasis on variable pay.

As a result of Steve Morgan taking on full responsibility as Executive Chairman the Remuneration Committee reviewed the level of notional fees being paid to him. The Committee sought advice from Deloitte LLP and benchmarked comparative fees and agreed to increase these from £322,000 to £425,000 (see page 40(i)).

In the light of prevailing economic conditions, no increase in prevailing salary levels for Executive Directors is proposed for the year ending June 2011.

(ii) Pension and retirement benefits

Group Managing Director John Tutte is a member of the defined benefit section of the Redrow Staff Pension Scheme. The Scheme is a contributory scheme which provides a pension, lump sum death in service benefit and dependent's pension.

Pensionable earnings have historically been calculated on base salary only. From 1 July 2009, pensionable earnings are calculated on a shadow salary where increases in the shadow salary are restricted to the lower of increases in base salary, inflation and 2.5%. Executive Director Member contributions are 8.3% of shadow salary, and Company contributions 12.3% of shadow salary with pension entitlement for an Executive Director Member accruing at the rate of 1/45th for each year of service. The Scheme has a normal retirement age of 65 which also applies to the Executive Director Members.

Group Finance Director Barbara Richmond is not a member of the Redrow Staff Pension Scheme and instead receives a pension allowance equivalent to 20% of base salary.

Due to previous service Steve Morgan is a pensioner member of the Redrow Staff Pension Scheme.

With the exception of Steve Morgan the Executive Directors are also covered by fixed term permanent health insurance.

(iii) Benefits in kind

These primarily relate to a fully expensed car or cash equivalent car allowance and private medical insurance.

(iv) Annual Cash bonus

For the financial year ended June 2010, Executive Directors were entitled to a bonus, payable in cash, equivalent to a maximum of 75% of their salary subject to meeting certain performance criteria.

Performance was measured against challenging pre-determined targets set by the Remuneration Committee. In 2010, the targets for potential 75% cash bonus consisted of four elements: land purchases, forward sales, profit before taxation and capital turn.

The Executive Directors were awarded 39% of base salary for the performance period which is payable in September 2010.

For the financial year ending June 2011, Executive Directors are entitled to a bonus, payable in cash, equivalent to a maximum of 75% of their salary, subject to meeting certain performance criteria.

Performance will be measured against four elements: land purchases, forward sales, profit before tax and return on capital.

(v) Long Term Incentives

LTSIP 2006 vesting

During the year an element of the Total Shareholder Return performance condition under the 2006 LTSIP was achieved and as a result John Tutte, and Colin Lewis exercised options over 4,773 shares and David Arnold exercised options over 4,222 options. The remaining shares under the 2006 LTSIP lapsed.

LTSIP 2007 vesting in September 2010

In accordance with the performance conditions attached to the 2007 LTSIP grant, the performance conditions were not achieved and, the Committee confirmed that all of the 2007 LTSIP options will lapse on 19 September 2010.

LTSIP 2009 grant

Group Managing Director John Tutte was awarded a grant of nil cost options under the LTSIP with a value equivalent to 100% of his base salary as at 1 July 2008.

The options will vest three years from the date of grant of the option, subject to the satisfaction of performance conditions. The award was based on EPS (30%), ROCE (30%) and TSR (40%) with the following performance parameters determined by the Remuneration Committee.

Directors' Remuneration report

EPS for the year ending June 2012 ("x")

Award
Nil	x < 13.0p
10.0% to 29.9% on sliding scales	13.0p x < 19.0p
30.0%	x 19.0p

ROCE for the year ending June 2012 ("y")

Award
Nil	y < 13.0%
10.0% to 29.9% on a sliding scale	13.0% y < 17.5%
30.0%	y 17.5%

TSR for the year ending June 2012 ("z")

Award
Nil	z < index
15.0% to 39.9% on a sliding scale	index z index + 10.0%
40.0%	z > index + 10.0%

The TSR performance criteria is measured against an unweighted index of comparator group companies.

Following Barbara Richmond's appointment as Group Finance Director on 18 January 2010 she was awarded a grant of nil cost options with a value equivalent to 200% of base salary. This special one off award reflects the Remuneration Committee's change of approach to increase the emphasis on variable pay.

LTSIP 2010 grant

In respect of the 2010 grant, it is proposed that each Executive Director, with the exception of Steve Morgan, will be awarded a grant of nil cost options under the LTSIP with a value equivalent to 100% of their 2009 base salary. The options will vest three years from the date of grant of the options, subject to the satisfaction of performance conditions. The award will be split between capital turn (30%), EPS (30%) and TSR (40%) with performance parameters to be determined by the Remuneration Committee.

LTSIP Phantom Share Scheme

Due to the size of Steve Morgan's shareholding, it is the intention of the Remuneration Committee to grant him a phantom option under the LTSIP. This option will be paid out in cash. The LTSIP will be amended to enable phantom options to be granted but in all other respects Steve Morgan's option will mirror the terms and conditions of the LTSIP currently being awarded to the other Executive Directors.

(vi) Historic share option schemes The Phantom Share Option Scheme

The Phantom Share Option Scheme (the "Phantom"), approved at the Annual General Meeting on 5 November 2001, was previously the vehicle used by the Company for rewarding long term performance over a seven year performance period. This scheme ceased in respect of new Phantom option grants on 5 November 2006.

The performance conditions in respect of the phantom options granted to John Tutte were not met and those options lapsed in July 2009.

(vii) The CSOP

Following approval at the AGM on 5 November 2008, the Company granted options over 18,292 shares to each of its then Executive Directors under the approved Company Share Option Plan, which is approved by HM Revenue & Customs for tax purposes. Following the Rights Issue the Remuneration Committee, having obtained HM Revenue & Customs clearance, adjusted the number of share options under the scheme to 23,981 for Executive Directors. These options become exercisable five years from the date of grant of the option subject to the performance condition being satisfied. The performance condition is the achievement of earnings per share target of 19.25 pence.

(viii) SAYE

The Executive Directors are encouraged to participate in the SAYE scheme as a means of increasing their shareholdings.

Share Ownership Guidelines

The importance of encouraging share ownership is recognised by the Group. Both John Tutte and Barbara Richmond are encouraged to have a shareholding in the Group equivalent to 100% of base salary while the Company Secretary is encouraged to have a shareholding of 75% of base salary.

Directors' Service Agreements

The service agreements of the Executive Directors provide for formal notice to be served to terminate the agreement, by either the Company or the Director.

Steve Morgan is required to give the Company 6 months notice and the Company is required to give him 6 months notice. John Tutte is required to give the Company 12 months notice and the Company is required to give him 12 months notice, while Barbara Richmond is required to give the Company 6 months notice and the Company is required to give her 12 months notice.

The agreements do not include provision for pre-determined compensation for early termination and mitigation will be applied to any compensation payments where considered justified by the Remuneration Committee. No additional compensation or extended notice period is included within the service agreements in the event of a change of control. The service agreements of the Executive Directors are rolling contracts which were entered into on the following dates and had the following unexpired notice periods as at 30 June 2010:

Name	Contract Date	Notice Period
Steve Morgan	23/03/09	6 months
John Tutte	14/09/09	12 months
Barbara Richmond	18/01/10	12 months

The Non-Executive Directors' terms of appointment, with maturity dates, are detailed in formal letters of appointment with three month notice periods as follows:

		Letter of Appointment
Name	Position	Dated	Matures
Alan Jackson	Deputy	19/08/09	18/08/12
	Chairman and
	Senior
	Independent
	Director
Debbie Hewitt	Non-Executive	19/08/09	18/08/12
Paul Hampden Smith	Non-Executive	19/08/09	18/08/12

Total Shareholder Return

The graph shows the Total Shareholder Return on the Company's shares over a five year period plotted against the total shareholder return of the FTSE 250 share index which the Company considers to be a representative comparative indicator.

Directors' Remuneration report

Directors remuneration for period 2009/10.

The following tables and notes constitute the audited part of the Directors' Remuneration report.

Directors' detailed emoluments					Payment	Statutory
	Basic salary		Car	Pension	in lieu	redundancy	(viii)	Total	Total
	and fees	Benefits	allowance	allowance	of notice	pay	Bonus	2010	2009
	£000	£000	£000	£000	£000	£000	£000	£000	£000
Executive Directors
Steve Morgan (i)	15	1	-	-	-	-	-	16	3
John Tutte	360	2	15	-	-	-	140	517	315
Barbara Richmond (ii)	114	52	-	23	-	-	44	233	-
David Arnold (iii)	225	12	2	-	292	-	90	621	325
Colin Lewis (iv)	77	6	-	-	361	8	90	542	327
Non-Executive Directors
Alan Jackson (v)	81	-	-	-	-	-	-	81	-
Debbie Hewitt (v)	39	-	-	-	-	-	-	39	-
Paul Hampden Smith (v)	40	-	-	-	-	-	-	40	-
Denise Jagger (vi)	8	-	-	-	11	-	-	19	45
Malcolm King (vi)	7	-	-	-	11	-	-	18	45
Bob Bennett (vi)	7	-	-	-	11	-	-	18	45
	973	73	17	23	686	8	364	2,144	1,105

(i) Steve Morgan draws a nominal salary of £15,000 per annum which he donates via Payroll Giving to the Morgan Foundation. The Company also made a donation to the Morgan Foundation (£576,000 in the year ended 30 June 2010), a UK registered charity of which Steve Morgan is a trustee. Further details are given in the Directors' report on page 45 and in note 23 to the financial statements.

• (ii) Barbara Richmond was appointed on 18 January 2010.
• (iii) David Arnold resigned on 31 March 2010.
• (iv) Colin Lewis was made redundant on 14 September 2009.
• (v) Appointed on 19 August 2009.
• (vi) Resigned on 19 August 2009.
• (vii) Benefits in kind represent fully expensed cars and private health insurance.
• (viii) Bonuses received by David Arnold and Colin Lewis represented bonuses earned and waived in respect of the financial year ended 30 June 2009 which became payable on their leaving the Company.

Pension Scheme

Details of the Executive Directors' pension entitlements are as follows:

Disclosure required by Schedule 15 to the Companies Act 2006

Defined Benefit accrued entitlements

		Additional	Transfer	Transfer
		accrued	value of	value of	Change in
	Accrued	benefits	accrued	accrued	transfer value
	benefit at	earned in	benefit at	benefit at	less directors'
	30 June 2010	the year	30 June 2009	30 June 2010	contributions
Director	£	£	£	£	£
David Arnold*	35,219	6,576	215,487	338,600	93,188
Colin Lewis**	57,793	2,660	579,614	722,914	133,325
John Tutte	37,958	7,201	311,728	462,187	109,561

Disclosure required under the Listings Regulations

Defined Benefit accrued entitlements

			Transfer value
		Additional	of change
		accrued	in accrued
	Accrued	benefit	benefit less
	benefit at	over year net	directors'
	30 June 2010	of inflation	contributions
Director	£	£	£
David Arnold*	35,219	6,983	35,417
Colin Lewis**	57,793	3,442	30,613
John Tutte	37,958	7,638	49,787

* Director ceased accruing benefits in the Scheme from 31 March 2010

** Director ceased accruing benefits in the Scheme from 30 September 2009

The accrued pension shown above is the amount of pension entitlement that would be paid each year on retirement at age 65 based on service to the end of the current year. The transfer value shown above has been calculated on the basis of actuarial advice in accordance with relevant legislation, less Directors' contributions. The transfer values represent the present value of future payments from the Scheme rather than remuneration currently due to the individual and cannot be meaningfully aggregated with annual remuneration.

Directors' Remuneration report

The following table sets out those share options held by Directors under SAYE, CSOP and LTSIP schemes. The options granted in respect of the LTSIP schemes were granted at nil cost to the Directors and were awarded in respect of past performance with future performance conditions attached.All options are in respect of shares in Redrow plc. Once the award has vested the exercise of the share options is unconditional.

Interests in share options

Directors' interests in share options

Scheme	Options held at 1 July 2009	Options granted in year	Options exercised in year	Options lapsed	Options held at 30 June 2010	Exercise price £	From	To
John Tutte
SAYE 2008 (i)	6,859	2,166	-	-	9,025	1.06	01/01/12	01/07/12
LTSIP 2006	45,514	-	(4,773)	(40,741)	-		21/09/09	20/09/16
LTSIP 2007 †	56,194	-	-	-	56,194		19/09/10	18/09/17
LTSIP 2008 ††	359,648	-	-	-	359,648		21/11/13	20/11/18
CSOP 2008 (i)	18,292	5,689	-	-	23,981	1.25	21/11/13	20/11/18
LTSIP 2009 †††	-	229,007	-	-	229,007		22/12/12	21/12/19
	486,507	236,862	(4,773)	(40,741)	677,855
Barbara Richmond
LTSIP 2009 †††	-	358,423	-	-	358,423		25/02/13	24/02/20
	-	358,423	-	-	358,423
David Arnold
SAYE 2008 (i)	6,859	2,166	-	(9,025)	-	1.06	01/01/12	01/07/12
LTSIP 2006	40,263	-	(4,222)	(36,041)	-		21/09/09	20/09/16
LTSIP 2007 †	53,237	-	-	(53,237)	-		19/09/10	18/09/17
LTSIP 2008 ††	359,648	-	-	(359,648)	-		21/11/13	20/11/18
CSOP 2008 (i)	18,292	5,689	-	(23,981)	-	1.25	21/11/13	20/11/18
	478,299	7,855	(4,222)	(481,932)	-
Colin Lewis
SAYE 2008	11,968	-	-	(11,968)	-	1.06	01/01/12	01/07/12
LTSIP 2006	45,514	-	(4,773)	(40,741)	-		21/09/09	20/09/16
LTSIP 2007 †	56,194	-	-	(56,194)	-		19/09/10	18/09/17
LTSIP 2008 ††	359,648	-	-	(359,648)	-		21/11/13	20/11/18
CSOP 2008	18,292	-	-	(18,292)	-	1.25	21/11/13	20/11/18
	491,616	-	(4,773)	(486,843)	-

(i) Additional options granted as a result of the Rights Issue.

† The performance conditions attached to the exercise of share options granted under the LTSIP 2007 are ROCE, growth in EPS and generation of Total Shareholder Return. These share options will lapse on 19 September 2010.

†† The performance conditions attached to the exercise of share options granted under the LTSIP 2008 are ROCE, growth in EPS and generation of Total Shareholder Return. The performance condition end date is 30 June 2013.

††† The performance conditions attached to the exercise of share options granted under the LTSIP 2009 are ROCE, growth in EPS and generation of Total Shareholder Return. The performance condition end date is 30 June 2012.

All remaining share options held by Colin Lewis and David Arnold lapsed on their leaving the Company.

No other Directors have been granted share options in shares of the Company. The mid-market price of Redrow plc shares at 30 June 2010 was 112.83p and the range during the year was 112.83p to 245.41p.

Gains made by Directors on share options

Gains made by individual directors from the exercise of share options during the financial year ended June 2010 are calculated as at the exercise date, although in some cases shares were retained. The gains are set out in the table below:

Executive Director	Share option scheme	No. of shares exercised	Date of exercise	Mid price on date of exercise (pence)	Notional gain on exercise (£000)
John Tutte	LTSIP 2006	4,773	22/12/09	131.5	6
David Arnold	LTSIP 2006	4,222	22/12/09	131.5	6
Colin Lewis (i)	LTSIP 2006	4,773	25/03/10	139.7	7
		13,768			19

(i) Colin Lewis exercised the share option noted above after his departure from the Company.

Directors' contingent interests in share options

No director has a contingent interest in share options as at 30 June 2010 or 30 June 2009.

Directors' interests in shares (This section does not constitute an auditable part of the Remuneration report)

The Directors' interests in the ordinary shares of the Company were:

Beneficial:	8 September 2010	30 June 2010	30 June 2009
	No.	No.	No.
Executive Directors
Steve Morgan	92,436,874	92,436,874	47,878,380
John Tutte	127,398	125,430	58,954
Barbara Richmond	70,512	70,512	-
Non-Executive Directors
Alan Jackson	19,285	19,285	-
Debbie Hewitt	18,787	18,787	-
Paul Hampden Smith	46,000	46,000	-

In October 2009 the Company proposed a 13 for 14 Rights Issue of 148,584,705 new shares at 105 pence per new share.As a result of this offer all of the Directors, except Barbara Richmond who was not in post at the time, accepted the offer in full and as a result their shareholding in the Company increased in accordance with the table set out below.

	Pre-rights issue	Post rights issue (04.11.09)
Steve Morgan	47,878,380	92,336,874
John Tutte	65,126	121,670
Alan Jackson	10,000	19,285
Debbie Hewitt	9,638	18,587
Paul Hampden Smith	8,000	15,428

By order of the Board

Debbie Hewitt

Chairman of the Remuneration Committee 8 September 2010

Directors' report

The Directors have pleasure in presenting to the members their report and the financial statements for the 12 months ended 30 June 2010.

Principal Activities and Business Review

The principal activity of the Group is residential development which includes mixed use development. Redrow plc is a public listed company, listed on the London Stock Exchange and domiciled in the UK.

Revenue and profit on ordinary activities before taxation from continuing operations are stated at £396.9m and £0.7m respectively.

In the current environment, the Board considers that shareholders are best served by retaining cash within the business and therefore does not propose making a final dividend payment.

The information that fulfils the requirements of the business review can be found in the Chairman's statement and the Operating review and Financial review on pages 6 to 20. This includes a review of the key risks facing the business and a review of the key performance indicators of the business and future developments. Details of the financial risk management objectives and policies and associated risk exposure is given in note 14: Financial Risk Management.

Going Concern

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

The current economic conditions and uncertainty in the housing market create uncertainties for the business, and a description of the Group's principal risks and uncertainties and the arrangements to manage these risks are set out on page 20. The Group's business activities, together with the factors likely to affect its future performance, are set out in the Operating review and Financial review on pages 9 to 20. The Group's management of exposure to financial risk, including liquidity, interest rate risk and credit risk, is disclosed in note 14 to the financial statements together with details of the Group's banking facilities and capital management policies and processes.

As explained in the Financial review on page 17 and 18, the Group maintains adequate committed banking facilities which comprise an unsecured £250m revolving credit facility due to mature on 30 September 2011.As stated in note 14 to the financial statements, at 30 June 2010, the Group had £200m of undrawn committed borrowing facilities available. Positive preliminary discussions in respect of facility requirements post 30 September 2011 have commenced.

The Directors have reviewed the Group's financial forecasts for the period to 30 June 2012 and associated financial covenants and have considered various downside sensitivities reflecting the potential impact of a further reasonably foreseeable deterioration in economic conditions. This review confirmed headroom within both financial covenants and facilities, subject to the business undertaking identified mitigating actions which lie within the Group's control. The principal sensitivity relates to the impact of market conditions on profitability and in turn on the Group's net asset position relative to the covenanted level.

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

Significant Interests

As at 8 September 2010, the Company has been advised of the following notifiable interests of 3% or more in its ordinary shares:

	No. of	% of issued
Name	shares held	share capital
Bridgemere
(incl. Steve Morgan)	92,436,874	29.95%
Toscafund	15,532,969	5.03%
Aegon Asset Management	11,623,422	3.77%
Legal & General
Investment Management	12,146,138	3.93%

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

At 8 September 2010, no change in these holdings had been notified nor, according to the registrar of members, did any other shareholder at that date have a notifiable holding of issued share capital.

Directors

The Directors of the Company during the year are listed on page 40 of the Directors' Remuneration report.

The current Directors are listed together with their biographical details on pages 26 and 27.

Formal appraisals of Executive Directors were undertaken during the financial year.All the Non-Executive Directors underwent an annual appraisal conducted by the Non-Executive Deputy Chairman.

The Board confirms that Steve Morgan, John Tutte and Barbara Richmond, who stand for re-appointment as Executive Directors, and Alan Jackson, Debbie Hewitt and Paul Hampden Smith who stand for re-appointment as a Non-Executive Directors, continue to be effective and demonstrate the appropriate commitment to their roles.

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

The Non-Executive Directors have fixed term service agreements outlining their duties and responsibilities.

Details of Directors' service agreements are given in the Directors' Remuneration report on page 38.

So far as each Director is aware, there is no relevant audit information of which the Group's external Auditors are unaware. Each Director has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Group's external Auditors are aware of that information.

Directors' Interests

Related party transactions are disclosed in note 23 to the financial statements.A summary of remuneration provided to key management personnel is provided in note 7c.

The Directors' interests in the ordinary shares of the Company are given in the Directors' Remuneration report on pages 42 to 43. There has been no change in the Directors' interests between 30 June 2010 and 8 September 2010 apart from the increase in holdings by John Tutte arising from his participation in a monthly share purchase plan.

Charitable and Political Donations

The Group made no political donations but paid £594,000 in charitable donations during the year being £588,000 in respect of National charities and £6,000 in support of local charities. The Group and its employees are actively involved in fundraising activities for specific charities. The Group made a £576,000 donation during the year to the 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.

Employees

Redrow places considerable importance on the provision of training and development; training@redrow, a purpose built in-house training facility at Tamworth, completed over 1,300 training days during the year ended 30 June 2010 including those which support the Group induction process.

The Group supports the employment of disabled persons wherever possible through recruitment and by the retention and retraining of those who become disabled during their employment.

The Directors recognise the importance of good communications with employees. Companies within the Group are encouraged to make their employees aware of the financial and economic factors affecting their respective companies and the Group. This is assisted through the medium of regular management meetings, staff publications and the Redrow intranet.

Employee share ownership is encouraged through savings related schemes. In the year ended 30 June 2010, the Save As You Earn scheme was administered via a Qualifying Employee Share Ownership Trust (QUEST).

Creditor Payment Policy

The Group values its relationships with suppliers and subcontractors. It is the policy to agree credit terms prior to commencement of trading. Subject to any items of genuine dispute, it is policy to pay creditors within the terms agreed.At June 2010 the Group had 51 days' purchases outstanding in respect of payments to suppliers and subcontractors (2009: 48 days). The Company had nil days' purchases outstanding in respect of payments to suppliers (2009: nil).

Research and Development

The Group has a centralised Product Development Team charged with identifying and evaluating new construction techniques and products. Environmental and sustainability issues play a prominent role in its activities. The charge to the income statement in respect of research and development in the year was £0.2m (2009: £0.3m).

Directors' report

Environment

Redrow recognises its responsibilities to the community as a whole and has adopted an environmental strategy which is a core part of the Group's objectives. Further details are provided in the Corporate responsibility review on pages 21 to 25 and also on our website at www.redrow.co.uk.

Significant Agreements

The Company's banking arrangements are terminable upon a change of control of the Company. There are no contractual or other arrangements essential to the business which require disclosure under the Companies Act 2006.

Auditors

A resolution to re-appoint PricewaterhouseCoopers LLP as external Auditors will be proposed at the Annual General Meeting on 4 November 2010.

Provision of information to auditors: In the case of each Director in office at the date the Directors' report is approved, confirm that:

• (a) so far as the Director is aware, there is no relevant audit information of which the Company's auditors are unaware; and
• (b) he has taken all the steps that he ought to have taken as a Director in order to make himself aware of any relevant audit information and to establish that the Company's auditors are aware of that information.

Capital Structure

The Company has an authorised share capital of 480,000,000 ordinary shares of 10p each of which 308,607,479 have been issued. The Company has one class of ordinary shares which carry ordinary rights to dividends (subject to the Company's Articles of Association). Each share carries the right to one vote at general meetings of the Company.

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

The Group successfully completed a 13 for 14 Rights Issue of 148,586,495 new shares at 105 pence per new share during the year. Further details are given in the Financial review on page 16. Authority was given to the Directors at last year's AGM to allot unissued shares up to an aggregate nominal amount of £5,333,751 equivalent to approximately 33% of the Company's issued share capital. Further authority was given allowing the Company to make market purchases of its own shares up to an aggregate nominal value of £1,600,125 which was equivalent to 10% of the Company's issued ordinary share capital as at 30 June 2009.As these authorities expire at the forthcoming AGM the Directors will be seeking new authorities as set out in the Notice of Meeting and as referred to below.

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.

The voting rights attaching to the shares held by the Company's Employee Benefit Trust are exercisable by Abacus Trust Company (Isle of Man), the trustee of the Trust.

Purchase of the Company's Own Shares

Resolution 13 set out in the Notice of Annual General Meeting seeks authority from shareholders for the Company to purchase up to 30,860,747 ordinary shares, an aggregate nominal amount of £3,086,075 which is equivalent to approximately 10% of the Company's issued ordinary share capital at 30 June 2010. The authority will expire at the end of next year's Annual General Meeting and the resolution specifies the maximum and minimum prices at which the shares may be bought. Other investment opportunities, appropriate gearing levels and the overall financial position of the Company will be taken into account before deciding upon this course of action.

In addition, the Company will be seeking approval to the waiver granted by the Panel on Takeovers and Mergers such that Steve Morgan will not have to make a general offer to other

shareholders for all of their ordinary shares as a result of market purchases by the Company pursuant to the authority to be granted by resolution 13.

Notice Of Annual General Meeting

Pages 82 to 86 set out the Notice of Annual General Meeting and details the resolutions proposed together with explanatory notes.

To the extent that the Directors' report makes reference to information contained in other sections of the Annual Report, such information will be regarded as forming part of the Directors' report.

By order of the Board Graham Cope Company Secretary Redrow plc Registered no. 2877315 8 September 2010

Board

Notice

Statement of Directors' Responsibilities in respect of the Annual Report, the Directors' Remuneration report and the Financial statements

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

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

• ⁿ select suitable accounting policies and then apply them consistently;
• ⁿ make judgements and accounting estimates that are reasonable and prudent;
• ⁿ state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements; and
• ⁿ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

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

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed on page 27 confirm that, to the best of their knowledge:

• ⁿ the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and
• ⁿ the Directors' report contained on pages 44 to 47 includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

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

Steve Morgan, Chairman

Alan Jackson, Deputy Chairman and Senior Independent Director John Tutte, Group Managing Director Barbara Richmond, Group Finance Director Debbie Hewitt, Non-Executive Director Paul Hampden Smith, Non-Executive Director

By order of the Board Graham Cope Company Secretary 8 September 2010 Redrow plc Redrow House St. David's Park Flintshire CH5 3RX

Independent Auditors' report

ⁿ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements,Article 4 of the lAS Regulation.

Opinion on other matters prescribed by the Companies Act 2006

In our opinion:

• ⁿ the part of the Directors' Remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006;
• ⁿ the information given in the Directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
• ⁿ the information given in the Corporate Governance statement set out on pages 28 to 33 with respect to internal control and risk management systems and about share capital structures is consistent with the financial statements.

Matters on which we are required to report by exception We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• ⁿ adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
• ⁿ the parent company financial statements and the part of the Directors' Remuneration report to be audited are not in agreement with the accounting records and returns; or
• ⁿ certain disclosures of Directors' remuneration specified by law are not made; or
• ⁿ we have not received all the information and explanations we require for our audit; or
• ⁿ a Corporate Governance statement has not been prepared by the parent company.

Under the Listing Rules we are required to review:

• ⁿ the Directors' statement, set out on page 44, in relation to going concern; and
• ⁿ the parts of the Corporate Governance Statement relating to the Company's compliance with the nine provisions of the June 2008 Combined Code specified for our review.

Nicholas Boden (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Manchester 8 September 2010

We have audited the financial statements of Redrow plc for the year ended 30 June 2010 which comprise the Group consolidated income statement, the Group and parent company consolidated statement of comprehensive income, the Group and parent company balance sheets, the Group and parent company reconciliation of movements in equity, the Group and parent company cash flow statements, the accounting policies and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

Respective Responsibilities of Directors and Auditors

As explained more fully in the Statement of Directors' Responsibilities on page 48, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose.We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of the audit of the financial statements

An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group's and the parent company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements.

Opinion on financial statements

In our opinion:

• ⁿ the financial statements give a true and fair view of the state of the Group's and of the parent company's affairs as at 30 June 2010 and of the Group's profit and Group's and parent company's cash flows for the year then ended;
• ⁿ the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
• ⁿ the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and

Consolidated income statement

12 months ended 30 June 2010			Pre exceptional items	Exceptional items Note 2	Total
	Note	2010 £m	2009 £m	2009 £m	2009 £m
Revenue		396.9	301.8	-	301.8
Cost of sales		(355.2)	(296.4)	(103.2)	(399.6)
Gross profit/(loss)		41.7	5.4	(103.2)	(97.8)
Administrative expenses		(29.0)	(27.8)	6.6	(21.2)
Operating profit/(loss) before financing costs	2	12.7	(22.4)	(96.6)	(119.0)
Financial income	3	1.8	3.8	-	3.8
Financial expenses	3	(13.8)	(25.4)	-	(25.4)
Net financing costs		(12.0)	(21.6)	-	(21.6)
Share of loss of joint ventures after interest and taxation	10	-	(0.2)	-	(0.2)
Profit/(loss) before tax from continuing operations		0.7	(44.2)	(96.6)	(140.8)
Income tax (expense)/credit	4	(0.2)	13.4	27.0	40.4
Profit /(loss) for the period from continuing operations		0.5	(30.8)	(69.6)	(100.4)
Earnings/(loss) per share - basic	6	0.2p	(14.7)p		(47.9)p
- diluted	6	0.2p	(14.7)p		(47.9)p

Consolidated statement of comprehensive income

12 months ended 30 June 2010 The Group			The Company
		2010	2009	2010	2009
	Note	£m	£m	£m	£m
Profit/(loss) for the period		0.5	(100.4)	(8.6)	3.8
Other comprehensive income
Effective portion of changes in fair value of interest rate cash flow hedges		1.8	(4.2)	1.8	(4.2)
Deferred tax on change in fair value of interest rate cash flow hedges		(0.5)	1.2	(0.5)	1.2
Actuarial (losses) on defined benefit pension scheme	7e	(7.3)	(11.9)	(7.3)	(11.9)
Deferred tax on actuarial (losses) taken directly to equity		2.1	3.3	2.1	3.3
Other comprehensive expense for the period net of tax		(3.9)	(11.6)	(3.9)	(11.6)
Total comprehensive expense for the period	18	(3.4)	(112.0)	(12.5)	(7.8)

Balance sheets

As at 30 June 2010			The Group	The Company
	Note	2010 £m	2009 £m	2010 £m	2009 £m
Assets
Intangible assets	8	1.8	0.3	-	-
Plant, property and equipment	9	14.6	14.5	-	-
Investments	10	2.2	2.1	0.1	30.7
Deferred tax assets	11	77.2	76.7	4.9	3.4
Retirement benefit surplus	7	-	2.8	-	2.8
Trade and other receivables	12	7.4	6.3	-	-
Total non-current assets		103.2	102.7	5.0	36.9
Non-current assets available for sale	9	2.3	3.9	-	-
Inventories	13	539.7	566.3	-	-
Trade and other receivables	12	12.2	13.9	379.9	362.3
Current income tax receivables	4	-	-	4.5	1.1
Cash and cash equivalents	14	21.9	17.5	20.8	17.5
Total current assets		576.1	601.6	405.2	380.9
Total assets		679.3	704.3	410.2	417.8
Equity
Issued capital	17	30.9	16.0	30.9	16.0
Share premium	18	58.7	58.7	58.6	58.6
Hedge reserve	18	(0.8)	(2.1)	(0.8)	(2.1)
Other reserves	18	7.9	7.9	7.0	7.0
Retained earnings	18	339.2	213.0	214.4	92.8
Total equity		435.9	293.5	310.1	172.3
Liabilities
Bank loans	14	50.0	165.2	50.0	165.2
Trade and other payables	15	17.1	26.3	-	-
Derivative financial instruments	14	-	0.7	-	0.7
Deferred tax liabilities	11	0.6	1.4	-	-
Retirement benefit obligations	7	4.4	-	4.4	-
Long-term provisions	16	8.7	8.9	-	-
Total non-current liabilities		80.8	202.5	54.4	165.9
Bank overdrafts and loans	14	19.0	66.9	28.4	60.0
Trade and other payables	15	138.6	135.3	16.2	17.4
Derivative financial instruments	14	1.1	2.2	1.1	2.2
Current income tax liabilities		3.9	3.9	-	-
Total current liabilities		162.6	208.3	45.7	79.6
Total liabilities		243.4	410.8	100.1	245.5
Total equity and liabilities		679.3	704.3	410.2	417.8

The financial statements were approved by the Board of Directors on 8 September 2010.

Directors S P Morgan B M Richmond

Reconciliation of movements in equity

		The Group		The Company
	2010 £m	2009 £m	2010 £m	2009 £m
Profit/(loss) for the period	0.5	(100.4)	(8.6)	3.8
Other comprehensive income relating to the period (net)	(3.9)	(11.6)	(3.9)	(11.6)
Shares issued	150.3	-	150.3	-
Share-based payment	0.2	0.2	-	-
Movement in LTSIP/SAYE	(4.7)	0.7	-	-
Net increase/(decrease) in equity	142.4	(111.1)	137.8	(7.8)
Opening equity	293.5	404.6	172.3	180.1
Closing equity	435.9	293.5	310.1	172.3

As permitted by section 408 of the Companies Act 2006, the income statement of Redrow plc is not presented as a part of these financial statements.

The consolidated profit/(loss) on ordinary activities after taxation for the financial year, excluding intra-Group dividends, is made up as follows:

	2010 £m	2009 £m
Holding company	(8.6)	3.8
Subsidiary companies	9.1	(104.2)
	0.5	(100.4)

Cash flow statements

12 months ended 30 June 2010		The Group		The Company
Note	2010 £m	2009 £m	2010 £m	2009 £m
Cash flow from operating activities
Operating profit/(loss) before financing costs	12.7	(119.0)	(0.6)	9.3
Depreciation and amortisation	1.4	2.6	-	-
Adjustment for non-cash items	(8.3)	(13.3)	(7.3)	(11.5)
Operating profit/(loss) before changes in working capital and provisions	5.8	(129.7)	(7.9)	(2.2)
Decrease/(increase) in trade and other receivables	2.0	(0.6)	(17.6)	16.8
Decrease in inventories	40.0	189.6	-	-
(Decrease) in trade and other payables	(4.8)	(75.2)	0.1	(0.2)
Increase/(decrease) in employee benefits and provisions	7.0	3.8	7.2	(3.0)
Cash inflow/(outflow) generated from operations	50.0	(12.1)	(18.2)	11.4
Interest paid	(9.8)	(20.9)	(9.8)	(20.1)
Tax received	-	40.4	-	-
Net cash from operating activities	40.2	7.4	(28.0)	(8.7)
Cash flows from investing activities
Acquisition of business	(15.0)	-	-	-
Sale of subsidiary to other Group company	-	-	30.6	-
Acquisition of plant, property and equipment	(1.4)	(0.4)	-	-
Proceeds from sale of plant and equipment	1.4	2.1	-	-
Interest received	-	2.7	-	18.9
Payments to joint ventures - continuing operations	-	(0.3)	-	-
Net cash (outflow)/inflow from investing activities	(15.0)	4.1	30.6	18.9
Cash flows from financing activities
Issue of bank borrowings	50.0	218.0	50.0	218.0
Repayment of bank borrowings	(218.0)	(337.5)	(218.0)	(337.5)
Issue costs of bank borrowings	-	(5.6)	-	(5.6)
Purchase of own shares	(5.2)	-	-	-
Proceeds from issue of share capital	150.3	-	150.3	-
Net cash outflow from financing activities	(22.9)	(125.1)	(17.7)	(125.1)
Increase/(decrease) in net cash and cash equivalents	2.3	(113.6)	(15.1)	(114.9)
Net cash and cash equivalents at the beginning of the period	0.6	114.2	7.5	122.4
Net cash and cash equivalents at the end of the period 19	2.9	0.6	(7.6)	7.5

Accounting policies

Both the consolidated and Company financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and effective at 30 June 2010, and in accordance with IFRIC interpretations and the Companies Act 2006 as it applies to companies reporting under IFRS and Article 4 of the IAS Regulation and in accordance with the historical cost convention as modified by the revaluation of derivative financial instruments and retirement benefit obligations.

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the balance sheet date and the reported amounts of revenue and expenses during the reporting period.Whilst these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates (refer to note 1).

The principal accounting policies have been applied consistently in the periods presented apart from the policy in respect of forward land which has been amended such that the expenditure incurred on owned sites without residential planning consent is no longer provided for when incurred but is included in inventories and is subject to a regular impairment review. The impact of this change has been the release of a £0.4m provision in the year ended 30 June 2010. The impact is not considered material and hence the prior year figures have not been restated.

The principal accounting policies are outlined below:

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of Redrow plc and all its subsidiaries, together with the Group's share of the results and share of net assets of jointly controlled entities made up to 30 June each year i.e. the financial statements of Redrow plc and entities controlled by Redrow plc (and its subsidiaries). Control is achieved where Redrow plc has the power to govern the financial and operating policies of an entity.

a) Subsidiaries

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal. The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair value at the date of acquisition.Any excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets represents goodwill. Goodwill is subject to an annual impairment review, with any reduction in value being taken straight to the income statement.

Adjustments are made as necessary to the financial statements of subsidiaries to ensure consistency with the policies adopted by the Group.

All inter-company transactions and balances between Group companies are eliminated on consolidation.

b) Interests in Joint Ventures

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity which is subject to joint control. Joint venture arrangements which involve the establishment of a separate entity in which each venturer has an interest are referred to as jointly controlled entities. The Group reports its interests in jointly controlled entities using the equity method of accounting - the Group's share of profit after tax is shown separately on the face of the income statement and its share of net assets is included within non-current assets in the balance sheet as an investment.

When the Group transacts with its jointly controlled entities, unrealised profits and losses are eliminated to the extent of the Group's interest in the joint venture, except where unrealised losses provide evidence of impairment of the asset transferred. Where joint venture arrangements are undertaken directly, the Group's share of jointly controlled assets and liabilities are recognised in the relevant subsidiary company and classified according to their nature.

Revenue and Profit Recognition

Revenue represents the fair value received and receivable in respect of the sale of residential housing and land and of commercial land and developments net of value added tax and discounts. This is recognised on legal completion.

Profit is recognised on legal completion.

Segmental reporting

The main operation of the Group is focused on housebuilding. As it operates entirely within the United Kingdom, the Group has only one business and geographic segment. This is consistent with the internal reporting of the Group.

Exceptional Items

Exceptional items are those which in the opinion of the Board, are material by size or nature, non-recurring and of such significance that they require separate disclosure.

Net Finance Costs

Interest income is recognised on a time apportioned basis by reference to the principal outstanding and the effective interest rate. Borrowing costs are recognised in the income statement on an accruals basis in the period in which they are incurred.

Income Tax

Income tax comprises current tax and deferred tax.

Current tax is based on taxable profits for the year and any appropriate adjustment to tax payable in respect of prior years. Taxable profit differs from profit before tax as shown in the income statement as it excludes income or expenditure items which are never chargeable or allowable for tax or which are chargeable or deductible in other accounting periods. Deferred tax is provided in full, using the balance sheet liability method, on temporary differences arising between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the calculation of taxable profit.

Deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax liabilities are recognised for all temporary differences. Deferred tax is calculated at the rates enacted at the balance sheet date.

Deferred tax is credited or charged in the income statement, statement of recognised income and expense, or retained earnings as appropriate.

Intangible Assets – Computer Software

Acquired computer software licences are capitalised on the basis of costs incurred to bring to use the specific software and are amortised over their estimated useful lives of three years. These are reviewed for impairment whenever events or changes in circumstances indicate that the carrying values may not be recoverable.

Plant, Property and Equipment

Freehold property comprises offices or other buildings held for administrative purposes. Freehold property is shown at cost (or deemed cost at opening balance sheet date under the IFRS 1 transitional rules) less the subsequent depreciation of buildings.

All other plant, property and equipment is stated at historic cost less depreciation. Historic cost includes any costs directly attributable to bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by management.

Land is not depreciated. Depreciation on other assets, excluding assets in the course of construction, is charged so as to write off the cost of assets to their residual values over their estimated useful lives, on a straight line basis as follows:

Buildings	50 years
Plant & machinery	5 – 10 years
Fixtures & fittings	3 – 5 years

The assets useful lives are reviewed and adjusted if appropriate at each balance sheet date.

These are reviewed for impairment whenever events or changes in circumstances indicate that the carrying values may not be recoverable.

The gain or loss arising on the disposal of an asset represents the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.

Non-current assets available for sale

Non-current assets are classified as assets available for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at management's best estimate of realisable value less estimated costs necessary to make the sale.

Investment in Subsidiary Companies

In the parent company books, the investment in its subsidiaries is held at cost less any impairment.

Leases

Leases in which substantially all of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Rentals payable under operating leases are charged to work in progress or income on a straight line basis over the term of the relevant lease. Leases classified as finance leases are those where substantially all of the risks and rewards of ownership pass to the lessee.

The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Inventories

Inventories are stated at the lower of cost and net realisable value less cash on account.

Cost comprises land and associated acquisition costs, direct materials and subcontract work, other direct costs and those overheads (based on normal operating capacity) that have been incurred in bringing the inventories to their present location and condition, excluding borrowing costs.

In order to better assess net realisable value as at 30 June 2010, the Group has differentiated its inventories into two categories:

• a) Type 1: land where generally the construction of homes had commenced at the year end and which was generally short to medium term in its development horizon. This category also includes undeveloped land on which housebuild had not commenced at 30 June 2010 but which the Group believes it is more likely to develop than to sell undeveloped.
• b) Type 2: land where housebuild had not commenced and land could be identified as a distinct parcel. This land is more generally medium to long term in time horizon and the Group believes it is more likely to be sold undeveloped.

Net realisable value for land where construction of homes had commenced at the year end (Type 1) was assessed by estimating selling prices and cost (including sales and marketing expenses), taking into account current market conditions.

The net realisable value of land where housebuild had not commenced (Type 2) and is more likely to be sold undeveloped was assessed by re-appraising the land using current selling prices and costs for the proposed development and assuming an appropriate financial return to reflect the current housing market conditions and the prevailing financing environment. This net realisable value represents valuing the land at the amount the Group estimates it could be sold for at the balance sheet date less estimated costs necessary to make the sale.

This provision will be closely monitored for adequacy and appropriateness as regards under and over provision to reflect circumstances at future balance sheet dates. This will include consideration of the continued appropriateness of the allocation of sites between Type 1 and Type 2.Any material change to the underlying provision will be reflected through cost of sales as an exceptional item.

Cash And Cash Equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand, forming an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Borrowings and Trade Payables

Interest bearing borrowings and trade payables are recorded at the proceeds received, net of transaction costs incurred and subsequently at amortised cost.Any difference between the proceeds, net of transaction costs and the redemption value is recognised in the income statement over the period of the borrowings.

Accounting policies

Forward Land

Expenditure relating to forward land excluding owned sites without residential planning consent but including options, fees etc is provided for when incurred.After exercise of an option and acquisition of land following the securing of planning permission, the provisions relating to that land are released. Expenditure incurred on owned sites without residential planning consent is included in inventories and is subject to a regular impairment review.

Employee Benefits

a) Pension obligation

The Group operates a contributory pension scheme for all its staff. The scheme is externally invested and comprises two sections: a defined benefit section and a defined contribution section.A defined benefit plan is a pension plan which defines an amount of pension benefit that an employee will receive on retirement. It is funded through payments to trustee administered funds, determined by actuarial valuations carried out on at least a triennial basis.A defined contribution plan is a pension plan under which the Group pays agreed contributions into a separate fund for each employee and any subsequent pension payable to a specific employee is determined by the amount accumulated in their individual fund.

The (liability)/asset recognised in the balance sheet in respect of the defined benefit section of the scheme is the present value of the defined benefit obligation at the balance sheet date, less the fair value of plan assets. The defined benefit obligation is determined using the projected unit credit method on an annual basis by an independent scheme actuary.

Under IAS 19, revised December 2004, the Group has taken the option to allow actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions to be charged or credited to equity as they arise in full via the statement of comprehensive income.

Scheme service costs are charged to gross contribution and administrative expenses as appropriate and scheme finance costs are included in net financing costs. Past service costs are recognised immediately to the extent that the benefits are already vested, or otherwise amortised on a straight line basis over the vesting period, if they are conditional on the employees remaining in service for a further period.

In respect of the defined contribution section of the scheme, contributions are recognised as an employee benefit expense when they are due. The Group has no further payment obligations in respect of the defined contribution section of the Scheme once the contributions have been paid.

b) Bonus plans

The Group recognises a liability and an expense for bonuses where contractually obliged.

c) Share-based payments

The Group has applied the requirements of IFRS 2 'Share-based payments'. In accordance with the transitional provisions, IFRS 2 has been applied to all grants of equity instruments after 7 November 2002, which had not vested as of 1 July 2004. Equity settled share-based payments are measured at fair value on the date of grant and expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.

d) Termination benefits

Termination benefits are payable when employment is terminated by the Group before normal retirement date by redundancy. These benefits are recognised by the Group in the period in which it becomes demonstrably committed to terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal.

Financial Instruments

a) Land creditors

Deferred payments arising from land creditors are held at discounted present value using the effective interest method, in accordance with IAS 39. The difference between the fair value and the nominal value is amortised over the deferment period via financing costs.

The interest rate applied is an equivalent loan rate available on the date of the land purchase.

b) Derivative financial instruments and hedge accounting Derivative financial instruments are initially recorded at fair value and the fair value is remeasured to fair value at each reporting date.

The Group's use of financial derivatives is governed by an interest rate risk management framework adopted by the Board which sets parameters to ensure an appropriate level of hedging is maintained to manage interest rate risk in respect of borrowings.

The policy prohibits any trading in derivative financial instruments or their use for speculative purposes.

The effective portion of changes in the fair value of derivative financial instruments which are designated and which qualify as cash flow hedges are recognised directly in equity in a hedge reserve. The gains or losses relating to the ineffective portion are recognised in the income statement immediately they arise.

c) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are classified as 'trade receivables' and 'other receivables' in the balance sheet note 12.

Long term trade receivables are held at discounted present value less any impairment. The amount is then increased to settlement value over the settlement period via financing income.

Onerous contracts

Onerous contracts are contracts in which the unavoidable costs in meeting the obligations under the contract exceed the economic benefits expected to be received under it. Provision is made to reflect management's best current estimate of the least net cost of either fulfilling or exiting the contract.

Share Capital

Ordinary shares are classed as equity.

Financial

Dividend Distribution

Dividend distribution to the Company's shareholders is recognised as a liability in the Group's financial statements in the period in which the dividends are declared and paid.

Impact Of New Standards And Interpretation

a. New Standards

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 July 2009:

• IFRS 2 (amendment), 'Share-based payment transactions', effective for annual periods beginning on or after 1 January 2009. The impact is insignificant.
• IFRS 3 (revised), 'Business combinations' and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates' and IAS 31, 'Interests in joint ventures' is effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. This has been applied to the acquisition made during the period (see note 22).
• IFRS 8, 'Operating segments', effective for annual periods beginning on or after 1 January 2009. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. The Group has only one business and geographic segment.
• IAS 1 (revised), 'Presentation of financial statements', effective for annual periods beginning on or after 1 January 2009. The Group has elected to present two performance statements (the Consolidated income statement and the Consolidated statement of comprehensive income). In addition IAS 1 (revised) requires the statement of changes in equity to be presented as a primary statement. The other revisions to IAS 1 have not had significant impact on the presentation of the Group's financial position.
• IAS 23 (revised): Borrowing costs effective 1 January 2009. This amendment requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the costs of the asset.A qualifying asset is one that takes a substantial period of time to get ready for use or sale. Inventories which are produced in large quantities on a repetitive basis over a short period of time are not qualifying assets. This amendment is not expected to have any material impact on the Group's financial statements as the activities performed by the Group do not generally produce qualifying assets.
• IAS 32 (amendment), 'Financial instruments: presentation', and consequential amendments to IAS 1, 'Presentation of financial statements', effective for annual periods beginning on or after 1 January 2009. The impact is insignificant.
• IFRIC 14, 'IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction', effective for annual periods beginning on or after 1 January 2009. The interpretation clarifies the limitations on recognising defined benefit pension surpluses (and the related deferred tax liabilities) in the balance sheet and may also require recognition of an additional liability for any

committed future contributions. The impact is insignificant.

• Annual improvements to IFRSs, effective for annual periods beginning on or after 1 January 2009. This standard improves existing standards and amends 20 standards, basis of conclusions and guidance. The improvements include changes in presentation, recognition and measurement plus terminology and editorial changes. These improvements have an insignificant impact on the financial statements.
• IAS 39 (amendment), 'Eligible hedged items'. The impact is insignificant.
• IFRS 7 (amendment), 'Financial instruments: disclosures'. The impact is insignificant.

The following new standards, amendments to standards and interpretations are mandatory for the first time for the financial year beginning 1 July 2009, but are not currently relevant for the Group:

• IFRS 1 (revised) "First time adoption of IFRS"
• IFRIC 12 Service concession arrangements.
• IFRIC 15 Agreements for construction of real estates
• IFRIC 16 Hedges of a net investment in a foreign operation
• IFRIC 17 Distributions of non-cash assets to owners
• IFRIC 18 Transfer of assets from customers
• IFRIC 19 Extinguishing financial liabilities with equity instruments

No new standards or amendments have been early adopted by the Group.

Standards and interpretations in issue, but not yet effective or early adopted

• Annual improvements 2009. This is a collection of amendments to 12 standards as part of the IASB program of annual improvements. The latest amendments were included in exposure drafts published in October 2007,August 2008 and January 2009. Most of the amendments are effective for annual periods beginning on or after 1 January 2010 although, subject to EU endorsement, entities are permitted to adopt them earlier.
• Amendment to IFRS 2 'Share based payments Group cashsettled share-based payment transactions'. These amendments provide a clear basis to determine the classification of share based payment awards in both consolidated and separate financial statements. The amendments incorporate IFRIC 8 and IFRIC 11 into the standard, expands on the guidance given in IFRIC 11 to address plans that were not considered in the interpretation and provides amendments to the definitions section of IFRS 2.

Standards and interpretations that are not yet effective and not relevant for the Group's operations:

• IAS 24 (revised) 'Related party disclosures'
• Amendments to IFRS 1 for additional exemptions
• Amendments to IAS 32 Financial instruments: Presentation on classification of rights issues
• Amendment to IFRS 1, First time adoption of IFRS
• Amendment to IFRIC 14 'Prepayments of a minimum funding requirement'

Notes to the financial statements

Note 1. Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management consider the key sources of estimation uncertainty and critical accounting judgements relate to:

Carrying value of inventories

The Group carries inventories at the lower of cost and net realisable value less cash on account.

Due to the nature of development timescales, it is routinely necessary to estimate costs to complete and future revenues and to allocate non-unit specific development costs between units legally completing in the current financial year and in future periods.

A full review of the net realisable value of inventories was undertaken by the Group as at 30 June 2010.

In respect of land where the construction of homes had commenced or undeveloped land that the Group believes it is more likely to develop than sell undeveloped (Type 1 land), the Group estimated selling prices and costs of its homes under construction. These estimates were based on a combination of experience to date, local market research and management experience.

In respect of land where housebuild had not commenced, land could be identified as a distinct parcel and the Group believes it is more likely to be sold undeveloped (Type 2 land), the Group judged it appropriate to assess the net realisable value of the undeveloped land. It prepared estimates using a land appraisal methodology reflecting land as a residual value and used an appropriate financial return to take into account the current housing market conditions and the prevailing financing environment. The estimates reflected management's estimate at the balance sheet date of home selling prices and costs and current estimate of the market required rate of return.

The categorisation of undeveloped land between land the Group believes it is more likely to develop (Type 1 land) and land the Group believes it is more likely to sell undeveloped (Type 2 land) is based on the Group's current judgement of its medium term land requirements and prevailing market conditions. The Directors regularly consider which element of the Group's land bank they intend to develop and that which they do not. Land which is not intended for development is generally considered as available to swap or sell.

Pensions

The Group has utilised assumptions including a rate of return on assets, mortality assumptions and a discount rate having been advised by its actuary. To the extent that such assumed rates are different from what actually transpires, the retirement benefit obligations of the Group would change.

Carrying value of deferred tax asset

As disclosed in note 11 to the financial statements, the Group has considered carefully the extent to which it is probable that future taxable profit will be available resulting in taxable amounts against which the carried forward tax losses can be utilised. The Group's medium term financial forecasting model forecasts profitability and the deferred tax asset being utilised in the medium term.

Note 2. Operating Profit/(Loss) Before Financing Costs

			2010	2009
		Note	£m	£m
	Operating profit/(loss) before financing costs is stated
After crediting:
Rental income			0.1	0.2
Profit on disposal of fixed assets			0.1	-
After charging:
Inventories recognised as expenses in the year		13	335.9	388.3
Exceptional items			-	96.6
Depreciation		9	1.0	2.5
Amortisation		8	0.1	0.1
Loss on disposal of fixed assets			0.2	0.1
Plant hire			5.5	2.7
Operating leases	- plant and machinery		1.1	1.3
	- other		0.1	0.1
Research and development expenditure			0.2	0.3
Auditors' remuneration	- fees payable to Company's auditor for audit services		0.2	0.2
	- fees payable to Company's auditor for other services		0.3	0.1

Fees payable to Company's auditor for audit services comprise:

(i) Fees payable for the audit of parent company and consolidated financial statements £30,000 (2009: £57,000) and

(ii) Fees payable for the audit of the Company's subsidiaries pursuant to legislation £120,000 (2009: £140,000).

Auditors' remuneration for non-audit services comprised £6,000 (2009: £35,000) in respect of pensions advice to the Company on actuarial and accounts pension scheme disclosure matters, £305,000 (2009: £nil) in respect of the preparation of a working capital report in conjuction with the Rights Issue and £20,000 (2009: £20,000) in respect of an independent review of the half-yearly financial statements. Exceptional items are summarised as follows:

		2010	2009
	Note	£m	£m
Cost of sales
NRV provision inventories (i)	13	-	96.5
Onerous contract provision (ii)	16	-	6.7
		-	103.2
Administrative expenses/(credits)
Redundancy and termination costs (iii)	7	-	4.9
Board restructuring costs (iv)		-	1.8
Impairment - surplus offices (v)	9	-	1.2
Pension curtailment gain (vi)	7	-	(14.5)
		-	(6.6)
Total		-	96.6

(i) During the year ended 30 June 2010, net realisable value provisions of £39.1m have been created and net realisable value provisions of £39.2m released. The net impact of £0.1m has not been disclosed as exceptional as it is not material. In 2009, £96.5m represented provisions in respect of the net realisable value of inventories.

(ii) The Group successfully renegotiated a number of contracts during the year ended 30 June 2009. £6.7m was provided in respect of contracts in place at 30 June 2009 viewed as onerous.

(iii) This represented the redundancy and termination costs resulting from the significant reduction in employee headcount during the year ended 30 June 2009. It included the compensation payment made to Neil Fitzsimmons in relation to his stepping down as Chief Executive.

Notes to the financial statements

• (iv) This represented the Company's advisory costs in respect of the Board restructuring agreed in March 2009 and in relation to Board changes following Steve Morgan's return.
• (v) As a result of the restructuring during the year ended 30 June 2009, the Group identified four office properties as surplus to requirements and £1.2m was provided in relation to the carrying value of these properties identified as non-current assets available for sale.
• (vi) This curtailment gain includes £3.4m as a result of the redundancies of a significant number of defined benefit pension scheme members during the year ended 30 June 2009 and £11.6m as a result of the pensionable salary capping agreement. This is offset in part by a £0.5m past service cost.

Note 3. Net Financing Costs

	2010	2009
	£m	£m
Interest payable on other bank loans	(11.9)	(23.7)
	(11.9)	(23.7)
Imputed interest on deferred land creditors	(1.9)	(1.7)
	(13.8)	(25.4)
Net interest received on pension scheme	0.4	0.4
Other interest receivable	1.4	3.4
	1.8	3.8
Net financing costs	(12.0)	(21.6)

Interest expense includes £2.8m in respect of the amortisation of the issue costs of bank borrowings (2009: £2.8m).

Note 4. Income Tax Charge/(Credit)

	2010	2009
	£m	£m
Current tax charge/(credit)
UK Corporation Tax at 28.0% (2009: 28.0%)	-	-
(Over) provision in respect of prior year	-	(1.0)
	-	(1.0)
Deferred tax
Origination and reversal of temporary differences (see Note 11)	0.2	(39.4)
Total income tax charge/(credit) in income statement	0.2	(40.4)
Reconciliation of tax charge/(credit) for the year
Profit/(loss) before tax	0.7	(140.8)
Tax calculated at UK corporation tax rate of 28.0% (2009: 28.0%)	0.2	(39.4)
(Over) provision in respect of prior year	-	(1.0)
Tax effect of share of losses in joint ventures	-	-
Expenses not deductible for tax purposes net of rolled over capital gains	-	(0.1)
Short term temporary differences	-	0.1
Tax charge/(credit) for the year	0.2	(40.4)
Deferred tax recognised directly in equity
Relating to pension scheme	2.1	3.3
Relating to fair value adjustment on interest rate swaps	(0.5)	1.2
	1.6	4.5

Current income tax receivable in the Company is £4.5m (2009: £1.1m).

Note 5. Dividends

No dividend was paid in the year ended 30 June 2010 (2009: £nil).

Note 6. Earnings Per Ordinary Share

The basic earnings per share calculation for the year ended 30 June 2010 is based on the weighted number of shares in issue during the period of 275.6m (2009 (restated): 209.7m) excluding those held in trust under the Redrow Long Term Incentive Plan, which are treated as cancelled.

Diluted earnings per share has been calculated after adjusting the weighted average number of shares in issue for all potentially dilutive shares held under unexercised options.

12 months ended 30 June 2010

		No. of
	Earnings £m	shares millions	Per share pence
Basic earnings per share for continuing operations	0.5	275.6	0.2p
Effect of share options and SAYE	-	2.1	-
Diluted earnings per share for continuing operations	0.5	277.7	0.2p

12 months ended 30 June 2009 (restated)

		No. of
	Losses £m	shares millions	Per share pence
Basic losses per share for continuing operations post exceptional items	(100.4)	209.7	(47.9)p
Effect of share options and SAYE	-	-	-
Diluted losses per share for continuing operations post exceptional items	(100.4)	209.7	(47.9)p

The weighted average number of shares in issue and consequently the losses per share for the 12 months ended 30 June 2009 have been restated to reflect the Rights Issue which took place during the 12 months ended 30 June 2010.

Financial

information Directors &

Board

reports Business review

Notes to the financial statements

Note 7. Employees

	2010 £m	2009 £m
Salaries and wages	28.0	33.7
Social security	3.1	3.2
Pensions	2.2	(12.3)
Share-based payments	1.1	1.0
	34.4	25.6

Included in Salaries and wages are £1.1m of redundancy and termination payment costs (2009: £4.9m).

b. Number
	2010 number	2009 number
The average number of persons employed by the Group was:
Directors and administrative staff	322	329
Other personnel	457	476
	779	805

c. Key Management remuneration

Key management personnel, as defined under IAS 24 (Related Party Disclosures), are identified as the Main Board together with Group Senior Management.

Summary key management remuneration is as follows:

	2010	2009
	£m	£m
Short term employee benefits	1.7	2.4
Post-employment benefits	0.1	0.3
Share-based payments	0.4	0.5
	2.2	3.2

In addition, the Redrow Staff Pension scheme paid £3,000 to Steve Morgan in his capacity as an active Scheme pensioner.

Detailed disclosure of Directors' emoluments and interests in shares are included in the Directors' Remuneration report on pages 36 to 43, which form part of these financial statements.

d. Share-based payments Save As You Earn Share Option Scheme

The Redrow plc Save As You Earn scheme is open to all employees and share options can be exercised either 3 or 5 years after the date of grant, depending on the length of the savings contract. The Save As You Earn schemes are not subject to performance conditions.

The Save As You Earn schemes have been valued using the Black-Scholes pricing model.

	2010	2009
Options granted during the year	405,821	1,050,447
Date of grant	1 January 2010	1 January 2009
Fair value at measurement date	£0.61/£0.75	£0.62/£0.77
Share price	£1.58	£1.55
Exercise price	£1.42	£1.40
Expected volatility	68.1%/68.1%	49.4%/49.4%
Option life (contract length)	3/5 years	3/5 years
Expected dividend	0.0%	0.0%
Risk free interest rate	1.7%/1.7%	3.1%/3.4%

The expected volatility on Save As You Earn schemes is based on the historic volatility of the Group's share price over periods equal to the length of the savings contract.

Long Term Share Incentive Scheme

Except in specified circumstances, options granted under the scheme are exercisable between 3 and 10 years after the date of grant.

Options granted under the LTSIP on 22 December 2009 and 25 February 2010 were granted to a limited number of Senior Executives. The scheme is discussed in greater detail within the Remuneration report.

The Long Term Share Incentive schemes have been valued using the Black-Scholes pricing model, with the exception of the TSR element of the options granted on 25 February 2010, 22 December 2009, 21 November 2008 and 19 September 2007, for which a simulation model provided by external consultants has been used.

		2010
Options granted during the year	389,312	358,423	2,109,934
Date of grant	22 December 2009	25 February 2010	21 November 2008
Fair value at measurement date	£0.97/£1.31	£0.89/£1.34	£1.25/£1.71
Share price	£1.32	£1.34	£1.71
Exercise price	£0.00	£0.00	£0.00
Expected volatility	68.1%	69.3%	45.7%
Option life	3 years	3 years	5 years
Expected dividend	0.0%	0.0%	0.0%
Risk free interest rate	1.7%	1.6%	3.3%

The fair value at measurement date of the LTSIP granted on 22 December 2009 and 25 February 2010 comprises £0.97/£0.89 in respect of the TSR element, and £1.31/£1.34 in respect of non-market based performance conditions (21 November 2008 grant: £1.25 in respect of the TSR element and £1.71 in respect of non-market based performance conditions).

The expected volatility of the Long Term Share Incentive scheme is based on the historic volatility of the Group's share price over a period equivalent to that of the options' vesting. The expected volatility of the TSR element of the options granted on 22 December 2009 and 25 February 2010 is based on the historic volatility of Redrow and its peer group companies (being the comparator group as defined in the Directors' Remuneration report).

Company Share Option Plan

Grants under the CSOP were limited to Senior Management. Except in specified circumstances, options granted to those other than the Executive Directors are exercisable between 3 and 10 years after the date of grant and are not subject to performance conditions. Except in specified circumstances, options granted to the Executive Directors are exercisable between 5 and 10 years after the date of grant and are subject to performance conditions.

The CSOP scheme has been valued using a simulation model provided by external consultants.

	2009
Options granted during the year	1,102,096
Date of grant	21 November 2008
Fair value at measurement date	£0.73/£0.81
Share price	£1.71
Exercise price	£1.64
Expected volatility	49.4%/43.3%
Option life	3/5 years
Expected dividend	0.0%
Risk free rate	3.1%/3.4%

A dividend yield of 0.0% has been used in the SAYE, LTSIP and CSOP valuations as no dividend was paid during the year ended 30 June 2010.

Notes to the financial statements

Share Options Outstanding

The following share options were outstanding at 30 June 2010:

Type of scheme	Date of Grant	Number of shares 2010	Number of shares 2009	Exercise price
Long Term Share Incentive	30 June 2000	4,974	4,974	-
Long Term Share Incentive	30 June 2001	1,321	1,321	-
Long Term Share Incentive	28 September 2001	1,552	1,552	-
Long Term Share Incentive	30 June 2002	1,078	1,078	-
Long Term Share Incentive	23 September 2002	541	541	-
Long Term Share Incentive	30 June 2003	1,119	1,119	-
Long Term Share Incentive	25 June 2004	145	145	-
Long Term Share Incentive	28 September 2004	1,552	1,552	-
Long Term Share Incentive	24 June 2005	120	120	-
Long Term Share Incentive	21 September 2006	-	226,739	-
Long Term Share Incentive	19 September 2007	93,657	239,565	-
Long Term Share Incentive	21 November 2008	611,401	1,600,433	-
Long Term Share Incentive	22 December 2009	389,312	-	-
Long Term Share Incentive	25 February 2010	358,423	-	-
Company Share Option Plan	21 November 2008	1,033,147	896,310	£1.25
Save As You Earn	1 January 2005	5,449	11,461	£2.06
Save As You Earn	2 January 2006	16,887	16,253	£2.63
Save As You Earn	2 January 2007	23,701	20,576	£3.82
Save As You Earn	2 January 2008	85,793	101,303	£2.26
Save As You Earn	1 January 2009	1,082,586	972,469	£1.06
Save As You Earn	1 January 2010	380,959	-	£1.42

The total share options outstanding at 30 June 2010 under the Long Term Share Incentive Plan, Company Share Option Plan and the Save As You Earn schemes represent 1.3% of the issued share capital (2009: 2.6%).

The number and exercise price of the CSOP and SAYE share options in issue at the time of the Rights Issue were adjusted to reflect the impact of the Rights Issue.

Movements In The Year

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

	Weighted		Weighted
	average exercise	Number of	average exercise	Number of
	price	options	price	options
	2010	2010	2009	2009
Long Term Share Incentive scheme:
Outstanding at the beginning of the year	-	2,079,139	-	952,681
Forfeited during the year	-	(1,344,790)	-	(969,869)
Exercised during the year	-	(16,889)	-	(13,607)
Granted during the year	-	747,735	-	2,109,934
Outstanding at the end of the year	-	1,465,195	-	2,079,139
Exercisable at the end of the year	-	11,435	-	12,402
Company Share Option Plan:
Outstanding at the beginning of the year	£1.64	896,310	-	-
Forfeited during the year pre Rights Issue	£1.64	(45,730)	(£1.64)	(205,786)
Rights Issue adjustment	-	264,501
Forfeited post Rights Issue	£1.25	(81,934)
Granted during the year	-	-	£1.64	1,102,096
Outstanding at the end of the year	£1.25	1,033,147	£1.64	896,310
Exercisable at the end of the year	-	-	-	-
Save As You Earn scheme:
Outstanding at the beginning of the year	£1.65	1,122,062	£3.23	837,673
Forfeited during the year pre Rights Issue	£1.88	(91,777)	(£3.03)	(765,523)
Exercised during the year pre Rights Issue	£1.40	(5,607)	(£1.40)	(535)
Rights Issue adjustment	-	323,464
Forfeited post Rights Issue	£1.37	(155,759)
Exercised during the year post Rights Issue	£1.06	(2,829)
Granted during the year pre Rights Issue	£1.42	405,821	£1.40	1,050,447
Outstanding at the end of the year	£1.27	1,595,375	£1.65	1,122,062
Exercisable at the end of the year	£2.52	39,265	-	-

The weighted average share price at the date of exercise of share options exercised during the year was £1.54 (2009: £1.88).

The options outstanding at 30 June 2010 had a range of exercise prices of £nil to £3.82 (2009: £nil to £5.02) and a weighted average remaining contractual life of 6.3 years (2009: 7.5 years).

The expected life used in the models has been adjusted, based on best estimates, to reflect exercise restrictions and behavioural considerations.

The charge to income in relation to equity settled share-based payments in the year is £1.1m (2009: charge: £1.0m).

Financial

Notice of AG M

information Directors &

Board

reports Business review

Notes to the financial statements

e. Retirement benefit schemes

The Redrow Staff Pension Scheme (the "Scheme") comprises two sections: a funded, self-administered, defined benefit section and a funded defined contribution section, the former of which is contracted out of the State Earnings Related Pensions Scheme. The defined benefit section was closed to all new entrants from July 2006, having been closed to all but a limited number of agreed new entrants from October 2001.

The total pension charge for the year was £9.5m (2009: credit of £0.4m).A charge of £8.0m related to the defined benefit section of the scheme (2009: credit of £1.3m), with £0.7m being charged to the income statement (2009: credit of £13.2m) and £7.3m being charged to the statement of comprehensive income (2009: charge of £11.9m). The charge arising from the defined contribution section was £1.5m (2009: £0.9m).

TriennialValuation

A full independent triennial actuarial valuation of the defined benefit section of the Scheme was undertaken at 1 July 2008. The method used was the Projected Unit Method. The main assumptions were an investment return of 6.42% per annum compound, salary increase of 2.4% per annum compound, and mortality in accordance with the PA92 series of tables with allowance for the cohort effect (medium cohort protection) with a 1% pa minimum improvement. In the opinion of the Actuary, there was a surplus of £9.9m in the defined benefit section of the Scheme, with the value of the Scheme's assets representing 116% of the Scheme's liabilities.As at 1 July 2008 the value of the defined benefit section of the Scheme's assets was £70.6m. The previous triennial valuation was undertaken as at 1 July 2005 and reported a deficit of £11.5m.

Defined Benefit Scheme – IAS 19Valuation

Redrow has a policy of recognising all actuarial gains and losses for its defined benefit plan in the period in which they occur, outside the income statement, in the statement of comprehensive income.

This disclosure relates to the defined benefit section of the Scheme. The Scheme's assets are held separately from the assets of Redrow and are administered by the trustees and managed professionally.

The latest formal actuarial valuation of the defined benefit section was carried out at 1 July 2008. This valuation has been updated to 30 June 2010 by a qualified actuary for the purposes of these accounts.

The Company and the Trustees have agreed the following contribution rates for the year ending 30 June 2011:

	Company	Employee
Executive members	12.3%	8.3%
Other members	9.0%	6.2%

The major financial assumptions used in arriving at the IAS 19 valuation were:

	2010	2009
Long term rate of increase in pensionable salaries 1	2.4%	2.4%
Rate of increase of benefits in payment (lesser of 5% per annum and RPI) 2	3.3%	3.3%
Rate of increase of benefits in payment (lesser of 2.5% per annum and RPI) 3	2.3%	2.3%
Discount rate	5.4%	6.3%
Inflation assumption	3.4%	3.4%
Expected return on assets	6.0%	6.6%

¹ Allowing for the change in definition of pensionable salary where increases are limited to maximum of (i) each member's actual salary increase, (ii) the annual change in RPI (measured at the previous 1 April) and (iii) 2.5% per annum.

² In respect of pensions in excess of the guaranteed minimum pension earned prior to 30 June 2006.

³ In respect of pensions in excess of the guaranteed minimum pension earned after 30 June 2006. Other pension increases are valued in a consistent manner.

The expected return on assets assumption has been derived by considering the appropriate return for each of the main asset classes listed on page 68. The yields assumed on bond type investments are based on published redemption yields at the balance sheet date. The assumed return on equities and property reflects an assumed allowance for the out-performance of these asset classes over UK Government bonds in the long term. The rates of return are shown net of investment manager expenses.

The mortality tables used in the actuarial valuation were updated during the year (making allowance for projected further improvements in mortality):

For male members:	PMA92	(with a medium cohort projection and an allowance for 1% minimum
		improvements year on year mortality rates)
For female members:	PFA92	(with a medium cohort projection and an allowance for 1% minimum
		improvements year on year mortality rates)

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

Pensioner currently aged 70:	Male 18.1 years	Female 21.2 years
Future pensioner when aged 65:	Male 22.7 years	Female 26.0 years

It has been assumed that the majority of members will commute part of their pension in return for a tax free cash sum on retirement.

Financial

Board

reports Business review

information

of AG M

Notes to the financial statements

The total assets, the split between the major asset classes in the Scheme, the present value of the Schemes' liabilities, and the amounts recognised in the balance sheet are shown below:

		The Group and Company
	2010	2009
	£m	£m
Equities	24.2	20.6
Property	5.7	3.7
Gilts	20.4	19.0
Corporate bonds	15.3	13.2
High yield bonds	9.0	7.2
Redrow plc shares held directly	-	0.5
Cash	0.1	0.1
Insurance policies	2.0	1.7
Total market value of assets	76.7	66.0
Present value of obligations	(81.1)	(63.2)
(Deficit)/surplus in the Scheme	(4.4)	2.8

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

		The Group and Company
	2010	2009
	£m	£m
Amounts included within the income statement:
Periodic administrative expenses
Current service cost	(1.1)	(1.7)
Curtailments and past service costs	-	14.5
Financing costs
Expected return on assets	4.3	5.2
Interest cost	(3.9)	(4.8)
	(0.7)	13.2
Amounts recognised in the statement of comprehensive income:
Actuarial (losses)	(7.3)	(11.9)
	(8.0)	1.3
Cumulative amount of (losses) recognised in the statement of comprehensive income since 1 July 2004	(23.8)	(16.5)

		The Group and Company
	2010	2009
	£m	£m
Balance sheet surplus/(deficit)
At start of year	2.8	(0.2)
Amounts (charged)/credited against statement of comprehensive income	(8.0)	1.3
Employer contributions paid	0.8	1.7
At end of year	(4.4)	2.8
Changes in the present value of the defined benefit obligation:
At start of year	63.2	72.4
Current service cost	1.1	1.7
Curtailments and past service costs (i)	-	(14.5)
Interest cost	3.9	4.8
Member contributions	0.5	1.1
Benefit payments, group life insurance death in service premiums and administration costs	(1.6)	(1.4)
Actuarial losses/(gains) on liabilities	14.0	(0.9)
At end of year	81.1	63.2
Changes in the fair value of the Scheme's assets:
At start of year	66.0	72.2
Normal employer contributions	0.8	1.7
Member contributions	0.5	1.1
Expected return on assets	4.3	5.2
Benefit payments, group life insurance death in service premiums and administration costs	(1.6)	(1.4)
Actuarial gain/(loss) on assets	6.7	(12.8)
At end of year	76.7	66.0

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

A five year history of experience adjustments is set out below:

	2010	2009	2008	2007	2006
Present value of defined benefit obligation (£m)	81.1	63.2	72.4	66.2	63.2
Present value of Scheme assets (£m)	76.7	66.0	72.2	72.3	54.6
Scheme (deficit)/surplus (£m)	(4.4)	2.8	(0.2)	6.1	(8.6)
Experience adjustments on Scheme liabilities over the year (£m)
excluding change in assumptions	0.4	(0.2)	0.4	-	(0.9)
Percentage of Scheme liabilities	0.5%	(0.3%)	0.6%	-	1.4%
Experience gain/(loss) on Scheme assets over the year (£m)	6.7	(12.8)	(7.7)	2.2	5.0
Percentage of Scheme assets	8.7%	(19.4%)	(10.7%)	3.0%	9.2%

(i) Further details on the curtailment gains and past service cost are given in note 2. The pensionable salary capping agreement was introduced from 1 July 2009 such that any increase in pensionable salaries are capped at the lower of the increase in base salary, inflation or 2.5%.

Notes to the financial statements

Note 8. Intangible Assets

Group	Goodwill £m	Software £m	Total £m
Cost
At 1 July 2008 and 30 June 2009	-	1.0	1.0
Additions	1.5	0.1	1.6
At 30 June 2010	1.5	1.1	2.6
Amortisation
At 1 July 2008	-	0.6	0.6
Charge	-	0.1	0.1
At 30 June 2009	-	0.7	0.7
Charge	-	0.1	0.1
At 30 June 2010	-	0.8	0.8
Net book value
At 30 June 2010	1.5	0.3	1.8
At 30 June 2009	-	0.3	0.3

Details of the goodwill acquired are given in note 22.

Note 9. Plant, Property and Equipment

Group	Freehold and long	Plant &	Fixtures &
	leasehold property £m	machinery £m	fittings £m	Total £m
Cost
At 1 July 2008	21.9	4.1	5.4	31.4
Additions	-	0.2	0.2	0.4
Reclassification	(5.8)	-	-	(5.8)
Disposals	(2.3)	(0.3)	(0.5)	(3.1)
At 30 June 2009	13.8	4.0	5.1	22.9
Additions	0.6	0.2	0.5	1.3
Disposals	-	(0.3)	(0.3)	(0.6)
At 30 June 2010	14.4	3.9	5.3	23.6
Depreciation
At 1 July 2008	2.9	1.9	3.9	8.7
Charge	1.5	0.4	0.6	2.5
Reclassification	(1.9)	-	-	(1.9)
Disposals	(0.4)	(0.1)	(0.4)	(0.9)
At 30 June 2009	2.1	2.2	4.1	8.4
Charge	0.3	0.4	0.3	1.0
Disposals	-	(0.1)	(0.3)	(0.4)
At 30 June 2010	2.4	2.5	4.1	9.0
Net book value
At 30 June 2010	12.0	1.4	1.2	14.6
At 30 June 2009	11.7	1.8	1.0	14.5

There was £0.1m of capital expenditure contracted at 30 June 2010 (2009: £nil).

The net £3.9m reclassification during the year ended 30 June 2009 related to four surplus office properties which the Group is actively marketing which have been reclassified as non-current assets available for sale. One of these properties was sold during the year ended 30 June 2010 and a tenant was found during the year for a further property.All the remaining are being actively marketed for sale and negotiations for sale took place during the year. The carrying value at 30 June 2010 was £2.3m. Further details are given in note 2 (v).

Note 10. Investments

a. Investments
	The Group		The Company
	2010	2009	2010	2009
	£m	£m	£m	£m
Joint ventures	2.2	2.1	-	-
Subsidiary companies	-	-	0.1	30.7
	2.2	2.1	0.1	30.7

b. Investments in joint ventures

	The Group		The Company
	2010	2009	2010	2009
	£m	£m	£m	£m
Share of joint venture net assets:
Current assets	3.7	3.7	-	-
Current liabilities	(3.0)	(3.0)	-	-
Non-current liabilities	(1.7)	(1.7)	-	-
Net (liabilities)	(1.0)	(1.0)	-	-
Loans from Group companies	3.2	3.1	-	-
	2.2	2.1	-	-
Share of post-tax losses from joint ventures:
Revenue	-	-	-	-
Cost of sales	0.1	(0.1)	-	-
Gross loss	0.1	(0.1)	-	-
Administrative expenses	-	-	-	-
Operating profit/(loss)	0.1	(0.1)	-	-
Finance costs	(0.1)	(0.1)	-	-
Result before tax	-	(0.2)	-	-
Taxation	-	-	-	-
	-	(0.2)	-	-

The Group has a 50% shareholding in the ordinary share capital of The Waterford Park Company Limited, a company incorporated in Great Britain with a 30 June year end. The remaining shares are held by Denrock Associates Limited. The Waterford Park Company Limited was formed to pursue the potential redevelopment of Watford Junction railway station.

c. Investments in subsidiary undertakings

	The Company £m
At 1 July 2009	30.7
Disposals to Redrow Homes Limited	(30.6)
At 30 June 2010	0.1

The principal subsidiary companies are detailed on page 2.All are incorporated in Great Britain except Redrow Homes (Park Heights) Limited which is incorporated in Jersey.A full list of subsidiary undertakings as at 30 June 2010 will be appended to the Company's next annual return. The capital of all the subsidiary companies, consisting of ordinary shares, is wholly owned. Redrow Holdings Ltd is directly owned by Redrow plc.

In the opinion of the Directors the value of the Company's investment in subsidiary undertakings is not less than the amount at which it is stated in the Balance Sheet.

Notes to the financial statements

Note 11. Deferred Tax Assets And Liabilities

The following are the deferred tax assets and liabilities recognised by the Group and the movements thereon during the current and prior year:

	Employee benefits £m	Imputed interest £m	Hedge reserve £m	Share-based payment £m	Short term temporary differences £m	Losses carried forward £m	Total £m
Deferred tax assets
At 1 July 2008	0.3	2.2	-	0.3	0.5	29.1	32.4
(Charge)/credit to income	(0.1)	0.2	-	-	0.2	43.2	43.5
Credit to equity	-	-	0.8	-	-	-	0.8
At 1 July 2009	0.2	2.4	0.8	0.3	0.7	72.3	76.7
(Charge)/credit to income	(0.8)	-	-	-	-	(0.2)	(1.0)
Credit to equity	2.0	-	(0.5)	-	-	-	1.5
At 30 June 2010	1.4	2.4	0.3	0.3	0.7	72.1	77.2

	Employee benefits £m	Imputed interest £m	Hedge reserve £m	Share-based payment £m	Short term temporary differences £m	Losses carried forward £m	Total £m
Deferred tax liabilities
At 1 July 2008	-	-	(0.4)	-	(0.6)	-	(1.0)
Credit to income	(4.1)	-	-	-	-	-	(4.1)
Credit to equity	3.3	-	0.4	-	-	-	3.7
At 1 July 2009	(0.8)	-	-	-	(0.6)	-	(1.4)
(Charge) to income	0.8	-	-	-	-	-	0.8
Credit to equity	-	-	-	-	-	-	-
At 30 June 2010	-	-	-	-	(0.6)	-	(0.6)

The Group has no material unrecognised deferred tax assets.

The deferred tax balances in the Company relate to a deferred tax asset arising on retirement benefit obligations and arising on the hedge reserve of £4.9m (2009: £3.4m).

The Group has considered carefully the extent to which it is probable that future taxable profit will be available resulting in taxable amounts against which the carried forward tax losses could be utilised. The basis for supporting the recognition of the deferred tax asset is as follows:

(i) Historic profitability

The Group floated in May 1994 and, prior to the financial year ended June 2008, had never made a loss before tax since flotation or during the five years prior to flotation (these being included as its financial record in the placing and public offer prospectus). This strong earnings history provides evidence of historic profitability.

(ii) Identifiable causes of the losses and likelihood of reoccurrence

The carried forward tax losses arise primarily from the exceptional net realisable value provisions created in 2008 and 2009 and to a lesser extent the trading losses in 2009 arising from the challenging housing market conditions. The provisions principally arise from the reductions in house prices and the reduced rate of sales which have reduced land values.Whilst the housing market remains uncertain, short of a collapse of market conditions from those experienced to date during 2010, material provisioning is not anticipated to reoccur regularly into the future.

(iii) Financial forecasts demonstrating a return to profitability

The Group's medium term financial forecasting model has been reviewed. This forecasts a return to profitability and the deferred tax asset being utilised in the medium term.

As discussed in note 1, the Group considers this to be a critical accounting judgement.

The Finance (No.2) Act 2010, which was substantially enacted on 20 July 2010 includes legislation reducing the rate of corporation tax from 28.0% to 27.0% from 1 April 2011. The carrying value of the £77.2m deferred tax asset at June 2010 at 27.0% would be £74.4m.

Board

Note 12.Trade And Other Receivables

		The Group		The Company
	2010	2009	2010	2009
	£m	£m	£m	£m
Non-current assets
Trade receivables (net)	7.1	6.0	-	-
Other receivables	0.3	0.3	-	-
	7.4	6.3	-	-
Current assets
Trade receivables (net)	2.9	8.9	-	-
Amounts due from subsidiary companies	-	-	379.9	362.3
Other receivables	5.8	2.1	-	-
Prepayments and accrued income	3.5	2.9	-	-
	12.2	13.9	379.9	362.3

Trade receivables due after more than one year are stated after an allowance of £4.5m has been made (2009: £2.5m) in respect of estimated irrecoverable amounts. This allowance is based on an estimate of default rates. £2.0m provision was made during the year (2009: £1.0m). £0.1m was utilised (2009: £0.1m). It is not considered that a material amount of current asset trade receivables are overdue for payment.

Trade and other receivables due in 1 to 2 years are £nil (2009: £2.2m), due between 2 and 5 years are £0.3m (2009: £nil) and due in more than 5 years are £7.1m (2009: £3.8m). The Group holds a charge over the underlying assets.At the balance sheet date, there is no material difference between the fair value of trade and other receivables and their carrying values as shown in the balance sheet.

Note 13. Inventories

		The Group		The Company
	2010	2009	2010	2009
	£m	£m	£m	£m
Land for development	321.5	320.4	-	-
Work in progress	211.6	247.9	-	-
Stock of showhomes	15.9	15.3	-	-
	549.0	583.6	-	-
Payments on account	(9.3)	(17.3)	-	-
	539.7	566.3	-	-

Inventories of £335.9m net of £62.4m net realisable value provision utilisation, were recognised as expenses in the year (2009: £388.3m net of £36.5m net realisable value provision).Work in progress includes £4.3m (2009: £2.8m) in respect of part exchange properties. Land held for development in the sum of £23.8m is subject to a legal charge as security in respect of deferred consideration (2009: £39.9m).

The carrying value of undeveloped land where net realisable value has been determined on the basis of a sale of land in its current state is £8.8m (2009: £41.7m). Of the net realisable value provision of £256.9m (2009: £319.4m), £233.6m (2009: £278.5m) is attributed to land and £23.3m (2009: £40.9m) is attributed to work in progress. The allocation of land between Type 1 and Type 2 is described in the Inventories accounting policy.

As discussed in note 1, the Group considers the carrying value of inventories to be a critical accounting judgement.

The net realisable value provision movement is analysed below:

	Type 1 £m	Type 2 £m	Total £m
As at 1 July 2009	202.9	116.5	319.4
Utilised during the year	(54.2)	(8.2)	(62.4)
Created during the year	21.8	17.3	39.1
Reclassified during the year	61.6	(61.6)	-
Released during the year	(39.2)	-	(39.2)
As at 30 June 2010	192.9	64.0	256.9

The net realisable value provisions of £39.1m and £39.2m created and released in the year are the result of our review at the balance sheet date in the context of prevailing market conditions and the re-assessment of selling prices and costs.

Notes to the financial statements

Note 14: Financial Risk Management

The Group's financial instruments comprise cash and cash equivalents, bank loans and overdrafts, derivative financial instruments and various items included within trade receivables and trade payables which arise during the normal course of business.

The tables below provide a summary of financial assets and liabilities by category.

The accounting policies for financial instruments have been applied to the following items:

The Group			2010 Loans & receivables £m	2010 Derivatives used for hedging £m	2010 Total £m	2009 Loans & receivables £m	2009 Derivatives used for hedging £m	2009 Total £m
Assets per the balance sheet
Non current trade and other receivables			7.4	-	7.4	6.3	-	6.3
Current trade and other receivables			8.7	-	8.7	11.0	-	11.0
Cash and cash equivalents			21.9	-	21.9	17.5	-	17.5
			38.0	-	38.0	34.8	-	34.8
	2010 Liabilities at fair value through the income statement £m	2010 Derivatives used for hedging £m	2010 Other financial liabilities £m	2010 Total £m	2009 Liabilities at fair value through the income statement £m	2009 Derivaties used for hedging £m	2009 Other financial liabilities £m	2009 Total £m
Liabilities per the balance sheet
Bank loans & overdrafts net
of issue costs	-	-	69.0	69.0	-	-	232.1	232.1
Derivative financial instruments	-	1.1	-	1.1	-	2.9	-	2.9
Trade payables and other creditors	-	-	95.6	95.6	-	-	87.3	87.3
Land creditors	37.6	-	-	37.6	53.4	-	-	53.4
	37.6	1.1	164.6	203.3	53.4	2.9	319.4	375.7
The Company			2010 Loans & receivables £m	2010 Derivatives used for hedging £m	2010 Total £m	2009 Loans & receivables £m	2009 Derivatives used for hedging £m	2009 Total £m
Assets per the balance sheet
Cash and cash equivalents			20.8	-	20.8	17.5	-	17.5
Amounts due from subsidiary companies			379.9	-	379.9	362.3	-	362.3
			400.7	-	400.7	379.8	-	379.8
	2010 Liabilities at fair value through the income statement £m	2010 Derivatives used for hedging £m	2010 Other financial liabilities £m	2010 Total £m	2009 Liabilities at fair value through the income statement £m	2009 Derivaties used for hedging £m	2009 Other financial liabilities £m	2009 Total £m
Liabilities per the balance sheet
Bank loans & overdrafts net
of issue costs	-	-	78.4	78.4	-	-	225.2	225.2
Derivative financial instruments	-	1.1	-	1.1	-	2.9	-	2.9
Amounts due to subsidiary
companies	-	-	13.3	13.3	-	-	13.3	13.3
	-	1.1	91.7	92.8	-	2.9	238.5	241.4

Fair values of financial assets and liabilities are determined by reference to the rates at which they could be exchanged between knowledgeable and willing parties.Where no such price is readily available then fair value is determined by discounting net forward cash flows at a risk adjusted rate.

All financial assets and liabilities are categorised at level 2 with the hierarchical classification of IFRS7 Revised.

The Group's activities expose it to a variety of financial risks.

Financial risk management is conducted centrally using policies approved by the Board. Market risk is negligible due to the Group's limited exposure to equity securities (some limited exposure arises through the pension scheme's investment portfolio) and the associated price risk. Its foreign exchange exposure is negligible given the nature of the Group's business and its exclusive UK activities.

a. Liquidity risk and interest rate risk

Liquidity risk is the risk that the Group does not have sufficient financial resources to meet its obligations as they fall due. Liquidity risks are managed through the regular review of cash forecasts and by maintaining adequate committed banking facilities to ensure appropriate headroom.

At 30 June 2010, the Group had total unsecured bank borrowing facilities of £280.5m, representing £250.0m committed facilities and £30.5m uncommitted facilities.

The Group's cash surpluses arise from the short term timing differences.As a consequence the Group does not consider it bears significant risk of changes to income and cashflows as a result of movements on interest rates on its interest bearing assets.

The Group is exposed to interest rate risk as it borrows money at floating rates. The Group's interest rate risk arises primarily from long term borrowings. In order to manage its interest rate risk, the Group enters into simple risk management products, almost exclusively interest rate swaps.All interest rate swaps are sterling denominated. The swaps are arranged so as to match with those of the underlying borrowings to which they relate. There was no ineffectiveness to be recorded in respect of these cashflow hedges in 2010 or 2009.

The following table shows the profile of interest bearing debt together with its effective interest rates, after taking account of interest rate swaps as at the balance sheet date and the periods in which they will reprice:

			2010					2009
	Effective interest rate %	Total £m	0-1 year £m	1-2 years £m	2-5 years £m	Effective interest rate %	Total £m	0-1 year £m	1-2 years £m	2-5 years £m
Bank overdraft	2.8	(19.0)	(19.0)	-	-	2.5	(16.9)	(16.9)	-	-
Bank loans - fixed rate	6.6	(50.0)	(50.0)	-	-	7.0	(100.0)	(50.0)	(50.0)	-
Bank loans - floating rate	-	-	-	-	-	3.7	(118.0)	-	(50.0)	(68.0)
		(69.0)	(69.0)	-	-		(234.9)	(66.9)	(100.0)	(68.0)

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

	Balance at 30 June £m	0-1 year £m	1-2 years £m
2010	50.0	50.0	-
2009	100.0	50.0	50.0

At 30 June 2010, the fixed interest rates vary from 3.43% to 4.93% excluding borrowing margin (2009: 3.43% to 5.76%) and the floating rates are 3 month LIBOR.

For the year ended 30 June 2010, it is estimated that a general increase of 1% in interest rates applying for the full year would decrease the Group's profit before tax by £0.4m (2009: £1.7m).

Notes to the financial statements

b. Maturity of bank loans and borrowings

The maturity of bank loans and borrowings is as below:

The Group	Bank overdraft 2010 £m	Bank loans 2010 £m	Bank overdraft 2009 £m	Bank loans 2009 £m
Due within one year	19.0	-	16.9	50.0
Due between one and two years	-	50.0	-	100.0
Due between two and five years	-	-	-	68.0
	19.0	50.0	16.9	218.0
The Company	Bank overdraft 2010 £m	Bank loans 2010 £m	Bank overdraft 2009 £m	Bank loans 2009 £m
Due within one year	28.4	-	10.0	50.0
Due between one and two years	-	50.0	-	100.0
Due between two and five years	-	-	-	68.0
	28.4	50.0	10.0	218.0

The Company was fully compliant with its banking covenants as at 30 June 2010.

At the year end, the Group and Company had £200.0m (2009: £207.0m) of undrawn committed bank facilities available.

There is no material difference between the fair value of the bank overdrafts and bank loans and their carrying values as shown in the balance sheet.

c.Amounts due in respect of development land

The Group's policy permits land purchases to be made on deferred payment terms. In accordance with IAS 39, the deferred creditor is recorded at fair value and nominal value is amortised over the deferment period via financing costs, increasing the land creditor to its full cash settlement value on the payment date.

The interest rate used for each deferred payment is an equivalent loan rate available on the date of land purchase, as applicable to a loan lasting for a comparable period of time to that deferment.

The maturity profile of the total contracted cash payments in respect of amounts due in respect of land creditors at the balance sheet date is as follows:

	Balance at 30 June £m	Total contracted cash payment £m	Due less than one year £m	Due between 1 and 2 years £m	Due between 2 and 5 years £m
2010	37.6	40.0	20.5	13.5	6.0
2009	53.4	54.7	27.6	15.6	11.5

d. Credit risk

Credit risk arises from cash and cash equivalents, including call deposits with banks and financial institutions, derivative financial instruments and trade receivables. It represents the risk of financial loss where counterparties are unable to meet their obligations. Credit risk is managed centrally in respect of cash and cash equivalents and derivative financial instruments. In respect of placing deposits with banks and financial institutions and funds, individual risk limits are approved by the Board. The table below shows the cash and cash equivalents as at the balance sheet date:

		The Group		The Company
	2010	2009	2010	2009
	£m	£m	£m	£m
AA	21.9	17.5	20.8	17.5
	21.9	17.5	20.8	17.5

No credit limits were exceeded during the reporting period or subsequently and the Group does not anticipate any losses from non-performance by these counterparties.

There is no specific concentration of credit risk in respect of home sales as the exposure is spread over a number of customers. In respect of trade receivables, the amounts presented in the balance sheet are stated after adjusting for any doubtful receivables, based on the judgement of the Group's management through using both previous experience and knowledge of the current position of any more substantial debtors.

e. Capital management

The Group defines total capital as equity plus net debt where net debt is calculated as total borrowings less cash and cash equivalents. The Group monitors capital on the basis of the level of returns achieved on its capital base and, with respect to its financing structure, the gearing ratio. This is defined as net debt divided by equity.

The Group's objective in managing capital is to safeguard its ability to continue as a going concern in order to deliver value to its shareholders and other stakeholders. The Group operates within policies outlined by the Board in order to maintain an appropriate funding structure. The Board keeps the Group's capital structure under review.

The Group successfully completed a Rights Issue during the year generating £150.3m of funds net of expenses.

No dividends were paid in the year. The Board has a policy of only paying a dividend once the Group has an appropriate level of earnings cover.

The total capital levels and gearing ratios as at 30 June 2010 and 30 June 2009 are as follows:

	2010	2009
	£m	£m
Total borrowings	69.0	232.1
Less cash and cash equivalents	(21.9)	(17.5)
Net debt	47.1	214.6
Equity	435.9	293.5
Total capital	483.0	508.1
Gearing ratio	11%	73%

f. Fair values

At 30 June 2010 there is no material difference between the fair value of financial instruments and their carrying values in the balance sheet.

Notes to the financial statements

Note 15:Trade And Other Payables

	The Group		The Company
	2010	2009	2010	2009
	£m	£m	£m	£m
Non-current liabilities
Amounts due in respect of development land	17.1	26.3	-	-
	17.1	26.3	-	-
Current liabilities
Trade payables	90.1	86.0	-	-
Amounts due in respect of development land	20.5	27.1	-	-
Amounts owed to subsidiary companies	-	-	13.3	13.3
Other payables	5.5	1.3	-	-
Other taxation and social security	1.2	0.9	-	-
Accruals and deferred income	21.3	20.0	2.9	4.1
	138.6	135.3	16.2	17.4
Note 16. Long Term Provisions
The Group		Onerous
		contracts	Other	Total
		£m	£m	£m
At 1 July 2009		6.7	2.2	8.9
Provisions made during the year		-	(0.1)	(0.1)
Provisions used during the year		-	(0.1)	(0.1)
At 30 June 2010		6.7	2.0	8.7

Provisions made during the year relate to onerous contracts and maintenance and sundry remedial costs in respect of development activities, which it is assessed will be utilised within four years. Further details on onerous contracts are given in note 2.

Note 17. Share Capital

At 30 June 2010		308,607,479
Share options exercised		8,436
Shares issued via Rights Issue		148,586,495
At 1 July 2009	160,012,548
Movement in the year was as follows:
		Number of ordinary shares of 10p each
Allotted, called up and fully paid	30.9	16.0
480,000,000 ordinary shares of 10p each (2009: 330,000,000)	48.0	33.0
Authorised
	2010 £m	2009 £m

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

The Gross consideration from the Rights Issue was £156.0m prior to expenses of £5.7m.

Note 18. Share Capital, Share Premium Account And Reserves

		Share
	Share	premium	Hedge	Other	Retained
	capital	account	reserve	reserves	earnings
The Group	£m	£m	£m	£m	£m
At 1 July 2008	16.0	58.7	0.9	7.9	321.1
Total comprehensive income	-	-	(3.0)	-	(109.0)
Shares issued	-	-	-	-	-
Dividends paid	-	-	-	-	-
Share-based payment	-	-	-	-	0.2
Credit in respect of LTSIP/SAYE	-	-	-	-	0.7
Contribution to QUEST	-	-	-	-	-
At 30 June 2009	16.0	58.7	(2.1)	7.9	213.0
Total comprehensive income	-	-	1.3	-	(4.7)
Shares issued	14.9	-	-	-	135.4
Dividends paid	-	-	-	-	-
Share-based payment	-	-	-	-	0.2
Movement in respect of LTSIP/SAYE	-	-	-	-	(4.7)
Contribution to QUEST	-	-	-	-	-
At 30 June 2010	30.9	58.7	(0.8)	7.9	339.2

Hedge Reserve

The hedge reserve comprises the effective portion of the gain or loss arising from the fair value of cash flow hedging transactions entered into by the Group that have not yet crystallised.

Other Reserves

Other reserves consists of a £7.0m Capital Redemption reserve (2009: £7.0m) and a £0.9m Consolidation reserve (2009: £0.9m).

Undistributable Reserves

The hedge reserve and other reserves are not available for distribution.

		Share
	Share	premium	Hedge	Other	Retained
	capital	account	reserve	reserves	earnings
The Company	£m	£m	£m	£m	£m
At 1 July 2009	16.0	58.6	0.9	7.0	97.6
Total comprehensive income	-	-	(3.0)	-	(4.8)
Shares issued	-	-	-	-	-
Dividends paid	-	-	-	-	-
Dividends received from subsidiary companies	-	-	-	-	-
At 30 June 2009	16.0	58.6	(2.1)	7.0	92.8
Total comprehensive income	-	-	1.3	-	(13.8)
Shares issued	14.9	-	-	-	135.4
Dividends paid	-	-	-	-	-
Dividends received from subsidiary companies	-	-	-	-	-
At 30 June 2010	30.9	58.6	(0.8)	7.0	214.4

Hedge Reserve

The hedge reserve comprises the effective portion of the gain or loss arising from the fair value of cash flow hedging transactions entered into by the Company that have not yet crystallised.

Other Reserves

Other reserves consists of a £7.0m Capital Redemption reserve (2009: £7.0m).

Undistributable Reserves

The hedge reserve and other reserves are not available for distribution.

About

Redrow

Notes to the financial statements

Note 19. Movement In Net (Debt)/Cash

	At			Net	At
	1 July	Cash	Other	movement	30 June
	2009	flow	movements	in the year	2010
The Group	£m	£m	£m	£m	£m
Cash and cash equivalents	17.5	12.7	(8.3)	4.4	21.9
Bank overdrafts	(16.9)	(2.1)	-	(2.1)	(19.0)
	0.6	10.6	(8.3)	2.3	2.9
Bank loans	(218.0)	168.0	-	168.0	(50.0)
Issue costs	2.8	-	(2.8)	(2.8)	-
	(214.6)	178.6	(11.1)	167.5	(47.1)
	At			Net	At
	1 July	Cash	Other	movement	30 June
	2009	flow	movements	in the year	2010
The Company	£m	£m	£m	£m	£m
Cash and cash equivalents	17.5	10.6	(7.3)	3.3	20.8
Bank overdrafts	(10.0)	(18.4)	-	(18.4)	(28.4)
	7.5	(7.8)	(7.3)	(15.1)	(7.6)
Bank loans	(218.0)	168.0	-	168.0	(50.0)
Issue costs	2.8	-	(2.8)	(2.8)	-
	(207.7)	160.2	(10.1)	150.1	(57.6)

Other movements comprise amortisation of issue costs, imputed interest on deferred land creditors, actuarial losses on the pension scheme and the movement in fair value of interest rate cash flow hedges.

Note 20. Operating Lease Total Commitments

	Land and		Land and
	buildings 2010	Other	buildings 2009	Other
		2010		2009
	£m	£m	£m	£m
Within one year	-	0.1	-	0.3
Within one to five years	-	0.9	-	0.7

Note 21. Contingent Liabilities

The Company has guaranteed the bank borrowings of its subsidiaries. Performance bonds, financial guarantees in respect of certain deferred land creditors and other building or performance guarantees have been entered into in the normal course of business.

Note 22.Acquisition of Harrow Estates

As outlined in the Rights Issue Prospectus, in conjunction with the Rights Issue, the Company acquired on 20 October 2009 the Harrow Estates business which represented a related party transaction with Steve Morgan (see note 23). This comprised five freehold land assets, options over further strategic land assets totalling 1,100 plots and 100% of a newly incorporated business now renamed Harrow Estates plc which held, among other assets, certain employees and the Harrow Estates name.

The table below summarises the consideration transferred to acquire the Harrow Estates business and an analysis of net assets acquired and the fair value to the Group:

	Fair value to Group
	£m
Inventories	14.0
Trade and other payables	(0.6)
Fixtures & fittings	0.1
Net assets acquired	13.5
Goodwill	1.5
Total cash consideration	15.0

The reputation Harrow Estates has as an expert in brownfield and highly contaminated sites, including remediation and master planning, stems from the ability and reputation of its' assembled workforce including their track record of delivery. It is this to which the goodwill represents.

The acquired business contributed £1.4m in revenues in the period from 20 October 2009 to 30 June 2010 and generated a pre tax loss of £0.2m (notional pre tax loss for year ended 30 June 2010 would have been £0.6m).

Note 23. Related Party Transactions

Within the definition of IAS 24 (Related Party Disclosures), the Board and key management personnel are related parties. Detailed disclosure of the remuneration of the Board is given in the Directors' Remuneration report on pages 36 to 43.A summary of remuneration provided to key management personnel is provided in note 7c.

In addition, related party transactions were carried out with parties related to Steve Morgan during the year in respect of the acquisition of the Harrow Estates business as referred to in note 22 and as outlined in the Rights Issue prospectus for a total consideration of £15.0m and £1.0m (Company £0.6m), primarily relating to the donation to the Morgan Foundation as described in the Directors' Remuneration report on page 40 and in respect of the Group, relating to services provided by Harrow Estates plc on an arms length basis under promotional agreements forming part of the acquisition of the Harrow business, as outlined in the Rights Issue prospectus.

As at 30 June 2010, an amount of £0.3m was due to Harrow Estates plc under normal trading terms.

During the year, the Group made purchases of £4.1m (£nil for the Company) from Travis Perkins plc, a company in which Paul Hampden Smith is an Executive Director.As at 30 June 2010 an amount of £0.3m was due to Travis Perkins plc in respect of those purchases.

There have been no other material transactions with key management personnel. There is no other difference between transactions with key management personnel of the Company and the Group.

The Company funds the operating companies through both equity investment and loans at commercial rates of interest. In addition, the Company provides its subsidiaries with the services of Senior Management, for which a recharge is made to those subsidiary companies based upon utilisation of services.

The amount outstanding from subsidiary undertakings at 30 June 2010 was £379.9m (2009: £362.3m). The amount owed to subsidiary undertakings at 30 June 2010 was £13.3m (2008: £13.3m).

The Company provides the Group's defined benefit pension scheme, as detailed in note 7e. Expected service costs are charged to the operating businesses at cost. There is no contractual arrangement or stated policy relating to the charge. Experience and actuarial gains are recognised in the Company, via the statement of recognised income and expense.

The Group did not undertake any transactions with The Waterford Park Company Limited joint venture. The Group's loans to its joint ventures are disclosed in note 10.

Notice of annual general meeting

Notice is hereby given that the Annual General Meeting of Redrow plc will be held at St. David's Park Hotel, St. David's Park, Flintshire on Thursday 4 November 2010 at 12 noon for the following purposes.All resolutions will be proposed as ordinary resolutions except numbers 12, 13 and 14 which will be proposed as special resolutions.

Resolution 1 - Annual Report & Accounts

To receive and adopt the Directors' report and the financial statements for the year ended 30 June 2010, together with the Auditors' report.

Resolution 2 - Re-appointment of Director

To re-appoint Steve Morgan as a Director.

Resolution 3 - Re-appointment of Director To re-appoint John Tutte as a Director.

Resolution 4 - Re-appointment of Director

To re-appoint Barbara Richmond as a Director.

Resolution 5 - Re-appointment of Director To re-appoint Alan Jackson as a Director.

Resolution 6 - Re-appointment of Director To re-appoint Debbie Hewitt as a Director.

Resolution 7 - Re-appointment of Director To re-appoint Paul Hampden Smith as a Director.

Resolution 8 - Re-appointment of Auditors

To re-appoint PricewaterhouseCoopers LLP as external Auditors to the Company, to hold office until the end of the next general meeting at which financial statements are laid before the Company and to authorise the Directors to fix their remuneration.

Resolution 9 - Directors' Remuneration report

To approve the Directors' Remuneration report for the year ended 30 June 2010.

Resolution 10 - Authority to allot shares

That the directors, in place of any existing authority conferred upon them for the purpose of section 549/551 of the Companies Act 2006, be generally and unconditionally authorised pursuant to and in accordance with section 551 of the Companies Act 2006 to exercise all powers of the Company to allot and to make offers or agreements to allot shares or convert any securities into shares:

• (i) up to an aggregate nominal amount of £10,286,915;
• (ii) up to a further aggregate nominal amount of £10,286,915 in connection with an offer by way of a rights issue.

Provided that this authority shall (unless previously revoked or renewed) expire on the date of the next Annual General Meeting of the Company (or 31 December 2011 whichever may be the earlier) but so that the Company may, before such expiry, make an offer or agreement which would or might require shares to be allotted or rights to subscribe for or to convert any security into shares to be granted after such expiry and the Directors may allot shares or grant rights to subscribe for or convert securities into shares in pursuance of such offer or agreement as if the authority had not expired.

Resolution 11 - Approval of Rule 9 waiver

To resolve that the waiver granted by the Panel of the obligation which may otherwise arise, pursuant to Rule 9 of the Code, for Steve Morgan (or any person with whom Mr Morgan is acting in concert) to make a general offer to the other Shareholders for all of their Ordinary Shares as a result of market purchases of Ordinary Shares by the Company pursuant to the authority granted under Resolution 13 below, that could potentially increase Mr Morgan's shareholding from approximately 29.95 per cent. of issued share capital to a maximum of approximately 33.3 per cent. of issued share capital, be and is hereby approved

Resolution 12 - Authority to disapply pre-emption rights

That, subject to the passing of Resolution 10 as set out above, the Directors be given power pursuant to Resolution 10 to make allotments of equity securities (as defined in section 560(1) of the Companies Act 2006) pursuant to the authority contained in the said Resolution 10 and to sell shares which are held in treasury wholly for cash as if section 561(1) of the said Act did not apply to such allotments or sale provided that this power shall be limited to:

• (i) allotments of equity securities in connection with a rights issue, being an offer of equity securities by way of rights to ordinary shareholders of the Company in proportion (as nearly as may be) to their holdings subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of or the requirements of any recognised regulatory body or stock exchange in any territory; and
• (ii) any other allotments for cash or equity securities or sale of shares held in treasury up to a maximum nominal amount of £1,543,037;

and shall (unless previously revoked or renewed) expire on the date which is the earlier of the next Annual General Meeting of the Company or 31 December 2011 save that the said power shall permit the Company to make an offer or enter into an agreement before the expiry of such power which would or might require equity securities to be allotted after such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if such power conferred had not expired. For the purposes of this Resolution, the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or convert any securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights.

Resolution 13 – Authority to purchase own shares

That the Company be and is hereby generally and unconditionally authorised, in accordance with section 701 of the Companies Act 2006, to make market purchases (within the meaning of section 693 of the said Act) of ordinary shares of 10p each in the capital of the Company ("ordinary shares") provided that:

Notice of AG M

• (a) the maximum number of ordinary shares authorised to be purchased is 30,860,747;
• (b) the minimum price which may be paid for an ordinary share is 10p exclusive of expenses payable by the Company;
• (c) the maximum price which may be paid for an ordinary share is an amount equal to the higher of (i) 105% of the average of the middle market quotations for an ordinary share derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the ordinary share is purchased (exclusive of expenses payable by the Company); and (ii) that stipulated by Article 5(1) of the Buy-back and Stabilisation Regulation (EC 2273/2003); and
• (d) the authority conferred shall expire at the conclusion of the next Annual General Meeting of the Company (or 31 December 2011 whichever may be the earlier) except that the Company may before such expiry make a contract to purchase it own shares which will or may be completed or executed wholly or partly after such expiry.

Resolution 14 – Calling of a general meeting other than an AGM

That a general meeting other than the Annual General Meeting may be called on not less than 14 clear days' notice.

Registered office: Company Secretary Redrow House St. David's Park Flintshire CH5 3RX Registered in England No. 2877315

14 September 2010 By order of the Board Graham Cope

Notes:

• (i) A shareholder entitled to attend and vote may appoint a proxy or proxies to attend, speak and vote instead of him. A proxy need not be a member of the Company.A member may appoint more than one proxy, provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him.
• (ii) A form of proxy is enclosed which, if required, should be completed in accordance with the instructions set out therein and returned so as to reach the Company's Registrars not later than 48 hours before the time of the meeting or any adjourned meeting. Completion of a form of proxy will not preclude a shareholder from attending and voting at the meeting in person if they so wish.
• (iii) All shareholders on the Register at 6pm on 2 November 2010 (or if the meeting is adjourned 48 hours before the

time fixed for the meeting) and only those shareholders are entitled to attend and vote at the Annual General Meeting in respect of the number of shares registered in their respective names at that time. Changes to entries on the Register after that time will be disregarded in determining the rights of any person to attend or vote at the meeting.

• (iv) The right to appoint a proxy does not apply to persons whose shares are held on their behalf by another person and who have been nominated to receive communications from the Company in accordance with Section 146 of the Companies Act 2006 ("nominated persons"). Nominated persons may have a right under an agreement with the member who holds the shares on their behalf to be appointed (or to have someone else appointed) as a proxy. Alternatively, if nominated persons do not have such a right, or do not wish to exercise it, they may have a right under such an agreement to give instructions to the person holding the shares as to the exercise of voting rights.
• (v) Holders of ordinary shares are entitled to attend and vote at general meetings of the Company. The total number of issued ordinary shares in the Company on 14 September 2010 is 308,607,479, carrying one vote each on a poll. Therefore, the total number of votes exercisable as at 14 September 2010 are 308,607,479.
• (vi) Shareholders should note that, under Section 527 of the Companies Act 2006, members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the auditors' report and the conduct of the audit) that are to be laid before the Annual General Meeting for the financial year beginning 1 July 2009; or (ii) any circumstance connected with an auditor of the Company appointed for the financial year beginning 1 July 2009 ceasing to hold office since the previous meeting at which annual accounts and reports were laid. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 (requirements as to website availability) of the Companies Act 2006.Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting for the relevant financial year includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website.
• (vii) Any member attending the meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the meeting but no such answer

Notice of annual general meeting

need be given if (a) to do so would interfere unduly with the preparation for the meeting or involve the disclosure of confidential information, (b) the answer has already been given on a website in the form of an answer to a question, or (c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

• (viii) A copy of this notice and other information required by Section 311A of the Companies Act 2006 can be found at www.redrow.co.uk.
• (ix) Under Section 338 and Section 338A of the Companies Act 2006, members meeting the threshold requirements in those sections have the right to require the Company (i) to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which may properly be moved and is intended to be moved at the meeting and/or (ii) to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be properly included in the business.A resolution may properly be moved or a matter may properly be included in the business unless (a) (in the case of a resolution only) it would, if passed, be ineffective (whether by reason of inconsistency with any enactment or the Company's constitution or otherwise), (b) it is defamatory of any person, or (c) it is frivolous or vexatious. Such a request may be in hard copy form or in electronic form, must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company not later than 23 September 2010, being the date six clear weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request.
• (x) Copies of the Directors' service contracts will be available for inspection at the registered office during normal business hours on any business day and at the place of the Annual General Meeting for at least 15 minutes before the meeting is held until its conclusion.
• (xi) The register of Directors' interests in the share capital of the Company will be available for inspection at the place of the meeting from 12 noon on 4 November 2010 until the conclusion of the meeting. None of the Directors has a service contract which cannot be terminated within one year without payment of compensation.

• (xii) CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting (and any adjournment of the meeting) by following the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members (and those CREST members who have appointed a voting service provider) should refer to their CREST sponsor or voting service provider, who will be able to take the appropriate action on their behalf.

• (xiii) In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual (available via www.euroclear.com/CREST). The message (regardless of whether it constitutes the appointment of a proxy or an amendment to the instruction given to a previously appointed proxy) must, in order to be valid, be transmitted so as to be received by the issuer's agent (ID 3RA50) by the latest time(s) for receipt of proxy appointments specified in Note (ii) above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.After this time any change of instructions to a proxy appointed through CREST should be communicated to him by other means.

• (xiv) CREST members (and, where applicable, their CREST sponsors or voting service providers) should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider, to procure that his CREST sponsor or voting service provider takes) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members (and, where applicable, their CREST sponsors or voting service providers) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
• (xv) The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
• (xvi) If you have any questions about the meeting or need any special assistance at the meeting, please contact the Company Secretary at the registered office or telephone 01244 520044 during normal business hours.

Explanatory Notes To Annual General Meeting Resolutions: Resolutions 2-7 - Re-appointment of directors

As required by The new UK Corporate Governance Code, annual re-election of all directors is now required.

Resolution 8 - Re-appointment of Auditors

The Company is required to appoint Auditors at every general meeting at which the accounts are presented to shareholders. PricewaterhouseCoopers LLP were appointed at last year's Annual General Meeting and are willing to seek re-appointment this year. It is normal practice for a Company's Directors to be authorised

to agree the Auditors' fees. If this resolution is passed, the Audit Committee will approve the fees for recommendation to the Board.

Resolution 9 - Directors' Remuneration report

Under the Companies Act 2006 companies are required to ask shareholders to vote on the Directors' Remuneration report. The report is contained on pages 36 to 43 of the Annual Report & Accounts.

Resolution 10 - Authority to allot shares

Shareholders are being invited to renew the authority given to Directors in previous years to allot new shares. If passed, Resolution 10 would renew this authority by authorising the Directors to allot shares up to an aggregate nominal amount of £10,286,915 or an additional £10,286,915 in respect of a Rights Issue (or 66% in the context of a rights issue).

This represents 102,869,150 ordinary shares of 10p each and is equivalent to approximately 33% of the Company's current issued ordinary share capital (excluding shares held in treasury). The authority will expire on the date of the next Annual General Meeting of the Company or, if earlier, 31 December 2011.

The Company does not, as of 14 September 2010 hold any shares in treasury.

The Directors will exercise the authority to allot only when satisfied that it is in the interests of the Company to do so. They have no present intention of exercising the authority, except in connection with the issue of shares under the Company's share option schemes.

Resolution 11 - Approval of Rule 9 Waiver

Pursuant to Rule 9 of the code and the Waiver granted by the panel, which is conditional upon Independent Shareholder approval, we are asking the Independent Shareholders to approve the terms of the Waiver in favour of Steve Morgan for the reasons set out on pages 87 to 96 of the document.

Resolution 12 - Authority to disapply pre-emption rights

The Directors may only allot shares for cash to persons who are not already shareholders in the Company if authorised to do so by the shareholders in a general meeting. This resolution renews authority for the Directors to allot shares for cash without first offering them to existing members up to an aggregate nominal amount of £1,543,037. This sum represents 15,430,374 ordinary shares of 10p each, being equivalent to approximately 5% of the Company's current issued share capital. The resolution also enables the Directors to modify the strict requirements for a rights issue in circumstances where they consider it necessary or expedient.

In addition, if the Company has purchased its own shares and holds them in treasury, this resolution would give the Directors power to sell these shares for cash to persons other than existing shareholders, subject to the same limit that would apply to issues of shares for cash to these persons.

The authority will expire on whichever is the earlier of the conclusion of the next Annual General Meeting or 31 December 2011.

Resolution 13 – Authority to purchase own shares

The Directors are seeking authority, as in previous years, to make market purchases of the Company's shares. The proposed authority would be limited by the terms of the special resolution to the purchases of 30,860,747 shares, an aggregate nominal value of £3,086,075 which is equivalent to 10% of the Company's issued share capital at 14 September 2010.

Shares purchased by the Company could be held as treasury shares, which could then be subsequently cancelled, sold for cash or used pursuant to the Company's employee share schemes. The ability to hold in treasury shares that the Company purchases pursuant to the authority conferred by this resolution would give the Company the ability to re-issue treasury shares quickly and cost-effectively, and would provide the Company with additional flexibility in the management of its capital base. If any shares were used in this way, the Company would take them into account when calculating the share issuing limits in the schemes, as long as required under the Guidelines of the Association of British Insurers.

Details of any shares purchased pursuant to the proposed authority would be notified to the London Stock Exchange by 7.30am on the business day following the purchase and to the Registrar of Companies within 28 days. Details would also be included in the Company's Annual Report & Accounts in respect of the financial period in which any such purchases take place. The authority set out in the special resolution will expire on whichever is the earlier of the end of the next Annual General Meeting or 31 December 2011 and the resolution specifies the maximum and minimum prices at which the shares may be bought. Other investment opportunities, appropriate gearing levels and the overall financial position of the Company will be taken into account before deciding upon the course of action. The Company's current intention is to hold any shares purchased as treasury shares but it retains the flexibility to cancel them or sell them for cash if it considers this to be in the best interests of the Company.

The Directors would exercise this authority only if they felt it would be in the best economic interests of the Company to do so.At 14 September 2010 there were options outstanding over 4,033,555 shares, (representing 1.3% of the Company's current issued ordinary share capital (excluding shares held in treasury). If the authority given by this resolution were to be fully used, these would represent 1.5% of the Company issued ordinary share capital (excluding shares held in treasury). There are no warrants outstanding.

In addition, if Resolution 11 is approved and the authority granted by this resolution were to be fully used, Steve Morgan's shareholding would increase from 29.95% to approximately 33.3% of the Company's issued ordinary share capital.

Notice of annual general meeting

Resolution 14 – Calling of a general meeting other than an AGM

Changes made to the Companies Act 2006 by the Shareholders' Rights Regulations increase the notice period required for general meetings of the Company to 21 days unless shareholders approve a shorter notice period, which cannot, however, be less than 14 clear days. AGMs of the Company will continue to be held on at least 21 clear days' notice.

Documents available for your inspection

Copies of the following documents will be available for inspection during normal business hours on Monday to Friday each week (public holiday excepted) at the company's registered office and at the office of Linklaters LLP at One Silk Street, London EC2Y 8HQ from the date of this document up to and including the date of the Annual General Meeting and at the place of the Annual General Meeting from 11.45am until the close of the meeting.

• ⁿ a copy of the Annual Report and Accounts of the Company for each of the years ended 30 June 2008, 2009 and 2010;
• ⁿ the letters of consent from BofA Merrill Lynch and J.P. Morgan Cazenove to the Company referred to in paragraph 10 on page 94 of this document;
• ⁿ the Articles of Association and Memorandum of the Company;
• ⁿ a copy of the material contracts i.e. the Underwriting Agreement, the Relationship Agreement, the Syndicated Facility Agreement, the Harrow Estates agreements;
• ⁿ the service agreements of the Directors; and
• ⁿ the register of the Directors interests.

Approval of Rule 9 Waiver

THIS SECTION OF THE DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the proposal set out in this section of the

document you should consult an independent financial

Letter from the Senior Independent Director

adviser authorised under the FSMA.

Redrow plc (incorporated and registered in England and Wales under number 2877315) Registered Office: Redrow House St. David's Park Flintshire CH5 3RX 14 September 2010

To Independent Shareholders

Dear Shareholder

Rule 9 Waiver granted by the Panel in favour of Steve Morgan

As at the Latest Practicable Date, Steve Morgan (the Chairman of the Company) held 92,436,874 Ordinary Shares representing approximately 29.95 per cent of the issued share capital of the Company.

Following consultation with major shareholders and given the recent weakness of share prices in the sector, including Redrow's own, where companies are trading at prices below net asset value, your Board considers that it is appropriate for the Company to be in a position to buy back shares at such low levels if it would be in the best economic interests of the Company to do so.

The authority to repurchase shares proposed by Resolution 13 at the AGM provides the Company with the flexibility to manage its capital base in line with other listed companies that include this standard resolution at their AGM each year. However, if the Company undertakes a share repurchase in accordance with the authority granted by Resolution 13 at the AGM, Mr Morgan's interest in Ordinary Shares could increase beyond 30 per cent. of the issued share capital of the Company, in which case he could be required under Rule 9 of the Code to make a mandatory offer for the remainder of the share capital of the Company. The maximum interest in Ordinary Shares which Mr Morgan could hold as a result of a share repurchase in accordance with Resolution 13 is approximately 33.3 per cent.

We are therefore asking the Independent Shareholders to approve the terms of a waiver of this requirement granted by the Panel to Mr Morgan.An explanation of the reasons for this request, and the background to the obligation arising from Rule 9 of the Code, follow this letter.

In any event, and as stated above, the Directors would only exercise the authority to buy back under Resolution 13 if it would be in the best economic interests of the Company to do so. The final decision relating to any buy-back would be taken by the Independent Directors and would be conducted within the pricing and size parameters agreed by the Independent Directors but in compliance with the limits set out in Resolution 13.

The Waiver, if granted, would only apply for as long as Resolution 13 remains in force.Accordingly, whether or not the authority given under Resolution 13 is used in the coming year, the Independent Directors will (again, in consultation with major shareholders) consider whether to seek a renewal of the Waiver by the Panel at the time of the 2011 annual general meeting.Any such renewal of the Waiver would again be subject to Independent Shareholder approval at next year's AGM.

As mentioned above, the Company has consulted privately with a number of its major institutional shareholders and with their representative bodies on the proposed Waiver. It has gained sufficient comfort from these discussions both on the economic rationale for the buy-back and on the grant of a Waiver to proceed with the proposed Waiver Resolution at the AGM. The Independent Directors having been so advised by BofA Merrill Lynch and J.P. Morgan Cazenove, consider the Waiver to be fair and reasonable as far as the Independent Shareholders and the Company as a whole are concerned. In providing advice to the Independent Directors, BofA Merrill Lynch and J.P. Morgan Cazenove have taken into account the Independent Directors' commercial assessments.Accordingly, the Independent Directors, who consider the Waiver Resolution to be in the best interests of the Independent Shareholders and the Company as a whole, unanimously recommend that the Independent Shareholders vote in favour of the Waiver Resolution at the AGM, as they intend to do in respect of their own beneficial shareholdings (representing approximately 0.09 per cent. of issued share capital).

In accordance with the requirements of the Code, Mr Morgan will not be voting his interest in 92,436,874 Ordinary Shares in the Company, representing approximately 29.95 per cent of issued share capital on the Waiver Resolution. The vote in respect of the Waiver Resolution will be held by means of a poll vote.

Yours faithfully,

Alan Jackson

Senior Independent Director

Section I — Background

1 Background

• 1.1 Steve Morgan (the Chairman of the Company) held 92,436,874 Ordinary Shares (representing approximately 29.95 per cent. of the issued share capital) at the Latest Practicable Date. Should his interest in Ordinary Shares increase beyond its current level such that he holds 30 per cent or more of the issued share capital, he may be required under Rule 9 of the Code to make a mandatory offer for the remainder of the share capital of the Company.
• 1.2 If Resolution 13 (authority to purchase own shares) is approved, Mr Morgan would be in a position where, were he not to participate pro rata to his interests in any further

Approval of Rule 9 Waiver

re-purchase by the Company of its own shares, his percentage interest in the Ordinary Shares would increase beyond its current level, thereby potentially triggering a mandatory offer under Rule 9 of the Code. The approval of the Independent Shareholders is therefore being sought, by means of the Waiver Resolution (to be taken on a poll at the AGM), for the Waiver which the Panel has granted (subject to such approval). The Waiver will not permit Mr Morgan's interest to reach or exceed 33.3 per cent. (see further paragraph 4 below).

• 1.3 In seeking authority to buy back shares, the Company wishes to give itself flexibility in the management of its capital structure. In so doing, the Company brings itself into line with the majority of listed companies who seek a re-purchase authority on an annual basis and, more narrowly, into line with its house-building peers;
• 1.4 Whilst the Company will continue to devote the bulk of its cash flow to the purchase of land or to the development of plots to create value, it is also clear that the economic benefit to the Company from buying back shares at a discount to net asset value may be value-enhancing;

2 Reasons for the Waiver

Rule 9 Mandatory Offer Obligation

2.1 Under Rule 9 of the Code, when any person, together with persons acting in concert with him, is interested in shares which in aggregate carry not less than 30 per cent. of the voting rights but does not hold shares carrying more than 50 per cent. of the voting rights of such a company, a general offer will normally be required if any further interests in shares are acquired by any such person. Such an offer would have to be made in cash at a price not less than the highest price paid by him, or by any member of the group of persons acting in concert with him, for any interest in shares in the company during the 12 months prior to the announcement of the offer.

Share Purchases

• 2.2 Under Rule 37 of the Code, any increase in the percentage holding of a shareholder which results from a company purchasing its own shares will also be treated as an acquisition for the purposes of Rule 9 of the Code.
• 2.3 If Mr Morgan does not participate pro rata to his interest in the Ordinary Shares in any future repurchases by the Company of its own shares pursuant to the authority to be granted under Resolution 13, he will become interested in a greater percentage of Ordinary Shares representing between 30 and 33.3 per cent of the Company's voting share capital and will therefore be subject to the provisions of Rule 9 of the Code.As a result, the Independent Directors consulted with the Panel which agreed, subject to a poll vote of the Independent Shareholders on the Waiver Resolution, that it would waive any obligation that would otherwise arise under Rule 9 as a result of market purchases of Ordinary Shares by the Company, pursuant to the authority to be granted under Resolution 13, that

would take Mr Morgan's interest in Ordinary Shares to a level above his current interest (being 29.95 per cent. of issued share capital as at the date of this document) up to a potential maximum of approximately 33.3 per cent of issued share capital.

3 Independent advice

• 3.1 BofA Merrill Lynch and J.P. Morgan Cazenove have provided advice to the Independent Directors, in accordance with the requirements of paragraph 4(a) of Appendix 1 to the Code, in relation to the granting of the Waiver.
• 3.2 This advice was provided by BofA Merrill Lynch and J.P. Morgan Cazenove to the Independent Directors of the Company only and in providing such advice BofA Merrill Lynch and J.P. Morgan Cazenove have taken into account the Independent Directors' commercial assessments as well as the confirmations of Mr Morgan's future intentions that he has provided to the Company as set out in paragraph 6 of this Section I.

4 Maximum potential holding

• 4.1 Pursuant to the Code, it is necessary to provide an illustration of Mr Morgan's maximum potential interest in Ordinary Shares based on certain assumptions.
• 4.2 Assuming (i) full use by the Company of the authority granted under Resolution 13; (ii) no pro rata participation or other sales of interests in Ordinary Shares by Mr Morgan in connection with any share re-purchases or otherwise; and (iii) no other person exercising any options or any other rights to subscribe for Ordinary Shares, Mr Morgan's maximum potential interest in the Ordinary Shares if the Waiver is approved would be as set out in the following table:

Steve Morgan's	Number of	Steve Morgan's
current interest	Ordinary Shares	maximum
in Ordinary	in issue as	potential
shares	at the Latest	interest in
	Practicable	Ordinary
	Date	Shares
92,436,874	308,607,479	92,436,874
(29.95%)		(33.28%)

• 5 Further explanation of the Waiver and the Resolution Share Purchases under Resolution 13 or any other buyback resolution
• 5.1 The Waiver will apply, provided the Waiver Resolution is approved by the Independent Shareholders, only in respect of increases in Mr Morgan's percentage interest in Ordinary Shares resulting from re-purchases of Ordinary Shares under Resolution 13. It will not apply in respect of other increases in Mr Morgan's percentage interest in Ordinary Shares (arising, for example, from market purchases of Ordinary Shares by or on behalf of Mr Morgan or from other re-purchases of Ordinary Shares by the Company that are not pursuant to the authority granted by Resolution 13).As explained above, if there are any

re-purchases of Ordinary Shares by the Company pursuant to Resolution13 in which Mr Morgan does not participate pro rata to his interests in Ordinary Shares, Mr Morgan may become interested in Ordinary Shares carrying 30 per cent. or more of the Company's voting share capital but will not hold Ordinary Shares carrying more than 33.3 per cent. of such voting rights and any further increase in that interest in Ordinary Shares (other than pursuant to the proposals set out in this section of the document and as approved by the Waiver Resolution) will be subject to the provisions of Rule 9 of the Code.

• 5.2 The authority under Resolution 13 and the Waiver Resolution will (unless varied, revoked or renewed) both expire at the conclusion of the next Annual General Meeting of the Company. It has been the Company's regular practice to seek Shareholders' approval at each Annual General Meeting for the Company to be authorised to purchase its own shares. No re-purchases of Ordinary Shares were made under the authority granted by Shareholders at the Annual General Meeting in 2009 and the Directors have no present intention of exercising the authority sought at the AGM this year to make market purchases. However, the renewal of the authority provides the flexibility to allow the Directors to do so in the future.
• 5.3 The Directors envisage that Shareholder approval for a further re-purchase authority may be sought at the annual general meeting of the Company in 2011.At that time, the Independent Directors will (in consultation with major shareholders) consider whether to seek a further waiver by the Panel of any obligation of Mr Morgan under Rule 9 of the Code to make a general offer to the Shareholders of the Company to purchase their shares as a result of an increase in his percentage interest in Ordinary Shares arising from the purchase by the Company of its own shares pursuant to such further authority.Any further waiver granted by the Panel would again be conditional upon Independent Shareholder approval at that time.
• 5.4 If the Independent Shareholders do not approve the Waiver Resolution but Resolution 13 is passed, the Board will not make use of the authority to be granted under Resolution 13 unless arrangements can be put in place to ensure that Mr Morgan's percentage interest in the Ordinary Shares will not increase as a result of any future purchases by the Company of its own shares or a further waiver is sought from the Panel in respect of such increases (and Independent Shareholder approval is granted), since, based on the issued share capital of the Company and Mr Morgan's percentage interest in the Ordinary Shares as at the Latest Practicable Date, any purchases by the Company of its own shares from Shareholders other than Mr Morgan could result in Mr Morgan having to make a mandatory offer to all Shareholders under Rule 9 of the Code.

Poll vote of Independent Shareholders

5.5 As required by the Code, voting on the Waiver Resolution at the AGM will be by means of a poll of Independent Shareholders.

6 Steve Morgan's intentions

• 6.1 Mr Morgan has confirmed to the Company that he is not proposing, as a result of any increase in his percentage interest in Ordinary Shares following any re-purchases by the Company of its own shares, to seek any change in the composition of the Board or to the general nature or any other aspect of the Company's business.
• 6.2 As required by the Code, Mr Morgan has also confirmed that his intentions regarding the future of the Company's (and its subsidiaries') businesses, his intentions regarding the locations of the Company's (and its subsidiaries') places of business and his intentions regarding the continued employment of their employees and management, including any material change in conditions of employment, will not be altered as a result of the proposals set out in this section of the document, nor will there be any redeployment of the fixed assets of the Company (or any of its subsidiaries) as a result of such proposals.
• 6.3 Mr Morgan has not taken part in any decision of the Independent Directors relating to the Waiver, since it is his interest in Ordinary Shares which is the subject of the Waiver. Mr Morgan has confirmed he will not vote on the Waiver Resolution.

Section II — Additional Information

1 Responsibility

• 1.1 The Directors accept responsibility for the information contained in this section of the document, save that:
• (a) Steve Morgan, who has not participated in the Board's consideration of the Waiver, takes no responsibility for the recommendation by the Independent Directors on page 87; and
• (b) the only responsibility accepted by the Independent Directors in respect of the information in this section of the document relating to Steve Morgan has been to ensure that such information has been correctly and fairly reproduced or presented (and no steps have been taken by the Independent Directors to verify this information). To the best of the knowledge and belief of the Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this section of the document for which they accept responsibility is in accordance with the facts and does not omit anything likely to affect the import of such information.
• 1.2 Steve Morgan accepts responsibility for the information contained in this section of the document which relates to him. To the best of his knowledge and belief (having taken all reasonable care to ensure that such is the case), the information contained in this section of the document for which he is responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

Approval of Rule 9 Waiver

2 Directors

The Directors of the Company and their functions are as follows:

Name	Function
Steve Morgan	Chairman
John Tutte	Group Managing Director
Barbara Richmond	Group Finance Director
Alan Jackson	Non Executive Deputy Chairman and Senior Independent Director
Paul Hampden Smith	Non-Executive Director
Debbie Hewitt	Non-Executive Director

3 Interests and dealings

3.1 As at the close of business on the Latest Practicable Date, the interests, rights to subscribe and short positions of the Directors, their immediate families and persons connected with them (within the meaning of Part 22 of the Act) in Ordinary Shares (all of which are beneficial unless stated) required to be notified pursuant to Part 22 of the Act and related regulations, or which are required to be entered in the register maintained under Part 22 of the Act, were as set out below:

Director	Number of Ordinary Shares Ordinary Shares	Percentage of current issued
Steve Morgan	92,436,874	29.95%
John Tutte	127,398	0.04%
Barbara Richmond	70,512	0.02%
Alan Jackson	19,285	0.01%
Paul Hampden Smith	46,000	0.01%
Debbie Hewitt	18,787	0.01%

3.2 As at the close of business on the Latest Practicable Date, details of options over Ordinary Shares granted to the Directors under the SAYE were as set out below:

Director	Options held at 1 July 2009	Options granted in year	Options exercised in year	Options lapsed	Options held at 30 June 2010	Exercise price £	From	To
John Tutte SAYE 2008	6,859	2,166	-	-	9,025	1.06	01/01/12	01/07/12

3.3 As at the close of business on the Latest Practicable Date, the beneficial interests of the Directors in options over Ordinary Shares granted under the LTSIP, were as set out below:

Director	Options held at 1 July 2009	Options granted in year	Options exercised in year	Options lapsed	Options held at 30 June 2010	Exercise price £	From	To
John Tutte
LTSIP 2007 †	56,194	-	-	-	56,194	-	19/09/10	18/09/17
LTSIP 2008	359,648	-	-	-	359,648	-	21/11/13	20/11/18
LTSIP 2009	-	229,007	-	-	229,007	-	22/12/12	21/12/19
Barbara Richmond
LTSIP 2010	-	358,423	-	-	358,423	-	25/02/13	24/02/20

† These share options will lapse on 19 September 2010.

3.4 As at the close of business on the Latest Practicable Date, details of options over Ordinary Shares granted to the Directors under the CSOP were as set out below:

Director	Options held at 1 July 2009	Options granted in year	Options exercised in year	Options lapsed	Options held at 30 June 2010	Exercise price £	From	To
John Tutte CSOP 2008	18,292	5,689	-	-	23,981	1.25	21/11/13	20/11/18

• 3.5 As at the close of business on the Latest Practicable Date, none of Mr Morgan, his immediate family, persons connected to him (within the meaning of Part 22 of the Act and related regulations) or any person acting on concert with him had any interests, rights to subscribe or short positions (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery in any relevant Redrow securities, save as disclosed in paragraphs 3.1 above and 3.6 below.
• 3.6 As at the close of business on the Latest Practicable Date, none of Mr Morgan, his immediate family, persons connected with him (within the meaning of Part 22 of the Act) or any person acting in concert with him had any dealings (including borrowing or lending) in relevant Redrow securities which took place during the period beginning 12 months preceding the date of this document and ending on the Latest Practicable Date, save that Mrs F. E. Morgan, wife of Steve Morgan, acquired 100,000 Ordinary Shares at a price of 131.4 pence per Ordinary Share on 1 March 2010.
• 3.7 As at the close of business on the Latest Practicable Date, no relevant Redrow securities had been borrowed or lent by Mr Morgan or any person acting in concert with him or by the Directors or any persons acting in concert with them.
• 3.8 As at the close of business on the Latest Practicable Date, none of the Directors, their immediate families, persons connected with them (within the meaning of Part 22 of the Act) or any person acting in concert with him had any interests, rights to subscribe or short positions (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery in any relevant Redrow securities, save as disclosed in paragraphs 3.1 to 3.4 and 3.6 above.
• 3.9 As at the close of business on the Latest Practicable Date, none of the Directors, their immediate family or persons connected with him (within the meaning of Part 22 of the Act) had any dealings (including borrowing or lending) in relevant Redrow securities which took place during the period beginning 12 months preceding the date of this document and ending on the Latest Practicable Date, save as disclosed in paragraph 3.6 above.
• 3.10 As at the close of business on the Latest Practicable Date:

• (a) the Redrow Employee Benefit Trust held 4,240,526 Ordinary Shares, having acquired 4,220,000 shares in May 2010 and having subsequently divested 4,813 shares on 11 August 2010 to satisfy an exercise of an SAYE option by an employee;

• (b) save as set out in paragraph 3.10(a) above, no pension fund or employee benefit trust of the Company nor any person acting in concert with Mr Morgan had any interests, rights to subscribe or short positions (whether conditional or absolute and whether in the money or otherwise), including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery in relevant Redrow securities;

• (c) no pension fund or employee benefit trust of the Company nor any person acting in concert with Mr Morgan had any dealings (including borrowing or lending) in relevant Redrow securities which took place during the period beginning 12 months preceding the date of this document and ending on the Latest Practicable Date, save that the Redrow Staff Pension Scheme transferred 284,329.72 shares to Legal and General Investment Management Limited on 10 February 2010 in exchange for 321,118.90 units in Legal and General's Global Equity 70:30 Index; and
• (d) neither BofA Merrill Lynch, J.P. Morgan Cazenove nor any other connected adviser of the Company (including any person controlling, controlled by or under the same control as it) had any interests, rights to subscribe or short positions in relevant Redrow securities, save that:
• (i) Bank of America Corporation (the ultimate parent company of BofA Merrill Lynch) and its subsidiaries have an aggregate holding of 0.66 per cent. of the Ordinary Shares; and
• (ii) BofA Merrill Lynch has a short equity position in respect of 0.23 per cent. of the Ordinary Shares.
• 3.11 In this paragraph 3, references to "relevant Redrow securities" are to Ordinary Shares and securities convertible into, rights to subscribe for, derivatives referable to and agreements to sell or any delivery obligations in respect of, or rights to require another person to purchase or take delivery of Ordinary Shares.
• 4 Arrangements in connection with the proposal Mr Morgan has not entered into any agreement, arrangement or understanding (i) with any of the Independent Directors (or their close relatives and related trusts) which has any connection with or dependence upon the proposals set out in this Part III; or (ii) for the transfer of any Ordinary Shares acquired by Mr Morgan.

In addition, the Independent Directors are not aware of any agreement, arrangement or understanding having any connection with or dependence upon the proposals set out in this section of the document between Mr Morgan and any person interested or recently interested in Ordinary Shares, any other recent director of the Company or BofA Merrill Lynch or J.P. Morgan Cazenove (or any person who is, or is presumed to be, acting in concert with BofA Merrill Lynch or J.P. Morgan Cazenove).

Approval of Rule 9 Waiver

5 Directors' service contracts

5.1 Details of the service agreements currently in place between the Company and the Executive Directors are set out below: *

Executive director	Effective date of contract	Notice period
Steve Morgan	23 March 2009	6 months
John Tutte	14 September 2009	12 months
Barbara Richmond	18 January 2010	12 months

* No service contracts have been entered into or amended by the Company in the last six months.

5.2 Details of the appointment agreements currently in place between the Company and the Non-Executive Directors are set out below:

Non-executive director	Effective date of contract	Notice period
Alan Jackson	19 August 2009	3 months
Paul Hampden Smith	19 August 2009	3 months
Debbie Hewitt	19 August 2009	3 months

5.3 The aggregate emoluments, excluding pensions, of the Directors for the year ended 30 June 2010 are set out below:

Executive	Base salary and Non-executive Directors' fees £'000	Benefits in kind £'000	Bonus £'000	2010 Total Remuneration £'000
Steve Morgan (i)	15	1	-	16
John Tutte	360	17	140	517
Barbara Richmond	114	75	44	233
Non-Executive
Alan Jackson	81	-	-	81
Paul Hampden Smith	40	-	-	40
Debbie Hewitt	39	-	-	39

(i) Steve Morgan draws a nominal salary of £15,000 per annum which he donates via Payroll Giving to the Morgan Foundation. The Company also made a donation to the Morgan Foundation (£576,000 in the year ended 30 June 2010), a UK registered charity of which Steve Morgan is a trustee.

6 Information on Steve Morgan

Steve Morgan founded the Redrow group in 1974 and led the business from a small civil engineering contractor to become one of the UK's leading home builders. He floated the Company in 1994 and eventually stepped down as Chairman in November 2000. He returned to the helm in March 2009 and was re-appointed Chairman, on 30 June 2009. Mr Morgan is also Chairman of the Bridgemere Group of Companies, which includes Wolverhampton Wanderers, Carden Leisure and Trinity Aviation. He was awarded an OBE in 1992.

7 Financial and other information on the Company

• 7.1 Redrow is one of the UK's leading residential and mixed use property developers. For the year to 30 June 2010, the Group delivered revenues of £396.9m, operating profit of £12.7m, basic earnings per share of 0.2 pence and ended the year with a net debt position of £47.1m.
• 7.2 As set out in Section III below, this document incorporates by reference the audited consolidated financial statements of the Group, and the related auditor's report of PricewaterhouseCoopers LLP thereon, for the years ended 30 June 2008, 2009 and 2010. Please refer to Section III below for a list of cross references to the relevant sections of these reports and accounts, and for how to access this information.

7.3 For the three years ended 30 June 2008, 30 June 2009 and 30 June 2010, the Company reported the following dividend per share information:

		Dividend	Basic earnings
		per share	per share
	Dividend	(pence)	(pence)
	(£m)
2008 †	14.8	9.3	(66.7p)
2009 †	-	-	(47.9p)
2010	-	-	0.2p

† restated in 2010 to reflect the Rights Issue

7.4 Save as described in the Annual Report and Accounts accompanying this Notice of AGM, there have been no material changes in the financial or trading position of the Company since 30 June 2010 (the date of its most recent published accounts).

8 Material contracts

During the period beginning two years preceding the date of this document and ending on the Latest Practicable Date, the Company and its subsidiaries have not entered into any material contracts otherwise than in the ordinary course of business except as set out below:

• 8.1 The Relationship Agreement The Relationship Agreement governs Mr Morgan's relationship with the Company in the event of potential conflicts of interest and the key terms of the Relationship Agreement include the following:
• 8.1.1 Mr Morgan acknowledges that in the event of a potential conflict of interest between the Company and an associated entity of Mr Morgan's the interests of the Company will be given priority;
• 8.1.2 if an associated entity wishes to acquire land which meets certain thresholds ("Qualifying Land"), this must be brought to the attention of the Company and both parties must then follow a prescribed procedure in order to determine next steps of both parties with respect to any attempt to acquire the relevant land;
• 8.1.3 if Mr Morgan or an associated entity wishes to dispose of Qualifying Land, this must be brought to the attention of the Company;

• 8.1.4 transactions between the Company and Mr Morgan or an associated entity shall be on an arms' length basis, and properly disclosed to the relevant Company directors;

• 8.1.5 the Company is entitled to appoint an observer to the board of the relevant associated entity if any such entity acquires Qualifying Land. The observer may only attend meetings at which there are discussions relating to acquiring the Qualifying Land;

• 8.1.6 there are reciprocal confidentiality provisions requiring the Company and an associated entity to keep the other party's information confidential; and
• 8.1.7 the agreement terminates if Mr Morgan ceases to be a director of the Company.

8.2 The Underwriting Agreement

The Company entered into an Underwriting Agreement dated 23 September 2009 in relation to a rights issue it carried out in October 2009, under which it appointed each of J.P. Morgan Cazenove, BofA Merrill Lynch, HSBC, Lloyds TSB Corporate Markets and RBS Hoare Govett as underwriters to the rights issue.

8.3 Syndicated Facility Agreement

Harrow Estates business.

The Company entered into the Syndicated Facility Agreement dated 4 September 2008 as amended on 18 September 2009 between the Company as the original borrower and original guarantor, certain subsidiaries of the Company as original guarantors, the lenders named therein and Barclays Bank PLC as Agent. The Syndicated Facility Agreement was originally a £450,000,000 term and revolving credit facility.As a result of the Rights Issue completed in October 2009 the Company amended its facilities so that the facility is now £250,000,000 and expires on 30 September 2011.

8.4 Agreements relating to the Harrow Estates Business Acquisition In September 2009 the Company entered into a series of agreements in connection with the Group's purchase of the

Approval of Rule 9 Waiver

9 Middle market quotations

Set out below are the middle market quotations for an Ordinary Share, as derived from the Daily Official List of the London Stock Exchange plc, for the first business day of each of the six months set out below and for the Latest Practicable Date:

Date	Price per Ordinary Share (pence)
1 April 2010	142.3
4 May 2010	145.0
1 June 2010	127.0
1 July 2010	107.3
2 August 2010	113.7
1 September 2010	118.1
10 September 2010	134.1

10 Consent

BofA Merrill Lynch and J.P. Morgan Cazenove have given and have not withdrawn their written consent to the issue of this document with the references to it in the form and context in which they appear.

11 Documents on display

The documents required by the Code to be put on display are described on page 86 of this document.

Section III — Information Incorporated by Reference

The table below sets out the various sections of those documents which are incorporated by reference into this document, so as to provide the information required pursuant to the Code. These documents will also be available at the Company's website, www.redrow.co.uk, from the date of this document and available for inspection as set out on page 86 of this document.

Document	Section	Page number(s)
		in such document
2010 Group Financial Statements *	Consolidated income statement	50
	Consolidated balance sheet	51
	Reconciliation of movements in equity	52
	Consolidated cash flow statement	53
	Accounting policies	54 to 57
	Notes to the consolidated financial statements	58 to 81
	Independent auditor's report	49
2009 Group Financial Statements *	Consolidated income statement	58
	Consolidated balance sheet	59
	Consolidated cash flow statement	60
	Accounting policies	62 to 65
	Notes to the consolidated financial statements	66 to 89
	Independent auditor's report	57
2008 Group Financial Statements *	Consolidated income statement	54
	Consolidated balance sheet	55
	Consolidated cash flow statement	56
	Accounting policies	58 to 61
	Notes to the consolidated financial statements	62 to 85
	Independent auditor's report	53

* which are available at www.redrowplc.co.uk

Any Shareholder, person with information rights or other person to whom this document is sent may request a copy of each of the documents set out above in hard copy form. Hard copies will only be sent where valid requests are received from such persons. Requests for hard copies are to be submitted to our Registrar, Computershare, either by calling 0870 707 1257 (calls to this number are charged at national rate from a BT landline. Other telephony provider costs may vary). From overseas, please call +44 870 707 1257 or write to Computershare Investor Services plc, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH.All valid requests will be dealt with as soon as possible and hard copies mailed by no later than two business days following such request.

The documents incorporated by reference into this document have been incorporated in compliance with Rule 24.14 of the Code. Except as set forth above, no other portion of these documents is incorporated by reference into this document.

Section IV - Definitions

"Act" - means the Companies Act 2006;

"acting in concert" - has the meaning attributed to it in the Code;

"AGM" - means the Annual General Meeting of the Company to be held on 4 November 2010 at St. David's Park Hotel, St. David's Park, Flintshire at 12 noon;

"arrangement" - includes any indemnity or option arrangements, and any agreement or understanding, formal or informal, of whatever nature, relating to relevant securities which may be an inducement to deal or refrain from dealing;

"BofA Merrill Lynch" - means Merrill Lynch International, a company registered in England, with its registered address at 2 King Edward Street, London EC1A 1HQ;

"Code" - means the UK City Code on Takeovers and Mergers;

"Company" - means Redrow plc, a company incorporated under the laws of England and Wales (registered number 2877315), with its registered office at Redrow House, St David's Park, Flintshire, CH5 3RX;

"Computershare" - means Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ;

"control" - means an interest or interests, in shares carrying an aggregate 30 per cent. or more of the voting rights (as defined in the Code) irrespective of whether the holding or aggregate holding gives de facto control;

"CSOP" - means the Company's company share option plan;

"dealing" or "dealt" - includes the following:

• (i) the acquisition or disposal of relevant securities, or the right (whether conditional or absolute) to exercise or direct the exercise of voting rights attached to relevant securities, or of general control of relevant securities;
• (ii) the taking, granting, acquisition, disposal, entering into, closing out, termination, exercise (by either party) or variation of an option (including a traded option contract) in respect of any relevant securities;
• (iii) subscribing or agreeing to subscribe for relevant securities;
• (iv) the exercise or conversion of any relevant securities carrying conversion or subscription rights;
• (v) the acquisition of, disposal of, entering into, closing out, exercise (by either party) of any rights under, or variation of, a derivative referenced, directly or indirectly, to relevant securities;
• (vi) entering into, terminating or varying the terms of any agreement to purchase or sell relevant securities; and
• (vii) any other action resulting, or which may result, in an increase or decrease in the number of relevant securities in which a person is interested or in respect of which he has a short position;

"Directors" or "Board" - means the Executive Directors and the Non-Executive Directors;

"derivative" - includes any financial product whose value in whole or in part is determined directly or indirectly by reference to the price of an underlying security but which does not include the possibility of delivery of such an underlying security;

"Executive Directors" - means Steve Morgan, John Tutte and Barbara Richmond;

"Form of Proxy" - means the enclosed proxy form for completion by those Shareholders who wish to vote in the resolutions set out in this document but are unable to attend the AGM;

"Group" or "Redrow Group" - means the Company together with its subsidiaries and subsidiary undertakings;

"J.P. Morgan Cazenove" - means J.P. Morgan plc, a company registered in England with its registered address at 125 London Wall, London EC2Y 5AJ;

"Independent Directors" - means the Directors other than Steve Morgan;

"Independent Shareholders" - means the Shareholders other than Steve Morgan (or any other persons presumed to be acting in concert with Steve Morgan);

"issued share capital" - means, except where stated to the contrary, the issued share capital of the Company excluding treasury shares;

being "interested" in relevant securities - includes where a person:

• (i) owns relevant securities;
• (ii) has the right (whether conditional or absolute) to exercise or direct the exercise of the voting rights attaching to relevant securities or has general control of them;
• (iii) by virtue of any agreement to purchase, option or derivative, has the right or option to acquire relevant securities or call for their delivery or is under an obligation to take delivery of them, whether the right, option or obligation is conditional or absolute and whether it is in the money or otherwise; or
• (iv) is party to any derivative whose value is determined by reference to its price and which results, or may result, in his having a long position in it;

"Latest Practicable Date" - means 10 September 2010, being the latest practicable date prior to the publication of this document;

"LTSIP" - means the Company's long term share incentive scheme;

"Non-Executive Directors" - means Alan Jackson, Paul Hampden Smith and Debbie Hewitt;

Ordinary Shares - means the ordinary shares of 10p each in the capital of the Company;

"Panel" - means The Panel on Takeovers and Mergers;

Approval of Rule 9 Waiver

"relevant securities" - means Ordinary Shares (or derivatives referenced thereto) and securities convertible into, rights to subscribe for and options (including traded options) in respect thereof;

"SAYE" - means the Company's save as you earn share scheme;

"Shareholders" - means the holders of Ordinary Shares from time to time;

"short position" - means any short position (whether conditional or absolute and whether in the money or otherwise) including any short position under a derivative, any agreement to sell or any delivery obligation or right to require another person to purchase or take delivery;

"Steve Morgan" or "Mr Morgan" - shall be taken to mean both Steve Morgan and where the context requires, members of his immediate family holding Ordinary Shares and each of Bridgemere Securities Limited and Durcan Investments Limited, being companies holding Ordinary Shares and which are ultimately controlled by Steve Morgan;

"Waiver" - means the waiver by the Panel of the obligation which would otherwise arise under Rule 9 of the Code requiring Steve Morgan (or an entity through which Mr Morgan may hold shares in the Company) to make an offer for the issued share capital of the Company following re-purchases of Ordinary Shares by the Company pursuant to Resolution 13 that could potentially increase Mr Morgan's shareholding from approximately 29.95 per cent. of issued share capital to a maximum of approximately 33.3 per cent. of issued share capital; and

"Waiver Resolution" - means Resolution 11 set out at page 82 of this document.

Corporate & shareholder information

Dividend Reinvestment Plan ("the Plan")

The Company offers a dividend reinvestment plan that gives shareholders the opportunity to use their cash dividend to buy ordinary Redrow shares through a special low-cost dealing arrangement.

The Plan is run by Computershare Investor Services PLC ("Computershare") and for further information on the Plan and how to join, please contact Computershare at PO Box 1064, The Pavilions, Bridgwater Road, Bristol BS99 3EB (Telephone Number: 0870 702 0000) or the Company Secretary.

Shareholder Discounts

The Company offers a discount of 1% to shareholders off the purchase price of a new Redrow home. In order to qualify for the discount a purchaser must hold a minimum of 2,500 ordinary shares in Redrow plc for a minimum of 12 months prior to the date of reservation.

Details of our current developments are available on our website: www.redrow.co.uk

Group contacts Officers and Advisers

Company Secretary Graham A Cope

Registered Office

Redrow House St. David's Park Flintshire CH5 3RX Registered No. 2877315

Registrars

Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ

Stockbrokers

J. P. Morgan Cazenove 10 Aldermanbury London EC2V 7RF

BofA Merrill Lynch 2 King Edward Street London EC1A 1HQ

Auditors

PricewaterhouseCoopers LLP 101 Barbirolli Square Lower Mosley Street Manchester M2 3PW

Solicitors

Linklaters LLP One Silk Street London EC2Y 8HQ

Glossary

Affordable housing - properties targeted at or reserved for people who are unable to compete effectively for existing market housing in an area.

Average selling price (ASP) - the statistical average selling price of properties i.e. total price of homes sold divided by total number of properties.

Brownfield sites - brownfield land is another term for previously developed land, or land that contains or contained a permanent structure and associated infrastructure.

Consented land - land which has an outline or detailed planning consent.

Current land - land owned by Redrow which has an outline or detailed planning consent together with land controlled by Redrow, usually under contract, where planning consent is being sought.

Development site - parcel of land which is being developed for residential, commercial and/or mixed use.

EcoHomes - an independent labelling scheme for housing administered by the Building Research Establishment (BRE), which assesses the environmental quality of a development.

Exchange - when the customer has exchanged contracts to purchase a Redrow home and has usually provided a deposit.

Forward land - land which is owned or controlled by Redrow, generally under option, which is being promoted through the planning system in order to ultimately achieve a planning consent.

Forward sales - reservations and exchanges for homes that will be legally completed in a subsequent financial period.

Greenfield sites - land that has not previously been used for development, often referring to land in agricultural use.

HCA - Homes and Communities Agency.

Land bank - a supply of potential development plots.

Legal completion - the transfer of legal ownership has contractually passed from the seller to the purchaser.

Mixed use - development that combines two or more types of development, e.g. residential, commercial (retail, office), leisure and/or industrial.

Mortgage approvals - written notification from the mortgage lender to the borrower that approves the advance of a specified amount of mortgage funds under specified conditions.

NHBC - National House-Building Council.

Open market - method of asset disposal that involves advertising an asset (e.g. land) for sale and inviting bids from prospective purchasers. The alternative of 'private treaty' which involves negotiating with a single potential purchaser to agree terms for the disposal of the asset or land.

Option - a contract which gives one side the contractual right but not an obligation to do something.

Part exchange - a means of purchasing a new home whereby the purchaser's existing property is taken by the developer in part payment for the new home they are buying.

Planning consent - the permission required by most property developers and private individuals in the UK in order to be allowed to build on, or change the use of, a plot of land or to redevelop an existing building. Normally granted by the local planning authority (e.g. district council, unitary authority or county council). Consent can be granted in either 'Outline', awaiting detailed plans; or 'Detailed' when planning drawings have been submitted and approved.

Planning permission - see Planning consent.

Plot cost - the cost of the land on which one dwelling is built.

Reservation - a property that has been reserved for purchase – normally by payment of a reservation fee – but legal contracts have not yet been exchanged between buyer or seller to make the transaction legally binding.

RICS - Royal Institute of Chartered Surveyors, the professional body representing and regulating property professionals and surveyors of all types.

Social housing - a form of housing tenure in which the property is owned by a Government authority, which may be central or local. Sometimes applied more generally to affordable housing usually offered through housing associations on a rented or shared ownership basis (see affordable housing).

Strategic land/land bank - see forward land.

Sustainable - sustainable development is an approach towards development that tries to satisfy people's basic needs and good quality of life without compromising the quality of life for future generations.

Waste management - process by which products and by-products generated by individuals, businesses and industry are collected, stored, transported, treated, disposed of, recycled or reused.

5 year summary

12 months ended 30 June	IFRS 2010 £m	IFRS 2009 £m	IFRS 2008 £m	IFRS 2007 £m †	IFRS 2006 £m
Revenue	396.9	301.8	650.1	834.3	770.1
Operating profit/(loss) before financing costs pre-exceptional item	12.7	(22.4)	84.5	136.6	132.8
Operating profit/(loss) before financing costs pre-exceptional item
as a percentage of turnover	3.2%	(7.4%)	13.0%	16.4%	17.2%
Operating profit/(loss) before financing costs	12.7	(119.0)	(174.9)	136.6	132.8
Profit/(loss) for the period	0.5	(100.4)	(139.9)	84.4	84.1
Net assets	435.9	293.5	404.6	577.8	513.8
Net (debt)	(47.1)	(214.6)	(223.3)	(177.6)	(129.8)
Gearing – net (debt) as a percentage of capital and reserves	10.8%	73.1%	55.2%	30.7%	25.3%
Return on capital employed – operating profit, pre-exceptional item
adjusted for joint ventures, as a percentage of opening and
closing capital employed pre-exceptional item	1.5%	(2.9%)	10.3%	19.4%	22.0%
Number of legal completions	2,587	2,113	3,925	4,823	4,735
Earnings per ordinary share ††	0.2p	(47.9p)	(66.7p)	40.3p	40.3p
Dividends per ordinary share	-	-	9.3p	15.6p	13.0p
Net assets per ordinary share	141.3p	183.4p	252.9p	361.5p	322.0p

† Restated in 2008 for change of Revenue recognition policy

†† Restated in 2010 to reflect the Rights Issue

Notes

REDROW plc

Redrow House, St. David's Park, Flintshire CH5 3RX Telephone: 01244 520044 Facsimile: 01244 520720 E-mail: groupservices@redrow.co.uk