Internal Control and Risk Management

The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness. The system is designed to manage risks that may impede the achievement of the Group’s business objectives rather than to eliminate those risks entirely. The system of internal control therefore provides only reasonable, not absolute, assurance against material misstatement or loss. The system of internal control does, however, provide reasonable assurance that potential difficulties can be identified promptly and appropriate remedial action taken.

It is the responsibility of the Executive Directors and senior management to implement and maintain the Group’s internal control and risk management systems in accordance with policy approved by the Board. The key aspects of the Group’s internal control and risk management framework are as follows:-

A clear organisational structure with defined levels of authority and responsibility for each operating division.

Extensive financial and management reporting systems under which financial and operating performance is consistently reviewed against budget and forecasts at divisional, regional and Group level on a monthly basis.

Key risk areas such as land purchase, planning permission, production, sales, quality, customer care and service standards, adverse publicity, the market, corporate responsibility, environmental and health and safety performance and the integration of Barratt Developments Plc with Wilson Bowden Plc are embedded in the Group’s monthly management reporting system so that risk identification and the control of risk are a routine aspect of management responsibility.

Internal control and risk management systems are supported by the Group Internal Audit Team which is responsible for advising senior management, the Executive Directors and, through the Audit Committee, the Board on the operation and effectiveness of those systems. The Internal Audit Team undertakes a planned programme of audit appraisals across Group operations approved by the Audit Committee, including full divisional audits and targeted audits of key risk areas such as land viability process, land acquisition control and monitoring, work in progress and subcontractor payment controls. Material issues identified in these audits and follow-up action plans are reviewed by the Executive Directors and by the Board on a quarterly basis.

The Board has reviewed the effectiveness of the system of internal control in accordance with the Turnbull Guidance and is satisfied that it is in accordance with that guidance.

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Barratt Developments PLC (Company Number 00604574), a company registered in England whose registered office is at Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire, LE67 1UF