Corporate Governance

Introduction from the Chairman

The Board believes that, in terms of the overall direction and control of Barratt Developments PLC (the ‘Company’), effective corporate governance comes principally from the establishment and maintenance of values, standards and disciplines the Company seeks to apply in dealings with shareholders, customers, employees, suppliers, contractors and other stakeholders. The Board’s stewardship of these matters and its role in providing appropriate guidance is pivotal to this ethos. Many of the Company’s core values and standards are set out in a range of procedures and practice guidelines communicated throughout the Barratt Group of companies (the ‘Group’). External governance codes also set the framework for the Group’s internal standards and it therefore seeks to comply with established best practice in all areas of corporate governance.

Statement of compliance with Code provisions

The Company recognises the importance of seeking to maintain the highest standards of corporate governance in all areas of its business. In June 2010, the Financial Reporting Council (the ‘FRC’) published the new UK Corporate Governance Code (the ‘Code’), a copy of which is available from the FRC’s website (www.frc.org.uk). The Code applied to the Company with effect from 1 July 2010. Being committed to operating in accordance with the highest standards of corporate governance, the Company has now implemented the requirements of the Code, including those relating to the submission of all directors for annual re-election at the annual general meeting to be held on 16 November 2011 (the ‘2011 AGM’).Throughout the year ended 30 June 2011 the Company complied with Section 1 of the Code, full details of which can be found on pages 39-47 of the 2011 Annual Report.

Risk management and internal controls

A key focus of the Code is risk management and the responsibility of boards to determine the nature and extent of the risks they are willing to take in achieving strategic corporate objectives, as well as including an explicit obligation for boards to review the effectiveness of risk management systems and internal control. For the Group, risk appears in many forms and can fall into any one of several categories such as: market; liquidity; people; subcontractors and suppliers; land; Government regulation; Construction; Health and Safety and IT. As there is no single solution for managing such a diverse range of risks, the Board dedicates considerable time to discussing the risks affecting the Group and mitigation against them. The principal risks and uncertainties of the Group, their relevance to the Group’s business and the Board’s mitigation strategies are set out at pages 32 to 35 of the 2011 Annual Report.

The Company has a clear focus on identifying and managing risk. To enhance this, the management risk committee, established during the 2009/10 financial year, undertook a review of a number of specific risks affecting the business and reported its findings to the Audit Committee, who took into account these findings when carrying out its review of the effectiveness of the Company’s risk management and internal control systems on behalf of the Board.

Shareholder engagement

In July 2010 the FRC introduced the UK Stewardship Code which aims to enhance the quality of engagement between the Company and its institutional investors to help improve long-term returns to shareholders and the efficient exercise of governance responsibilities. The Board recognises the importance of maintaining an ongoing relationship with the Company’s shareholders and achieves this through regular dialogue with shareholders on issues such as the macroeconomy, the availability of mortgage lending to customers, strategy, performance and governance.

The Board

In January 2011 the Board met for its annual strategic review to discuss the Company’s growth plans and a number of strategic issues. The continuing reluctance of financing institutions to provide third party debt for housebuilding and commercial projects, the issues created by constraints on mortgage lending and alternative financing structures were amongst the matters explored. The challenges facing the housing market continue but I believe that the Company’s senior management and employees remain totally committed to delivering improving performance and shareholder value.

Robert Lawson
CHAIRMAN