Corporate Governance

CORPORATE GOVERNANCE REPORT – INTRODUCTION AND OVERVIEW

Board leadership and company purpose

Caroline Silver
Chair

The Board:

is responsible for the long term sustainable success of the Company, determines purpose, values and strategy and models the Group’s culture;
ensures the necessary resources are available to the Group; and
engages with stakeholders to inform its decisions.

See pages 96 to 97 of the 2024 Annual Report and Accounts for the main activities and outcomes of the Board in FY24 and how governance contributes to strategy. The Nomination Committee report describes management of conflicts of interest (see page 105 of the 2024 Annual Report and Accounts).

The Group’s purpose, culture and strategy and the Section 172 Statement and information on stakeholder engagement (including engagement with shareholders and employees) are set out in the Strategic Report on pages 1 to 87 of the 2024 Annual Report and Accounts.

Division of responsibilities

The Chairman leads the Board, the Executive Directors manage the business on a day-to-day basis and the Non-Executive Directors provide constructive challenge and strategic guidance.

Board policies and processes are in place to ensure that the Board functions effectively and efficiently.

Pages 99 to 100 of the 2024 Annual Report and Accounts outline, Board balance, the division of responsibilities, and our Governance framework.

Membership of and attendance at the Board and its Committees is shown on page 95 of the 2024 Annual Report and Accounts..

Composition, succession and evaluation

The Board regularly reviews its composition to ensure it remains balanced.

Board appointments are subject to a formal, rigorous and transparent procedure and an effective succession plan is maintained for the Board and Senior Management. The Board undertakes an annual evaluation of its own effectiveness, that of its committees and of individual Directors.

The Nomination Committee report on pages 102 to 111 of the 2024 Annual Report and Accounts details:

the main activities of the Nomination Committee and their outcomes;
the process for Board appointments, succession planning and promotion of diversity and inclusion; and
Board and committee evaluation actions and outcomes.

Information on the composition of the Board can be found on pages 89 to 95.

Audit, risk and internal control

The Board is mindful of the risk environment in which it operates when making any decisions and has established formal and transparent policies and procedures to ensure independence and effectiveness of internal and external audit functions.

The Board satisfies itself on the integrity of the financial and narrative statements, and that they present a fair, balanced and understandable assessment of the Group’s position and prospects.

It maintains sound risk management and internal control systems and regularly reviews the principal and emerging risks impacting the business.

The Board assesses the appropriate appetite for risk in striving to achieve the Group’s strategic objectives.

The Audit and Risk Committee report on pages 112 to 120 of the 2024 Annual Report and Accounts  summarises:

the main activities of the Audit and Risk Committee and their outcomes;
the significant issues the Audit and Risk Committee considered regarding the financial statements and how they were addressed;
systems for risk management and internal controls and the Audit and Risk Committee’s review of their effectiveness; and
the Audit and Risk Committee’s assessment of the independence and effectiveness of the external audit process and the re-appointment of the external auditor.

The Directors’ statement of responsibility for a fair, balanced and understandable Annual Report and Accounts can be found on page 148 of the 2024 Annual Report and Accounts. The Board’s assessment of the Group’s emerging and principal risks and information on how these are being managed are set out on pages 63 to 70 and the Viability and Going concern statements, can be found in the Strategic Report on page 85 of the 2024 Annual Report and Accounts.

Remuneration

The Board, through its Remuneration Committee, determines Director and Senior Management remuneration policy and practice in a way that supports the successful delivery of the Group’s strategy and promotes its long-term sustainable success.

The Board ensures Executive remuneration is aligned to the Group’s purpose and values.

The Directors’ Remuneration report on pages 123 to 145 of the 2024 Annual Report and Accounts sets out:

information on the Group’s remuneration policy;
how it was operated during FY24, including performance-based remuneration outcomes, and how independent judgement and discretion was applied; and
how the remuneration policy will be applied in FY25.

CHAIRMAN, CHIEF EXECUTIVE AND SENIOR INDEPENDENT DIRECTOR TERMS OF REFERENCE

1 Relationship of the chair and the chief executive – guiding principles

1.1 The two roles must be complementary and should not be exercised by the same individual. The chair is responsible for the leadership of the board and ensuring its effectiveness on all aspects of its role whilst the chief executive is responsible for the day-to-day management of the business. The chair and the chief executive must ensure that each is appropriately informed of the other’s current areas of activities. They must be seen to work closely together as a team.

1.2 Their relationship must be based on mutual respect and trust. It must be frank and open, with problem areas being addressed openly.

1.3 The chair has direct access to senior executives, as he deems necessary.

1.4 The chair and the chief executive must agree on their respective roles in setting major tasks and in taking new initiatives in particular where there are areas of overlap.

1.5 There should be shared vision to promote the long term success of the group.

1.6 These guiding principles will only be modified by mutual agreement between the chair and the chief executive and with the prior approval of the board.

2 Terms of reference for the chair

The duties of the chair, which is a non-executive role, arise from his position as the senior officer of the Company and his responsibility for presiding over the official business of the Company and the board.

The chair’s duties include, but are not limited to:

2.1 leadership of the board and ensuring its overall effectiveness in directing the Company and on all aspects of its role including regularity and frequency of meetings;

2.2 managing the business of the board and chairing its meetings;

2.3 setting the agenda for discussion at board meetings and ensuring that adequate time is available for discussion of agenda items, particularly those of a strategic or critical nature, and that debate is not truncated;

2.4 shaping the culture in the boardroom;

2.5 encouraging all board members to engage in board committee meetings by drawing on their skills, experience and knowledge;

2.6 ensuring that board committees are properly structured with appropriate terms of reference, that membership is periodically refreshed and that independent non-executive directors are not over-burdened when deciding the chairs and membership of the committees;

2.7 ensuring that there is appropriate delegation of authority from the board to executive management;

2.8 facilitating constructive board relations generally, and in particular resolution of any differences of opinion or approach between directors and to work to prevent any differing factions emerging and dividing the board. In the event factions amongst the board do develop, the chair should deal with them in the best interests of the Company and promoting its long term sustainable success;

2.9 promoting a culture of openness and debate by facilitating the effective contribution of all directors by drawing on their skills, experience and knowledge,

2.10 fostering relationships based on trust, mutual respect and open communication – both inside and outside the boardroom - between executive and non-executive directors;

2.11 ensuring that all directors are aware of and able to discharge their statutory duties;

2.12 ensuring that all directors receive the information that is required for the proper performance of their duties in a timely manner and that such information is accurate, high quality and clear;

2.13 ensuring that the board determines the nature, and extent, of the significant risks the Company is willing to embrace in the implementation of its strategy;

2.14 developing a productive working relationship with the chief executive, providing support and advice, while respecting executive responsibility;

2.15 participating with the chief executive, as appropriate, in corporate relations, including relations with the Company’s shareholders, customers, government, other public organisations, other companies, the media and stakeholders generally;

2.16 ensuring that the board has a clear understanding of the views of shareholders;

2.17 meeting with major shareholders to understand, their views on governance and performance against the Group’s strategy and to engage on significant matters related to his/her areas of responsibilities;

2.18 leading the annual internal or external evaluation of the board, its committees and individual directors, including obtaining feedback from the workforce and other stakeholders, and acting on the results of such evaluation by recognising the strengths and addressing the weaknesses of the board;

2.19 ensuring that new directors participate in a full, formal and tailored induction programme;

2.20 providing guidance and mentoring to new directors as appropriate;

2.21 ensuring that the training and development needs of the directors and the board as a whole are identified and met and that the directors continue to regularly update and refresh their skills, knowledge and familiarity with the Company to fulfil their role both on the board and committees;

2.22 chairing the meetings of the Nomination Committee, except where the appointment of his own successor is to be discussed;

2.23 hold meetings with the non-executive directors without the executive directors being present;

2.24 providing direction to the Company Secretary in terms of good, accurate, high-quality and clear information flows on a timely basis within the board and its committees and between senior management and non-executive directors; the facilitation of induction, board training and professional development of directors;

2.25 ensuring that the chair of each of the board’s committees are available to attend the Annual General Meeting and answer any questions from shareholders and encouraging them to make statements on the activities and achievements of their respective committees on an annual basis;

2.26 representing the Company to its key stakeholders and ensuring that the board understands the views of these key stakeholders; and

2.27 considering ways in which the board can reach out to increase its visibility with the workforce and gain insights into the culture and concerns at different levels of the business.

3 Terms of reference for the chief executive

The chief executive’s duties, amongst other matters, include:

3.1 proposing the Company’s strategy and delivering the strategy as agreed with the board;

3.2 setting an example to the workforce and communicating to them the expectations in respect of the Company’s culture;

3.3 ensuring that operational policies and practices drive appropriate behaviour;

3.4 supporting the chair to make certain that appropriate standards of governance are permeating through all parts of the organisation;

3.5 ensuring that the board is made aware of the views gathered via engagement between management and the workforce;

3.6 ensuring that the board is aware of the views of senior management on business issues in order to improve the standard of discussion in the boardroom and, prior to any final decision on an issue, explain in a balanced way any divergence of view;

3.7 ensuring that management fulfils its obligation to provide board directors with: accurate, timely and clear information in a form and of a quality and comprehensiveness that will enable the board to discharge its duties; the necessary resources for developing and updating their knowledge and capabilities; and appropriate knowledge of the company, including access to company operations and members of the workforce;

3.8 exercising executive stewardship of the group’s physical, financial and human resources;

3.9 being generally responsible to the board for the development of the company and its profitable operation, including the profits, cash and costs of all its businesses;

3.10 ensuring that such action is taken as is necessary to secure the timely and effective implementation of the objectives, policies and strategies set by the board and of decisions taken by or on behalf of the board;

3.11 ensuring that appropriate objectives, policies and strategies are adopted for each of the businesses or divisions of the company; that appropriate budgets are set for them individually; that their performance is effectively monitored; and that guidance or direction is given where appropriate;

3.12 ensuring that the company complies with all relevant legislation and regulatory requirements;

3.13 managing the group’s risk profile, including health and safety performance of the business, in line with the extent and categories of risk identified as acceptable by the board;

3.14 ensuring appropriate internal controls are in place;

3.15 after appropriate consultation with the chair, allocating duties to individual directors and assigning ad hoc responsibilities or special tasks to directors or groups of directors;

3.16 motivating, reviewing and appraising the performance of the other executive directors, in their capacity as executives and, after reviewing with the chair, as appropriate, making appropriate recommendations to the remuneration committee on the remuneration payable to them;

3.17 being responsible, with the participation of the chair as appropriate, for corporate relations, relations with the company’s shareholders, customers, governments, other public organisations, other companies, the media and any other stakeholders; and

3.18 regularly keeping the chair and other non-executive directors informed on all matters that may be of importance to the company and of relevance to them in the performance of their role as non-executive directors, including its current performance and progress.

4 Terms of reference for the senior independent director

The senior independent director should, where appropriate;

4.1 act as a sounding board for the chair, providing them with the support in the delivery of their objectives;

4.2 lead the evaluation of the chair by meeting with the non-executive directors without the chair being present at least annually (taking into account the views of the executive directors) and on such other occasions as are deemed appropriate;

4.3 be responsible for the orderly succession process for the chair of the board and chair the Nomination Committee when it is considering succession to the role of chair of the board;

4.4 be available to shareholders if they have concerns which contact through the normal channels of chair, chief executive or other executive directors has failed to resolve or for which such contact is inappropriate;

4.5 attend sufficient meetings with a range of major shareholders to listen to their views in order to help develop a balanced understanding of their issues and concerns;

4.6 when the company or the board are undergoing periods of stress, work with the chair and other directors and/or shareholders, to resolve significant issues;

4.7 intervene in circumstances such as where: there is a dispute between the chair and the chief executive; shareholders or non-executive directors have expressed concerns which the chair or chief executive have failed to address; the strategy is not supported by the whole board; the relationship between the chair and the chief executive is particularly close; decisions are being made without the approval of the whole board; and succession planning is being ignored; to maintain board and company stability; and

4.8 have the authority to call a meeting of the non-executive directors if, in his opinion, it is necessary.

Approved on 30 June 2022

INTERNAL AUDIT CHARTER

Internal Audit Charter January 2021

POLICY ON AUDITOR INDEPENDENCE AND NON AUDIT FEES

1. Responsibility of the Audit Committee

This policy is established to ensure the independence of the Company’s external auditor (the “Auditor”).

Provision 25 of the UK Code on Corporate Governance (July 2018) and DTR 7.1, requires listed companies, through its Audit Committee, to review and monitor the Auditor’s independence and objectivity and the effectiveness of the audit process taking into consideration relevant UK professional and regulatory requirements. In addition, the Company should develop and implement a policy on the engagement of the Auditor to supply non-audit services, taking into account relevant ethical guidance and UK professional and regulatory requirements.

Through the application of this policy, the Company wishes to avoid the following general categories of threats to independence, identified by the Financial Reporting Council:

Self-interest threat – arises where the Auditor has a financial or other interest that might cause them to be reluctant to take actions that could be, or could be perceived to be, adverse to the interests of the audit firm or any individual in a position to influence the conduct and outcome of the audit;
Self-review threat – arises when the Auditor is put in the position of reviewing its own work;
Management threat – arises when partners or employees of the audit firm play any part in the management of, or take decisions on behalf of management of the Company;
Familiarity (or trust) threat – arises when an audit firm or member of the audit team is predisposed to accept, or insufficiently questioning of, the point of view of the Company;
Advocacy threat – arises when the audit firm acts as advocate for the Company and supports the position taken by the management of the Company in an adversarial or promotional situation, creating an actual or perceived threat; and
Intimidation threat – arises when the Auditor’s conduct is influenced by fear or threats.

With respect to the Auditor the Audit Committee shall be responsible for:

1.1 Negotiating and agreeing the statutory audit fee and the scope of the statutory audit, considering whether the level of fees is appropriate to enable the audit to be conducted;

1.2 Authorising the Auditor (and, after any tender, any replacement auditor to be appointed to replace the incumbent in a future period) to provide non-audit services (including audit related services) to the Company or Group, prior to the commencement of such services;

1.3 Monitoring annual estimated/actual spend for audit (including audit related) and non-audit fees;

1.4 Approving the terms of the audit engagement, including any engagement letter issued at the start of each audit and the scope of the audit;

1.5 Assessing annually: (i) the Auditor’s independence and objectivity taking into account any relevant UK professional and regulatory requirements; (ii) the relationship with the Auditor as a whole, including the provision of any non-audit services; and (iii) following discussions with the Auditor, any confirmation of independence received from the Auditor;

1.6 Satisfying itself that there are no relationships (such as family, employment, investment, financial or business) between the Auditor and the Company, the Company’s management and directors (other than in the ordinary course of business);

1.7 Monitoring the Auditor’s compliance with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the Company compared to the overall fee income of the firm, office and partner and other related requirements; and

1.8 Assessing annually their qualifications, expertise and resources and the effectiveness of the audit process including their own internal quality procedures and responses to any regulatory findings.

In carrying out the aforementioned responsibilities, the Audit Committee may consult such persons as it deems appropriate.

2. Appointment of the Auditor

The Audit Committee shall consider and make recommendations to the board, to be put to shareholders for approval at the AGM, in relation to the appointment, re-appointment and removal of the Company’s Auditor.

The Audit Committee shall be responsible for any auditor selection process to be carried out, and if the Auditor resigns, the Audit Committee shall investigate the issues leading to this event and decide whether any action is required.

The Audit Committee shall satisfy itself that the Auditor is independent on appointment (with any cooling-down that is required complete prior to appointment).

The Audit Committee shall arrange for the Company’s audit to be put out to tender at least every ten years with no continuous period of appointment running longer than 20 years.

The Audit Committee shall ensure that the recommendation after an audit tender process includes at least two firms, with a clear and justified preference for one.

3. Hiring Policy

The Company will not hire any employee of the Auditor who has been involved in the Company’s audit within the last two years. Should the Company wish to make such an appointment, written approval must be obtained from each of the Group Chair, the Chief Financial Officer and the Chairman of the Audit Committee prior to any offer of employment being made to the individual concerned.

4. Rotation of Audit Partners

The Auditor shall comply with relevant UK legal, ethical and professional guidance on the rotation of audit partners and other partners and staff in senior positions. Currently these requirements are:

Lead engagement partner – maximum period in the role continuously or in aggregate, five years: no return for at least five years;
Engagement Quality Control Reviewers - maximum period in the role, continuously or in aggregate, seven years: no return for at least five years;
Key audit partners responsible for the statutory audit of material subsidiaries: maximum period in the role continuously or in aggregate, five years: no return for at least five years; and
Other key audit partners involved in the audit – maximum period in the role, continuously or in aggregate, seven years: no return for at least two years.
Other partners and staff in senior positions – if involved in the audit for more than 7 years, the Auditor must undertake a threats and safeguards assessment. Following this assessment, if safeguards do not reduce the threats to a level where independence is not compromised, the partner or member of staff should be removed from audit.

5. Provision of Audit Services

Audit services are recurring services, with the objective of providing assurance on the financial statements and the annual report. Audit services include services that are a necessary part of the audit process.

6. Provision of non-audit services

The Audit Committee has adopted the FRC’s “Whitelist" of permitted services for UK incorporated UK Public Interest entities (‘UK PIEs’) as set out in the Revised Ethical Standard 2019 (Ethical Standard) (see Appendix 1). These services are those that are required by law and regulation, loan covenant reporting, other assurance services closely linked to the audit or annual report and reporting accountant services. Appendix 1 also sets out which of these services fall within the 70% cap as described in section 8.

Non-audit services will only be provided by the External Auditor if they also pass the “third party test” i.e. that an objective, reasonable and informed third party would conclude that integrity or objectivity (and therefore independence) of the External Auditor will not be compromised through the provision of the non-audit services.

The External Auditor will confirm, in writing, to the Chairman of the Audit Committee, or the Chief Financial Officer or the Company Secretary, that the “third party test” has been conducted and the outcome of that assessment, prior to any non-audit services being provided. The confirmation will need to set out the factors, both qualitative and quantitative, (such as the nature of the service, the level of fees and fee arrangement, and any other factors that may be relevant for a third party to understand the effectiveness of the safeguards) considered as part of the assessment.

7. Prohibited Services

The Auditor should not provide the following services (the “Prohibited Services”) even if they fall within a type of service that is “permitted” according to Appendix 1:

7.1 Tax services and compliance;

7.2 Services that involve playing any part in the management or decision-making process of the Company;

7.3 Bookkeeping and preparing accounting records and financial statements/payroll services;

7.4 Designing and implementing internal controls related to financial information or designing and implementing financial information technology systems;

7.5 Valuation services;

7.6 Legal services/internal audit/Human Resource services;

7.7 Services linked to financing, capital structure and allocation, and investment strategy of the Company;

7.8 Promoting, dealing in or underwriting shares in the Company; and

7.9 Any other service that the Audit Committee determines is not permissible.

8. Non-audit fees

The following annual limits will apply to non-audit fees (see Appendix 1):

8.1 In any one financial year, the Chief Financial Officer has the authority to approve Projects, which in aggregate, do not exceed £50k in anticipated or approved fees;

8.2 Where, in aggregate, anticipated and approved non-audit fees, in any one financial year, exceed £50k but are less than £150k, the Projects must be approved by the Chief Financial Officer following consultation with the Chairman of the Audit Committee;

8.3 Where, in aggregate, the anticipated and approved fees, in any financial year, exceed £150k, the Projects must be approved, in advance of any formal commission, by the Audit Committee;

8.4 The Audit Committee will review, at each of its meetings, the cumulative year to date and annual estimated audit and non-audit fee expenditure; and

8.5 if the average of three consecutive years of audit fees paid to the individual audit firm for its audit of the Company and, where applicable, its parent and its subsidiaries, compared to fees for non-audit services paid to the individual audit firm in respect of the Company, its parent and its subsidiaries in the fourth year, are likely to exceed 70%¹ (the “Cap”), the Audit Committee will apply appropriate controls over non-audit expenditure for the remainder of the year to ensure the Cap is not breached; and

8.6 if the average of three consecutive years of audit fees paid to the audit firm and its entire network for audits of the UK PIE and its subsidiaries, compared to fees for non-audit services paid to the audit firm and its entire network for non-audit services provided to the UK PIE and its subsidiaries in the fourth year, are likely to exceed 70%² (the “Cap”), the Audit Committee will apply appropriate controls over non-audit expenditure for the remainder of the year to ensure the Cap is not breached.

¹Does not apply to non-audit fees for services required by law or regulation e.g. regulatory reporting to the Prudential Regulation Authority and Financial Conduct Authority

²Does not apply to non-audit fees for services required by law or regulation e.g. regulatory reporting to the Prudential Regulation Authority and Financial Conduct Authority

9. Employee conduct

Employees of the Company and its subsidiaries have an obligation to comply with all reasonable requests for information from the Auditors and to provide information that is not misleading, false or deceptive.

Appendix 1 – Whitelist of non-audit services

Whitelist approach to non-audit services

The FRC’s whitelist of non-audit services set out in the table below indicates where a type of service is expected by the FRC to fall within or outside the 70% cap on non-audit services under the network calculation³.

This whitelist describes the nature of all services that can be provided by the external auditor of an UK PIE if approved by the Audit Committee – services not on the list cannot be provided.

Even if a service appears on the whitelist, the auditor must still consider the threats to their independence. Further considerations laid out in the Revised Ethical Standard 2019 include:

Whether it is probable that an objective, reasonable and informed third party would conclude that the understanding of the entity obtained by the auditor for the audit of the financial statements is relevant to the service.
Whether the nature of the service would compromise independence.
An assessment of threats to independence and the safeguards applied to counter those threats.
Whether the audit committee and the auditor are confident that no element of the service would conflict with the EU blacklist of non-audit services which will continue to apply as a matter of law. Some services that appear allowable under the whitelist will be prohibited by the blacklist.

For avoidance of doubt, the whitelist does not permit tax, consulting, valuation or corporate finance services (other than reporting accountant engagements). In addition, under the Revised Ethical Standard 2019, all engagements involving a contingent fee are banned for all audited entities and all engagements involving internal audit services, management roles or secondments are banned for the Company and its significant affiliates.

Revised Ethical Standard 2019 – Whitelist

Type of non‑audit service	Outside cap	Counts towards cap
Reporting required by a competent authority or regulator under UK law or regulation* for example: Reporting to a regulator on client assets; In relation to entities regulated under the Financial Services and Markets Act 2000 (FSMA), reports under s166 and s340 of FSMA; Reporting to a regulator on regulatory financial statements; Reporting on a Solvency and Financial Condition Report under Solvency II.	Yes
In the case of a controlled undertaking incorporated and based in a third country, reporting required by law or regulation in that jurisdiction where the auditor is required to undertake that engagement.	Yes
Reporting on internal financial controls when required by law or regulation.**	Yes
Reporting on the iXBRL tagging of financial statements in accordance with the European Single Electronic Format for annual financial reports.	Yes
Reports, required by or supplied to competent authorities/regulators supervising the audited entity, where the authority/regulator has either specified the auditor to provide the service or identified to the entity that the auditor would be an appropriate choice for service provider.	Yes
Services which support the entity in fulfilling an obligation required by UK law or regulation, including listing requirements where: the provision of such services is time critical; the subject matter of the engagement is price sensitive; and it is probable that an objective, reasonable and informed third party would conclude that the understanding of the entity obtained by the auditor for the audit of the financial statements is relevant to the service, and where the nature of the service would not compromise independence.***	Yes
Reviews of interim financial information; and providing verification of interim profits not otherwise required by law or regulation.		Yes
Where not otherwise required by law or regulation, non‑audit and additional services, as defined in this Ethical Standard provided as auditor of the entity, or as reporting accountant, in relation to information of the audited entity for which it is probable that an objective, reasonable and informed third party would conclude that the understanding of the entity obtained by the auditor is relevant to the service, and where the nature of the service would not compromise independence.		Yes
Extended audit or assurance work that is authorised by those charged with governance performed on financial or performance information and/or financial or operational controls, in the audited entity or a third‑party service provider, where this work is closely linked with the audit work.		Yes
Additional assurance work or agreed upon procedures authorised by those charged with governance performed on material included within or referenced from the annual report.		Yes
Reporting on government grants.		Yes
Reporting on covenant or loan agreements which require independent verification and other reporting to third parties with whom the audited entity has a business relationship in accordance with Appendix C of this Ethical Standard****.		Yes
Services which have been the subject of an application to the Competent Authority.		Yes
Generic subscriptions providing factual updates of changes to applicable law, regulation or accounting and auditing standards.		Yes

* It is not always clear which services fall within the exemption for services required by EU or national law. It is worth bearing in mind that simply because work may be advised or required by an industry regulator does not mean it is pursuant to legislation – it will depend whether the industry regulator has statutory rights to require the work. Early discussion with the auditor is recommended for such services in order to avoid potential problems.

** This will permit any new requirements for auditors under the future BEIS consultation on internal controls to be outwith the fee cap.
*** In each of these cases the whitelist emphasises that consideration should be placed on whether it is probable that an objective, reasonable and informed third party would conclude that the understanding of the entity obtained by the auditor for the audit of the financial statements is relevant to the service, and whether the nature of the service would compromise independence.
**** This is cross referenced to Appendix C of the Ethical Standard, which replicates and updates the referencing of the staff guidance ay bring in restructuring services to the extent provided in that Appendix.

In respect of reporting accountant engagements, the FRC has not sought to change the services that reporting accountants can provide but they have applied the rules on additional services as if the reporting accountant was the company’s auditor (for this purpose the rules applied are for companies that are neither a PIE nor OEPI). This means there are more services that rule out a particular firm from becoming reporting accountant than under the current standard⁴.

Reporting accountant service	Outside cap (required by UK law or regulation)	Counts towards cap
Public accountant’s report or special purpose audit opinion (true and fair)	Yes
Public reports on profit forecasts (proper compilation)	Yes
Public report on pro forma statements (proper compilation)	Yes
Public report on acquirer’s GAAP regulation (proper compilation)	Yes
Public report on quantified financial benefit statements (proper compilation)	Yes
Consent letter	Yes
Auditor’s independence letter	Yes
FRC Ethical Standard independence letter	Yes
Long form report or other kinds of due diligence report carried out as part of a reporting accountant engagement		Yes
Working capital opinion and supporting report		Yes
Private reporting on profit forecasts/estimates		Yes
Financial policies and procedures (FPP) comfort letter and supporting commentary report		Yes
Private reporting on a synergy statement		Yes
Comfort letters: on extraction of financial information on significant change on reporting accountant’s responsibilities to Sponsor or Nominated Adviser on tax		Yes
Pathfinder comfort letter		Yes
Bring down comfort letter		Yes

¹The average of three consecutive years of audit fees paid to the audit firm and its entire network for audits of the UK PIE and its subsidiaries, compared to fees for non‑audit services paid to the audit firm and its entire network for non‑audit services provided to the UK PIE and its subsidiaries in the fourth year.

²Currently the only common services which rule the firm out completely are tax services on a contingent fee basis and advising on the quantum and measurement criteria of senior management and directors’ pay. Otherwise, reporting accountants assess the additional services against the Transaction, subject matter and subject matter information. Assuming there is no self‑review threat, the reporting accountant will often use a threats and safeguards approach.

Approved on 30 August 2023

DIRECTORS' SERVICE CONTRACTS AND LETTERS OF APPOINTMENT

Letters of appoint to:

Service Contracts

2023 LONG-TERM PERFORMANCE PLAN (LTTP) TARGETS

2023 LTPP Targets

In December 2023, Barratt Developments PLC (the ‘Company’) granted an award under its Long-Term Performance Plan (‘2023 LTPP’). At the time of grant, the Remuneration Committee agreed to set the non-financial targets but defer the setting of the financial targets (absolute EPS and underlying ROCE) for the 2023 LTPP due to continued market uncertainty. The Company at that time, announced that it would determine the financial targets as soon as possible and no later than the end of March 2024.

However, in February 2024, prior to setting the financial targets, the Company announced its proposed combination with Redrow plc (the ‘Combination’). Consequently, the setting of the financial targets was further delayed, in part due to the Remuneration Committee seeking advice on, and considering, the implications of setting standalone targets for the Company given that the 2023 LTPP would not vest until after completion of the Combination.

At its meeting in June 2024, considering the advice received, the Remuneration Committee agreed the following financial targets for the 2023 LTPP (the non-financial targets (TSR and GHG Emissions), as published in the FY23 Annual Report and Accounts on pages 157 and 158, are included for completeness):

Performance Measure¹	Reason Selected	Weighting (of Total Award)	Below Threshold (0% Vesting)	Threshold (25% Vesting)	Maximum (100% Vesting)
Absolute Adjusted EPS² for financial year ending 30 June 2026³	To ensure efficient and effective management of our business and align interests with those of shareholders.	15%	Below 38p	38p	42p
Underlying ROCE for the financial year ending 30 June 2026⁴	To ensure efficient and effective management of our business and align interests with those of shareholders.	40%	Below 11%	11%	13%
TSR against 50+/50- comparator group	To ensure that the comparator group remains current and relevant whilst factoring in the continued movement in the Company’s market capitalisation.	15%	Below median	Median	Upper Quartile
TSR against a house builder index	To ensure rewards are linked to outperformance of our peers.	15%	Below index average of peer group	Index average of peer group	Index average +8% per annum
Reduction of GHG Emissions	To ensure we focus on reducing our emissions by meeting our science-based target of a 29% reduction in absolute scope 1 and 2 greenhouse gas emissions.	15%	29% reduction	33% reduction	38% reduction

For the absolute adjusted EPS and underlying ROCE performance targets (as well as TSR), vesting will be on a straight-line basis between threshold and maximum. For the Reduction of GHG Emissions, vesting is on a straight-line basis between below threshold and threshold and between threshold and maximum.
Absolute EPS and underlying ROCE targets will be based on current corporation tax rates.
Absolute EPS is calculated by dividing the adjusted profit after tax for the year attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during FY26, excluding those held by the Employee Benefit Trust which are treated as cancelled.
Underlying ROCE is calculated as earnings before amortisation, interest, tax, operating charges relating to the defined benefit pension scheme and adjusted items, divided by average net assets adjusted for goodwill, intangibles and land payables, tax, cash, loans and borrowings, retirement benefit assets/obligations, derivative financial instruments and legacy property provisions.

The Remuneration Committee expects that each of these performance targets will be subject to necessary adjustments following completion of the Combination.

For completeness, LTPP awards to Executive Directors, members of the Executive Committee and the Regional Managing Directors are subject to a two-year post-vesting holding period. All LTPP awards are subject to an overriding Remuneration Committee discretion, as set out in the Policy table on page 146 of the FY23 annual report. The Remuneration Committee retains discretion to adjust the number of shares vesting from the 2023 LTPP award to mitigate against any potential windfall gains. The 2023 LTPP will also be subject to the malus and clawback provisions summarised on pages 148 and 149 of the FY23 annual report.

Date: 5 August 2024

ARTICLES OF ASSOCIATION

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Corporate Governance

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