We are leading the future of housebuilding Annual Report and Accounts 2023 Strategic Report Non-financial and sustainability information statement The information below is intended to help stakeholders understand our position on these key non-financial matters. We have considered these non-financial matters and disclosed in the relevant sections, when determining what information should be included in the Annual Report and Accounts, the information needs of different stakeholders and their relative importance as well as the relevant time horizons in each matter. The following complies with the non-financial reporting requirements contained in Sections 414CA and 414CB of the Companies Act 2006. Description of the business model Our business summary Our business model Non-financial key performance indicators relevant to the company’s business Social matters Market review Our sustainability focus areas Affordability Employees Development and training Diversity Wellbeing Employee engagement Gender pay gap Board diversity Human rights Human rights Third parties Anti-bribery and corruption Group policy Working with suppliers Environmental matters Climate-related financial disclosures Waste Building sustainably Greenhouse gas emissions disclosure Policy, due diligence and outcomes Risk management Principal risks Long-term viability statement Audit Committee Report 12 14 16 20 40 30 36 38 38 35 37 84 39 39 39 39 78 33 40 97 71 73 99 124 Our fifth integrated report We are committed to being a sustainable and responsible business. This is demonstrated in this integrated Annual Report. Our focus is the connection of economic, environmental, social and governance matters to create and preserve long- term value for all our stakeholders. For a detailed description of our approach to integrated reporting, go to the Appendix on page 243. Notice regarding limitations on Directors’ liability under English law Under the Companies Act 2006, a safe harbour limits the liability of Directors in respect of statements in, and omissions from, the Strategic Report contained on pages 2 to 100 and the Directors’ Report contained on pages 101 to 171. Under English Law, the Directors would be liable to the Company (but not to any third party) if the Strategic Report and/or the Directors’ Report contains errors as a result of recklessness or knowing misstatement or dishonest concealment of a material fact, but would not otherwise be liable. Strategic Report and Directors’ Report Pages 2 to 100 inclusive, and the Non-financial and sustainability information statement here, comprise the Strategic Report, and pages 101 to 171 inclusive comprise the Directors’ Report, both of which have been drawn up and presented in accordance with, and in reliance on, English Company Law. The liabilities of the Directors in connection with the reports shall be subject to the limitations and restrictions provided by such law. Cautionary statement regarding forward-looking statements The Group’s reports, including this document and written information released, or oral statements made, to the public in future by or on behalf of the Group, may contain forward-looking statements. Although the Group believes that its expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different. Nothing contained in this Annual Report or on the Group’s website should be construed as a profit forecast or an invitation to deal in the securities of the Company. Alternative performance measures In addition to the Group using a variety of statutory performance measures it also measures performance using alternative performance measures (APMs). Definitions of the APMs and reconciliations to the equivalent statutory measures are detailed on pages 235 to 237. The definition of net cash is included in note 18 of the Financial Statements. Cover image 1: Orchards Rise, Swindon Cover image 2: Victoria Chalmers, Site Manager at Hopecroft and NHBC Pride in the Job Award winner We are leading the future of housebuilding for our customers 96 NHBC Pride in the Job Quality Awards Strategic Report Highlights Investment case Chair’s Statement At a glance Business model Key performance indicators Marketplace Chief Executive’s Statement Our strategy Building sustainably Section 172 Stakeholder engagement Chief Financial Officer’s review Risk management Climate-related risks and opportunities Viability Statement 8 9 10 12 14 16 20 23 29 40 50 54 66 71 78 99 Corporate Governance Board of Directors and Company Secretary Executive Committee Regional Managing Directors Corporate Governance Report Nomination Committee Report Audit Committee Report Safety, Health and Environment Committee Report Remuneration Report Other statutory disclosures Statement of Directors’ Responsibilities 102 106 107 108 116 124 133 137 169 171 Financial Statements Independent Auditor’s Report Consolidated Income Statement and Consolidated Statement of Comprehensive Income Statement of Changes in Shareholders’ Equity – Group Statement of Changes in Shareholders’ Equity – Company Balance Sheets Cash Flow Statements Notes to the Financial Statements Definitions of alternative performance measures and reconciliation to IFRS (unaudited) Five-year record (unaudited) Glossary Integrated reporting approach Group advisers and Company information 173 182 183 184 185 186 188 235 238 240 243 244 Interactive report See page Strategic Report G F QR codes for more information online Tap to move to allocated page www.barrattdevelopments.co.uk Tap to move between sections Barratt Developments PLC Annual Report and Accounts 2023 1 Strategic Report Strategic Report G G F F Sustainability We are determined to be the leading national sustainable housebuilder. We were recognised on the CDP Climate Change A List for Leadership, one of fewer than 300 companies worldwide. We believe that fundamental to building quality homes is building a positive environmental, social and economic legacy for future generations. This is reflected in our ambitious targets and clear plans and actions. Leadi Employees committed to excellence Our site managers compete every year to secure industry-wide recognition for their management of excellent site standards and build quality, through the Pride in the Job Awards. Our site managers won 96 awards in 2023 – more than any other housebuilder for the 19th year running. 96 Pride in the Job Awards 2 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report Strategic Report G G F F Build quality Build quality is monitored across our developments by the NHBC. There are five key stages in the home building process, each marked by NHBC inspections and the logging of reportable items, (RIs). Barratt has delivered the lowest rate of RIs across the major housebuilders consistently for each of the last four years, highlighting our focus on build quality controls and high standards across our developments. 0.16 reportable items (RIs) in FY23 See page 33 Leadi ng Scale We are the largest housebuilder in the UK with our operations spanning England, Scotland and Wales and encompassing both greenfield development and brownfield regeneration activities. Through our network of 29 divisions, we deliver more homes than any other housebuilder across the UK. 17,206 homes completed in FY23 Building at scale and great customer service is at the heart of what we do Everything was perfect and as we wanted it.” Francesca and Jordan, Barratt customers Barratt Developments PLC Annual Report and Accounts 2023 3 Strategic Report Strategic Report G G F F Future Homes Hub Our Chief Executive and other members of the senior leadership team are playing leading roles in the Future Homes Hub. This organisation brings together the housebuilding sector, the wider supply chain, the infrastructure sector, finance and the Government to ensure we, as an industry, have a long-term delivery plan for the sector in line with the Government’s legally binding net zero target. See page 64 the futu Innovation in future home design Through partnerships with our supply chain and academia, Barratt is leading innovation in both the products we use and in our construction methods, to ensure the industry can deliver zero carbon homes, at scale, in the future. The eHome2, built within a climate chamber at the Energy House 2.0 at the University of Salford, is a zero carbon home which is testing the effects of climate change and analysing how new homes can cope with more extreme weather conditions, whilst reducing energy and water use. See page 34 eHome2 Link Scan to view more 4 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Strategic land Land remains the foundation of our business. Our current land bank provides the land we require in the short to medium term to support our development activity. Our strategic land supports our long-term growth, securing land for future development but without committing to current land values. During the year we have expanded our strategic land bank by more than 10,000 plots and we held 101,784 plots of strategic land at the year end. Future leaders Through our internal development programmes we are committed to developing the potential of our employees and developing our leaders of the future. Our “Catalyst” programme is designed to help high potential female employees develop their careers within the Group. Our “Rising Stars” programme seeks to identify and support our diverse future leaders across all aspects of the Group’s activities. See page 35 futu re of house building Barratt Developments PLC Annual Report and Accounts 2023 5 Strategic Report G F Customer satisfaction 93% of our customers said they would recommend Barratt to a friend in the latest annual HBF National New Homes Customer Satisfaction survey. As a result, Barratt was awarded a 5 star rating for customer satisfaction, making us the only major housebuilder to be awarded this accolade for 14 consecutive years. 93% of customers said they would recommend Barratt to a friend See page 30 Discover some of our outstanding developments Scan to view more for our custo Helping address cost of living pressures Our customers unlock significant annual savings by moving into our new build homes. The average new house buyer is saving more than £180 per month or £2,200 per year on energy bills, when compared with purchasers of equivalent older houses. Our customers also benefit from lower utility costs through reduced water usage. Beyond the compelling financial benefits, our new homes dramatically lower carbon emissions for our customers too. £2,200 average savings per year on energy bills, when compared with purchasers of equivalent older houses. 6 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report Strategic Report G G F F Homes for everyone Everyone deserves a safe and affordable home, whether buying, or renting in the public or private rental sectors. We build homes for everyone. During the year, we completed 12,456 homes for private homebuyers and those looking to rent in the private rental sector, as well as 3,922 affordable new homes, sold at 55% below the average price of private new homes completed in the year. 55% below the average price of private new homes completed in the year See page 26 custo mers This is the first time we have moved home in over 20 years. We chose Barratt not just because of the style, layout and design of the development but also the sales team. They’re friendly, helpful, have great knowledge and always on hand to answer questions; we felt absolutely at ease with them.” Darren and Katie, Barratt customers Barratt Developments PLC Annual Report and Accounts 2023 7 Strategic Report G F Highlights 2023 highlights Operational and sustainability highlights 17,206 Total home completions1 (FY22: 17,908) 4.31 Waste intensity3 (FY22: 4.97) 96% Health & safety (SHE audit compliance) (FY22: 97%) 23.7% Carbon reduction4 (FY22: 23.2%) 367 Average active sales outlets2 (FY22: 332) 4.3 Land bank years (FY22: 4.7) 5 star HBF 5 star customer satisfaction (FY22: 5 star) 84.4% Employee engagement score (FY22: 79.4%) Financial highlights 21.2% Adjusted gross margin5 (FY22: 24.8%) £884.3m Adjusted profit before tax5 (FY22: £1,054.8m) 67.3p Adjusted basic EPS5 (FY22: 83.0p) £1,069.4m Year-end net cash5 (FY22: £1,138.6m) 18.3% Gross margin (FY22: 17.1%) £705.1m Profit before tax (FY22: £642.3m) 53.2p Basic EPS (FY22: 50.6p) 22.2% ROCE4 (FY22: 30.0%) 1 Total home completions, including JVs, were 17,206 (FY22: 17,908) for the year. Privately, wholly owned completions were 12,456 (FY22: 13,327), affordable home completions were 3,922 (FY22: 3,835) and JV home completions in which the Group had an interest were 828 (FY22: 746). 2 Including JV active sales outlets. 3 Waste intensity is measured in tonnes relative to 100m2 of legally completed build area in the financial year. 4 Scope 1 and 2 GHG emissions reduction from an FY18 baseline. Our science-based target is to achieve 29% reduction by FY2025. 5 In monitoring its performance, the Group uses a number of alternative performance measures. These measures are defined on pages 235 to 237. 8 In focus ∙ Awarded 96 Pride in the Job Awards for outstanding site management in the June 2023 NHBC Awards, more than any other housebuilder for the 19th consecutive year ∙ Awarded maximum 5 star HBF customer satisfaction rating for the 14th consecutive year, more than any other major housebuilder ∙ Our sustainability performance recognised with the Group joining the CDP’s Climate Change A List for Leadership, one of just 300 companies worldwide and the top-rated UK housebuilder ∙ Sales rate of 0.55 net private reservations per active outlet per week during the year (FY22: 0.81) ∙ Total forward order book (including JVs) at 30 June 2023 of 8,995 homes at a value of £2,223.4m (30 June 2022: 13,579 homes at £3,622.3m) ∙ Strong balance sheet with net cash of £1,069.4m, after dividend payments of £360.0m and the completion of the £200m share buyback, reflecting strong working capital discipline Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Investment case Reasons to invest H o w we add value Highly experienced build and sales teams Quality and service Strong balance sheet and cash generation Nationally diversified Shorter owned land bank Putting customers at the heart of everything we do Leading in sustainability The backdrop The housebuilding industry is in a period of adjustment, reflecting the impact of inflation and the subsequent changes in the cost of living and mortgage interest rates. These dynamics remain significant in the near term but the long-term need for additional housing is clear. We will manage these near-term challenges and ensure we emerge a stronger business, capable and ready to deliver the high quality, energy efficient, sustainable homes the country so desperately needs. Shorter owned land bank We operate an efficient “build and sell” model. We seek to run one of the shortest but most developable land banks in the industry. As soon as land is acquired, we look to begin development at the earliest opportunity, to drive our build efficiency and home completions. This minimises capital employed and brings forward returns, resulting in greater value for investors. Strong balance sheet and cash generation We maintain strong financial discipline, recognising the cyclicality of the industry in which we operate. We maintain a strong balance sheet with a focus on cash generation and a clearly defined operating framework. Highly experienced build and sales teams We have an experienced management team and workforce as well as long-standing and committed sub-contractors who schedule, manage and deliver our high quality, sustainable homes to exacting standards. Our experienced teams also leverage our reputation around build quality, customer service, national scale and financial strength to unlock additional sales channels with our significant expansion in the private rental sector. Quality and service Build quality and customer service are fundamental to our business and customer trust. Our build quality is recognised as industry-leading through the external checks on our homes during the build process, as well as a 19-year unbroken record in the industry’s Pride in the Job Awards. We are the only major housebuilder to be awarded a 5 star rating for customer satisfaction for 14 consecutive years. Nationally diversified We operate throughout England, Scotland and Wales. We design and build homes that meet local market demand, from one-bedroom apartments to five and six-bedroom homes. We deliver homes for private homebuyers, social landlords and the private rental sector, supplying the desperately needed high quality, sustainable new homes across this variety of tenures. Leading in sustainability We are the leading national sustainable housebuilder. Our ambitious targets are supported by clear plans and action. We lead the industry in developing and testing the step-change in future home designs, which will allow the industry deliver net zero at scale. We believe that fundamental to building quality homes is building a positive environmental, social and economic legacy for future generations. Barratt Developments PLC Annual Report and Accounts 2023 9 Strategic Report G F Chair’s Statement Strong and resilient The Group is well placed to navigate the challenging market backdrop, continuing to deliver the high-quality, sustainable homes that are needed across the country. Committed to leading the future of housebuilding for our customers I am pleased to present my first Annual Report as Chair, having taken over from John Allan on 30 June 2023. I joined the Group at the end of a financial year in which we delivered a strong operational and financial performance whilst maintaining our industry-leading quality, customer service and sustainability credentials, against a backdrop of both political and economic instability. Our balance sheet, with net cash of £1,069m, is robust and provides the financial strength and flexibility to ensure we can manage through this period of uncertainty and emerge well positioned for the future. As part of my induction, I have met with our senior leadership team, employees and external stakeholders, which has helped me to gain a good understanding of the business and how it operates. It is evident that there is a strong internal culture of ‘doing the right thing’, as well as a desire throughout the organisation to ensure everyone has the opportunity to develop to their full potential within a diverse and inclusive workplace. I have been very impressed with the dedication and commitment of our senior leadership team, and with the passion and purpose of all our colleagues across the business. Our focus on leading the industry in terms of customer service, quality and sustainability is evidenced through the achievement of the HBF 5 star rating for the 14th consecutive year, 96 NHBC Pride in the Job Awards for our site managers and by the Group joining the CDP Climate Change A List for Leadership, one of fewer than 300 companies worldwide. The industry’s contribution to climate change makes it imperative that we continually scrutinise and challenge the ways in which we operate, as well as the environmental and social impact of our business. I am delighted to have joined a Group with both a successful history and a clear focus on its leading role in developing the sustainable homes of the future. (For more information on the HBF customer satisfaction survey see pages 30, on Pride in the Job Awards see page 33 and on our approach to sustainability see pages 40 to 49.) The Board recognises that we must manage the Group through what is likely to be a more challenging period of trading, but we will remain focused on managing these risks and challenges whilst ensuring the Group is in the best possible position to create long-term value for all our stakeholders. Caroline Silver Chair 10 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Board changes There have been several changes in the composition of the Board during FY23. Jasi Halai joined the Board as an Independent Non-Executive Director on 1 January 2023 and, as announced later in January, I joined as a Non-Executive Director and Chair designate on 1 June 2023. Full biographical details and membership of Committees can be found on pages 102 to 105 and details of the recruitment processes can be found on page 119. John Allan stepped down from the Board on 30 June 2023. John played a key role in the Group’s development since joining the Board in August 2014 and taking up the role of Chair in November 2014. His experience and dedication were invaluable and the Board wishes John well for the future. As announced in January this year, Dame Sharon White decided to step down early from her position as a Non-Executive Director on 30 June 2023, after more than five years of service on the Board, due to her other commitments. The Board would like to express thanks to Sharon for her dedication and service. Finally, I am pleased that Nigel Webb has agreed to join the Board as a Non-Executive Director with effect from 1 October 2023. Nigel brings a wealth of property, construction and land experience to the Board, which complements the skills of the existing Board members. Further details can be found on page 117. We will continue to assess our composition and that of our committees, considering the recommendations of the FTSE Women Leaders Review, the Parker reviews and the McGregor- Smith review. For information on the diversity of the Board please see page 117. Shareholder returns The Board declared an interim dividend for FY23 of 10.2 pence per share (FY22: interim dividend of 11.2 pence per share) and is pleased to recommend a final FY23 dividend of 23.5 pence per share (FY22: final dividend of 25.7 pence per share) in line with our dividend policy of maintaining cover at two times. Subject to shareholder approval, the final dividend will be paid on 3 November 2023 to shareholders on the register at the close of business on 29 September 2023. Shareholders who elect for the Dividend Reinvestment Plan should do so by 13 October 2023. The total proposed dividend for FY23, including the interim dividend paid in May, is 33.7 pence per share (FY22: 36.9 pence per share) lower than last year, reflecting the reduction in adjusted earnings per share, offset by the reduction of dividend cover to two times. We also returned surplus capital during the financial year with a £200m share buyback programme. The Board has reviewed our capital allocation policy in light of current market conditions. In principle, the Board continues to believe that excess capital should be returned to shareholders when it is appropriate to do so. Whilst the Company remains in a strong financial position, the UK housing market remains difficult and the outlook remains uncertain. We have therefore agreed that whilst our reduction in dividend cover to 1.75 times will apply from FY24 as planned, there will be no further share buybacks at this stage. The Board will continue to review the capital allocation policy as market conditions develop. The future Looking ahead, we recognise that there are significant macro-economic headwinds, most notably the continuing inflationary pressures and the resulting interest rate environment which is impacting mortgage affordability and availability in the UK as well as economic growth, employment and consumer confidence and spending. We are in a strong position to deal with these challenges with a proven operational team, a prudent net cash balance and a solid forward sales position. The experienced senior management team are responding to market conditions by driving revenue through the efforts of our sales teams across the country with the focused use of incentives, as well as diversification to secure sales into the private rental sector. The Board will continue to monitor changes in both the housing and land markets, as well as the wider economy, but our operating disciplines, forward order book and strong financial position provide us with resilience and flexibility to adjust to changes in the operating environment in the year ahead, and as the market evolves thereafter. Finally, on behalf of the Board, I would like to express our thanks to our colleagues and our supply chain for their commitment to the Group, both over the last year, and as we look forward to the year ahead. On a personal note, I also look forward to meeting many more colleagues as I get around more of the Group’s operations in the coming year. Caroline Silver Chair 5 September 2023 Barratt Developments PLC Annual Report and Accounts 2023 11 Strategic Report Strategic Report G G F F At a glance Our business at a glance Our purpose To lead the future of housebuilding by putting customers at the heart of everything we do. We will achieve our purpose by continually innovating and applying best practice across our four strategic priorities. Our strategic priorities See page 29 Customer first We put customers at the heart of everything we do. We deliver customer satisfaction through building high quality, energy efficient and sustainable homes. Great places We build long-term relationships to secure attractive land opportunities where people aspire to live. Through great design and planning expertise, we create positive legacies for communities. Leading construction Investing in our people We seek to deliver the highest quality homes by focusing on excellence across each stage of construction. We work with our supply chain partners to ensure security of supply, minimise waste and promote the use of MMC and development of new technologies. People are at the heart of our business and we aim to attract and retain the best by investing in their development and success. We have established apprenticeship and degree apprenticeship schemes to attract the next generation to our industry. See page 40 Building sustainably Nature We preserve and enhance the natural world by using resources responsibly and creating places where people and nature can thrive together. Places We design and build great places that meet the highest standards, and that promote sustainable, healthy and happy living for our customers. People We believe everyone has the right to be respected and treated fairly at work. We do the right thing, nurturing diverse talent and prioritising the wellbeing of our people and partners. Being a trusted partner Building meaningful, long-term relationships that make us the developer of choice for our partners. Innovating with our supply chain to drive efficiency and sustainability, whilst meeting our customers’ needs. Our principles Building strong community relationships Engaging fully with local communities and customers when creating our developments. Ensuring we create places where our customers aspire to live and local communities thrive. Safeguarding the environment Minimising the environmental impact of our operations and supply chain while increasing the energy and resource efficiency of our homes. Seeking to enhance habitats, biodiversity and local environments across all of our developments. Ensuring the financial health of the business We maintain financial discipline across all aspects of our operations. This enables us to deliver our operational targets whilst maintaining our industry-leading standards of customer service and build quality. Keeping people safe Putting health and safety first by committing to the highest industry standards. Embedding health and safety as a core value for which we are all responsible. 12 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report Strategic Report G G F F Our homes We are committed to building high- quality energy efficient homes and have been awarded 96 NHBC Pride in the Job Awards – more than any other housebuilder – for 19 consecutive years. Our customers We put our customers, at the heart of everything we do, throughout their home-buying journey, with our long- standing commitment to exceptional customer service. Completions by unit type 15% 35% 30% 2% 8% 10% 1 and 2-bedroom homes 3-bedroom homes 4-bedroom homes 5 and 6-bedroom homes Flats London Flats Non-London 15+ 9+ Help to Buy Part-exchange Traditional private Investor Affordable 9% 6% 53% 8% 24% Completions by deal type Central 3,189 2022: 3,546* West 2,091 2022: 2,413* Our brands Housebuilding Commercial development Land promotion Scotland 1,951 2022: 1,938 Northern 2,821 2022: 2,751 East 3,400 2022: 3,281* London and Southern 3,754 2022: 3,979 * Comparatives for 2022 have been restated to reflect the movement of divisions between regions. Barratt Developments PLC Annual Report and Accounts 2023 13 35 + 30 + 2 + 8 + 10 + T 6 + 53 + 8 + 24 + T Strategic Report G F Business model How we build value Our resources People Barratt recruits, trains and retains an experienced and committed workforce. Our people’s experience supports delivery of a high quality product. Expertise The Group, established in 1958, has deep knowledge and expertise in the design and construction of housing in the UK, both in conventional brick built properties and through the use of timber frame. Barratt continues to advance its capabilities through investments such as in the Zed House and Energy House 2.0. Stakeholder relationships Barratt builds great places to live through partnerships in the supply chain, with JV partners in our build programmes, and with local communities as part of our site planning and development. We develop innovative products to support home ownership in conjunction with mortgage lenders. Our strong relationships with our stakeholders are critical in developing the products that our customers want. Land and planning Barratt’s owned land bank is short by design, but is complemented by investment into strategic land and promotional agreements. Through its acquisition of Gladman in 2022, the Group has sought to increase its level of in-house land expertise to drive margin and deliver a better return on capital. Finances The Group’s financial position and balance sheet are robust, giving the Group confidence, irrespective of market conditions, to deliver homes into the market at the right price and to engage in the land market with value-accretive bids. The Group held c. £1.1bn of cash as at 30 June 2023. 14 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report Strategic Report G G F F Competitive edge Value for our stakeholders We build homes in which customers want to live, in locations where people want to live We do this with an experienced team which delivers the best homes on the market We operate nationally and at scale, rapidly converting our land bank to cash We see sustainability as a differentiator, and a way to create value We have the financial resources, in-house expertise and stakeholder network to allow us to tender for land in desirable locations around the UK. We use our knowhow and the experience of our people, supported by our three complementary brands, to design and build developments which delight our customers, support local communities and deliver competitive returns for our investors. Total home completions 17,206 Our customers tell us that our homes are the best in the market. For 14 years in a row, we have been 5 star rated by the Home Builders Federation, meaning over 90% of our customers would recommend us to a friend. In addition, in 2023, our site managers won 96 Pride in the Job Quality awards, the 19th year in a row that Barratt has won more awards than any other housebuilder. HBF customer satisfaction rating 5 star We are the UK’s biggest housebuilder by volume and we operate with a national footprint. This allows us to leverage economies of scale across our supply chain, deploy our capital into attractive development opportunities across the country and more easily navigate an increasingly complex regulatory environment. Average active sales outlets 367 We seek to lead the industry to a more sustainable future, both as a responsible home builder, and to develop better, more affordable products for our customers which are easier to finance. We are investing in projects such as the Energy Home 2.0 to understand how this can be done, both to see how such housing can be built and to understand how our customers can benefit from the change. Scope 1 & 2 carbon intensity 23.7% reduction vs. FY18 Customers We deliver high quality, energy efficient homes, with 99% of our homes being EPC A or B-rated. This means our homes should have running costs that are lower than average. Employees We offer a great place to work which is focused on performance and personal development and invest in our people both through training and longer-term career development. We support our people through economic challenges with help such as our £1,000 cost of living payment and invest in their health and wellbeing. Shareholders We deliver capital returns, having declared dividends each year since 2013, and in 2023 we completed a £200m share buy-back programme. With our operating framework, we aim to balance business growth with cash returns and seek to develop markets for our products, whether through private sales, bulk deals or the private rental sector. Suppliers We nurture our supplier relationships by being honest and transparent, giving forward visibility on both demand and workload. We work with our suppliers to help develop the next generation of housing. Communities We seek to create a positive legacy in our developments, incorporating affordable housing alongside private sales. We increase biodiversity on our sites, creating a space for nature and for communities to thrive, and invest to improve community infrastructure as part of our planning gain contributions. Wider society In 2023 we paid £186.0m in direct taxation and a further £251.7m in indirect taxes, driven by the sale of 17,206 homes, and employed 6,728 people at the year end. As the largest housebuilder in the UK, we take our responsibility to support the industry and our supply chain in our journey to a net zero future seriously. We are investing to understand how to get to a zero carbon future and are committed to reaching that destination. Barratt Developments PLC Annual Report and Accounts 2023 15 Strategic Report G F Key performance indicators How we measure progress for the future Non-financial 1 2 3 HBF 5 star customer satisfaction Land approvals Scope 1 and 2 carbon emissions (tCO2e) 5 star 2022: 5 star (812) 2022: 19,089 5 Star 5 Star 5 Star 5 Star 5 Star 18,448 18,067 19,089 24,909 2022: 25,074 30,582 29,265 21,963 25,074 24,909 9,441 2019 2020 2021 2022 2023 2019 2020 2021 2022 Target HBF 5 Star customer satisfaction. Target Replace plots utilised in year. (812) 2023 Definition The percentage of homebuyers who would recommend us to family and friends taken from the HBF Homebuilder Survey. Why it’s a KPI Customer satisfaction is a strategic priority and fundamental to our business. HBF Homebuilder Survey is an industry recognised independently measured indicator of our customer service and build quality. Key metric for assessing performance for Executive Directors’ remuneration. Link to strategy Definition The number of plots approved for purchase, less the number of approvals withdrawn. Why it’s a KPI Monitors whether the Group is approving the appropriate amount of land for purchase to support future business activity. Ensures land is approved at minimum hurdle rates. Link to strategy 2019 2020 2021 2022 2023 Target Reduce absolute scope 1 and 2 greenhouse gas emissions by 29% by 2025 from 2018 levels. Definition Tonnes of greenhouse gas emissions associated with our scope 1 and market based scope 2 emissions, which includes energy and fuel use on our sites, in our offices and in our company vehicles. Why it’s a KPI Monitors the environmental impact of our business activities and our exposure to climate-related transition risk. Scope 1 and 2 carbon emissions intensity is a key metric for assessing performance for Executive Directors’ remuneration. To achieve net zero by 2040, we must reduce absolute emissions, therefore we have revised our KPI to be in line with our approved science-based target. Link to strategy 16 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F 4 5 6 Waste intensity SHE audit compliance 4.31 2022: 4.97 7.70 6.53 5.89 4.97 4.31 96% 2022: 97% 96% Employee engagement score 84.4% 2022: 79.4% 96% 97% 97% 96% 84.5% 84.2% 79.4% 84.4% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 N/A Target Reduce construction waste intensity (tonnes per 100m2 of legally completed build area) to 5.67 by 2025. Definition Tonnes of waste generated from above ground construction for every 100m2 of legally completed build area. Why it’s a KPI Monitors the efficiency of operations and the use of materials in the construction process. Key metric for assessing performance for Executive Directors’ remuneration. Link to strategy Target Over 94% SHE audit compliance. Target Exceed 75th percentile score in the engagement survey. Definition The percentage of internal inspections which are compliant with SHE guidelines. Why it’s a KPI Demonstrates compliance with safety standards on our sites. Lead indicator highlighting areas of SHE focus. Key metric for assessing performance for Executive Directors’ remuneration. Link to strategy Definition The percentage level of satisfaction of our people measured using an annual independently conducted survey. Why it’s a KPI Monitors employee engagement and satisfaction, whilst also providing a forum for view-sharing, to ensure we retain and invest in the best people and focus on their development and success. Link to strategy Link to strategy See page 29 Great places Leading construction Investing in our people Customer first On track Achieved Monitor Below target Target not met Barratt Developments PLC Annual Report and Accounts 2023 17 Strategic Report G F Key performance indicators continued Financial 1 2 3 Total home completions Adjusted gross margin Gross margin Adjusted PBT (£m) Profit before tax (£m) 17,206 2022: 17,908 21.2% 18.3% 2022: 24.8%/17.1% 884.3 705.1 2022: 1,054.8/642.3 17,856 17,234 17,908 17,206 12,604 22.8% 18.5% 18.0% 24.8% 23.2% 21.0% 21.2% 920.0 909.8 17.1% 18.3% 1,054.8 919.7 812.2 884.3 642.3 705.1 505.7 491.8 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Target Growth to 21,500 in the medium term. Target Achieve minimum 23% gross margin. Target Informed by consensus at the start of the financial year. Definition Legally completed homes during the year including JV homes legally completed in which the Group has an interest. Why it’s a KPI Reflects activity and growth. Monitors business capacity. 2023 performance See page 26 Definition Gross profit divided by total revenue, expressed as a percentage. Why it’s a KPI Key internal metric for assessing site profitability. Enables consistent comparison of land acquisitions. 2023 performance See page 67 Definition Profit before tax including the applicable share of profits from JVs and associates. Why it’s a KPI Shows the profitability of the Group relative to market expectations. Key metric for assessing performance for Executive Directors’ remuneration. 2023 performance See page 68 18 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F 4 5 6 7 Return on Capital employed Net cash (£m) Adjusted basic EPS (p) Basic EPS (p) Total shareholder return 22.2% 2022: 30.0% 1,069.4 2022: 1,138.6 67.3 53.2 2022: 83.0/50.6 10.6% 2022: (4.9)% 29.9% 30.0% 27.8% 15.5% 22.2% 765.7 1,138.6 1,069.4 74.1 73.2 83.0 73.5 64.9 67.3 59.8% 50.6 53.2 36.8% 40.5 39.4 308.2 317.4 6.1% 10.6% (4.9)% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Target Minimum 25%. Target Year-end net cash. Definition Earnings before amortisation, interest, tax, operating charges relating to the defined benefit pension scheme and operating adjusting items for the year, divided by average net assets adjusted for goodwill and intangibles, tax, net cash, derivative financial instruments and provisions in relation to legacy properties. Why it’s a KPI Ensures efficient and effective use of capital. Key metric for assessing performance for Executive Directors’ remuneration. 2023 performance See page 167 Definition Cash and cash equivalents, bank overdrafts, interest- bearing borrowings and prepaid fees. Why it’s a KPI Monitors business liquidity, resilience to risk and ability to take advantage of opportunities, including investments and land acquisition. Allows for distributions to shareholders. Net cash is key to understanding the strength of the business and has been added as a new KPI this year. 2023 performance See page 68 Target Informed by consensus at the start of the financial year. Definition Profit for the year attributable to ordinary shareholders divided by the weighted average number of ordinary shares in issue during the year, excluding those held by the EBT on which no dividend is paid. Why it’s a KPI Shows profit attributable to each share. Key metric for assessing performance for Executive Directors’ remuneration. 2023 performance See page 68 Target To grow total shareholder return against FTSE companies (those within 50 above and 50 below the Company in the index) and the Housebuilding sector. Definition Measure of the performance of the Group’s share price over a period of three financial years. It combines share price appreciation and dividends paid to show the total return to the shareholders expressed as a percentage. Why it’s a KPI Shows the appreciation and income a shareholder receives from holding each share. Key metric for assessing performance for Executive Directors’ remuneration. 2023 performance See page 234 On track Achieved Monitor Below target Target not met Barratt Developments PLC Annual Report and Accounts 2023 19 Strategic Report G F Marketplace Trends in our markets The UK economy UK economic output has grown by 1%1 during the 12 months to 30 June 2023 with the last quarter to June 2023 registering 0.2% growth on the previous quarter from January 2023 through March 2023. UK monthly GDP at the end of June was 0.8% ahead of that prior to the onset of the pandemic in February 2020. The outlook for the UK economy in the remainder of 2023 and into 2024 is uncertain. Stubborn inflationary pressures being experienced across the whole economy are being exacerbated by limited labour availability and resulting labour cost inflation. Government economic policies and the Bank of England’s decisions around interest rates, to further dampen inflation, will be critical in the months ahead, most notably with the Autumn Statement. In its March 2023 “Economic and fiscal outlook”, the Office for Budget Responsibility forecast a GDP decline of 0.2% in 2023 and growth of 1.8% in 2024. HM Treasury‘s August collated consensus economic forecasts suggested limited GDP growth of just 0.3%2 in 2023 and 0.6%2 in 2024. Housing supply and demand There remains a fundamental shortage of homes in the UK. This is evidenced both by the long-term growth in home prices relative to incomes and the significant inflationary pressures being seen in the rental market, as an ever increasing number of households are being failed by inadequate housing supply. New build housing additions in England were 210,0703 in the last reported 12-month period to 31 March 2022, growth of 9.5% on the 191,820 in the year to 31 March 2021. This recovery reflected strong home-buying demand following the pandemic, along with the industry’s drive to recover build activity following the national lockdown, although labour and building material supply chain constraints moderated the pace of this recovery. As a result, new home additions recovered but remained some 4% below the 219,120 homes completed in the year to 31 March 2020. Net new build additions may register growth when data is released in the winter of 2023, with respect to the year to 31 March 2023 but new build additions look set to fall in the current year. This decline reflects the end of Help to Buy, higher mortgage interest rates and the consequent change in mortgage affordability. The participation of first time buyers in the market has sharply reduced in 2023. Whilst house prices peaked in August 2022, affordability constraints have seen house prices move lower in the ten months through to June 2023. The average UK house price had reduced by 3.5%4 in nominal terms according to the Nationwide Building Society over the 12 months to 30 June 2023, which equates to a real terms decline, after adjusting for CPI, of 10.1%. The shortage of new homes for sale has created additional demand in the rental sector, increasing the average household rent by 10.4%5 over the year to 30 June 2023, with every region of the UK experiencing significant rent cost increases, according to the HomeLet Rental Index. Based on the HomeLet Rental Index data, rents have increased by 22.0% over the past two years to June 2023 and absent a significant reduction in mortgage interest rates, rental demand will continue to grow as potential homebuyers remain unable to buy. The housing shortage is increasingly evident across all tenures and is a critical issue for the UK economy and the economic health and wellbeing of its population. England - new build home additions (RHS) England - planning consents (‘000s) – revised series (RHS) Savills UK Greenfield Development Land Price Index (LHS) English planning consents and net new build home additions and Savills UK Greenfield Land Price Index 100.0 53.3 158.7 99.6 339.5 95.7 291.2 270.6 237.1 360 300 240 180 120 60 0 d n a s t n e s n o c g n i n n a l p l a u n n a g n i v o m d n a l g n E ) s 0 0 0 ‘ ( s n o i t i d d a e m o h d l i u b w e n t e n 7 0 0 2 8 0 0 2 9 0 0 2 0 1 0 2 1 1 0 2 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 6 1 0 2 7 1 0 2 8 1 0 2 9 1 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 x e d n I d n a L t n e m p o l e v e D d l e i f n e e r G K U s l l i v a S ) k a e p 7 0 0 2 = 0 0 1 ( 120 100 80 60 40 20 0 20 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Land supply and the planning system The steady and consistent supply of land within a predictable planning system is critical to the housebuilding industry. There are a number of risks and uncertainties being managed by developers: ∙ the typical size of development sites, which is growing, and requiring additional time and resources; ∙ the uncertainty as to the timing of when construction activity can commence on a site given pre-development clearances required; ∙ the speed with which labour and building materials can be procured for build activity; ∙ the scheduling and consistency of workload for the sub-contract labour required to sustain the industry over the medium to long term; whilst also, ∙ ensuring build activity is delivered to required quality standards, whilst ensuring the health and safety of the workforce, as well as customers and homeowners, on new housing development sites. Following the pandemic, planning consents reached a peak of 339,4736 in the 12 months to 30 June 2021, a level consistent with the Government’s target to deliver 300,000 homes annually by the mid-2020s. However, this level has not been maintained, falling by 20% to 270,5596 in the year to 31 March 2023. The political backdrop has not been conducive to delivering the number of planning consents needed by the industry, including five changes in Housing Minister in the last 18 months. There has been a noticeable shift in delivery since the announcement in December 2022 that local housing targets were “advisory” rather than “mandatory”, as well as to end the obligation on local authorities to maintain a rolling five-year land supply where they have a local plan in place. This has allowed 58 local authorities to stall, delay or withdraw their local housing delivery plans, with 28 doing so following the December announcement7. Halifax Mortgage Affordability Index 60% 1990 Q2, 56.4% Halifax Affordability Index 55% 50% 45% 40% 35% 30% 25% 20% Average (1985 - Q1 23) 2007 Q3, 46.4% 2023 Q2, 40.8% 32.9% 2020 Q2, 27.7% 5 8 9 1 7 8 9 1 9 8 9 1 0 9 9 1 1 9 9 1 3 9 9 1 5 9 9 1 7 9 9 1 9 9 9 1 1 0 0 2 3 0 0 2 5 0 0 2 7 0 0 2 9 0 0 2 1 1 0 2 3 1 0 2 5 1 0 2 7 1 0 2 9 1 0 2 1 2 0 2 1 Q 3 2 0 2 In addition to this, Natural England, a non-departmental public body sponsored by the Department for Environment, Food and Rural Affairs, intervened in the planning process in March 2022 and advised 74 local authorities that developments should not proceed if they increased the level of nutrients in water courses and failed to deliver “nutrient neutrality”. It is estimated that more than 145,0007 planning consents have been blocked across the 74 local authority areas, with new housebuilding effectively under a moratorium in these areas and many smaller housebuilders facing business closure. The Government announced plans to amend the Levelling Up and Regeneration Bill on 29 August 2023 in order to unblock homes currently held up by nutrient neutrality mitigation measures. The details around these measures, their successful passage into legislation, as well as the speed with which the changes come into force, remain uncertain. Finally, despite the growing complexity of planning applications, the resourcing of local authority planning departments has failed to match growing planning demands. National Audit Office analysis has shown that between 2010/2011 and 2019/2020 funding for planning services reduced by £1.3bn or 55%8. All of these factors are conspiring to create a continuing and accelerating decline in planning consents which, in the first quarter of calendar 2023, declined by 24.7% to 63,013, when compared to 20226. The mortgage market and housing affordability The step-change in mortgage interest rates is charted below and highlights the challenge now faced by homebuyers requiring mortgage finance. Based on Bank of England data9, mortgage borrowing costs for new mortgages steadily declined for more than 12 years to a low of 1.51% in November 2021. This has though seen a sharp reversal in less than 18 months, with the average cost of new mortgages advances in June 2023 increasing to 4.64%, a threefold increase from the low point, with mortgage interest rates back at levels last seen in 2009. The Halifax Mortgage Affordability Index combines the prevailing mortgage interest rate on new advances with current home prices, and as can be seen in the chart opposite, the purchase of a new home now equates to 40.8% of after tax income, materially ahead of the long-term average at 32.9%. In the coming months, this affordability measure looks set to be impacted positively by the rate of nominal wage growth but will then ultimately be dependent on the future movements in both mortgage rates and house prices. We are continuing to work with banks and building societies and other financial institutions to introduce additional lenders to the new build sector and increase lender understanding as to the advantages of new build lending. The development of green mortgages remains an important initiative in this regard. We are also playing an active role in increasing the understanding amongst residential valuers through the Future Homes Hub, as well as developing and promoting advantageous mortgage products, which reflect the energy efficiency and lower running costs, as well as the environmental credentials and the absence of future retrofit spending on the insulation of our homes. Barratt Developments PLC Annual Report and Accounts 2023 21 Strategic Report G F Marketplace continued Building materials and labour We experienced an elevated rate of build cost inflation at between 9% and 10% throughout FY23. This reflected: ∙ the relatively positive outlook for continued housing growth, in the second and third quarters of calendar 2022, which, against a backdrop of relatively constrained supply, created upward pressure on forward building materials supply agreements; and ∙ the underlying inflationary pressures on labour costs experienced across the wider UK economy during the year; and the lagged impact of the dramatic increase in energy costs, which began in the autumn of 2021 and was further compounded by the conflict in Ukraine. These increases took time to feed through supply chains, given production timeframes and suppliers’ energy hedging arrangements. Through our centralised procurement team, careful scheduling of our building materials demands and the support of our long-standing supply chain partners, we are focused on ensuring security of supply as well as sustainable but competitive pricing. As a result of the combination of weaker forecast activity, falling energy costs and increased competition in the supply chain for future orders, we expect total build cost inflation will slow to around 5% in FY24. Future regulatory changes The industry faces future regulatory changes with respect to biodiversity net gain, as well as the Future Homes Standard over the coming three years. Biodiversity net gain Under legislation which will come into force in November 2023, all of our developments will be required to identify and deliver a minimum biodiversity net gain of 10%. This requires our developments to create plans to deliver at least a 10% measurable improvement in the biodiversity of the site developed, relative to the site had development not occurred. How we are prepared From January 2023 we have identified a minimum biodiversity net gain of 10% across all new development designs submitted for planning – more than nine months ahead of legislation. We have also embedded a comprehensive operational framework to deliver this change across our divisions, including colleague training, calculation tools, automated data collection, workshops with external consultants, a review of external consultant capacity and capability, and a network of divisional representatives championing BNG. Future Homes Standard From 2025 the FHS will require new homes to produce 75-80% less carbon emissions than standards applicable through to June 2022. The detailed requirements and performance measurement around this new Standard are not yet finalised with the timing and transition arrangements for this new Standard, along with industry consultation, yet to be initiated. How we are prepared We are evolving our house types and trialling new technologies, with the eHome2 project at the University of Salford, in particular, testing evolving solutions which will be adopted to meet this new standard. 1 GDP monthly estimate, UK: June 2023 https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/ gdpmonthlyestimateuk/june2023 2 HM Treasury: forecasts for the UK economy August 2023 https://assets.publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/1180276/forecomp_Aug1.pdf 3 DLUHC: Housing supply: net additional dwellings https://www.gov.uk/government/statistics/housing-supply-net- additional-dwellings-england-2021-to-2022/housing-supply-net- additional-dwellings-england-2021-to-2022 4 Nationwide House Price Index – June 2023 https://www.nationwidehousepriceindex.co.uk/reports/house-prices- relatively-stable-in-june-but-annual-growth-remains-in-negative-territory 5 HomeLet Rental Index June 2023 https://homelet.co.uk/homelet-rental-index 6 HBF Pipeline Report 1Q 2023 – Published July 2023 https://www.hbf.co.uk/documents/11892/HPL_REPORT_2022_Q1_final.pdf 7 HBF Report – 30 June 2023 https://www.hbf.co.uk/news/nutrient-neutrality-four-years-of- government-failure/#:~:text=New%20estimates%20published%20 today%20suggest,year%20until%20solutions%20are%20found. 8 Levelling Up, Housing and Communities Committee – Reforms to national planning policy – 10 July 2023 https://publications.parliament.uk/pa/cm5803/cmselect/cmcomloc/1122/ report.html# 9 Bank of England Mortgage lending data: https://edu.bankofengland.co.uk/boeapps/database/fromshowcolumns. asp?Travel=NIxAZxSUx&FromSeries=1&ToSeries=50&DAT=RNG&FD=1&F M=Jan&FY=2010&TD=11&TM=May&TY=2025&FNY=Y&CSVF=TT&html. x=66&html.y=26&SeriesCodes=CFMBJ95&UsingCodes=Y&Filter=N&title= CFMBJ95&VPD=Y Bank of England – average mortgage interest rate on new advances (%) Average mortgage interest rate Long-term trend 4 0 0 2 5 0 0 2 6 0 0 2 7 0 0 2 8 0 0 2 9 0 0 2 0 1 0 2 1 1 0 2 2 1 0 2 3 1 0 2 4 1 0 2 5 1 0 2 6 1 0 2 7 1 0 2 8 1 0 2 9 1 0 2 0 2 0 2 1 2 0 2 2 2 0 2 3 2 0 2 7% 6% 5% 4% 3% 2% 1% 0% 22 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Chief Executive’s Statement Strong performance in a challenging year Introduction During what has been a year of economic and political uncertainty, we have delivered a strong operational and a good financial performance, given the market backdrop. I would like to thank our employees, sub-contractors and supply chain partners for their hard work and commitment which enabled us to manage our site-based construction activity effectively, delivering high-quality efficient homes and great service to our customers. Our purpose remains clear: to lead the future of housebuilding by putting customers at the heart of everything we do. Reflecting our position as Britain’s largest and leading national sustainable housebuilder, we are committed to playing a key role in addressing the housing shortage and delivering the sustainable, high-quality and energy-efficient homes and developments needed across England, Scotland and Wales. We will continue to operate the business in a flexible way, with a short land bank aimed at maximising our delivery of housing from our efficient and resilient balance sheet. Performance overview We delivered a strong performance against a challenging backdrop this year, while maintaining or focus on both build quality and customer service. Our performance is a testament to the disciplines embedded by our operating framework as well as the commitment of our employees, sub-contractors and supply chain partners. Barratt Developments PLC Annual Report and Accounts 2023 23 David Thomas Group Chief Executive Strategic Report G F Chief Executive’s Statement continued Performance overview continued ∙ Total home completions were 17,206 (FY22: 17,908). ∙ We achieved a 21.2% adjusted gross margin (FY22: 24.8%), with adjusted gross profit of £1,130.4m (FY22: £1,308.1m), with reduced profitability reflecting the fall in customer demand, overall house price inflation running below build cost inflation and the operational gearing impact as the market has slowed down. ∙ The impact of adjusting items, which reflected legacy property costs associated with building safety related remediation activities, resulted in reported gross profit of £974.9m (FY22: £899.9m) and a reported gross margin of 18.3% (FY22: 17.1%). ∙ We generated an adjusted profit before tax of £884.3m (FY22: £1,054.8m) in line with market expectations. Reported profit before tax, after deducting adjusting items, was £705.1m (FY22: £642.3m). ∙ Our balance sheet strength has been maintained with year-end net cash of £1,069.4m (FY22: £1,138.6m) after dividend payments of £360m and completion of the £200m share buyback. ∙ ROCE has reduced by 780 bps to 22.2% (FY22: 30.0%), largely due to reduced profitability. Our priorities for the year ahead Against the backdrop of the current more challenging market, our strategy is centred on four key areas. Driving revenue Firstly, driving reservations and home completions. This centres on using our industry leading quality and customer service to attract our core private homebuyers and then helping them to access affordable mortgages, thereby enabling them to buy. As evidenced in FY23, we are also focused on securing reservations from other channels, building on our strategic partnership with Citra Living, as well as our long-standing relationships with registered providers of social housing, public sector bodies and other investors, all of which will support our build activity and completions in FY24. Controlling costs We will manage build activity and build costs and control our indirect cost base to be as efficient as possible, whilst ensuring we have in place the operational capacity to deliver growth when market conditions improve. When the market slowdown accelerated following the mini budget in late September 2022, we implemented a recruitment freeze which has already reduced our headcount by 6% from 1 October 2022 through to 30 June 2023. Maintaining land investment discipline We will maintain our highly selective approach to land buying, particularly as prevailing land prices have not yet adjusted to the changed market conditions. We will continue to apply our long-standing hurdle requirements for land investment, which require a minimum gross margin of 23% and ROCE of 25%. Leading sustainability Finally, we will continue to lead the industry on sustainability, with a particular focus on reducing our environmental impact and increasing the future resilience of the business through our continued drive to reduce construction waste, our development of zero carbon homes and our targeted reduction of carbon emissions from our own operations. We have clear action plans, and targets, as we look to the future to build the energy-efficient, sustainable homes the country needs. 24 Keeping people safe Our fundamental priority is always to provide a safe environment for all our employees, sub-contractors and customers, and we are committed to achieving and maintaining the highest health and safety standards. We are continually developing our processes, challenging unsafe behaviours, and looking at ways we can further improve our procedures. During FY23 we were disappointed that our Injury Incidence Rate (IIR) increased to 289 per 100,000 workers (FY22: 262), reflecting increased levels of slips and trips. Our SHE audit compliance was broadly maintained at 96% (FY22: 97%). To drive improvement, we engaged with our employees, sub-contractors and our supply chain, seeking their views on how we can further enhance our safety, health and environmental performance. We continue to refine our working practices in line with the latest guidance from Government, Public Health Authorities and the Construction Leadership Council. Responsible development Fire safety and external wall systems On 13 March 2023 the Group signed the Self-Remediation Terms and Contract with the UK Government. This incorporated into contractual arrangements the commitments made by the Group under the Building Safety Pledge, signed in April 2022. On 31 May 2023 the Group also signed the Scottish Safer Building Accord, an industry commitment supporting the remediation and/or mitigation of external wall cladding systems on buildings of 11 metres and above. We are working with Homes for Scotland and the Scottish Government to agree a legally binding, long-form contract to give effect to the principles of the Accord. There remains uncertainty around the extent of remediation which will be required in Scotland. Our existing provisions for Scottish buildings have been made on a consistent basis with England and Wales. During the year, through the changes in inspection parameters and testing, we identified a further 55 buildings on 20 developments requiring potential remedial works. This change, in combination with an update to cost estimates across the portfolio, offset by an increase in the discount rate applied to the provision, resulted in an additional charge of £117.7m (FY22: £377.7m), recognised as an adjusted item. Leading the future Going the extra mile for our customers See page 30 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Reinforced concrete frames Our remediation activities with respect to concrete frame design and construction continued during the year with the majority of developments proceeding in line with plan, but against a backdrop of inflationary build cost pressures. During the second half we also finalised remediation plans for the one remaining development from the Citiscape review, where work is required across five buildings. Finalisation of this remediation plan as well as ongoing remediation activities resulted in an additional charge of £51.5m, of which £21.3m related to JV legacy developments. In addition, we identified two further developments where remediation work might be required. At the year end £2.4m had been spent on one JV development and £7.6m has been provided in relation to future remediation costs. The sum provided is below the initial estimate, detailed in our July trading update, but remains subject to further detailed analysis, which is ongoing and is expected to conclude over the next six months. Our dedicated Building Safety Unit is managing our overall ongoing building safety remediation programme, which we anticipate will be delivered over the next five years, with building safety considerations informing the prioritisation and scheduling of works. More details around the adjusted item charges with respect to building safety can be found in the Chief Financial Officer’s review on page 66. Further details on our approach to building safety can be viewed on our website at: www.barrattdevelopments.co.uk/about-us/ our-approach-to-building-safety. Competition and Markets Authority (CMA) The CMA announced on 16 August 2022 that, after more than three years of investigation, it had closed its investigation into the Group in relation to the sale of leasehold homes with no action being taken. On 28 February 2023 the CMA launched a market study into housebuilding in England, Scotland and Wales. We welcome the study, which will provide an opportunity for the industry to explain in detail the current challenges it is facing. We have taken a proactive and constructive approach in engaging with the CMA to assist with their study. The CMA reported on 25 August 2023 that its review was continuing and we will continue to work constructively with the CMA through this process. The Barratt Foundation Now in its third year of operation, the Barratt Foundation is fulfilling our commitments to charitable giving and social responsibility. We believe it is important to bring together both our financial resources and the commitment and enthusiasm of our employees to support charitable causes locally and at a national level. In FY23, we raised £6.3m (FY22: £5.1m) for charitable causes through the Barratt Foundation, including the Group donation of £4m. Notable grants during the year included £900,000 in grants to five new national charity partners. The five charities receiving grants were: Whizz-Kidz (£350,000), Place2Be (£300,000), Refuge (£100,000), Bookmark (£100,000) and the Lighthouse Club (£50,000). Each of these charities was carefully selected by the Barratt Foundation Trustees, reflecting their alignment with the Foundation’s key priorities centred around promoting social inclusion, mental health and education. Barratt and David Wilson Community Fund The Barratt Foundation also continued to support the Barratt and David Wilson Community Fund throughout the year. This enables each of our divisions and Group offices to support local charities that really matter to them by donating £1,500 to a different local charity each month. Building on this, and reflecting the challenges faced by many over the Christmas period in 2022, the Barratt Foundation also provided an additional £5,000 to each of the Group’s divisions and two Group offices with donations going to 48 small local charities such as hospices, food banks and homelessness charities. Employee engagement in our charitable activities To encourage our employees to raise funds for local causes, the Barratt Foundation matches funds up to £15,000 per division and up to £2,000 per employee for employee fundraising. The Group also partners with Payroll Giving in Action to enable employees to make regular, tax-free donations to their chosen charities. In FY23, Barratt employees and divisions raised a record £1.3m (FY22: £0.7m) for charities and good causes, with an additional £0.8m (FY22: £0.3m) provided by the Barratt Foundation in matched funding, after doubling the available match funding for employee fundraising at the start of the year. More details around the Barratt Foundation and its activities can be found at: www.barrattfoundation.org.uk. Operational review Reservation activity Our net private reservation rate in FY23 was 0.55 (FY22: 0.81). The decline across FY23 reflected a significant deterioration in trading following the fiscal event in September 2022, which continued to the end of the calendar year and was also impacted by the closure of the Help to Buy scheme, which closed to new reservations on 30 October 2022. Relative political stability, a modest recovery in consumer confidence and an easing in mortgage interest rates helped improve the reservation rate from the start of January 2023 through to early May 2023, before it reduced again, reflecting growing uncertainty around inflation and mortgage interest rates for our potential customers. Barratt Developments PLC Annual Report and Accounts 2023 25 Strategic Report G F Chief Executive’s Statement continued Operational review continued Reservation activity continued Net private reservation rate FY23 FY22 H1 0.44 0.79 H2 0.65 0.84 FY 0.55 0.81 FY23 vs FY22 (%) (44.3%) (22.6%) (32.1%) Reservation activity in the year also reflected the more challenging backdrop for first time buyers finding it harder to raise deposits following the end of the Help to Buy scheme in October 2022 and the sharp increase in mortgage interest rates and reduced availability of 95% mortgages following the fiscal event in September 2022. There was more resilient demand from existing homeowners who tend to have access to larger deposits, where limited numbers of homes for sale in the wider market, the energy efficiency of our new homes and the backdrop of significant rental cost growth helped to support demand. Our reservation rate in FY23 was augmented by increased multi-unit sales into the private rented sector along with additional private unit sales to registered providers of social housing (“RPs”). This has partly mitigated sales risk during the period, supported our construction activity and ensured more of our homes will be made available for both the private rental and affordable homes market. The net private reservation rate into the private rented sector, along with additional private units to RPs, contributed 0.10 (FY22: 0.03) in the year. During the year, we operated from an average of 367 active sales outlets (FY22: 332) including eight active JV sales outlets (FY22: seven). Growth in active outlets reflected two factors. Firstly, we made solid progress on new site openings, despite both ongoing planning delays and our step back from the land market, launching a total of 104 new sales outlets (including JVs) in the year (FY22: 118). Secondly, the significantly lower private reservation rate on existing sites extended the sales activity of several outlets. At the end of the year we were operating from 389 active sales outlets (30 June 2022: 352), including nine JV outlets (30 June 2022: nine). In FY24, we expect to see average active sales outlets reduce by around 6% reflecting both reduced outlet openings given our step back from the land market and the impact of sites ending where sales activity was extended by lower reservation rates. Construction activity adjusted to slower demand Reductions in demand from late September 2022 required adjustments to construction activity across our operations. The result was on average 322 (FY22: 352) equivalent homes (including JVs) built per week in the year. During FY24 our construction activity will reduce further as we align it with sales reservation activity and ensure efficient deployment of working capital across our sites. 26 Home completions Total home completions reduced by 3.9% in FY23. The strength of our order book and demand in the first quarter of the year supported growth of 6.9% in total home completions in the first half. However, the significant change in reservation activity during the second quarter, the closure of the Help to Buy scheme to new reservations from 31 October 2022, and the slower rate of reservations from the start of the new calendar year created a 12.8% decline in total home completions in the second half. As a result, the affordable housing share of wholly owned home completions increased to 23.9% (FY22: 22.3%) and the Help to Buy share of completions declined to 9% (FY22: 19%). Completions (homes) Private completions Of which: PRS Affordable completions Wholly owned completions JV completions Total (including JVs) FY23 FY22 Change 12,456 258 13,327 36 (6.5%) 616.7% 3,922 3,835 2.3% 16,378 828 17,162 746 (4.6%) 11.0% 17,206 17,908 (3.9%) The average selling price (ASP) of wholly-owned completions increased by 6.5% to £319.6k (FY22: £300.2k). The private ASP increased by 7.9% to £367.6k (FY22: £340.8k), up 13.6% in the first half, benefitting from the strong private order book position carried into FY23, as well as steady pricing during the first quarter. Following the turbulence in mortgage markets, the private ASP in the second half only grew by 3.2% reflecting the softening in demand seen following the September fiscal event and increased sales incentives. Within our private completions, we completed 258 homes (FY22: 36) for Citra Living. The ASP of these PRS completions was £280.9k (FY22: £172.3k) with the significant step up in the PRS ASP reflecting a more typical mix of the 2 and 3-bed homes being sought and acquired by Citra Living to the limited, and apartment dominated, completions in FY22. Affordable ASP increased by 4.9% to £167.2k (FY22: £159.4k), reflecting an increased proportion of completions from our outer London operations. We anticipate that the affordable ASP in FY24 will be at a similar level to that reported in FY23. Land and planning As market conditions changed, we stepped back from the land market in September 2022. We have adopted a highly selective approach to buying land, particularly as prevailing land prices have not yet adjusted to the changed market conditions. As a result, gross site approvals increased by 31 new sites during the year, including two sites through planning amendments. These were offset by 33 previously approved sites which are no longer economically viable, resulting in a net decrease of two sites in the year (FY22: net approval of 102 sites). Given our current view of the market, land prices and our existing development pipeline, we do not expect our approach to land acquisition to change for the foreseeable future. Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F The approved sites along with planning amendments added 4,821 plots, at a cost of £345.2m, with 5,633 plots removed with respect to the sites no longer proceeding, at a previously agreed cost of £360.1m. The result was a net reduction of 812 plots in the year (FY22: net addition of 19,089 plots) and a net decrease in our land approval commitments of £14.9m (FY22: net increase of £1,396.1m). We invested £822.8m (FY22: £1,036.0m) on land acquisitions and the settlement of land creditors during the year and we now expect to spend between c. £500m and £700m on land in FY24, largely settling existing commitments. We continue to target a geographically balanced land portfolio in the medium term with a supply of owned land of c. 3.5 years and a further c. 1.0 year of controlled land. We are broadly in line with this target with the land bank comprising 3.6 years of owned land (30 June 2022: 3.9 years) and 0.7 years of controlled land at 30 June 2023 (30 June 2022: 0.8 years). More than 81% (30 June 2022: 75%) of our owned and unconditional land bank plots have detailed planning consent, supporting our sales outlets position and future home completions. Our land bank at 30 June comprised: Our land bank 30 June 2023 30 June 2022 Plots with detailed planning consent Plots with outline planning consent Plots with resolution to grant and other Owned and unconditional land bank (plots) Conditionally contracted land bank (plots) Total owned and controlled land bank (plots) Number of years’ supply JVs owned and controlled land bank (plots) Strategic land bank (acres) Strategic land bank (plots) Promotional land bank (plots) Land bank carrying value (£m) 48,270 51,009 9,658 15,957 1,320 721 59,248 67,687 11,142 13,239 70,390 4.3 4,356 16,431 101,784 96,844 3,139.9 80,926 4.7 4,548 15,537 91,440 93,696 3,339.9 At 30 June 2023, the estimated ASP of plots in our owned land bank was £331k (30 June 2022: £322k) and the estimated gross margin in our land bank, based on current estimated sales prices and build costs, is 19.7% (30 June 2022: 25.8%). Strategic land activity During the year, we delivered 3,938 (FY22: 4,530) or 24% (FY22: 26%) of our wholly owned home completions from strategically sourced land, We converted 777 plots (FY22: 1,663) of strategic land into our owned and controlled land bank during the year. Our strategic land teams placed increased focus on securing additional strategic land to support future growth and 21,802 plots across 70 strategic sites were approved during the year (FY22: 14,620 plots and 61 sites). At 30 June 2023, around 23% (30 June 2022: around 25%) of our strategic land is allocated or included in draft local plans. We are also benefiting from the additional expertise brought by Gladman Developments’ planning teams who, working with our strategic land teams, are identifying ways to accelerate delivery from our strategic land bank. We continue to target around 30% of wholly owned completions from strategic and promotional land in the medium term. We believe this is both appropriate for our business model, and reflects the development and planning prospects held within our strategic land portfolio as well as our targeted land bank length and focus on ROCE. Notwithstanding that, along with the rest of the industry, we have experienced problems with the ineffective planning system over the past year, we are well positioned, with all expected FY24 completions (FY23: all FY23 completions) having outline or detailed planning consent. Land promotion activity Through the acquisition of Gladman we now hold a significant promotional land portfolio of 96,844 plots (30 June 2022: 93,696 plots), with Gladman continuing to operate as a standalone business within the Group. During FY23, Gladman secured an estimated 9,453 plots, (five months in FY22: 1,882 plots) through new promotional agreements with landowners. Following several planning successes, the business received planning consents on 2,437 plots during the year (five months in FY22: 807 plots). Whilst wider market demand for land weakened from the end of the first quarter, continued demand for land with planning consent from smaller developers saw Gladman secure land sales equating to 1,813 plots, (five months in FY22: 1,332 plots). Gladman generated revenue of £20.4m and an operating profit, before amortisation of intangible assets, of £3.8m during FY23, (five months in FY22: sales of £23.3m and operating profit, before amortisation of intangible assets, of £12.4m). The reduction in revenue and profitability reflects the slowdown in the land market as many housebuilders reduced their land buying activity. With access to the Group’s financial resources, Gladman continues to engage with new and existing land promotion partners around alternative routes to unlocking value from their respective land positions. Reflecting the changing needs and aspirations of land promotion partners, Gladman offers the ability to convert promotional agreements into option, hybrid or freehold sale arrangements for all, or part, of their land promotion partners’ holdings. Barratt Developments PLC Annual Report and Accounts 2023 27 Strategic Report G F Chief Executive’s Statement continued Operational review continued Maintaining efficiency and controlling costs Maintaining the efficiency of our operations and controlling costs remain key focus areas for the Group. Our supply chain is robust and carefully managed, with approximately 95% of our building materials sourced by our centralised procurement function, and around 90% of our building materials are manufactured or assembled in the UK. We remain committed to working with our supply chain partners to secure sustainable, competitive pricing, while maintaining security of supply to support our site-based operations and we have supply agreements in place for 73% of our material requirements to 31 December 2023 (FY23: 73% to 31 December 2022), and 14% of our requirements until 30 June 2024 (FY23: 12% to 30 June 2023). We are starting to see some of the inflationary pressure on the cost of skilled labour abating, reflecting the slowdown in housebuilding activity across the country and the desire of sub-contractors and skilled trades to secure future workload. We are looking to drive further construction efficiency through standardisation in our house types and increased use of timber frame to reduce our labour requirements and reducing waste. During FY23, total build cost inflation (including infrastructure costs, materials and labour) was between 9% and 10%, with the rate of inflation moderating towards the end of the year. Reflecting the slowdown in the market, and assuming no further material changes in the costs of energy or key commodities, we expect total build cost inflation to abate through FY24, with average total build cost inflation at around 5%. We are also pro-actively managing our overhead base. As the slowdown in the market became apparent in late September 2022, we began a headcount freeze which has reduced our number of employees by 6% since the end of the first quarter. We have continued to invest in priority areas including sustainability, building safety and in our IT infrastructure but are only hiring where additional skills are required by the business. We have also scaled back discretionary spend in other areas. Current trading and outlook Long-term housing market fundamentals reflect a continued and deteriorating imbalance between housing supply and demand. Despite this imbalance, the market is currently impacted by significant macro-economic headwinds, most notably persistent inflation and a higher interest rate environment. This backdrop has had a negative impact on UK economic growth, employment, mortgage affordability and consumer confidence and spending. We entered FY24 with a solid forward sales position and at 27 August 2023 we are 49% forward sold with respect to private wholly owned home completions for FY24 (28 August 2022 for FY23: 62%) with 51% of the private order book exchanged (28 August 2022: 59%). Since the start of the new financial year our net private reservation rate per active outlet per average week for the period to 27 August 2023 was 0.42 (FY23: 0.60). This reflects both traditional seasonality but also the continued affordability challenges faced by potential homebuyers. During the period there was minimal impact from sales to the private rental sector and registered providers of social housing, which contributed 0.02 (FY23: 0.05) to the reservation rate. Based on current market conditions, we are targeting total home completions of between 13,250 and 14,250 in FY24, including c. 650 home completions from our JVs and c. 750 completions for the private rental sector, whilst ensuring we maintain our industry-leading standards of build quality and customer service. We currently estimate that around 45% of our completions will be delivered in the first half of the financial year. 27 August 2023 28 August 2022 Variance % £m 1,527.6 752.0 2,279.6 157.7 2,437.3 Homes 4,440 4,691 9,131 477 9,608 £m 2,421.5 1,079.6 3,501.1 307.8 3,808.9 Homes 6,467 6,658 13,125 933 14,058 £m (36.9%) (30.3%) (34.9%) (48.8%) (36.0%) Homes (31.3%) (29.5%) (30.4%) (48.9%) (31.7%) Forward order book Private Affordable Wholly owned JVs Total 28 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report Strategic Report Strategic Report G G F F Our strategy Building Britain better homes Barratt Developments is well-placed to navigate through the current headwinds and deliver on its long-term growth strategy. Guiding all our actions are our principles Keeping people safe 6 1 2 5 Being a trusted partner 3 Building strong community relationships 2 1 6 e l p o e P Safeguarding the environment 5 t i n g Ensuring the financial health of the business 3 t s 4 sto m e r fi r u C I n v e s i n o 4 P l a c e s 3 Gre a t p 4 l a c e s 5 6 1 2 3 N ature n o g constructi 4 Our purpose To lead the future of housebuilding by putting customers at the heart of everything we do ur people 2 1 6 L e a d i n 5 Key Non-financial KPIs Sustainability commitments 1 3 Strategic priorities HBF 5 star customer satisfaction Scope 1 and 2 carbon emissions 5 SHE audit compliance 2 4 6 Land approvals Waste intensity Employee engagement score Barratt Developments PLC Annual Report and Accounts 2023 29 Strategic Report G F Our strategy continued Customer first Leading the industry in consistent customer service Our customers are at the heart of everything we do. We believe our industry leadership in customer service is fundamental to our success and we are the only major housebuilder to have now been awarded the maximum 5 star rating by our customers in the HBF Customer Satisfaction Survey for 14 consecutive years, with a customer satisfaction rating at 92.8%. New Homes Quality Code Building on investment and training during 2022, we successfully adopted the New Homes Quality Code and activated our registered developer status with the New Homes Quality Board in the year. We welcome the Quality Code, which is centred on fairness throughout the customer journey. The Quality Code covers the period from initial enquiry through to completion and then two years post-occupation of the new home. We are pleased that since activating the Quality Code, there have been no adjudications required by the New Homes Ombudsman Service with respect to our homes and customers. Delivering service beyond home completion for our customers As we seek to ensure our customers receive the best possible service throughout their home buying journey and in the period post-completion, we have invested in additional training and workshops to enhance our service and our customers’ experience beyond the handover of their new home. We have continued to drive improvements to the customer journey and have adapted our processes to help our customers through the volatility in the mortgage market during the year. We will continue to work with lenders to ensure our customers have access to the most attractive and suitable mortgage products available. Addressing mortgage access and the affordability challenges faced Given the affordability challenges now faced by potential homebuyers, we are continually looking at how we can help with numerous offers, which include: ∙ the housebuilding industry’s “Deposit Unlock” scheme which is available to our customers who only have access to a 5% deposit; ∙ our “Key Worker Deposit Contribution” scheme, where we offer a 5% contribution, as well as flooring included in their new home; ∙ our “Deposit Boost” scheme for customers with a 10% deposit where we can boost it with a further 5% contribution of the purchase price allowing access to 85% LTV lending rates; ∙ our “Parent Power” scheme where first time buyers with parental support can access a matching deposit contribution up to 5% of the purchase price of their new home; and ∙ our “Armed Forces Deposit Contribution” scheme where military service personnel will be offered a 5% contribution, up to £15,000. We also continue to promote our part-exchange offers to customers. We were the first housebuilder to introduce part-exchange and we have a long record of helping existing homeowners in their purchase of a Barratt or David Wilson home using one of our five tailored part exchange schemes. “ This is one of the most helpful companies I've ever dealt with; the staff are absolutely lovely and are really thorough and invested in getting you the best deal.” Trustpilot score 4.4 Jasmine and Kim, Barratt customers 30 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Growing the private rental opportunity Finally, recognising the ongoing demand for housing of all tenures, we have developed our relationship in the private rental sector, with Citra Living, on our developments across the country. New build advantages for our customers We are continually seeking to improve the energy and water efficiency of our homes and adapting our home designs to respond to changing homebuyer demands, the Future Homes Standard and other changes to Building Regulations. We aim to build high quality homes that optimise internal space, deliver excellent energy and water efficiency and, as a result, unlock lower lifetime costs for our customers. We actively promote the lower energy cost and environmental advantages of our homes across all our communication channels and in our sales centres. This is an increasingly important purchasing consideration for our customers. A typical Barratt or David Wilson home can unlock energy savings of up to £2,200 annually when compared to an average existing home. In FY23 99.2% of our home completions were EPC rated “B” or above, a level of energy efficiency shared by just 3.2% of the existing housing stock. In addition, all of our homes are built to a water use standard of 105 litres per person per day, creating the potential to reduce consumption by 26% when compared to the national average and creating further cost savings for our homeowners. Green mortgages: leading valuation and mortgage developments across the sector Mortgage lenders, driven by their own sustainability initiatives, the growing recognition of future retrofit costs in relation to energy efficiency for existing homes, and the scale of annual savings for customers buying a new home, are increasingly engaging with the housebuilding industry around green mortgages. As the leading national sustainable housebuilder we have adopted a dual approach to green mortgage development. Firstly, we are continuing to work directly with lenders to develop enhanced products that recognise the advantages of our new build homes. During FY23, we collaborated with The Leeds Building Society to support the launch of a new green mortgage product. This product, which recognises the advantages inherent in our new homes and has the potential to unlock up to a 10% uplift in lending available for our energy efficient homes. Secondly, through Government engagement, notably through the Future Homes Hub, Barratt’s Head of Mortgage Lender Relations chairs the “Valuation Oversight Group”, which is considering how the value of sustainable benefits of new homes can be recognised in the mortgage valuation process. The financial and environmental advantages of new build homes have never been as significant as they are today, and we are committed to enhancing both the access and affordability of our new homes in partnership with both lenders and surveyors. Customer First Objectives 0–1 year: We will target our continued 5 star customer service and drive improvement in our nine-month survey score. We will also launch a single portal covering our customers throughout their journey with the Group, encompassing the marketing and sale process through to customer care post-occupation. 1–3 years: We will develop new technology-based solutions to improve the planning, scheduling and efficiency of our customer care teams, internal technicians and external sub-contractors. We will continue engagement on green mortgage development with lenders, surveyors and Government. 3+ years: We will be developing immersive augmented and virtual reality tools to improve and further personalise each customer journey. Barratt Developments PLC Annual Report and Accounts 2023 31 Strategic Report G F Our strategy continued Great places Land supply We build homes in locations where our customers want to live, with good access to open space and amenities, transport connections, schools and workplaces. Our specialised divisional land teams, including the Gladman team, possess extensive local knowledge and strong relationships with landowners. This, combined with detailed research into local market conditions, means we can secure land in locations of strong customer demand. Built For Life Placemaking principles are fundamental to our business: our customers want to live in great places that create a positive legacy and for land owners too, the future legacy created by a site can be critical to successful land acquisition. Our internal Great Places design principles are aligned to the Government-endorsed “Building for Life 12” criteria and the updated “Building for a Healthy Life” standard, which incorporates additional health and wellbeing criteria. As a result, Great Places puts greater emphasis on development design to support good physical and mental health and wellbeing. We deliberately shape our developments around existing ecology, green spaces, walkways and cycle paths to encourage social interaction and a sense of community and appreciation of the surroundings created. During FY23, 19 developments achieved Gold awards under Great Places with a further 46 developments receiving Silver awards and 4 developments achieved commendations under the “Building for a Healthy Life” standard, with Phase 4 of our West Hendon development achieving an “Outstanding” rating from the judges. We also launched our new “Green Spaces” awards in FY23 to recognise and encourage developments with integrated and accessible green spaces. Warren Grove Storrington Upton Gardens 32 Biodiversity net gain adoption ahead of legislation With our national rollout programme embedding biodiversity best practice across all regions completed in the year, all our development designs submitted for planning from January 2023 identified a minimum biodiversity net gain (BNG) of 10% and we remain ahead of the legislation. An important ingredient in delivering BNG is landscaping. To drive our leadership in this area, we launched a new “Landscaping Handbook” which sets out best practice for the design and delivery of landscaping across our developments. Alongside the launch, we appointed divisional “BNG Champions”, ensuring landscaping best practice is both adopted and reported looking to the future. BNG also relies on the long-term stewardship of our developments, as such, measures have been put in place to ensure landscaping and BNG performance are also incorporated in the terms of operation for the management companies responsible for our developments post-completion. Water resilience for our customers Water resilience is becoming increasingly important and we have a responsibility to mitigate against future risks of geographical water scarcity and flooding. We do this by increasing the water efficiency of both our homes, as highlighted earlier, but also by increasing the resilience of our sites to water scarcity and flooding through careful design and development landscaping. In FY23, 83% (FY22: 72%) of our developments used above- ground, landscape-led Sustainable Urban Drainage Systems, which manage surface water volumes and flow rates, reducing the impact of urbanisation and flood risk. We are committed to further sustainable drainage adoption to address water management on our developments. Objectives 0–1 year: We will embed BNG best practice and ensure our sites are delivering accurate reporting on BNG performance and progress. We will work with Government and other interested parties to seek to overcome the challenges faced around nutrient neutrality to unlock future housing development. 1–3 years: We will further improve the layout and landscaping of our developments with a particular focus on inclusivity for all, including improvements to play areas and green spaces on our developments. 3+ years: Our focus will remain on leading the development of sustainable places that satisfy the country’s need for more housing whilst creating a positive economic, social and environmental legacy. Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Leading construction Industry leading build quality Our absolute commitment to excellent build quality is embedded throughout our business. We believe a key measure of build quality is delivered through the NHBC’s five-stage inspection of our homes throughout their build. Issues relating to build are identified as “Reportable Items” (RIs) at each inspection. Throughout FY23, and for the fourth consecutive year, we have maintained our industry leading position amongst the major housebuilders, with the Group once again registering the lowest RIs per NHBC inspection. The Group achieved an average 0.16 RIs per NHBC inspection (FY22: 0.13 RIs), the lowest of all major housebuilders. The strength of our site management, the standards we set for our long-standing sub-contractors, their familiarity with our housetypes, the photographic records taken of each home at key stages and our use of high-quality building materials all contribute to this result. Site management excellence for a record 19th year Our build quality also continues to be recognised through the NHBC Pride in the Job Awards for site management. At the 2022 Regional NHBC Pride in the Job Awards, 34 site managers won “Seals of Excellence” and our site managers secured five out of the nine Regional Awards where we operate in the “Large Builder” category. Finally, at the NHBC Pride in the Job Supreme Awards in January 2023, Kirk Raine, Site Manager at Doseley Park in our Mercia Division, was named Supreme Winner in the Large Builder category. In June 2023 at the 2023 National NHBC Pride in the Job Awards 96 site managers secured awards, more than any other housebuilder for the 19th consecutive year. No other major housebuilder has achieved this level of success and consistency, in terms of the recognition for the management of site standards and build quality. All of our sites also operate under the Group’s certification to the Environmental Management System standard ISO 14001, and Health and Safety standard OHSAS 18001. Innovation through modern methods of construction (MMC) We delivered 5,578 homes using MMC equating to 32% of our total home completions (FY21: 4,846 homes and 27% of total home completions). MMC creates opportunities to build with greater speed and efficiency, mitigate the impact of the skills shortage facing the industry, reduce on-site waste, reduce embodied carbon and diversify the types of materials we use. The various MMC used across our total home completions are detailed below. MMC Timber frame Roof cassettes Offsite ground floors Large format block Light gauge steel frame TotalA Percentage of completionsA FY23 4,564 224 560 230 — 5,578 32% FY22 3,736 194 614 226 76 4,846 27% A Total and percentage of completions include JVs and have been adjusted for homes where more than one technology has been used. New timber frame facility moving into operation Underpinning our growth in the use of MMC is the more widespread use of timber frame construction across our developments. Supporting this growth, we completed construction of the Group’s new Oregon timber frame facility at Infinity Park, near Derby. The new 186,000 square feet facility has been constructed to exacting requirements around its sustainability performance and has achieved a BREEAM “Very Good” rating and an EPC “A” rating. The facility also incorporates a wide range of energy- efficient features including photovoltaics, air source heat pumps and LED lighting, as well as electric vehicle (EV) charging points across 10% of the parking spaces. This £45m investment has been commissioned and will increase production through FY24. Waste reduction Waste reduction and resource efficiency remain clear priorities for the Group, notwithstanding our industry leading performance. Reflecting our workforce’s ability to drive waste reduction, bonus arrangements across the Group in FY23 once again included waste reduction targets and this will continue in FY24. Supported by our dedicated Group Waste Project Manager, detailed action plans and incentives, and monthly waste monitoring, we have delivered a further improvement in our waste intensity with a 13.3% reduction to 4.31 tonnes per 100m2 of legally completed build area (FY22: 4.97 tonnes per 100m2 legally completed build area. In the year, our absolute waste tonnage decreased by 17.1% (FY22: decreased by 15.5%). We continue to promote the segregation of waste and the efficient use of skips across our business; our diversion of waste from landfill remained at 96% during the year (FY22: 96%). In FY23, more than 36,000 paint tins across our sites were recycled (FY22: more than 30,000), and 392,363 pallets, used in the supply of building materials to site, were recycled (FY22: 366,408 pallets). Lightweight compactible materials continue to represent the largest portion of our remaining waste, particularly plastic and packaging materials. Several waste reduction initiatives were trialled in FY23 seeking to reduce packaging waste through specific supplier arrangement, to minimise damage to building materials in transit, combined with site best practice around building material storage on site. Future waste reduction initiatives will also involve revisions to our housetypes, with increasing standardisation of key components e.g. staircases and the introduction of a specific kit of parts reducing waste materials. Barratt Developments PLC Annual Report and Accounts 2023 33 Strategic Report G F Our strategy continued Leading construction continued Water efficiency on site We are committed to reducing operational water use on our sites and throughout our estate. Currently 80% of our operational sites have provided water consumption data (FY22: 61%) and through our metering rollout plan we are targeting that all of our sites will have water metering by the end of FY24. This will provide data on our baseline water use against which we can plan actions to reduce water consumption and measure our performance. New building regulations During FY23 our Group Design and Technical team, following the release of the Government’s SAP calculator in autumn 2022, fine-tuned our solutions to ensure all our housetypes met the requirements of new 2021 Building Regulations. The new standards became effective on new development sites on 15 June 2022 and applied to all development sites from 15 June 2023. The Zed House and the Future Homes Standard The Zed House completed extended periods of occupation, monitoring and testing during FY23. This has yielded invaluable performance information which is being used to inform the Group in determining the most effective changes to our housetypes to meet the Future Homes Standard in 2025 and the different legislative requirements in England, Scotland and Wales, while also ensuring we create the best possible homes for our customers. Future homes for our customers – eHome2 To achieve the Government’s carbon reduction targets, the UK will require a step-change in the design of new homes. As the leading sustainable housebuilder we are committed to developing homes that will meet the future challenges of both carbon emissions reduction and adaptation to climate change. A further milestone on this journey for the Group has been the construction of eHome2 where we have collaborated with Saint-Gobain to build a concept home within the “Energy House 2.0” on the University of Salford campus. Built within one of two environmental chambers inside the “Energy House 2.0”, the largest facility of its type in the world, the eHome2 can test the effects of climate change and look at ways new houses can cope with more extreme weather conditions, whilst cutting energy and water usage. The three-bedroom family home will test both innovative building products and new technologies designed to meet the Future Homes Standard and builds on our knowledge and understanding gained from the Zed House. The eHome2 has been constructed using an advanced closed panel timber frame solution with an offsite pre-insulated ground floor system and both lightweight alternative brickslip and render systems to the external façade. The eHome2 was also built in less than 14 weeks – half the time it takes to build a traditional home. The eHome2 will also test zero carbon performance in different temperatures and weather conditions to replicate extreme changes in the climate and the long-term expected increase in temperatures faced here in the UK. With Saint-Gobain and the University of Salford, we are working together to create a blueprint that will enable the industry to design and build the low carbon homes of the future that will not only be attractive to our customers, but also future proofed for climate change and less expensive to run through their dramatically improved energy efficiency. Objectives 0–1 year: Develop the design of our new house type portfolio supporting the FHS and our growth in MMC. Working with Government and the Future Homes Hub on realising the FHS. 1–3 years: Delivering our new house types encompassing changes in infrastructure connectivity, alternative building materials and new home technologies. Further development of our MMC strategy, notably around further expansion of timber frame adoption across our housetype range. 3+ years: Further development of our zero carbon strategy for homes in use from 2030 and from our own operations in 2040. Development of our embodied carbon strategy to drive emissions reduction through alternative building materials use and supply chain collaboration. Zed House project Energy House 2.0 34 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Investing in our people Male and female employees PLC Directors Female Male Total 2023 63% 5 38% 3 62+ 68+ Employees Total Male Total Female Total 2023 68% 4,345 32% 2,044 2022 67% 6 33% 3 2022 68% 4,401 32% 2,099 2022 83% 271 17% 57 Senior Managers Female Male Total 2023 82% 272 18% 59 82+ 71+ Total Executive Committee Male Total Female Total 2023 71% 5 29% 2 2022 83% 5 17% 1 Reports to Executive Committee 69+ Male Total 2023 69% 27 31% 12 Female Total 2022 66% 21 34% 11 Our continued success is ultimately achieved through the hard work and dedication of our employees. We aim to attract and retain the best people by engaging with our employees, investing in their development to maximise their potential, supporting their wellbeing and recognising their commitment by ensuring our employee packages are effective and competitive. We are also committed to becoming more diverse and inclusive organisation, as we believe this will create a stronger, more dynamic business for our customers, and also make us a more attractive employer. The volatility and uncertainty in the market in the last year necessitated a pause in Group-wide recruitment, other than recruitment for a small number of critical roles, since the end of the first quarter. Recognising the need to develop young talent, our graduate and apprenticeship programmes have continued, albeit at reduced intake levels. This pause to recruitment has created opportunities to increase our attention on our existing employees, ensuring we are engaging and developing our employees to their full potential and that they feel recognised and valued. Engaging with our employees and recognising their commitment Our 2022 employee engagement survey was completed in October 2022. This year’s survey delivered an engagement score of 84.4% (2021 survey: 79.4%). The improvement in the 2022 engagement score was welcomed and highlighted: ∙ The benefits of the Group’s proactive policy changes in FY22 around the provision of private medical insurance for all employees, an additional day’s holiday for all employees to celebrate a special day, and increased time for employee volunteering. ∙ The positive impact on our employees of the Group’s decision to award a cost of living salary supplement of £1,000 to all employees below senior management for the period from 1 July 2022 through 31 December 2022. ∙ The introduction of enhanced family friendly policies including extended maternity, paternity and carer leave, effective from October 2022. Following the 2022 engagement survey and reflecting our desire to positively respond and engage with our workforce, a number of new initiatives were introduced though the balance of FY23. These included: ∙ A Group-wide survey on health and safety seeking employee views on how we can further improve our safety, health and environmental performance with future targeted actions. ∙ A further cost of living salary supplement of £1,000 to all employees below senior management for the period 1 January 2023 through 30 June 2023. ∙ Tiered salary increases effective from 1 July 2023, designed to ensure our lower paid employees were cushioned from the withdrawal of the cost of living salary supplements, which drew to a close on 30 June 2023. Barratt Developments PLC Annual Report and Accounts 2023 35 38 + S 32 + S 31 + S 18 + S 29 + S Strategic Report G F Our strategy continued Investing in our people continued ASPIRE Degree Apprenticeships Intermediate & Advanced Apprenticeships Investing in the development and training of our employees We continue to play a leading role to address the industry’s skills shortage. In total, we have developed, or are developing, 136 delegates through our Armed Forces transition programme. Skills developed in the Armed Forces transfer well to site management, and the programme has brought a large number of high-calibre individuals into our business. Our ASPIRE graduate development programme takes between 15 and 30 graduates annually. The programme goes from strength to strength, attracting candidates from all degree backgrounds. ASPIRE is designed to provide a broad understanding of our business, coupled with both personal and professional development opportunities through a two-year programme, with the aim of creating leaders of the future. During FY23, we completed recruitment for our fourth degree apprenticeship with Sheffield Hallam University, in real estate. Sitting alongside existing programmes in construction, quantity surveying and technical design and management this makes us the first housebuilder to deliver degree apprenticeships across the three main build functions and real estate. Apprenticeships remain a vital route to develop skilled tradespeople for our industry Our programmes for bricklaying and carpentry apprentices enable participants to achieve apprenticeship level within a shorter timeframe while maintaining the same high standards. Our schemes focus on bringing new talent to the industry and on retaining it for the future. To date, within the bricklaying and carpentry apprenticeship programmes, 374 apprentices (FY22: 256) have attended, and 147 apprentices (FY22: 102) are due to complete the course in FY24, with a further 54 (FY22: 160) recruited in FY23 for our FY24 intake. We currently employ 483 apprentices, graduates and trainees (FY22: 391), around 7% (FY22: 6%) of our workforce, reflecting our ongoing commitment to developing future talent. With respect to apprentice recruitment in the year, 13% (FY22: 29%) of our apprentices were recruited from the most deprived areas according to the Index for Multiple Deprivation. We engage with our future workforce through our work with schools, national apprenticeship bodies, universities and Armed Forces resettlement organisations. This includes getting involved with campus activities, attendance at careers fairs and employer-led events. For a second year we also engaged with more than 1,200 schools and colleges to promote careers in construction and housebuilding and, in collaboration with the HBF, the School Outreach programme now engages with over 3,100 schools across the UK. 36 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Retaining the best talent It is vital for us to develop talent within our business to ensure we have the necessary skills for continued operational delivery and growth into the future. As part of our response to engagement survey feedback and the pause in recruitment, we are working to improve the visibility of career paths in all functions, with individual development plans, line manager development and the proactive prioritising and tracking of internal promotions. Remuneration and benefits are an important element of employee retention. We continue to review our employee packages to ensure they are effective and competitive. Identifying and supporting our leaders of the future, along with effective succession planning, are important elements in our long-term success. In FY23, 344 (FY22: 269) high-potential employees have attended or are attending our “Rising Stars” programme. Our Construction and Sales Academy programmes develop talent within our business and we continue to work with the Home Building Skills Partnership around employee training, learning and development. We also seek to address skills shortages and prepare for the future by developing our people through access to continuous learning. Our MyLearning mobile app provides colleagues with flexibility and choice in how they access and consume learning content. Growing our employee networks Our employee networks have also become an increasingly important way for us to create a more open and inclusive business, and enable us to listen directly to the needs of our people. Our networks include our gender network to support female colleagues and groups which connect parents, LGBTQ+ colleagues and allies, ethnic minority communities and “Barratt Connect”, a group for anyone who has felt isolated or misses the social interaction created by reduced office-based working. We are delighted to have launched “Scaffold”, a new network set up to raise awareness of disability in the workplace, influence policy decisions and connect disabled people and their allies across all divisions and functions. Gender and Ethnicity Pay Gap Report Real Living Wage accreditation During the year, we maintained our Living Wage Foundation accreditation, reflecting the Group’s commitment to paying our employees and supply chain employees an independently calculated rate of pay, based on the actual cost of living. The real Living Wage exceeds the national Living Wage (set by the Government) and covers all employees aged 18+, as well as incorporating a London weighting. Holding this accreditation demonstrates our clear and continuing commitment to our employees, suppliers and sub-contractors. Our standard sub-contractor terms and conditions also mandate the payment of the real Living Wage within our supply chain. To support this, we implement spot checks by divisions on higher risk trades and operate internal remediation feedback systems. Where we find instances of non-compliance, we require this to be rectified, with follow-up audits conducted to ensure full compliance. For those working in jurisdictions other than the UK, our expectation, included within our contract requirements, is that local statutory minimum wages are paid. Gender and ethnicity pay gap reporting In December 2022, we published our annual Gender Pay Gap Report and, for the first time, we also included our Ethnicity Pay Gap Report, as part of our commitment to transparency and to enhance our work through our Diversity & Inclusion Strategy to improve the representation of all groups across the business. Our mean gender pay gap increased from 6.2% to 8.8%, and the median pay gap increased from (0.4%) to 6.3%. Although our mean gender pay gap is smaller than the average for UK businesses in 2022 at 13.9%, we remain committed to further action in this area and delivering against our 2025 Diversity & Inclusion Strategy. Our mean ethnicity pay gap reduced from 11.0% to 7.7%, and the median ethnicity pay gap reduced from 7.1% to 5.9%. In order to deliver change in both of these areas, we will continue to build on the work already in place to support our teams through talent programmes, employee networks, succession planning and early careers. We will continue to work to close our gender and ethnicity pay gaps and ensure that we build an open and inclusive working environment. Expanding employee participation in share ownership for our business In April 2023, we invited all eligible employees to participate in the 15th grant under the Group’s Sharesave scheme, which allows eligible employees to contribute a maximum of £500 per month in one or more Sharesave schemes. As at 30 June 2023, 51.4% of our employees participated in one or more of the active schemes, compared to 51.2% as at 30 June 2022. In recognition of the continued dedication, commitment and loyalty of our employees, in FY23 the Board agreed that an annual share award would be made to all employees below Managing Director level. Accordingly, in July 2023, an award of shares equating to £1,250 (July 2022: £1,250) was made to all qualifying employees. This award will vest in July 2025. Reflecting the challenges faced by our industry as well as our recruitment freeze implemented at the end of September 2022, our total Group employee turnover reduced to 15% for the year to 30 June 2023 (FY22: 17%). Our target over the medium term remains at 15%. Barratt Developments PLC Annual Report and Accounts 2023 37 Strategic Report G F Our strategy continued Investing in our people continued Promoting both physical and mental wellbeing of employees A key objective for the Group during FY23 has remained the physical, mental and financial health and wellbeing of our employees. During the year, we continued to progress our health and wellbeing programmes, including the development of a health and wellbeing strategy. We have continued to deliver “manage the conversation” training to our manager population, grow our network of mental health first aiders and enhance, through additional investment, the support available to our mental health first aiders. We have continued to strive to reduce stigma and encourage openness around mental health across our employee and sub- contractor population, with suicide awareness training made available to all employees and promoted to both our employees and well as our sub-contractors and allied trades. Continuing this theme, in June, in conjunction with the Barratt Foundation, we launched a collaboration with the Lighthouse Club Construction Industry Charity, which has seen a series of site tours being supported by the charity bringing wellbeing advice, help and support to our site-based teams and sub-contractors. In order to support the financial wellbeing of our people, we have extended our partnership with our benefits providers to offer access to enhanced financial wellbeing support through innovative platforms and webinars. We continue to support our people’s physical health through investment in private medical support and annual health assessments, which are made available to all employees. Anti-bribery and corruption policy Diversity and inclusion We aim to create a working environment that provides equal opportunities for all and we are a signatory to the Business in the Community Race at Work Charter. Selection for employment and promotion within Barratt is based on merit, following an objective assessment of ability and experience, and after giving full and fair consideration to all applicants. We are also committed to ensuring that our workplaces are free from discrimination and that everyone is treated with dignity and respect. We strive to ensure that our policies and practices provide equal opportunities in respect of training, career development and promotion for existing and potential employees, at all levels throughout the business, irrespective of age, disability, gender, gender reassignment, marriage and civil partnership, pregnancy and maternity, race and ethnicity, nationality, religion or belief, sex, and sexual orientation. We also remain signatories to the Social Mobility Pledge, committing us to providing opportunities to people from all different backgrounds. A detailed review of our employee representation across all protected characteristics, by both function and level within the organisation, was completed during the year. This identified both our strengths and where there are clear opportunities to improve and a new three-year strategy has been put in place to drive measurable improvement through to FY25 and ensure everyone who works within the Group feels they belong and are comfortable to be themselves. 38 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Gender diversity Improving our gender diversity has been recognised as an initial priority with a support programme, a particular focus on graduate recruitment and early career intake and through carefully considered succession planning. To drive improvement the Group: ∙ Is now measuring gender representation in each function and level within the Group on a quarterly tracking basis; ∙ Has refreshed our recruitment processes, to ensure have balanced and diverse shortlists; and ∙ Has increased the female cohort on our Accelerated Leadership Programme, which is designed to identify our future Managing Directors. Catalyst, our existing development and support programme, designed to help high-potential female employees develop their careers within the Group, is a key part of our gender diversity strategy. This programme is showing positive results with 48% of participants being either promoted or having their roles extended. As well as Catalyst, we also worked with the Home Builders Federation and Women in Construction during the year to launch a nationwide employment programme for women, helping to address the gender imbalance in the construction workforce, which currently sees just 16% female representation. As at 30 June 2023, women held 18% (FY22: 17%) of senior manager roles within the Group. The gender diversity statistics for our employees as a whole, our senior managers, the direct reports to the Executive Committee, Executive Committee and PLC Directors are shown on page 35. Further information regarding the diversity (including ethnicity of our PLC directors and Executive Committee members can be found in the Nomination report on page 120. Ethnic diversity Increasing the ethnic diversity of our organisation is also a clear target over the coming years. In October 2022 we launched our ethnic minority community support programme, “Spotlight”. This is an eight-month externally facilitated programme, which includes feedback from the participants on actions needed, as well as a Group-wide EMC employee network. We were also delighted to have been part of the 30% Club’s “Leaders for Race Equity” inaugural programme, alongside nine other organisations seeking to share best practice and establish tangible actions for change. As at 30 June 2023, 7% (FY22: 7%) of employees were from ethnic minority backgrounds and 3.0% (FY22: 2.1%) of senior leadership positions were held by ethnic minority employees. Disability Every effort is also being made to retain and support employees who become disabled during their time working within the Group and we continue to remove physical barriers for disabled colleagues or applicants. Our “Scaffold” network, detailed earlier, is an important forum to ensure we understand the issues faced and are supporting our disabled employees. Human rights and anti-bribery Our respect for human rights is embedded within our strategic priorities. We have policies and procedures in place that support the core values of the UN Universal Declaration of Human Rights and the UN Guiding Principles of Business and Human Rights, and we act in accordance with our principles regarding diversity and the Modern Slavery Act 2015. Concerns can also be raised anonymously via our whistleblowing process. We are currently undertaking a thorough review of our approach with the aim of developing a more consistent, leading practice approach to managing material human rights risk across our value chain. In line with this, this year, we conducted an assessment to identify our most salient risks and key opportunities, and have also put in place measures to build on our existing due diligence systems. These have included: ∙ Updating signposting on our sites to encourage potential victims of modern slavery to seek help and, recognising that language barriers that may exist, our signposting has included QR coding for multiple languages. ∙ Recognising that the transition to net zero has the potential to increase human rights risks, particularly in relation to new technologies and new suppliers operating outside of our traditional supplier base and in more distant and less regulated markets. In one particular product area, photovoltaic panels, we are co-sponsoring the development of a procurement guide for responsible sourcing addressing the sourcing of materials and labour and the supply chain. Our non-financial KPIs regarding health and safety and employee engagement reflect our belief that it is a fundamental human right to work in a safe and supportive environment. Employees undertake training on modern slavery and site managers are given additional training in helping identify risks around modern slavery. We have a strict anti-bribery and corruption policy and conduct our business in a fair, open and transparent manner. All employees are required to undertake regular training on our anti-bribery and corruption policy. We also work closely with our partners to ensure our standards are applied to our extended workforce. We are signatories to the Gangmaster and Labour Abuse Authority Construction Protocol, helping us to share and receive information and training materials to identify and prevent modern slavery. It is a condition of all our supplier and sub-contractor contracts that they comply with the Bribery Act and our anti-bribery and corruption policy. Objectives 0–1 year: Increase leadership capability in key people management skills, developing inclusive leadership. Focused people planning including diverse hiring. 1–3 years: Embed the Company’s new purpose and values and employee value proposition across all areas of the employee experience. 3+ years: Enhance the employee experience through technology. David Thomas Chief Executive Barratt Developments PLC Annual Report and Accounts 2023 39 Strategic Report G F Building sustainably Leading sustainability We are determined to be the leading national sustainable housebuilder. We believe that fundamental to building quality homes is building a positive environmental, social and economic legacy for future generations. To us, that means putting our customers at the heart of everything we do to create great homes and great places that are designed and built for better living and to meet the challenges of the future. Building Sustainably Framework We preserve and enhance the natural world by using resources responsibly, building resilient, low-carbon homes, and by creating places where people and nature can thrive. See page 44 Nature e , N a t u r a l Resources, Carbon Reductio n, R e 12 13 n c e s il i e r u t a d N n Biodiversity a 6 15 7 11 P l a c e m a k i n g , P l a c e s G r e e n F i n a n c e We design and build great places that meet the highest standards, and that promote sustainable, healthy and happy living for our customers. See page 45 Link to the SDGs Building Sustainably 3 5 e l p o e P r u O , e f a ple s o e ple Peo n rig hts, Keeping p 8 u m a H We believe everyone has the right to be respected and treated fairly at work. We do the right thing, nurturing diverse talent and prioritising the health and safety and wellbeing of our people and partners. See page 45 3 Good health and wellbeing 7 Affordable and clean energy 12 Responsible consumption and production 5 Gender equality 8 Decent work and economic growth 13 Climate action 6 Clean water and sanitisation 11 Sustainable cities and communities 15 Life on land 40 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Our Building Sustainably Framework The last year has been one of extraordinary economic, social and environmental shifts, and this is expected to continue. Global conflicts amplified what was an emerging energy and cost of living crisis. This has had consequences across our entire value chain – from the sourcing of raw materials through to consumer sentiment. Political upheavals in the UK have also challenged the ability of business to respond and adapt. Against this, a backdrop of increasingly urgent warnings about climate change and nature depletion. At Barratt, our response to this is simple, yet focused. We are responding to the most urgent issues by ensuring we are driving the delivery of our Building Sustainably Framework, in line with our targets and commitments. We view the progress on our environmental and social ambitions as essential to future proofing our business in the long term. The framework is built around three pillars: Nature, Places and People. These cover the material issues for our business and are informed by industry understanding, as well as the opinions and challenges offered by our stakeholders. This focus is reflected in all that we have achieved. We are building resilient, low-impact homes that will make our customers and our country future-ready. We are creating places where people, nature and local economies thrive together, whilst also addressing the skills gap and supporting under-represented and disadvantaged groups. We are unlocking affordability for more people and rewarding customers who make sustainable choices. At a global level, our framework aligns with nine of the UN’s 2030 Sustainable Development Goals (UN SDGs), which are detailed within the framework wheel. We became a signatory to the UN Global Compact in July 2021, a voluntary initiative based on CEO commitments to implement universal sustainability principles, and to take steps to support UN goals. Our Communication On Progress qualifies for the Global Compact Advanced level. Nationally, our framework aligns with the UK Government’s 2050 net zero greenhouse gas emissions commitment and its 2025 Future Homes Standard. Creating value It is crucial that, through our sustainability activities, we realise these benefits for all stakeholders. This means ensuring our sustainability programmes address societal challenges, drive greater financial productivity, and aid effective management of climate and socio-political risks and opportunities. Within each area of our framework, we seek to innovate, create genuine impact and support long-term value creation. What matters most? Our Building Sustainably Framework has been created as a “living blueprint”, one that will evolve according to emerging sustainability risks and opportunities. This is why, periodically, we undertake a materiality review to understand which sustainability issues matter most to our stakeholders. Using the Future Fit Business Benchmark as a guiding framework, we have completed an extensive engagement programme of interviews and surveys. The next stage is to examine the findings, identify the issues that matter the most, and use these to advance our strategy, using an approach that considers business needs and potential for social and environmental value creation. These will be reported in 2024. External industry bodies and stakeholders Suppliers 63 Employees 576 21 Stakeholders consulted 1+ 2,462 1,802 Customers Leading sustainability Creating value What do our customers think? We are well positioned as the industry leader to inform and educate those in the market to buy a home. Sustainability forms part of our annual customer research and insight programme, which has allowed for over 25,500 interactions, reaching over 2,700 of our customers and an additional 22,600 UK residents in the past three years. This further helps us understand their attitudes towards sustainability in the home and sustainable lifestyles. There is a clear appetite and expectation for sustainable homes. The majority of customers care about the environment and want to reduce their carbon emissions, and place value on homes that provide lower running costs. 63% Say the cost of living and affordable energy is one of the top 3 issues facing the UK at this time* 62% Say net zero commitments are an important factor when choosing a housebuilder** 80% State “sense of community” is very or quite important when purchasing a home*** * Online survey of 780 recent purchasers or those in market to buy in the next two years, April 2023. ** Online survey of 1,800 BDW customers, recent purchasers, or those in market to buy in the next two years and those in market, April 2023. *** Online survey of 2,000 BDW recent purchasers, or those in market to buy in the next two years and those in market, April 2023. Barratt Developments PLC Annual Report and Accounts 2023 41 73 + 3 + 23 + T Strategic Report G F Building sustainably continued How we manage sustainability An established and robust governance structure underpins the framework. We have a clear process – from identifying our most material issues to the operational delivery of action plans – across each of the framework pillars and their corresponding priorities. This allows us to create supporting work streams, which drive our implementation plans and create clear accountability around each issue. The Board delegates day-to-day delivery of our framework to the Executive Committee, which is supported by operational cross-business working groups. Regular monitoring of targets enables us to continually identify and re-prioritise areas for improvement. This year, we improved our internal reporting mechanisms – in particular enabling divisional management teams to benchmark and monitor carbon and energy performance to a site level to put performance improvements in place where they are most needed. We will include new management metrics in FY24. See page 91 for further detail on our transition pathway. Our governance framework Board Group Board Chief Executive accountable for sustainability Scrutiny, oversight and approval of sustainability strategy Nomination Committee Audit Committee Sustainability Committee SHE Committee Remuneration Committee Executive Risk Committee Land Committee SHE Operations Committee Management Working Groups Biodiversity Net Gain Sustainable Homes Stakeholder Engagement Sustainable Operations Sustainability and People ESG Data and Controls Waste Sustainability Committee Our Sustainability Committee, chaired by our CEO, debates, reviews and scrutinises the sustainability strategy and implementation plan, and approves plans to mitigate risks and leverage opportunities. At least one member of the Committee must have sustainable development-related skills. External experts are also invited to sessions to share deeper insights on specific topics. This year external experts provided input on the subject of environmental economics, the potential impact of carbon pricing and the transition to net zero in hard to abate sectors. The Committee’s full terms of reference can be found here: https:// www.barrattdevelopments.co.uk/investors/corporate-governance In this financial year, the Committee reviewed and approved updated sustainability policies, and agreed the outcomes of a Human Rights saliency assessment. Furthermore, progress against our strategy and objectives around waste, carbon, biodiversity and water were reviewed, with focus areas and future opportunities identified. Climate related issues are a standard agenda item at meetings – this year, the Committee reviewed our net zero transition pathway, international approaches to decarbonisation, carbon pricing and embodied carbon assessments. See page 91 for further detail. 42 The Committee also reviewed future reporting requirements, including likely nature related requirements. It provided input into the approach for the measurement and monitoring of biodiversity net gain and offsetting requirements and also considered requirements for nature positive business. Meeting attendance There were three meetings held during the year ended 30 June 2023. The table below shows the attendance of each member of the Committee. Attended Did not attend David Thomas1 Steven Boyes Katie Bickerstaffe Jasi Halai2 Jock Lennox Tina Bains Bukky Bird Jeremy Hipkiss 1 David Thomas did not attend the March meeting due to a previous commitment. Prior to the meeting, David provided his views on the meeting agenda which were shared with the other Committee members during the meeting. Following the meeting, he was briefed on the business of the meeting and any decisions taken. 2 Jasi Halai was appointed on 1 January 2023. Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Our performance Performance is monitored throughout the year and reported to the Sustainability Committee biannually, and to the Board annually. Performance against our sustainability metrics is set out on page 48 and https://www.barrattdevelopments.co.uk/ building-sustainably. To drive progress against our priorities, we have included a carbon reduction target in our LTPP since 2021 and a waste intensity target in our annual bonus scheme since 2022. New bonus-related incentives at a divisional level have been introduced to encourage the reduction of waste across the business. Joined CDP’s Climate Change A List for Leadership, one of just 300 companies worldwide. The top-rated UK housebuilder and in the top 23% of global construction companies. Climate: A Water: B Forests: B Included in top-rated ESG Companies List. Listed as an ESG Regional (Europe) top-rated company, and an ESG Industry (Homebuilders). Top-rated company (second out of 86 global homebuilding companies). 1st out of 232 in the global construction industry. Leading national housebuilder. Gold Award for seventh consecutive year Crystal award for Transparency for the third time. Innovation Award for the Zed House. Advanced. We are the only UK company in the “Household Goods and Home Construction” sector to achieve this (and only achieved by around c.10% of all participating companies worldwide). Transparency Transparency underpins our Building Sustainably Framework. Our disclosures are critical for providing insight into and challenging our progress on meaningful industry-wide improvement around sustainability. We are committed to continuously enhancing our disclosure to meet evolving stakeholder needs. This means that as well as celebrating success, we share where we fall short of our own expectations, and flag areas for improvement. As a result, all information on our strategy, targets, and performance is publicly available through our website and other publications. By completing the most material benchmarks and indices throughout the year, we allow our stakeholders to track our progress consistently, and to assess our performance in accordance with global and national standards. Our performance Barratt Developments PLC Annual Report and Accounts 2023 43 Collaboration We can’t achieve all that we do in isolation and we acknowledge the opportunity to be a catalyst for change across the sector, as well as develop shared solutions to shared challenges. We take an active role in a number of industry groups and engage with government bodies to implement policies and action for a sustainable future. See page 54 for further detail. Strategic Report Strategic Report G G F F Building sustainably continued Sustainability highlights Nature Advancing modern methods of construction Modern Methods of Construction (MMC) creates opportunities to build with greater speed and efficiency, mitigate the impact of the skills shortage facing the industry, reduce on-site waste, reduce embodied carbon and diversify the types of materials we use. 32% homes built using MMC See page 33 Supplier emissions data visibility Collaboration with our suppliers and sector-wide groups is a critical part of delivering on our decarbonisation plan. We engaged our top suppliers and subcontractors (representing 20% of our supply chain emissions) to understand with more accuracy how much carbon is emitted by our supply chain. 22 of our top suppliers and subcontractors engaged on their carbon plans See page 94 Alternative fuels powering our transition Hydrotreated vegetable oil (HVO) is a critical transition fuel, whilst we await innovation in electric site plant. We have invested significantly in responsibly sourced HVO to reduce site-based emissions associated with diesel, which account for 65% of our footprint. 2,791 tonnes of carbon abated See page 94 44 Enhanced timber sourcing transparency We are committed to purchasing all timber and timber products from well-managed forestry sources, and have enhanced our timber survey to improve visibility of sustainability risks. 99.8% certified sustainable See page 48 Zero carbon home collaborative research We launched eHome2, our sector-leading research collaboration to enable us to test a range of technologies and build techniques within climate controlled extremes. This is a key element of our roadmap to zero carbon homes, and decarbonising our value chain. Over 40 partners collaborating on eHome2 See page 34 Reduced waste intensity significantly We continue to promote the segregation of waste and the efficient use of skips across our sites supported by bonus arrangements to incentivise performance. 14,000 tonnes less waste generated in 2023 See page 17 Fleet electrification The uptake of electric company cars has been faster than forecast, enabling us to move our target for fleet decarbonisation forward from 2030 to 2028. 66% of company car fleet are electric or hybrid See page 91 Fleet composition 45+ Electric Diesel Hybrid Petrol 45% 23% 21% 11% Barratt Developments PLC Annual Report and Accounts 202323 + 21 + 11 + T Strategic Report G F Places Achieving biodiversity net gains We have embedded a comprehensive operational framework to deliver this change including training, calculation tools, automated data collection and a network of divisional representatives championing it. In achieving this, we drive progress towards creating great places where people and nature can thrive. 100% sites submitted for full or outline planning with 10% minimum BNG since January 2023, excluding joint ventures See page 32 Greenspace focus in placemaking We have integrated greenspace awards into our Great Places design principles. 96 of our schemes achieve Built for Life accreditation. See page 32 4 of our developments were awarded Building for a Healthy Life Commendations. Championing green mortgages We have played an instrumental role in encouraging mortgage lenders to develop affordability calculations which incentivise homeowners to invest in energy efficient homes. Leeds Building Society offers Up to 10% uplift in lending for an energy efficient new home. See page 61 Leading the industry People Refreshed diversity and inclusion targets A detailed review of our employee representation across all protected characteristics, by both function and level within the organisation, was completed during the year. 31% female appointments 7% of employees from ethnic minorities See page 39 13% of our apprentices were recruited from the most deprived areas according to the Index for Multiple Deprivation Our commitment to developing future talent continues recognising the industry’s skills shortages and we promote opportunities to people from all different backgrounds. 7.2% workforce in a graduate, apprenticeship or trainee role Carbon and energy efficiency dashboard launched Improving visibility of key sustainability performance data across our divisions and regions is critical to delivery of our framework ambitions. See page 98 Leading sector-wide sustainable change We have taken a leadership role to ensure the whole sector can deliver sustainable outcomes, industry initiatives and policy development. 1st Our CEO, David Thomas has been appointed as the first chair of the Future Homes Hub See page 64 Leading in sustainability benchmarks and indices Our performance in benchmarks and indices has been strong, retaining either a global or national leadership position. One of fewer than 300 companies globally to be CDP Climate Change “A List” for Leadership See page 63 ^ Online survey of 1,300 of recent purchasers or those who intend to buy in next three years, May 2022. Linking performance to a sustainability- linked facility Our existing revolving credit facility has been amended to a sustainability-linked facility which includes sustainability linked performance measures. £700m Sustainability- linked facility See page 61 Leading on the customer voice We continue to gather extensive insights from customers and those in market on sustainability topics including: Future Homes Standard technologies, appetite for energy efficient homes, green mortgages, nature and greenspace, water, placemaking, and the materiality of sustainability issues. 70% see cheaper household bills as a benefit of living in a low carbon home^ See page 31 Barratt Developments PLC Annual Report and Accounts 2023 45 Strategic Report Strategic Report G F Building sustainably continued Building sustainable homes for the future With 40% of the UK’s carbon emissions coming from households, the residential sector has a critical role to play in meeting the nation’s climate goals. New build homes are already demonstrating their worth with 84% in England rated with an EPC of A or B compared to only 4% of existing housing stock.1 Zero carbon ready homes require fundamentally rethinking the design as well as the way we build. Solutions must meet the challenge practically, and the risks associated with innovating quickly and at scale across the country must be managed. Barratt has a clear roadmap to zero carbon in the homes we build, working with our supply chain and partners, to ensure we deliver high quality, sustainable homes that our customers love. Our roadmap is phased and we are currently trialling new technologies as part of our ongoing research and development programmes – more recently through eHome2 and the Zed House – to help refine our design and technology decisions. See page 34 for further detail. We have begun to incorporate some “zero carbon ready” technologies, for example at Delamere Park, our first gas-free development. Our “fabric-first” approach means making sure the building envelope maximises its insulation performance and is as airtight as possible whilst maintaining good indoor air quality which saves carbon an energy without the need for upgrading technology. Focusing efforts on the comparatively long-lived building fabric helps to “future proof” homes meaning they will be less likely to require difficult and expensive refurbishment upgrades at a later date. 1 https://assets.publishing.service.gov.uk/government/uploads/system/ uploads/attachment_data/file/1050357/EPB_Cert_Statistics_Release_-_ Q4_2021.pdf Designing for nature Most of our homes have their own private gardens. We have worked with the RSPB to maximise the potential of the gardens we create by installing gardens into our show homes that are packed with features such as “hedgehog highways”, wildlife-friendly planting and bee and bug houses to inspire our customers to recreate these in their own homes. Materials The majority of carbon emissions released during the lifecycle of a home occur before construction phase through materials, including extraction, manufacturing and transport. We are the only major housebuilder to sign up to support the proposed Building Regulations for limiting embodied carbon (“Part Z”). See our transition pathway on page 91 for further detail on our roadmap to net zero across the value chain. Adaptive homes We want to ensure the home can be more agile to the customer’s needs over time. Our homes are incorporating smart technology that simplifies how customers interact with them in order to live comfortably and save money. In addition we are trialling technology to support an ageing population – see page 34. 46 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report Strategic Report G G F F 31% carbon reduction 75-80% carbon reduction Zero carbon Building regulations 2021 Future homes standard Beyond Future homes standard Net zero and beyond 2030+ All new housetypes to be zero carbon (regulated energy) in use. Features being considered include: ∙ Batteries ∙ Smart energy tariffs ∙ Vehicle to home energy storage ∙ Smarter homes through automation solutions Current build Our homes are designed to achieve a 31% carbon reduction* in line with the update to Part L of the Building Regulations (2022). We are achieving this through: ∙ Enhanced fabric efficiency in walls, floors, roofs and windows ∙ Reduce airtightness from 5 to 4 ∙ Photovoltaics ∙ Efficient gas boilers ∙ Waste Water Heat Recovery ∙ Flue Gas Heat Recovery integrated in combination boilers ∙ Smart cylinders ∙ Introduction of decentralised mechanical extract ventilation ∙ Larger radiator and pipes to future proof for low carbon heating such as air source heat pumps ∙ Electric vehicle charging points * When compared to 2013 standards. FHS 2025 “Zero carbon ready”. We are now taking steps to prepare for the introduction of the Government’s full Future Homes Standard in 2025 which will enhance the specification of our homes further, to achieve a 75-80% carbon reduction against current regulations. Further features should include: ∙ Enhanced fabric efficiency in external walls and enhanced double glazing ∙ Air source heat pumps ∙ Underfloor heating ∙ Hot water cylinder in every home ∙ Smart technology ∙ Further reduced airtightness from 4 to 3 ∙ Mechanical ventilation with heat recovery ∙ Electric vehicle charging point in every home Barratt Developments PLC Annual Report and Accounts 2023 47 Strategic Report G F Building sustainably continued Sustainability goals Nature Biodiversity and nature Target Demonstrate a minimum biodiversity net gain (BNG) of 10% across all development designs submitted for planning from 2023. Waste and circular economy Target Reduce construction waste intensity by 20% by 2025 vs.2015. FY23 performance FY23 performance 100% of sites delivering an average BNG of 36% for area habitats, 76% for hedgerow habitats and 13% for river habitats.* * Excluding joint ventures See page 32 39% See page 17 Target Maintain 95% diversion of construction waste from landfill annually. FY23 performance 96% Carbon reduction Target Reduce absolute scope 1 & 2 (operational) carbon emissions by 29% by 2025 (from 2018 levels) and to net zero by 2040. Zero carbon homes Target All new housetypes to be zero carbon from 2030 (regulated energy). Deforestation Target 100% of timber certified for net zero deforestation annually (for all timber procured via Group agreements, BD Living, Oregon and sub-contractor fencing). FY23 performance 99.8% Modern Methods of Construction (MMC) Target Use offsite based products and systems in 30% of homes by 2025. FY23 performance 32% See page 33 Renewable energy Target Ensure 100% of own electricity is on renewable tariffs by 2025. Sustainable travel Target 100% of company car fleet free of diesel and petrol cars by 2030. See page 47 FY23 performance 87% See page 91 FY23 performance 66% of fleet are electric vehicles or hybrid See page 91 FY23 performance 23.7% See page 16 Target Reduce scope 3 (indirect) emissions intensity by 24% by 2030 (from 2018 levels). FY23 performance 242.13 tCO₂e/100m2 See page 97 48 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Performance versus target On track Achieved Monitor Below target Target not met Places People Great Places Development Attraction Employee engagement Target All completed developments designed to achieve our minimum Great Places standard on an annual basis. Target Maintain an average of four training days per employee per year. Target Maintain 7% of workforce in a graduate, apprenticeship or trainee role. Target Exceed 75th percentile score in the engagement survey. FY23 performance FY23 performance FY23 performance 90% 4 Achieved People Reward and benefits Target Gender & Ethnicity pay gap reporting. FY23 performance Gender: Mean Median 8.8% 6.3% Ethnicity: Mean Median 7.7% 5.9% FY23 performance 84.4% Achieved 7.2% Achieved Target Increase in apprenticeships with a minimum of one lower socioeconomic background indicator*. New target Diversity and inclusion Target 35% of all employees to be female by the end of FY26 vs. FY23. Target Overall 10% increase in ethnic minority employees by the end of FY26 vs. FY23. FY23 performance FY23 performance 31% of all employees are female 7% of all employees are from ethnic minorities * Target to be finalised in FY24. Barratt Developments PLC Annual Report and Accounts 2023 49 Strategic Report G F Section 172 Section 172 statement The Board recognises the importance of working and engaging with a number of key stakeholders in order to promote the long-term success of our business. Such engagement helps us to gain a better understanding of what areas our stakeholders are interested in or concerned about and how our decisions impact them. Healthy engagement with our stakeholders underpins our governance framework, which is embedded throughout our business and helps to ensure we maintain high standards of business conduct. Engagement with our stakeholders supports the Board’s regard to the likely consequences of any decision in the long term. In accordance with the requirements of the Companies Act 2006, the following pages set out how the Board acts in a way that promotes the long-term success of the Company, whilst considering various matters including those set out in s.172(1) of the Act: Key matter of which the Board must have regard Key matter of which the Board must have regard The likely consequences of any decision in the long term How the Board takes each of the matters into consideration Our business is cyclical in nature and it is therefore imperative that the Board takes a long-term approach to its decision making. This supports our ability to deliver our purpose and strategic priorities and create long-term sustainable value for our stakeholders. It also helps prepare the business for changes in Government and regulatory policies that impact our industry. For example, the introduction of the Future Homes Standard that becomes mandatory in 2025, will require all of our homes to produce 75-80% less carbon emissions than they do now. To meet these types of requirements within the prescribed timescales we have to act now, details of which can be found on page 47. In addition, the Board regularly assesses emerging risks that may impact the business and the way in which it operates in the future. It also reviews its Principal Risks annually to ensure that they remain appropriate and that the correct internal controls and mitigations are in place. For more information on our approach to risk management see pages 71 to 77. Our approach towards climate-related risks and opportunities can be found on pages 78 to 98. Taking a longer-term view helps the Board to assess the viability of the business over a three-year period on an annual basis. Our Viability Statement can be found on page 99. The interests of the Group’s employees Details of how we have regard to each of these and our engagement with them can be found on pages 35 to 39 and 55 to 56. The need to foster the Group’s business relationships with suppliers, customers and others The impact of the Group’s operations on the community and the environment The desirability of the Group maintaining a reputation for high standards of business conduct The need to act fairly as between members of the Company 50 Details of how we have regard to each of these and our engagement with them can be found on pages 54, 55 and 59 to 61. Details of how we have regard to each of these and our engagement with them can be found on pages 62 to 63. The Board sets the culture of the business from the top. This culture seeks to promote the right behaviours throughout the organisation in line with our values. In addition, all employees are required to understand all policies and procedures including those that look to ensure high standards of conduct. These include our policies and procedures around Health, Safety and Environment; Whistleblowing; Anti-Bribery and Corruption; Human Rights; and Modern Slavery. All of our employees participate in training sessions around diversity and inclusion and dignity and respect to better understand the behaviours that are acceptable and those that are not. We have reviewed our purpose and values during the year to further promote high standards of business conduct. The new purpose and values will be launched internally later this year and will be reported on in next year’s Annual Report and Accounts. For further information on our culture and values see page 112. Copies of our conduct policies can be found on our website at www.barrattdevelopments.co.uk/building-sustainably/our-publications-and-policies/policies. The Board is cognisant of the need to act fairly between members of the Company. Regular engagement with shareholders takes place throughout the financial year to understand their views and act in their best interests. Details can be found on pages 57 to 58. All shareholders have equal voting rights with one vote per share. We ensure that information is shared to all of our shareholders at the same time via a variety of communication channels such as our dedicated investor section on our website, postal mailings, emails and RNS announcements. In addition, all shareholders are invited to attend the Company’s AGM, either physically or virtually, where they can meet with Board members and ask questions. For those shareholders who are unable to attend the AGM, we have set up a dedicated shareholder email address barrattagm@ barrattplc.co.uk for them to submit their questions ahead of the meeting. These are answered via a Q&A document that is added to our website after the meeting. Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F The Board considers each of these factors, amongst others, when setting and implementing our strategy. In addition, as part of its decision making process it considers the current and emerging risks (both financial and non-financial) and the impact that they may have on the long-term success of the Company and the Group’s Principal Risks. The Company’s approach to Risk Management can be found on pages 71 to 77, with climate- related risks and opportunities set out on pages 78 to 98. Our stakeholders The following pages set out the engagement that has taken place with the following key stakeholders: ∙ Customers (see page 54) ∙ Employees (see page 55) ∙ Shareholders (see page 57) ∙ Sub-contractors and supply chain (see page 59) ∙ Banks (see page 61) ∙ Local communities and the environment (see page 62) ∙ Government, opposition parties and regulators (see page 64) The Board has identified each of these as a key stakeholder due to their influence on the success of our business model and our strategy and because they represent the key resources and relationships that support the generation and preservation of value in the Group. Each financial year, the Board reviews the stakeholders that it considers to be key to ensure that they remain appropriate and to ensure that they have a good understanding of their interests and how these may have evolved. The Board also looks to identify any new stakeholders whose interests may impact the long-term success of the Company and therefore need to be taken into account as part of the decision making process. For each key stakeholder we have set out: ∙ Why we engage; ∙ How we engage; ∙ Metrics – how we measure effectiveness; ∙ Interests and concerns; ∙ Outcomes of engagement; and ∙ The impact on Board decisions. How the Board makes decisions Throughout the year, the Board remained mindful of the implications that its decisions may have on our stakeholders and the potential reputational risk for the Group. This has highlighted the continual need for regular, clear and comprehensive engagement with our workforce, suppliers, shareholders and customers throughout various decision making processes to ensure that we continue to do the right thing and mitigate against matters that may potentially harm the reputation of the Group. Regular updates on the engagement undertaken and the outcomes are provided to the Board by the Executive Directors and there is an annual agenda that includes deep dive discussions on topics such as Diversity and Inclusion, ESG, Customers, and Investor Relations. Whenever possible, the Board (or members of the Board) will engage directly with our stakeholder groups. For example, the Chair of the Remuneration Committee annually engages with shareholders on Executive Directors’ remuneration in person, via video calls or through written correspondence. Feedback from this engagement is discussed by the Remuneration Committee. Any decisions or changes made as a result, are communicated to shareholders via this Annual Report and Accounts for them to vote on at the AGM (details of this year’s engagement and outcomes can be found on page 57). In addition, the Designated NED for Workforce Engagement will report back to the Board the topics discussed and issues raised at the Workforce Forum meetings and how these are going to be addressed. Actions taken as a result of these discussions are communicated back to the Workforce Forum and via the Group’s intranet in the form of a “You said, we did” notification. The Board appreciates that there may be situations where conflicts will arise between different stakeholder groups. In such circumstances, the Board will seek to understand the needs and priorities of each stakeholder group during its discussions and as part of its decision making process. It manages such conflicts by assessing shareholder and stakeholder interests from the perspective of the long-term sustainable success of the business, as is illustrated in the significant decisions examples set out on pages 52 to 53. Such actions and decisions by the Board also seek to align with the Group’s culture of customer focus, resilience and adaptability. In addition, the Board ensures that our culture encourages our wider workforce to take pride in what we do, and to do the right thing when in contact with customers, members of the local communities in which we operate, and other stakeholders. Significant decisions The main activities and decisions of the Board are set out on page 111. The following are just a couple of examples of significant decisions made by the Board, how they were made and, where applicable, how conflicts between different stakeholders were managed. Other significant decisions made by the Board are set out in the main activities section on page 111. Barratt Developments PLC Annual Report and Accounts 2023 51 Stakeholders considered: ∙ Customers; ∙ Employees; ∙ Shareholders; ∙ Sub-contractors and supply chain; and ∙ Local communities. How the Board made its decision: Management undertook a number of conversations with a variety of stakeholders ranging from employees to local authorities and the supply chain. This highlighted the importance of environmental and social sustainability to our key stakeholder groups. Five possible territories focusing on sustainability and the environment were presented to the Executive Committee for consideration, who reduced them to three. These were presented to a sub-group comprising of representatives from the Executive Committee, Group Communications and Group HR who proposed three definitions for a new purpose and values to the Chief Executive. The agreed purpose and values were then presented to the Board together with the narrative that will accompany each, in terms of the importance of each element for the Group and the alignment with shareholder expectations of the business. The Board also considered the proposed plan to launch and embed the new purpose and values throughout the business. The key risk identified by the Board was ensuring buy-in from the business to the new purpose and values. The Board suggested ways of supporting this for example using real live examples to better illustrate the values and including the purpose and values in the induction process for all employees to ensure clarity as to what is expected. The Board was mindful of the work and cost that the launch and embedding of a new purpose and values would incur on employees but was confident that Management would monitor the level of resource required and adjust as required. In addition, it was noted that the cost of this would utilise cash that could potentially be used to increase the returns to shareholders. The Board was however satisfied that the new purpose and values would promote the long-term success of the Company as it will help drive positive behaviours and result in a more inclusive and engaged workforce who are able to fully articulate what the business stands for. Accordingly, the Board approved the purpose and values and the proposed launch plan. Strategic Report G F Section 172 continued New purpose and values At its meeting in March 2023, the Board considered a new purpose and values for the Group together with a potential launch plan. The aim of this process is to deliver a fresh, memorable, distinctive and forward-looking purpose, together with a set of core values and associated behaviours that will help us deliver against it. When embedded and activated through decision making, the purpose and values will help position the Group for the next decade and will: (i) Support the Company’s ambition to continue to be recognised and understood as a leader, differentiated from others within the sector; (ii) Enable leaders and employees to articulate with consistency what we stand for, and be clear about the behaviours required to enable delivery against the purpose; and (iii) Help to build trust, engagement and reappraisal across our internal and external stakeholder groups. 52 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Protecting the Group’s resilience In August 2022, the Board considered various levers it could pull to protect the Group’s resilience and to mitigate against the challenging market conditions that the business was facing as it moved into the final quarter of 2022. Share Buyback Programme During the financial year the Board kept under review opportunities for further investment in the business and prevailing equity market conditions with a view to returning excess capital to its shareholders at the appropriate time. Stakeholders considered: ∙ Employees; and ∙ Shareholders. How the Board made its decision: Management updated the Board on the Group’s capital structure to enable the Board to assess the balance between the capital requirements of the business and returning excess capital to shareholders, and continuing to maintain balance sheet strength and flexibility. In line with its Dividend Policy, the Board agreed to make a final dividend payment to shareholders for FY23, but recognised that it had the ability to return additional surplus capital to its shareholders. The Board considered the capital requirements of the business, the market backdrop, balance sheet position and shareholder expectations as part of its deliberations. The Board also took into account the advice from the Group’s corporate brokers, Credit Suisse and UBS, who confirmed that in the context of historical trading and the Group’s valuation at the time, it was economically sensible to participate in a Share Buyback programme. Other methods, such as a special dividend, were also considered by the Board, who concluded that a share buyback programme would benefit shareholders, specifically through the opportunity for increased future dividends per share on the remaining shares and would also result in an increase in earnings per share. In addition, given that many of our employees are also shareholders, they too would benefit from future dividends opportunity. Accordingly, the Board approved a share buyback programme to return up to £200m of surplus cash to shareholders during the course of FY23. Stakeholders considered: ∙ Customers; ∙ Employees; ∙ Shareholders; ∙ Sub-contractors and supply chain; ∙ Local communities; and ∙ Government, opposition parties and regulators. How the Board made its decision: At its meeting in August 2022, the Board received a trading update from Management which signalled a possible slowdown in the market. Given the cyclicality of the business, the Board were cautious about taking any immediate action and agreed to monitor activity on a month by month basis. During this period, the Board considered actions taken during previous downturns to see if any were relevant to the current circumstances, compared our recruitment headcount plans against our target operating model to ensure that we continued to have the right organisational structure and levels of resource in place and assessed our business plan against developments in the market. As the uncertainty in market conditions continued, Management recommended the following actions to the Board: ∙ to restrict the acquisition of land to those divisions without a sufficient land bank, where there was a commitment to buy the land and paused new investments; ∙ to introduce a recruitment freeze other than for critical roles; ∙ to reviewed both overhead and non-overhead costs to identify potential savings; ∙ to increase focus on driving leads and appointments through higher incentive levels and more specific marketing activity; and ∙ to slow down the build rate to align it with the sales rate to avoid having too much work-in progress. The Board were at all times aware of the potential impact that their decisions would have on various stakeholders. For example existing employees would need to undertake roles for colleagues who were not being replaced; sub-contractors and the supply chain would be losing out on work and orders respectively. The Board was however satisfied that the actions they were taking would promote the long-term success of the Company. Less expenditure on land would help preserve the Group’s cash balance and the increased marketing activity and incentives would hopefully appeal to more customers and drive sales. Accordingly, the Board agreed to implement each of the actions recommended by Management. Barratt Developments PLC Annual Report and Accounts 2023 53 Strategic Report G F Stakeholder engagement Engaging with our stakeholders Stakeholder engagement is an important part of our operations. The Board is appraised of the feedback received and takes this into account when making decisions that may impact our stakeholders either collectively or individually. Customers Why we engage Customers are at the heart of everything we do. Without them there is no business for us to operate. It is imperative that we understand their needs and adapt our business processes and product accordingly. For value for our customers see page 30. How we engage We utilise different channels of engagement with our customers depending on the information that we are trying to gain or provide. Company engagement We ask for regular feedback from our customers directly through Trustpilot, and both the 8 week and 9 month National New Homes Customer Satisfaction surveys to help us make improvements to our service and their home buying journey. We have continued to engage with our customers on cladding and fire-safety to address any of their issues and concerns. We continuously update our website with up-to-date information about Barratt: where we are building, our key credentials (such as sustainability and energy efficiency) and ways in which we support our customers in their search for one of our high quality homes. We also provide customers with guidance on home and garden maintenance. Social media community management and social listening provides two-way engagement across a range of channels. We monitor key social media platforms and review sites to identify comments of both positive and negative sentiment. We engage where appropriate to develop a positive social community, address customer issues and advocate our brands. We have an established customer and insight programme that helps us stay engaged with our customers and deliver action led insights. We involve our customers and those in the market to buy a new home in research to understand their perceptions and preferences on matters such as the cost of living crisis, how they search for their new home, our brand positioning, our product, and their living preferences. We also review the specification of future homes to aid decision making and future business planning. We collect insight to understand customer awareness of sustainability within housebuilding, specifically around energy and water efficiency and changing legislation, and how this impacts their buying decisions. This is done through the use of quantitative and qualitative research methods reaching thousands of customers in any one year. We know from our research that expectation from low carbon homes is high. Three quarters of those in market expect new build properties to include features that make them as energy efficient as possible, and the desire for this technology remains high. For example, we are collecting insights on our our first gas-free site, Delamare Park, to gain direct feedback from customers living with the technology required to meet The Future Homes Standard, as well as detailed technical monitoring, which will continue to feed into our design and planning decisions. Through engagement with our customers we have determined new ways of helping them better understand the cost savings they can achieve through purchasing a new build home (see page 31 for further details) and introduced new incentives and selling schemes to help them with affordability challenges (see page 30). Board level engagement The Group Customer and Change Director, Jeremy Hipkiss, updates the Board annually on actions taken to engage with customers and the outcomes of such engagement, as well as providing insight on what else could or should be done. During the year, Katie Bickerstaffe, one of our Non-Executive Directors, continued to support the review and enhancement of the customer journey by bringing insight from her Executive role. Metrics – How we measure effectiveness The following metrics are reported to the Board by the Chief Executive and/or the Group Customer and Change Director to enable it to consider and agree what, if any, changes to make in how and when we engage with our customers: ∙ 8-week HBF National New Homes Customer Satisfaction rating – we achieved, 5 Star rating for the 14th consecutive year, meaning that 90% or more of our customers are willing to recommend us to a friend. ∙ 9-month NHBC National New Homes Survey rating measures the satisfaction of our customers after being in their new home for a period of nine months. This is included as a metric in the annual bonus scheme. ∙ Defect resolution – measures the number of open defects and time taken to resolve. ∙ Complaint resolution – looks at the formal complaint volumes and resolution timescales. ∙ Trustpilot scores – provides genuine feedback from customers about their buying and service experiences – for FY23 we were 4.4 for Barratt and 4.3 for David Wilson Homes (FY22: 4.3 for both brands). ∙ Open rate for our seasonal newsletter emails to customers was 29.9% with click through rate at 7.65%. ∙ Customer research and insight. 54 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Interests and concerns During FY23, the key interests and concerns of our customers remained focused on the cost of living, particularly running costs, energy efficiency and removing financial barriers to entering the market. Access to green open space remained a priority, as well as an appetite for sustainable homes. Outcomes from engagement We constantly look to improve in response to any feedback or information from our customers. During FY23 our marketing plans focused on communicating the benefits of our homes to our customers, focusing on the cost savings associated with our energy efficient homes, how we are designing homes to support flexible living and the changes being made due to the requirements of the Future Homes Standard. We continued to engage with lenders to encourage mortgage product innovation to support affordability challenges and improve mortgage products, process and criteria for our customers. Effect of engagement with customers on Board decisions The Executive Committee continued to drive defect and complaint resolution across the divisions and issued revised policies and procedures to ensure compliance following our activation with the New Homes Quality Board for reservations from November 2022. They also closely monitored build stage movements to ensure customers received handover of their new home within agreed timescales and agreed action plans to support those sites not selling in line with build. With interest rates rising sharply and inflation continuing to outstrip wages, affordability is a challenge for many prospective customers. In order to support customers with the challenge of affordability, particularly after the closure of Help to Buy to new business on 31st October, we have, for example: ∙ Continued to support Deposit Unlock which allows 95% lending on new build homes. ∙ Worked with lenders to promote the launch of Green Mortgages which take into account the savings from energy efficiency in affordability assessments. ∙ Reviewed the digital options available to us to engage with our customers at the earliest opportunity to establish affordability and support them on their home ownership journey. See page 30 Link to strategy Strategy key Great places Investing in our people Leading construction Customer first Employees Why we engage Without our employees we would not be able to build the high quality sustainable homes that our customers need. It is due to their hard work and commitment that we are strong, both operationally and financially. We must therefore attract, recruit and retain the best people. To do this we need to understand what matters most to them and ensure we have the right policies, processes and procedures, remuneration, as well as progression, training and development opportunities in place to support them. Engagement with our employees enables the Board to better understand the issues that are important to them and helps nurture a mutual understanding between senior management and their teams. For the value to our employees see page 35. How we engage We use a variety of channels of engagement which enable two-way interaction with employees and allow them to voice their concerns or thoughts either directly or anonymously. Company engagement Our Workforce Forum is developing into an important tool for providing insight to the thoughts and opinions of our employees and what matters most to them. In FY23 the Workforce Forum met three times, twice virtually and once in-person. We also arranged a site visit for the workforce to see the Insight House and understand the role it plays in supporting local schools to see the sustainable elements we build into our current homes. Topics discussed included hybrid working, sustainability (renewable energy and waste), the cost of living, training, development and progression, the results of our engagement survey, health and wellbeing and Executive Director and employee remuneration strategies. An overview of our Diversity and Inclusion strategy was also shared with the forum and feedback was taken on how to better reach the differing office and site teams on this topic. Employees can directly contact the Designated NED for Workforce Engagement on any matters relating to the workplace, on a confidential basis through a dedicated email address. We regularly send out emails (to Barratt or personal email addresses), newsletters, webinars and video messages to update our employees on issues that may be of interest to them, such as benefits, training, health and safety, hybrid working, sustainability and charitable giving. We have begun a programme of site visits by the HR team, to support those who spend less of their role online to ensure they are able to sign up to and receive the range of benefits available. We have established five employee networks (see page 37 for more details) and collectively they deliver an annual plan of key events and religious festivals, from webinars, book clubs and lead discussions, allowing our people to develop a wider insight and understanding of the business as well as develop a network that they can rely on. Our annual engagement survey provided great insight into the issues that matter most to our employees. Local action plans were put in place with individual functions and teams to either improve or enhance the engagement that they undertake with their teams. The Executive Committee received an analysis of the verbatim comments received to consider and address as appropriate. In 2023 we also ran a dignity and respect survey, to understand the specific issues, the results of which were shared with the leadership teams and action plans are in development. Barratt Developments PLC Annual Report and Accounts 2023 55 Strategic Report G F Stakeholder engagement continued Employees continued How we engage continued Company engagement continued We also surveyed all employees as part of our materiality assessment to understand which issues are of most importance to them. The findings will be critical to the advance of our sustainability strategy during FY24. Board level engagement During FY23, the Board received regular updates from Sharon White, the Designated NED of Workforce Engagement on the activities and discussions of the Workforce Forum, the Chief Executive on the topics discussed and decisions made by the Sustainability Committee, the SHE and Construction Director on health and safety matters, the HR Director on people strategy and diversity and inclusion, and from the Trustees of the Barratt Foundation. These updates include what engagement has taken place with our employees, the outcomes and the actions to be taken. The Board has this year reinstated its physical site visits, visiting the London and Central regions in March and May respectively. Board members received a regional update from the senior management team and met site and sales employees. Following the success of the Town Hall event in 2022, the Chief Executive, David Thomas, the Chief Operating Officer, Steven Boyes and the Chief Financial Officer, Mike Scott, held our second one in January 2023. Colleagues across the Group were able to hear directly from them and on behalf of the Board on topics such as current market conditions, the cost of living crisis, and progression and development. Employees had the opportunity to suggest, in advance, any topics they wanted to hear about and to ask questions on the day. These included hybrid working, bonuses, our plans for the future, incentives for our customers to the importance of our employee networks, our plans for offices and the performance of our share price. A full Q&A document was issued afterwards and the event was recorded for those who were not able to join on the day. Health and safety remains a fundamental priority for the business. The Chair of the SHE Committee, Chris Weston, now attends all SHE Operations Committee meetings and can make suggestions for improvement and hear first-hand the issues and challenges being faced by the teams. The membership of the SHE Operations Committee has been extended to include representatives from site. For more information on the SHE Committee see pages 133 to 136. The Board entered into a rolling three-year funding agreement with the Barratt Foundation to further engage employees with charitable giving and enable the Foundation to enter into multi-year partnerships, which employees can support and take advantage of the volunteering opportunities available. Metrics – How we measure effectiveness The following information is reported to the Board by the Chief Executive to enable it to consider and agree what, if any changes to make in how and when we engage with our employees: ∙ Employee engagement scores – provides a quantified measurement of engagement. ∙ Employee turnover – provides insight into the number of colleagues leaving the business and enables benchmarking across the industry. ∙ IIR – measures the Company’s safety performance against the national average for the same industry and provides an insight into areas of improvement to lower the rate to increase the level of safety of our employees. ∙ Diversity – helps us monitor the diversity of our workforce and inclusivity of our working environment. ∙ Gender and ethnicity pay gap – helps us ensure equality in remuneration across the organisation. ∙ Reports to the whistleblowing line – helps us ensure that we continue to do the right thing and tackle any issues in a timely and efficient manner. Interests and concerns Throughout FY23, the key interests and concerns of our employees related to remuneration, resource, training, development and progression, health and wellbeing, flexible working, the cost of living, and their own and the Group’s carbon footprint and it’s impact on the environment. Outcomes from engagement The engagement with our employees has seen significant positive movement on employee wellbeing, open communication, and reward and recognition, reflected in higher scores in these areas. We have also been able to better understand our employees areas of focus; collaboration and communication, equal and fair treatment, and customer focus. Supporting collaboration and communication has seen changes to the way we share Group information, with a number of webinars and videos to link teams throughout the business. We have extended our family policies, to ensure both parents and carers feel supported at key life stages, and reviewed our mental health first aider’s support following feedback from the Workforce forum. As part of our Diversity and Inclusion strategy we have established a network for our ethnic minority colleagues, to better understand different perspectives and created a programme of informative sessions to increase understanding of different cultures and religious beliefs. We have also updated our Diversity and Inclusion policy and established a zero tolerance approach, supported by dignity and respect training for our existing and new employees. We launched an energy efficiency campaign on our intranet site, sharing easy ways to save energy at home and in the office. The blog posts advice and tips from the Energy Saving Trust on how to improve energy efficiency, reduce carbon emissions and save money. Effect of engagement with employees on Board decisions The cost of living crisis has had a significant impact on our employees. Accordingly, the Board agreed to extend salary supplement payment of £1,000 for a further six months to June 2023. The payment was made in equal monthly instalments to each employee below our senior leadership team (95% of our employees) (see page 138). ∙ The amount of fundraising by employees – provides an insight into the level of engagement with Barratt Foundation initiatives. Other benefit improvements included the extension of our maternity and paternity leave and paid leave for carers. 56 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Strategy key Great places Investing in our people Leading construction Customer first The Board continue to provide funding to the Barratt Foundation to support the work that it is undertaking with the divisions across the business and charitable partners to further engage employees to participate in charitable giving and volunteering opportunities. See page 35 Link to strategy Shareholders Why we engage Shareholders own the Company. It is therefore imperative that we listen to what they have to say and operate the business in a way that delivers long-term value growth and sustainable returns. The Company’s reputation could be damaged and it could be prevented from attracting new investments without the full understanding and support of its shareholders. For value for our shareholders see page 11. How we engage Investors and retail shareholders appreciate contact, and whilst virtual meetings dominated during the year, we increased in-person meetings with a number of shareholders. We intend to offer both virtual and in-person meetings in the future. Company engagement: The Executive Directors and the Group Investor Relations Director follow a comprehensive programme of investor meetings and calls to discuss investors’ questions and areas of concern, particularly following the release of annual and half year results and trading updates. These included a combination of in person and virtual investor roadshows with shareholders in the UK, Europe and North America, following the Group’s final FY22 and interim FY23 results, and ad-hoc one-to-one meetings (including in-person and virtual conferences and fireside chat events) and Group investor meetings at a number of conferences during the year. The use of virtual meetings has again helped to improve our engagement with smaller institutions, regional pension funds and private wealth managers on results and non-results cycle roadshows. We continue to engage actively on our sustainability strategy. The Group Investor Relations Director and the Group Sustainability Director attended various ESG conferences and meetings and responded to incoming queries from analysts to provide insight into the Group’s activities. Key areas of shareholder focus included the Future Homes Standard and the changes this will require in the homes we build; our value chain carbon footprint and our response to the impacts of climate change; our approach to expanding our use of timber frame construction and modern methods of construction; diversity and inclusion, and modern slavery benchmarking studies. During the year two visits were arranged to see the Group’s future home development activities at the University of Salford. These visits involved presentations and tours of the Zed House and eHome2 by members of the Group Design & Technical team and were attended by more than 60 analysts, investors and advisers. We issue regular trading updates via the London Stock Exchange Regulatory News Service. These are normally published in May, July and October with our half and full year announcements in February and September respectively. Reflecting the challenging trading conditions in the final quarter of calendar 2022, we issued an additional trading update in early January, ahead of our interim results announcement, to update our investors and the analysts in a timely manner. During the year we also issued specific announcements with respect to the progress of the share buyback programme (see page 53), the signing of the Self-Remediation Terms and Contract, as well as, the Scottish Safer Building Accord, addressing necessary fire-safety issues on all our buildings of 11 metres and above, built in the last 30 years (see page 24). Finally, at the end of June, we also announced a portfolio sale of 604 future homes to Citra Living (see page 26). Our website is a valuable engagement tool and is continuously updated to reflect current information on matters such as sustainability, governance and building safety. The Company Secretarial team, together with the Company’s Registrars, have engaged with various retail shareholders and dealt with enquiries relating to their shareholdings or other information requests. The Company Secretary normally notifies the Chairman and the Chief Executive of any areas of concern or importance raised by retail shareholders. No such queries were raised during the year. We continue to encourage retail shareholders to request digital communications, in support of our work to enhance our sustainability credentials and reduce our carbon footprint as well as setting up dividend mandates, to enable them to receive their dividends faster and more securely. Board level engagement: The Chief Financial Officer, the Company’s brokers and the Group Investor Relations Director update the Board on a regular basis on the Company’s investor relations activities and shareholder and analyst feedback on the Group’s trading updates and interim and full year results as well as ad hoc announcements, to ensure that all Directors are aware of, and have a clear understanding of, the views of our major shareholders. All Board members are available at the AGM to answer questions submitted in advance (by post or via email to agmquestions@ barrattplc.co.uk) or on the day. Shareholders can attend in person or via a live webcast. The Chief Executive also updates shareholders on the Group’s performance and activities during the year. The Notice of AGM is circulated to all shareholders at least 20 business days prior to the meeting. All resolutions are voted on by way of a poll. In May 2023, the Remuneration Committee Chair consulted with major shareholders and proxy voting agencies on the Group’s FY23 remuneration outcomes, the Remuneration Policy and its implementation in FY24 (see page 138). The Chairman, the Senior Independent Director and other Non-Executive Directors are available to attend meetings with major shareholders to gain an understanding of any issues and concerns. Following her appointment on 1 June 2023, Caroline Silver, our newly appointed Chair, met with a number of our shareholders to gain a better understanding of their interests and concerns. Barratt Developments PLC Annual Report and Accounts 2023 57 Strategic Report G F Stakeholder engagement continued Shareholders continued Metrics – How we measure effectiveness The following information is reported to the Board by the Chief Executive and the Group Investor Relations Director to enable it to consider and agree what, if any, changes to make in how and when we engage with our shareholders: ∙ Share register movements – provides insight into the number of shareholders buying or selling shares in the Company. ∙ Results of qualitative investor feedback – helps to improve engagement and understanding of key interests and concerns. ∙ The number of meetings attended – shows the level of engagement led by the Company. In FY23 the Executive Directors, supported by Senior Management, attended 169 investor meetings (FY22: 155), 131 one-to-one meetings (FY22: 137) and 38 Group meetings (FY22: 18) engaging with around 46.6% (FY21: 45.6%) of shareholders (by shareholding value). Interests and concerns The key areas of interest and concern for our shareholders included: The impact of significant changes in homebuyer demand due to inward migration, the war in Ukraine and the cost of living and mortgage rates on the private reservation rate during the year. On capital allocation, shareholders have sought to understand more, both with respect to the Group’s future dividend policy in combination with the potential, over the short but also medium term, to return additional surplus capital. Sustainability matters, notably, the potential impact of the Future Homes Standard, the Zed House and eHome2 projects and details around our value chain emissions and our strategy to mitigate the impacts of climate change. Our approach to human rights and Modern Slavery, our developing diversity and inclusion strategy, the gender and ethnicity pay gaps, and our commitment to paying the real Living Wage. Increased understanding as to the speed with which we can deliver new product innovation into the homes we build; the ability for customers to pay a premium for such improvements; and the lessons being learnt on the incremental costs looking to the Future Homes Standard changes in 2025. The impact of signing the remediation terms in England on legacy properties on the financial position of the Group. Outcomes from engagement Shareholders have been kept informed through timely and clear disclosure of the private reservation rate, as well as the transparent detailing of the contribution from alternative sales channels. Our engagement also gave investors the opportunity to share their views on the relative merits of ordinary dividends and potential returns of surplus capital either by way of special dividends or through buybacks. The visits to the Zed House and eHome2 projects allowed investors and analysts to see the prototypes and the new technologies being tested as well as ask questions of the Group Design & Technical team. The Group enhanced its regular investor presentation materials to include additional details around our sustainability actions and targets and the various issues on which shareholders and wider stakeholders wished to increase their understanding. Effect of engagement with shareholders on Board decisions The Board gained further understanding of shareholder expectations in respect of ESG matters, particularly climate change risks and opportunities, following our publication of TCFD disclosures in the FY22 Annual Report. Reflecting additional shareholder feedback, the Board has included further development around our TCFD disclosures in this Annual Report and Accounts (see pages 78 to 98 inclusive), as well as reaffirming its commitment to developing future investor communications which increasingly integrate ESG related issues with financial and operational performance. The Board periodically reviewed the Group’s ordinary dividend policy in combination with potential returns of surplus capital, following on from the £200m buyback effected during FY23. In principle, the Board continues to believe that excess capital should be returned to shareholders when it is appropriate to do so. Whilst the Company remains in a strong financial position, the UK housing market remains difficult and the outlook remains uncertain. We have therefore agreed that whilst our reduction in dividend cover to 1.75 times will apply from FY24 as planned, there will be no further share buybacks at this stage. See page 11 Link to strategy 58 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Strategy key Great places Investing in our people Leading construction Customer first Sub-contractors and supply chain Why we engage Without our sub-contractors and supply chain we would not be able to build high quality, sustainable products at the volume expected by the market. It is therefore important for us to build relationships with them to secure continuity of supply of materials, support our productivity levels, manage costs of materials and sourcing alternative suppliers and avoid undue delays in construction. We must have a good understanding of what they expect from the Company in return for their continued support. For value for our sub-contractors and supply chain see page 46. How we engage The following methods of engagement give us the opportunity to speak to sub-contractors and our supply chain as a group which ensures consistency in the messaging and opportunity for networking and sharing ideas and best practice. Individual meetings allow us to focus on specific areas or issues relevant to that stakeholder. Company engagement: We held our annual Supply Chain conference in person in March 2023. It was attended by 120 of our key Group suppliers. We shared our immediate and medium-term plans and thoughts on the role our suppliers can play in helping us to achieve our objectives, including the reduction of Scope 3 carbon emissions, and gained an understanding of the issues they were facing and how we could support them. We shared relevant demand forecasting information with all key material suppliers to enable them to ensure appropriate manufacturing capacity is available to meet our requirements. We continue to support suppliers in the completion of our Supplier Sustainability Maturity Matrix to drive progress and develop shared solutions in the priority areas of carbon, waste, modern slavery, and governance. This was created with the Supply Chain Sustainability School, of which we are a Gold member, to inform and shape the provision of targeted learning and training resources. In support of this, we have built on the waste reduction workshop we held with a cross section of suppliers in 2022 and continue with one-to-one meetings to discuss the use of alternative packaging and fuels such as electricity, HVO and hydrogen. A key area of focus is working with our highest emitting suppliers and sub-contractors to better understand our Scope 3 emissions and how we might be able to help to reduce them. More information was requested from an expanded pool of suppliers, including an understanding of their carbon reduction strategies. Further information can be found on page 92. Our divisions held sub-contractor and supplier days to discuss local business plans and “Thank you” events to show our appreciation for their continued support. We have had some engagement with our brick suppliers to reduce plastic packaging, with initiatives leading to significant reductions in waste generated, with longer term strategies now being implemented by suppliers. We have also started working with a packaging design consultant (Valpak), who will be engaging with our supply chain to advise on potential alternatives that may reduce waste or improve recyclability. Board level engagement: Members of the Board attend the Supplier Conference (the Chief Executive, the Chief Operating Officer, and the Group Sustainability Director all presented). The Chief Operating Officer provided an update on the supply chain and sub-contractor performance at each Board meeting The Group Procurement Director is invited to attend the Board or the Audit Committee to directly answer any queries members may have. Barratt Developments PLC Annual Report and Accounts 2023 59 Strategic Report G F Stakeholder engagement continued Sub-contractors and supply chain continued Metrics – How we measure effectiveness The following information is reported to the Board by the Chief Operating Officer and/or the Group Procurement Director to enable it to consider and agree what, if any, changes with our sub-contractors and supply chain: ∙ Feedback received from a survey following the annual conference to help improve the conference in the following year. ∙ Availability of materials and services to support our build delivery programme despite shortages and/or challenges in the industry. ∙ Supplier performance data, captured via our Supplier Relationship Management Portal and Quarterly Divisional supplier performance feedback process. ∙ We maintain a dynamic supplier risk management assessment matrix to identify potential future issues and plan mitigating action. ∙ Supply Chain Sustainability School Membership – assesses the number of our sub-contractors and suppliers signing up as members to show their commitment to upskilling their employees in areas such as sustainability and diversity and inclusion. Interests and concerns The key interests and concerns of our sub-contractors and supply chain related to the health and safety of their employees whilst working on our sites, modern slavery, living wage and our actions and progress in respect of our sustainability and carbon reduction strategies and initiatives. Given the current cost of living crisis, it is not surprising that our sub-contractors and supply chain are concerned with being paid in a timely manner. Details of our prompt payment practices can be found on our website. In addition, our sub-contractors are concerned with the availability of materials given the rise in build cost inflation. No materials will mean no work for them on our sites. Outcomes from engagement We have received positive feedback regarding our leadership on sustainability issues ranging from carbon and waste to our commitments on modern slavery and the real Living Wage. We closely monitor our prompt payment performance to ensure we are supporting our partners. We have established long-term relationships with our sub-contractors and suppliers which 60 have helped to ensure delivery and performance standards are mutually understood and have also enabled us to secure materials to support build requirements during a period of shortage of certain components. It has also helped us gain a better understanding on the availability of carbon emission data, and the challenges associated with reporting this data. The majority of our suppliers have now completed the Supplier Sustainability Maturity matrix with 87% of suppliers completing the assessment and 52% of target badges having been met. Suppliers completed the Supplier Sustainability Maturity Matrix 87% Effect of engagement with the supply chain on Board decisions Engagement with sub-contractors and the supply has given the Board a better understanding of the challenges they are facing in respect of collating the emissions data to enable our business to better measure our scope 3 emissions. The Board therefore agreed with the Remuneration Committee that to allow our sub-contractors and the supply chain more time to implement and embed their processes to collect the relevant data, scope 3 emissions should not be included in the sustainability metric for the 2023 LTPP. The Board, guided by the Remuneration Committee, will reconsider this for the 2024 LTPP. In addition, hearing that the uncertain market conditions were causing a number of sub-contractor and supply chain firms to cease trading, the Board requested Management to ensure that those that support us are paid promptly. See page 46 Link to strategy Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Banks Why we engage We need sufficient finance and working capital to settle liabilities, manage working capital, respond to changes in the economic environment, and take advantage of appropriate land buying and operational opportunities to deliver strategic priorities. In addition, it is important to understand the banks’ views on the market and their risk appetite for lending as well as identifying ways in which the parties can collaborate to support mutual customers. How we engage The following methods of engagement are effective in ensuring continued mutual understanding of our respective businesses and of the services the banks can provide to us and to our customers. Company engagement: The Chief Financial Officer and Group Treasurer regularly engage with each of the banks in the RCF and USPP investors, including calls after each trading update and two site visits each year. Additional calls and meetings were held as appropriate throughout the year. We worked closely with the Banks to amend our existing RCF to a Sustainability Linked Loan which includes sustainability linked performance measures, aligned with our Building Sustainably strategy. The Head of Treasury has a schedule of regular diarised calls on a one to one basis with the Relationship Director of each of the banks who participate in the RCF. Our Head of Mortgage Lender Relations held regular meetings with the top 10 mortgage lenders, some of which are supported by the Executive Directors. In order to support customers with the challenge of affordability, particularly after the closure of Help to Buy to new business on 31 October, we have, amongst other things: ∙ continued to support Deposit Unlock which supports 95% lending on new Build homes; ∙ worked with lenders to promote the launch of Green Mortgages which take into account the savings from energy efficiency in affordability assessments – reviewed the digital options available to us to engage with our customers at the earliest opportunity to establish affordability and support them on their home ownership journey; and ∙ convened an industry forum for the top five surveying firms, supported by the HBF and the Future Homes Hub, to collaborate regarding changes required by the Future Homes Standard. Board level engagement: During the year, key meetings with members of the RCF and USPP investors were supported by the Executive Directors and members of the Executive Committee and have included site visits and other face to face meetings. The Chief Financial Officer and the Chief Executive provide regular updates to the Board on engagement activities with the RCF banks and mortgage lenders and on any actions being taken as a result of the information received. Metrics – How we measure effectiveness The banks’ willingness to engage with us and discuss new opportunities to support us and our customers is the key metric that is reported to the Board by the Chief Financial Officer to enable it to consider and agree what, if any, changes to make in how and when we engage with our banks. Strategy key Great places Investing in our people Leading construction Customer first Interests and concerns The key interests and concerns of our banks identified related to our progress with our sustainability strategy in particular energy efficient homes, the potential for a sustainability linked RCF, and the viability for green mortgage products and new high loan to value lending products for our customers. Outcomes from engagement Engagement with our banks has given us the opportunity to discuss the market environment and recent trends as well as our latest results. It has also enabled the banks to broaden their understanding of our business and how we operate, as well as the sustainability and environmental challenges, particularly around climate risk and carbon mitigation, facing the business, what we are doing to address these and what they can do to support us and our customers. This engagement enabled us to agree the sustainability linked performance measures in the RCF with the banks. We have engaged with a broader range of mortgage lenders, allowing customers to access mortgage products that are most suitable for their needs. Both parties have gained a greater understanding of each other’s priorities and agreed overlapping objectives, with a view to evolving improved lending terms for energy efficient homes. The strong engagement with Lloyds Bank has enabled strategic partnership to be created with Citra Living, a subsidiary of Lloyds, with Barratt selling a portfolio of homes to Citra, where they will retain ownership of the homes and rent them out acting as a corporate landlord. Effect of engagement with banks on Board decisions The Board was mindful that with the impending end of Help to Buy, large numbers of our customers may struggle to gain the financial support that they need to purchase their new home. The Board therefore agreed to support the launch of Deposit Unlock (see page 30) and explore alternatives to Help to Buy. See page 31 Link to strategy Barratt Developments PLC Annual Report and Accounts 2023 61 Strategic Report G F Stakeholder engagement continued Local communities and environment Why we engage It is important for us to engage with the local communities in which we build to ensure that we are responding to local needs and are able to create value whilst considering the impact that our business has on the local environment and the use of natural resources in our build process. We need to protect habitats and resources as we focus on creating sustainable homes. Regular and open engagement helps ease the whole build process, in particular planning, as it mitigates against objections from members of the community which could lead to undue delay and increased costs. How we engage We use a range of engagement methods to enable the local communities to better understand how we can benefit them and how we will protect the local environment around them. Details of how we engage with each of our key stakeholders on the environment and other sustainability matters can be found in the respective sections on pages 54 to 65. Company engagement: To ensure that community needs and considerations, including impact on the local environment, are taken into account at the earliest stage of the development process, we hold meetings and site specific consultations which all local residents are welcome to attend. We also hold in-person and virtual public exhibitions as well as regular meetings with other national and local organisations who are key to enhancing our environmental impact. These include parish/town councils, local planning authorities, environmental regulators, Local Water Authorities and Natural England. At these meetings we consult and seek views on our plans and look to incorporate the feedback we receive. We pay particular attention to residents’ concerns about how our activities might impact the natural environment. We frequently share the contact details of site managers with relevant figures at the local parish council, to allow them to be contacted quickly and any issues with construction to be rectified. 62 We work closely with local schools, to emphasise the importance of site safety and to keep everyone safe. This also teaches children about the construction process, the careers available, and the initiatives that we have implemented to create sustainable homes and places to live, such as through the interactive Insight House on our Heritage Grange development in Warwickshire (see page 55). Those that we engaged with can provide feedback through a multitude of channels both online and offline. A dedicated project website is often set up to provide information and updates for local residents and interested parties. We write to inform the local community of upcoming works that have the potential to cause disruption, such as highway and infrastructure works. On many sites we distribute a quarterly newsletter update on development progress so the local community can see what is happening in more detail and have forewarning about any disruptions. We use signage in and around our sites to demonstrate our credentials and the value that our activities bring to local communities. We highlight the number of jobs and businesses supported, amount of green space created and retained, and section 106 contributions to local infrastructure and services. New developments are publicised in the local press, as are positive news stories about our beneficial activities and impacts of our developments. We have a network of seven PR agencies promoting the business to national, regional and local media. We promote the resilience and sustainability credentials of our homes to the wider community to demonstrate the reduced impact they have on the natural environment at a local and a global level. The Barratt Foundation continues to grow, increasing its charitable activity by entering into a number of partnership agreements (see page 25 for more details). The Barratt Foundation team have been engaging with our divisions to support them with their charitable giving and creating volunteering opportunities with its national partners for our employees. Board level engagement: The Chief Executive and the Chief Operating Officer keep the Board appraised of any local issues that have been identified and have the potential to escalate into a wider matter that may impact the business as a whole. There are also two updates a year from the Group Construction and SHE Director as well as regular updates from the Sustainability Committee. The Board also receives an update from the Barratt Foundation twice a year including the impact our donations are having on our local communities and the protection of the environment. Metrics – How we measure effectiveness The following information is reported to the Board by the Chief Executive and/or Chief Operating Officer to enable it to consider Continued support for Deposit Unlock, supporting 95% lending on new homes 95% Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F “ This is one of the most helpful companies I've ever dealt with, the staff are absolutely lovely and are really thorough and invested at getting you the best deal.” Jasmine and Kim, Barratt customers and agree what, if any, changes to make in how and when we engage with our local communities: ∙ The extent of local opposition to our developments. ∙ The level of planning appeals – 95% of the units we build are approved at a local level and do not require a planning appeal. ∙ The amount donated to, and the feedback from, charities that we have supported and the impact we had. Interests and concerns The key interests and concerns of our communities relate to our local, regional and national socio-economic footprints, our impact on the environment and the availability of green spaces, disruption during construction of our developments including noise and air pollution, the safety and protection of members of the community around our developments, the impact of development on the local population, and the potential for knock-on pressures on the supporting infrastructure and the impact of the development on the environmental resilience of the landscape, including on biodiversity, public green space and flood resistance. Outcomes from engagement Our engagement with the local communities in which we operate has enabled us to better understand their needs and to develop a positive legacy from building great places to live, with the facilities that will help the local community thrive. It has allowed us to connect with local schools and families to share key messages such as how we keep people safe and how they can protect themselves. We evaluated the actions that our supply chain undertakes on environmental matters and how we can positively partner with them to drive improvements. We have set internal targets to reduce waste from our construction process and are considering alternative fuels to diesel for plant and other equipment with our supply chain. The protection of the environment is a key area of concern for the local communities in which we operate. We therefore aim to be mindful of our impact on the environment in everything that we do and have put in place steps to support this. We are accredited to ISO 14001 which demonstrates that we have robust policies and procedures for environmental management. We are also externally audited across all our business units. Our comprehensive Impacts and Aspects Register enables us to consider any areas where improvements can be made. Strategy key Great places Investing in our people Leading construction Customer first All our Safety, Health and Environmental team are individual members of the Institution of Environmental Management and Assessment and provide support and guidance to our Divisional teams in managing site based environmental aspects and impacts. We have a team of sustainability practitioners who assist with considering our wider business environmental and carbon impacts and drive improvements across our business. We have put in place environmental and surface water management plans for all our developments which are monitored by our Divisional Management teams and SHE Managers. We expect our construction teams to continually assess the controls and ensure that we focus on these and the use of resource. Our SHE Managers record levels of compliance as part of their regular reviews. We have a specific monthly monitoring process which focuses on the environmental impacts on site and, in particular, controls to prevent contamination of any adjacent watercourse. We have set stringent science-based targets for carbon emissions and have a target in place for all homes to be zero carbon in use (regulated energy) by 2030. We are also committed to enhancing biodiversity on every site and have a target in place to demonstrate a minimum biodiversity net gain of 10% across all development designs submitted for planning from 2023. During FY23, each of our divisions donated £1,500 per month to a different charity that supports the local community within the areas in which we operate. In addition, divisions are encouraged to raise funding for local charities and utilise the match funding available from the Barratt Foundation. During FY23, our colleagues and divisions raised over £1.3m for good causes, the most raised in any one financial year. The number of volunteering days utilised also increased in FY23, with 892 employees supporting local charities through various activities ranging from painting schools to tidying up gardens and cleaning beaches. Effect of engagement with local communities and the environment on Board decisions We monitor and report our impact publicly across a range of environmental indicators, including carbon emissions, water usage, waste generation, environmental incidents and prosecutions. The Board, through its Remuneration Committee, utilises this information to determine appropriate non-financial metrics for both our short- and long-term incentive schemes. The Board are keen to ensure that the Group continues to support and enhance the local communities in which it operates (and that we support them as much as we can). The Board entered into a three-year rolling funding agreement with the Barratt Foundation enabling it to engage in multi-year charitable partnerships and have a real positive impact on the communities in which we operate. See page 25 Link to strategy Barratt Developments PLC Annual Report and Accounts 2023 63 Strategic Report G F Stakeholder engagement continued Memberships Many of these meetings are organised by various organisations of which we are a member, or workstreams to which we contribute. We were invited to join the Government’s Energy Efficiency Taskforce, Net Zero Council and Green Jobs Delivery Group, were members of Climate Change Committee’s Business Advisory Board and contributed to the Rt Hon Chris Skidmore MP’s review of net zero. The Group supports the Energy Efficiency Taskforce on policy development, including the creation of a long-term cross sector roadmap to net zero with clarity on targets and standards, growing consumer confidence, a green finance framework and net zero skills. We also continue to inform Government on sustainability issues as well as providing leadership and expertise to the Future Homes Hub, a joint industry and Government initiative, designed to deliver a whole industry transition to net zero. David Thomas, our Chief Executive, was appointed as chairman of the Future Homes Hub and our Group Head of Biodiversity is Chair of the Future Homes Hub’s Biodiversity Net Gain working group. Our Group Sustainability Director sits on the Climate Change Committee’s Advisory Group on Business – a group convened to share the different ways in which UK businesses can accelerate progress towards net zero. The group has published a new report which looks at how we successfully transition to a net zero economy. At the centrepiece of this is a recommendation that a partnership with Government is urgently needed to meet the UK’s commitment to be net zero by 2050. Housebuilding is suffering from a severe skills shortage. The CITB estimates that almost 200,000 extra workers1 are required to build the homes the country needs between now and 2027. Many EU workers have left the UK in the wake of Brexit and the pandemic. As part of our role on the Green Skills Taskforce and through our membership of the Future Homes Hub, we are working with Government to ensure that the necessary skills and workforce are available as we scale up to building zero carbon homes at scale. A key area is to provide support to those currently working in high carbon industries, enabling them to retrain into a high quality, long-term green career, as a key component of a just transition. We are also working with manufacturers and our trades to ensure that specialist training is in place so that we are in a position to scale-up delivery of new technologies such as solar panels. Conferences Key to our engagement is the party conference seasons in the autumn. This year, David Thomas attended panel events hosted by the RSPB and the NHBC, alongside the then-Housing Minister Lee Rowley. At the Labour Conference, Bukky Bird, Group Sustainability Director, attended a series of meetings, including the Labour Business Forum events. At both conferences representatives from the Corporate Affairs team and other business functions held further meetings with party representatives. Site visits Site visits are an important strand of our stakeholder engagement, as they enable us to demonstrate the quality of our developments first-hand. During the year we welcomed the Leader and Deputy Leader of the Labour party to our Centurion Village development near Preston. We also hosted a number of stakeholders to the Zed House and Energy House 2.0 projects, including the Mayor of Greater Manchester Andy Burnham, and the author of the independent review of net zero, Chris Skidmore. 1 Construction Skills Network Outlook 2023 – 2027. Government, opposition parties and regulators Why we engage The government is responsible for creating the legislative environment in which we operate, which is enforced by regulators. Opposition parties can influence this environment through their scrutiny of government and by proposing alternative approaches. They may also form the next government. We engage with these stakeholders so that they understand the challenges facing the business, and the likely implications of any current or proposed policies, and so that we understand what future policy is likely to be and how it will be implemented. We also emphasise our positive credentials and build positive relationships to ensure we are well-regarded by these stakeholders and are able to contribute constructively to policy development. How we engage We engage with ministers, MPs and regulators through a range of channels. Company engagement: Meetings Senior representatives from the business regularly meet with political stakeholders. During the year David Thomas met with the Chancellor to discuss the economy, the Secretary of State for the Department of Levelling Up, Housing and Communities (DLUHC) to discuss the impact of planning reform, and a number of Housing Ministers. We also hold regular meetings with key representatives from DLUHC and other government departments like the Treasury, Department for Environment, Food and Rural Affairs, Department for Energy Security and Net Zero and the Department for Business and Trade. We have also engaged in ongoing discussion with policy representatives from the Labour party, with the Chair and Chief Executive attending meetings with the Leader of the Opposition, Shadow Chancellor and other relevant Shadow Ministers. We have also provided evidence to the House of Lords Built Environment Committee. We continue to raise concerns with Government and opposition parties on the disproportionate impact of nutrient neutrality policies on new housebuilding. The housebuilding industry is engaging positively with Government to find a solution, including credit schemes and other approaches to mitigation, to unlock housebuilding in areas where water treatment works may not be upgraded until 2030. 64 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Strategy key Great places Investing in our people Leading construction Customer first Letters We also regularly write to our political stakeholders, to showcase our positive credentials and to directly explain our positions on certain issues. We wrote to 81 MPs who had one of our 98 Pride in the Job-winning site managers in their constituencies, resulting in nine site visits. We also wrote introductory letters to each of the four new housing ministers and three Secretaries of State we saw during the year, as well as other new ministers. Complaints On the rare occasion that customer complaints are elevated to the point that they feel the need to contact their MP, the relevant Regional Managing Director will investigate the issue and prepare a response with the assistance of the Corporate Affairs team. Oversight of any such issues is maintained by the Group and used to inform the ongoing stakeholder engagement strategy. Consultations Much of our contribution to policy development comes in the form of responses to government consultations, which are prepared by the relevant Group functions with assistance from the Corporate Affairs team. This year Government consultations responded to by the Group included those on the forthcoming Building Safety Levy, changes to the National Planning Policy Framework, the requirement for two staircases in new high-rise buildings, increases in planning fees, and the Infrastructure Levy. CMA We continue to co-operate with the Competition and Markets Authority’s study into the housebuilding market. Board level engagement: At each Board meeting the Chief Executive provides an update on engagement with policymakers and regulators, covering knowledge gained and any potential impact on the business. This information is also regularly provided by the Group Corporate Affairs team. Metrics – How we measure effectiveness The following information is reported to the Board by the Chief Executive to enable it to consider how we engage with government and regulators and what, if any, changes to make: ∙ The business’s political engagement strategy – to ensure we are engaging with the right people to fully understand any policy changes and effectively communicate our key messages in line with our broader strategic aims. ∙ A comprehensive overview of our engagement with key political stakeholders, including meetings, site visits, mutual attendance at events, correspondence and public statements, so that we can track our relationships with our key stakeholders and assess the progress of our engagement strategy. ∙ Our responses to Government consultations and emerging legislation on relevant policy areas, such as the Building Safety Levy, Infrastructure Levy, and draft changes to the National Planning Policy Framework. We assess the extent to which policy and legislative outcomes accord with our representations to policymakers. Supply and planning – how to reconcile the desire to build 300,000 homes a year with political opposition and the wider levelling up agenda. Sustainability – how to reduce carbon emissions and protect the natural environment while achieving energy security and growing the economy. Inflation – the impact of increases in the cost of living and their knock-on impacts on interest rates, mortgage costs, house prices, employment and GDP growth. Quality – making sure new homes are built to the highest quality and consumers are protected should things go wrong. Building safety – addressing defects in historic buildings, making sure the costs of doing so are borne by parties across the industry, and promoting trust in the new regulatory regime. Skills – ensuring there are enough workers to build the homes the country needs, and that people have access to training to build the energy efficient homes of the future. Outcomes from engagement Our engagement with government, opposition parties and regulators has helped us build positive relationships with key figures, so that we can continue to be involved and inform conversations about the future of housing policy. Our continued positive engagement has meant we are frequently the housebuilder of choice for officials seeking a representative of the sector. It has helped us to understand upcoming policies and the broader operating environment, and to influence any proposed changes through meetings with key figures and responses to government consultations. Meetings with Ministers and MPs helped us understand the drivers behind proposed changes to government planning policy, while meetings with senior opposition ministers saw us emphasise the value of housebuilding sector for the economy and the country’s social fabric. We have also improved our reputation with those key stakeholders by showcasing the good work we do, which helps ensure our perspective and the impact on the industry is understood and taken into account when developing future policy. This enables us to explain the challenges facing the sector, and the opportunities it can provide, so that future policy can support new housebuilding and avoid adverse outcomes. Visits by MPs to Pride in the Job award-winning sites enable us to demonstrate first-hand the positives of our activities. Effect of engagement with Government, opposition parties and regulators on Board decisions Engagement with key political stakeholders assists the Board in understanding the risks and opportunities presented to the business by changes to the operating environment, allowing them to make decisions in line with the strategic interests of the business. The Board signed the Developer Remediation Contract following extensive engagement with Government. The Board has also gained knowledge of how evolving housing policy can impact the housing market at a local and national level, and therefore affect land bids which enables it to consider if the process and policies in place remain appropriate. Interests and concerns Some of the key areas of interest and concern to Government and regulators are: See page 24 Link to strategy Barratt Developments PLC Annual Report and Accounts 2023 65 Strategic Report Strategic Report G F Chief Financial Officer’s review Robust performance The Group is in a very strong position with substantial net cash, and an excellent forward sales position and land bank. Our financial results have reflected the change in market demand, triggered by the Fiscal Event in September 2022 and subsequent higher interest rate environment. FY23 saw a sharp contrast between our first half performance, which reflected the strength of our forward order book and robust house prices coming into the financial year and the second half, which reflected reduced reservation activity, an adjustment in achieved home prices and slower construction activity against a background of mortgage interest rate uncertainty. Our performance reflects the flexibility and resilience of our operating model which is supported by a strong balance sheet and the commitment and dedication of our employees, sub- contractors and supply chain partners in what has been a challenging year. “ Our performance also reflects the flexibility and resilience of our operating model which is supported by a strong balance sheet and the commitment and dedication of our employees, sub-contractors and supply chain partners in what has been a challenging year.” Mike Scott Chief Financial Officer 66 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Results to 30 June 2023 Income Statement Group revenue was £5,321.4m in FY23 (FY22: £5,267.9m) with Group wholly owned completions 4.6% lower at 16,378 (FY22: 17,162), reflecting weaker completions in the second half following the decline in reservation activity seen from September through December 2022 and the slower rate of reservations from the start of the new calendar year. Our private average selling prices increased by 7.9% to £367.6k (FY22: £340.8k), reflecting underlying house price inflation and minor changes in product and geographic mix, as well as the dilutive impact of PRS growth. The increase in the average selling price of our wholly owned completions was 6.5% to £319.6k (FY22: £300.2k). The lower increase reflected a greater proportion of affordable homes which accounted for 23.9% (FY22: 22.3%) of completions. Adjusted gross profit reduced by 13.6% to £1,130.4m (FY22: £1,308.1m), with the adjusted gross margin reducing by 360 bps to 21.2% (FY22: 24.8%). The reduction in adjusted gross margin reflected the impact of build cost inflation during the financial year and the dilutive effect of completion volume decline, which reduced incremental fixed cost efficiency. In FY23 our contribution margin was c. 32% (FY22: c. 34%) after land and direct build costs. Movements in operating margin in FY23 After operating adjusted items, totalling £155.5m (FY22: £408.2m) relating to legacy property costs, reported gross profit was £974.9m (FY22: £899.9m), and reported gross margin was 18.3% (FY22: 17.1%). Administrative expenses in the year were £270.8m (FY22: £256.4m). This increase included: ∙ the impact of salary increases, as well as additional salary supplements of £2,000 for employees below senior management levels; ∙ incremental costs reflecting expansion in the Group’s Building Safety Unit; ∙ the full year impact of Gladman Developments’ administrative expenses; and ∙ a further reduction of £4.5m in sundry income. After deducting administrative expenses and a modest net gain of £3.3m on part exchange activities (FY22: £3.1m), the Group delivered an adjusted profit from operations of £862.9m (FY22: £1,054.8m), with an adjusted operating margin of 16.2% (FY22: 20.0%). The 380 bps decline in the adjusted operating margin is analysed further below. 7.7% 20.0% (0.3%) (1.7%) (0.2%) (0.6%) 16.2% (0.7%) (0.3%) Increase Decrease Total 13.3% (2.9%) 12.3% 20% 15% 10% 5% 0% FY22 Reverse adjusted items FY22 Adjusted Volume impact Net inflation London mix increase Completed developments provision Mix/ other Admin expenses FY23 Adjusted Adjusted items FY23 Completion volumes The decline in our wholly owned completion volumes, with a 4.6% or 784 homes decrease, created a 30 bps negative impact (FY22: 10 bps positive impact). Net inflation Sales price inflation relative to higher underlying build cost inflation produced a 170 bps negative impact (FY22: 140 bps positive impact). London A significant increase in the share of completions from our London operations, 8% in FY23 (FY22: 6%), where margins are lower than in the regional business, resulted in a 20 bps negative margin impact. Completed developments provision Reflecting the increasingly extended time periods being experienced in relation to the adoption of roads and public space by local authorities on completed developments, an increase in this provision created at 60 bps negative margin impact. Mix and other items Changes in sales mix, increased selling costs, abortive costs in relation to land transactions no longer proceeding and other smaller items created a 70 bps negative impact (FY22: 40 bps negative impact). Net administrative expenses As detailed above, offset by the small increase in part-exchange income, increased net administrative expenses deducted 30 bps (FY22: deducted 100 bps) from the adjusted operating margin. Barratt Developments PLC Annual Report and Accounts 2023 67 Strategic Report G F Chief Financial Officer’s review continued Results to 30 June 2023 continued Income Statement continued After deducting adjusted items, on a reported basis we delivered an increase in profit from operations to £707.4m (FY22: £646.6m) and a reported operating margin of 13.3% (FY22: 12.3%). Net finance charges were £11.1m (FY22: £27.6m) reflecting increased interest income on cash balances held throughout FY23. The cash component of the finance charge was a credit of £13.4m (FY22: £8.3m cost) with non-cash charges of £24.5m (FY22: £19.3m). In FY24, finance costs are expected to increase to c. £20m reflecting a cash component credit of c. £20m and non-cash charges of £40m. The anticipated increase in non- cash finance charges reflects the impacts of the increase in legacy property provisions and the higher discount rate applied to these provisions arising from the increase in the gilt rate. Our JVs delivered adjusted profit for the year of £32.5m (FY22: £27.6m). The JV results included adjusted charges for JV legacy properties of £23.7m (FY22: £4.3m) with JV reported profits being £8.8m (FY22: £23.3m) as a result. Consequently, reported profit before tax for the year increased to £705.1m (FY22: £642.3m). The Group’s tax charge for the year increased to £174.8m (FY22: £127.1m), which included the final quarter impact of the 600 bps increase in the rate of corporation tax increasing from 19% to 25% from 1 April 2023. The tax charge comprised: ∙ A corporation tax charge on adjusted profit before tax of £188.1m (FY22: £200.8m); ∙ A full year impact of the Residential Property Developer Tax (RPDT) which equated to a FY23 charge of £26.0m (FY22: £8.8m); and ∙ Tax credits with respect to adjusted items, which totalled £39.3m in FY23 (FY22: £82.5m credit). Adjusted earnings per share decreased by 18.9% to 67.3 pence per share (FY22: 83.0 pence per share). The decline in adjusted earnings per share consisted of a 16.2% decline in adjusted pre-tax profitability, a further 5.4% impact from increased taxation, which was only partially offset by a 2.2% benefit from the reduced average count, reflecting the initial FY23 impact of the buyback. Basic earnings per share increased by 5.1% to 53.2 pence per share (FY22: 50.6 pence per share). Reflecting the decline in adjusted profitability but disciplined management of capital employed throughout the year, ROCE declined to 22.2% (FY22: 30.0%). Adjusted items Adjusted items recognised in the year related to costs associated with legacy properties and totalled £179.2m (FY22: £412.5m). Of this total charge £117.7m (FY22: £377.7m) related to future commitments in relation to fire safety and external wall systems with £51.5m (FY22: £34.8m) relating to remedial works arising from the review of reinforced concrete frames we announced in July 2020, following the issues we discovered at Citiscape. A further c. £10.0m was expensed in the second half of the year in relation to two other developments where investigations are ongoing. Fire safety and external wall systems In relation to fire safety and external wall systems, the additional costs relate to: ∙ an increase in the number of buildings within scope, from 223 at 30 June 2022 and 228 at 1 January 2023, to 278 at year end, following the signing of the Self-Remediation Terms and Contract in March 2023; and ∙ an update to cost estimates across the portfolio, reflecting the latest building material and labour cost information. This resulted in an additional provision of £172.3m prior to discounting to present value. The enlarged provision, as well as the discount rate applied to the provision, reflecting the increase in the UK gilt rate applied at 30 June 2023, resulted in a credit of £51.9m and the recognised net charge of £117.7m. In addition, we signed the Scottish Safer Buildings Accord on 31 May 2023. Industry negotiations over the legal agreement between the Scottish Government and Homes for Scotland are ongoing and there remains uncertainty around the extent of remediation required in Scotland. Existing provisions for Scotland have been made on a consistent basis with England & Wales. Reinforced concrete frames In relation to the Citiscape associated review our remediation activities continued during the year with the majority of developments proceeding in line with plan. During the second half of the year we also finalised remediation plans for the one remaining development in that review, where work is required across five buildings. Finalisation of this remediation plan, as well as ongoing remediation activities, resulted in an additional charge of £51.5m of which £21.3m related to JV legacy developments. In addition to this review, we identified two further developments where remediation work may be required. In FY23 £10.0m was charged to the Income Statement for remediation works at these developments, including a JV charge of £2.4m. Of the £10.0m charge, £2.4m was spent in the second half with £7.6m in the provision at 30 June 2023. Whilst the charges in respect of legacy properties reflect our current best estimates of the extent and future costs of work required, as assessments and work progress, estimates may have to be updated. Cash flow Net cash decreased to £1,069.4m at 30 June 2023 (30 June 2022: £1,138.6m). The main components of the change in net cash position were: ∙ a £465.5m net cash inflow from operating activities (FY22: £417.6m cash inflow); ∙ a £55.4m net cash inflow from investing activities (FY22: outflow of £222.4m), with the reversal reflecting increased cash received from joint ventures and the cash outflow impact of the Gladman acquisition in FY22; and ∙ a net financing cash outflow of £590.6m (FY22: outflow of £378.4m), principally reflecting dividends paid of £360.0m (FY22: £337.0m), as well as the £201.3m outflow in respect of the £200m share buyback including Stamp Duty and fees of £1.3m. 68 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F The major drivers of the £465.5 net cash inflow from operating activities in the year was our profit from operations, which increased to £707.4m (FY22: £646.6m), offset by a net cash outflow from working capital and provisions of £64.9m (FY22: £118.2m cash outflow) and net interest and tax payments, which increased to £196.3m (FY22: £140.2m). The net £64.9m outflow (FY22: £118.2m outflow) with respect to working capital and provisions was largely related to a significant decrease of £337.6m (FY22: £10.7m decrease) in payables, driven by the reduction in land creditor balances as we settled existing commitments, alongside a significant reduction in land acquisition and construction activity. This was offset by other net inflows in working capital including a £48.9m decrease in inventories (FY22: £543.4m increase) which also arose from reduced land activity and tighter control of work in progress, and a £163.4m net increase in provisions (FY22: £415.1m increase) which resulted from additional building safety charges during FY23. During FY23 £32.9m was spent on the remediation of legacy properties Balance sheet The Group’s net assets at 30 June 2023 totalled £5,596.4m (30 June 2022: £5,631.3m) after the payment of dividends totalling £360.0m (30 June 2022: £337.0m) and the return of surplus capital through the buyback totalling £201.3m. The Group bought back 48m shares at an average share price of 415 pence during the year, with all shares being cancelled. Net tangible assets were £4,548.6m (467 pence per share) at 30 June 2023 (30 June 2022: £4,573.0m; 447 pence per share). Land, net of land creditors, and work in progress totalled £4,540.3m (466 pence per share) at 30 June 2023 (30 June 2022: £4,444.1m; 435 pence per share). Goodwill and intangible assets reduced to £1,047.8m (30 June 2022: £1,058.3m) reflecting amortisation charges in the year. At 30 June 2023, the Group held net cash balances of £1,069.4m (30 June 2022: £1,138.6m). Whilst we continue to defer payment for some land purchases to optimise ROCE, the pause in land buying has seen land creditors reduce, whilst remaining within our operating framework range. At 30 June 2023, land creditors were £506.7m (30 June 2022: £733.6m) and equated to 16.1% (30 June 2022: 22.0%) of the owned land bank. Our minimal year-end total net indebtedness target was achieved with a net surplus of £562.7m at 30 June 2023 (30 June 2022: £405.0m net surplus). During FY24, £321.5m of land creditors will fall due for payment (30 June 2022, during FY23: £498.2m). Land creditors due beyond 30 June 2024 totalled £185.2m at 30 June 2023 (30 June 2022: £235.4m due beyond 30 June 2023). Capital returns The Board has reviewed our capital allocation policy in light of current market conditions. In principle, the Board continues to believe that excess capital should be returned to shareholders when it is appropriate to do so. Whilst the Company remains in a strong financial position, the UK housing market remains difficult and the outlook remains uncertain. We have therefore agreed that whilst our reduction in dividend cover to 1.75 times will apply from FY24 as planned, there will be no further share buybacks at this stage. The Board will continue to review the capital allocation policy as market conditions develop. Operating framework and capital structure Our operating framework and appropriate capital structure continue to serve us well. We continue to target an appropriate capital structure as part of our disciplined operating framework with shareholders’ funds and land creditors funding the longer-term land requirements of our business, and term loans and bank debt funding the shorter-term requirements for working capital. Our operating framework remains unchanged, and our performance against targets at 30 June 2023 and 2022 are summarised below: Land bank Operating framework c. 3.5 years owned and c. 1.0 year controlled Positions at 30 June 2023 3.6 years owned and 0.7 years controlled Land creditors Maintain at 15 - 25% of the land bank over medium term 16.1% Positions at 30 June 2022 3.9 years owned and 0.8 years controlled 22.0% Net cash Modest average net cash over the financial year FY23: average net cash of £759.1m FY22: average net cash of £957.4m Year-end net cash £1,069.4m £1,138.6m Total indebtedness Minimal year-end total indebtedness in the medium term Treasury Appropriate financing facilities Total net surplus of £562.7m Total net surplus of £405.0m. £700m Revolving Credit Facility extended to November 2027; £200m US Private Placement Notes maturing August 2027 £700m Revolving Credit Facility extended to November 2025; £200m US Private Placement Notes maturing August 2027 Dividend policy Dividend cover of 1.75x adjusted earnings per share in FY24 FY23: Total ordinary dividend of 33.7p per share FY22: Total ordinary dividend of 36.9p Barratt Developments PLC Annual Report and Accounts 2023 69 Strategic Report G F Chief Financial Officer’s review continued Results to 30 June 2023 continued Treasury The Board sets and approves the Treasury Policy and senior management control day-to-day operations. The Group’s Treasury Policy seeks to maintain an appropriate capital structure and provide the right platform for the business to manage its operating risks. Cash management and relationships with our banking partners are coordinated centrally by the Group Head of Treasury. During the year, we extended our £700m revolving credit facility to November 2027 with two further one-year extension periods through to November 2029, if agreed between the Group and its lenders. Looking to the future and aligning our credit facilities with our Building Sustainably Framework, our revolving credit facility has also been amended to include three sustainability linked performance measures to be assessed and verified annually. The three performance measures are: (1) science-based target aligned scope 1 & 2 emissions reductions; (2) waste intensity reduction; and (3) improving the sustainability of our homes. Tax The Group does not enter into business transactions that are for the sole purpose of reducing potential tax liabilities. The Group’s tax strategy is to only utilise any available reliefs and exemptions, which have been set out in any current tax legislation, to minimise the Group’s tax liabilities. The rate of corporation tax for the year ended 30 June 2023 was 24.8% (FY22: 19.8%), which was marginally above the standard effective rate of tax of 24.5% (inclusive of RPDT) (FY22: 20.0%). 70 Looking ahead, the Group’s tax charge and effective rate of tax is expected to increase, reflecting changes in the rate of corporation tax, which increased from 19% to 25% from 1 April 2023. With the full year impact of the increase in corporation tax, the Group’s effective tax rate is expected to increase to approximately 29.0% in FY24. Pensions Defined contribution pension arrangements are in place for current employees. Defined contribution scheme charges with respect to qualifying employees totalled £19.1m (FY22: £14.9m). Pension contributions are based upon a fixed percentage of each qualifying employee’s pay and, once paid, the Group has no further obligations under these schemes. Guidance for FY24 Looking to FY24, our guidance is summarised in the table below: Completions c. 13,250 - 14.250 total home completions including c. 750 PRS and c. 650 from JVs Affordable mix broadly in line with FY23 Average sales outlet movement (inc. JVs) c. 6% decline Build cost inflation c. 5% Administrative expenses Interest cost Land approvals c. £290m - £300m (including amortisation of intangible asset charges of c. £10m) c. £20m charge (c. £20m cash credit, c. £40m non-cash charge) Maintain our highly selective approach to land buying Land cash spend c. £0.5bn - £0.7bn Year-end net cash c. £0.7bn-£0.8bn Taxation Ordinary dividend cover Effective tax rate of 29% reflecting current corporation tax rate at 25% and 4% RPDT 1.75x ordinary dividend cover based on adjusted EPS Well positioned for an uncertain outlook in FY24 Despite significant economic headwinds and persistent challenges to affordability for our customers, the Group is in a strong position. We entered FY24 with substantial net cash, a solid forward sales position and an excellent land bank. Our operating framework and our strong financial position create the platform to focus on delivering high quality, sustainable homes and developments throughout the country, as well as the flexibility to react to changing market conditions and opportunities as they evolve. Mike Scott Chief Financial Officer 5 September 2023 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Risk management In pursuing our strategic priorities to create value for stakeholders, we are exposed to risk. The Board is responsible for risk management and ensuring the Group maintains the appropriate level of risk exposure to achieve its objectives. Board Board Committees Executive Committees Risk Committee Risk type How are risks assessed? Where are risks and controls captured? Key sources of assurance Enterprise risk management (ERM) framework Group- level risks Top-down risk assessment Group risk register Risk Assurance mapping Regional and functional risks Bottom-up risk assessments Regional and functional risk register 2nd line monitoring MRR*/DBM** Risk and internal control framework Process risks Control-self assessment Policies and procedures documentation and internal control matrices 2nd line monitoring and 3rd line internal audit programme The risks which the Group face could have a material adverse effect on the implementation of the Group’s strategy, business, financial performance, shareholder value and returns, and reputation. Changes in the economic or trading environment can affect the likelihood and potential impact of risks, and may create new and emerging risks. Risk management controls are integrated into all levels of our business and across all operations, including at site, divisional, regional and Group level, and are monitored to ensure controls are in line with risks as they evolve. Our risk management framework and the roles and responsibilities of the Board, its Committees and levels of management in the identification and management of risk are summarised below. Responsibilities Board and Board Committees ∙ Responsible for corporate strategy, governance, performance, internal controls and risk management. ∙ Monitor the effectiveness of the Group’s risk management and internal control systems. ∙ Promotes an appropriate culture to support effective and embedded risk management throughout the Group. ∙ Set risk appetite, considering the expectations of stakeholders, and the macroeconomic context. ∙ Monitor principal and emerging risks. ∙ Assess risks against the Group’s strategy and the interests of stakeholders, and gain assurance on their management. Executive Committee and Risk Committee ∙ Monitors business and operational performance and changes to key risks. Fraud risk framework Fraud risk Fraud risk assessment Fraud risk register Internal control matrices 3rd line internal audit programme ∙ Through the Risk Committee, assess and monitor identifies risks using a scoring system based on the likelihood of the risk materialising and the potential impact of the risk on the business. Internal Controls over Financial Reporting (ICoFR) framework Financial reporting risk Financial reporting risk assessment Policies and procedures documentation and risk and control matrices 3rd line internal audit Key controls (ICoFR) testing External audit * Management Regional Reviews ** Divisional Board Meetings ∙ Implements mitigation strategies to effectively manage key risks within the Group’s risk appetite. ∙ Responsible for ensuring that risk management is embedded within the business and appropriate actions are taken to manage risk. ∙ Delegate risk oversight to appropriate management committees. Group, Regional and Divisional Management ∙ Apply specialist knowledge to identify new risks and monitor changes to existing operational and strategic risks at a divisional, regional and functional level. ∙ Responsible for risk management and control within relevant divisions, regions or Group disciplines. Barratt Developments PLC Annual Report and Accounts 2023 71 Strategic Report G F Risk management continued Responsibilities continued Site management, assessments and valuations ∙ Identify and assess operational risks affecting housebuilding activity at site level, including construction, sub-contractor and SHE risk. ∙ Maintain an effective system of site-level risk management and internal control. Risk activities conducted during the year As part of the Group’s risk management framework all regions and key Group functions conducted risk workshops to review and identify their current risks and any potential emerging risks. These workshops presented a robust challenge to the principal risks identified at an executive level. During this process, management have reviewed the policies and methodologies behind our risk management framework to ensure that our procedures suitably allow key risks and the specific events that may cause them to materialise are identified, so that the Group can focus on mitigating these areas. The Group continues to assess the potential impact of both the physical impact of climate change and the regulatory and social measures that may be adopted to mitigate against it. In line with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), the Group has disclosed its response on pages 78 to 98. Climate-related risk is one of several challenges arising from the environment in which the Group operates and the Board recognises the business’ responsibility to be a sustainable partner and comply with environmental, social and governance (ESG) regulation. The Board has therefore broadened its principal climate risk to cover all ESG issues. The Board no longer considers the availability of finance and working capital to be a principal risk. We continue to have a strong balance sheet, with minimum debt financing and a strong cash position, and have recently refinanced our Revolving Credit Facility to November 2027. In our Viability Statement and going concern conclusions, we set out our liquidity and viability in the short, medium and long term, identifying limited risk. See page 99. Reputational risk could potentially arise from a number of sources including external and internal influences relating to the housebuilding sector that, when combined or over a period of time, could create a new principal risk. The Group actively manages the impact of reputational risk by carefully assessing the potential impact of all the principal risks and implementing mitigation actions to minimise those risks. Reputational risk is therefore covered by the management of each of our individual risks and is not presented as a principal risk in its own right. Heat map of principal risks net of mitigation Substantial >£50m Major £10m–£50m K G I J Moderate £5m–£10m Minor £1m–£5m t c a p m I Low <£1m C E D H A F B Likelihood Very unlikely Low Likely High Very likely High risk Medium risk Low risk Risk velocity Due to the changing internal and external environment in the year and the need to be mindful of the speed at which risks can materialise, the Board has this year assessed the velocity of the Group’s risks. This will assist the Board in assessing the mitigating actions to ensure that responses are sufficiently timely. Velocity is categorised as follows: Rapid: Risk can materialise immediately, or, impact felt within one month of occurring. Moderate: Risk can materialise quickly, or, impact felt between 1 and 12 months of occurring. Slow: Risk can materialise slowly, or, impact felt after 12 months of occurring. Principal risks The Group has identified 11 principal risks that it considers to be of material impact and likelihood: A Economic environment B Land and planning C Government regulation and political risk D Construction quality and innovation Overall assessment The Board has completed its assessment of the Group’s principal and emerging risks, including those that could threaten its business model, future performance, solvency or liquidity. E Supply chain resilience F Legacy properties G Safety, health and environment The current risk profile is within our tolerance range as the Group is willing to accept a moderate level of operational risk to deliver financial returns. There may be instances where these risks could have a moderate adverse impact on the Group – either financially or operationally. To ensure the Group’s business model remains resilient over the medium and long term, the Group has modelled these scenarios alongside achievable mitigating actions. The results are presented in the Viability Statement on pages 99 to 100. H Attracting and retaining high-calibre employees I Information technology J Environmental, social and governance K Business resilience and continuity The principal risks are detailed on pages 73 to 77, categorised by the strategic priorities to which they relate. Risk levels are presented net of any mitigation that is in place and the risk appetite defines the level of risk that the Board is comfortable with. 72 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Customer first A Economic environment Risk level: H Velocity: Moderate Risk appetite: M Risk description Changes in the UK macroeconomic environment may lead to falling demand, tightened mortgage availability, or reduced purchaser liquidity especially in the first time buyer market. This could reduce the affordability of our homes, resulting in reduced sales volumes and our ability to provide profitable growth. Response/mitigation ∙ Continual monitoring of the market at Board, Executive Committee, regional and divisional levels, leading to amendments in the Group’s forecasts and planning as necessary. ∙ Comprehensive sales policies, regular reviews of pricing in local markets and development of good relationships with mortgage lenders. ∙ Disciplined operating framework with an appropriate capital structure and strong balance sheet. Great places B Land and planning Risk level: H Velocity: Moderate Risk description Lack of developable land due to delays in planning approval, failure of a clear and consistent government policy or insufficient consented land and strategic land options at appropriate cost and quality could affect our ability to grow sales volumes and/or meet our margin and site ROCE hurdle rates. Risk appetite: M Response/mitigation ∙ All land acquisitions are subject to formal appraisal and approval by the Land Committee. ∙ Group, regional and divisional review of land currently owned, committed and identified against requirements. ∙ Regular meetings with external stakeholders including land agents, promoters and land owners. ∙ Review by Land Committee and management on strategic land and sites. ∙ Robust review of land appeals before resubmission. Responsibility: Executive Committee Key risk indicators Internal: Gross and operating margins, PBT, ROCE, EPS, TSR, total home completions. External: GDP growth, CPI inflation, mortgage approvals, mortgage affordability, new housebuilding site starts. Responsibility: Land Committee Key risk indicators Land approvals (plots), UK quantum of consented housing units per year, UK quantum of applications decided within statutory periods. C Government regulation and political risk Risk level: H Velocity: Moderate Risk appetite: L Responsibility: Operations Committee Risk description The housebuilding industry is subject to increasingly complex regulations, government intervention and policy changes, for example building regulation, legal, NHQC, CMA and environmental regulation. Deviation from regulations or failure to implement the changes effectively within our processes could lead to financial penalties, damage to the Group’s reputation or increased costs due to inefficient processes. Response/mitigation ∙ Robust and rigorous design standards for the homes and places we develop that exceed current and expected statutory requirements. Key risk indicators Gross and operating margin, PBT, ROCE, EPS, TSR, total home completions. ∙ Policies and technical guidance for employees on regulatory compliance and the standards of business conduct expected. ∙ Legal and compliance risks monitored by the Risk Committee. ∙ Consultation with government agencies and membership of industry groups to help monitor, understand and plan for proposed regulation change. Risk level/appetite H High risk M Medium risk L Low risk Change from previous year Increase Decrease No change N New Barratt Developments PLC Annual Report and Accounts 2023 73 Strategic Report G F Risk management continued Principal risks continued Leading construction D Construction quality and innovation Risk level: H Velocity: Moderate Risk appetite: L Risk description Failure to achieve excellence in construction, through an inability to develop and implement new and innovative construction methods or to be a market leader with changes in technology advancement in line with the Future Homes Standard, could increase costs, expose the Group to future remediation liabilities, and result in poor product quality and reputational damage. E Supply chain resilience Risk level: M Velocity: Rapid Risk description Not adequately responding to shortages or increased costs of materials and skilled labour, or the failure of a key supplier in the current economic environment, may lead to increased costs and delays in construction. Response/mitigation ∙ Continuous review of design and materials, which are evaluated by technical experts including the NHBC, to ensure compliance with all regulations. ∙ Monitoring and improving the environmental and sustainability impact of construction methods and materials. ∙ Implementation of modern methods of construction by design and technical teams. ∙ Detailed build programmes supported by robust quality assurance. ∙ Use of qualified engineers through an approved panel. ∙ Group Construction and Group Technical reviews of local divisions in key risk areas. Risk appetite: L Response/mitigation ∙ Centralised team procures most materials from within the UK, ensuring consistent quality and cost. ∙ Development of long-term supplier and sub-contractor partnerships with all significant supply agreements fixed in advance, usually for 12 months. ∙ Development of multiple supplier relationships for labour and material supplies, with contingency plans should any key supplier fail. ∙ Build and material cost controls throughout build programmes. ∙ Adherence to the Prompt Payment Code to support our partners. Responsibility: Operations Committee Key risk indicators Customer service, total home completions, gross margin, operating margin, PBT, ROCE, EPS, construction waste intensity and carbon intensity. Responsibility: Operations Committee Key risk indicators Customer service, gross and operating margin, PBT, ROCE, EPS, TSR, total home completions. 74 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F F Legacy properties Risk level: H Velocity: Moderate Risk description In March 2023 we signed the Self Remediation Terms and Contract with the UK Government to support leaseholders by funding or remediating life-critical fire safety works in buildings of over 11 metres which we have played a role in developing over the last 30 years. The amounts provided in the Financial Statements reflect the best estimate of the extent and costs of work required; however, these will be updated as work progresses or as government legislation or regulations develop. Risk appetite: L Responsibility: Operations Committee Response/mitigation ∙ A dedicated Building Safety Unit (BSU) has been set up to manage the remediation work. Key risk indicators Gross and operating margin, PBT, ROCE, EPS. ∙ BSU undertakes independent reviews and investigations of legacy buildings. ∙ BSU Steering Committee meets fortnightly to review ongoing remedial work, investigations and current valuations. ∙ Assumptions on the estimated financial costs have been tested and challenged robustly. Responsibility: Safety, Health and Environment Operations Committee Key risk indicators Health and safety (SHE) audit compliance. Investing in our people G Safety, health and environment Risk level: M Velocity: Moderate Risk appetite: L Risk description Health and safety or environmental incidents or compliance breaches can impact employees, sub-contractors, customers and site visitors, and undermine the creation of a great place to work and visit. Response/mitigation ∙ Dedicated internal health and safety team. ∙ Regular health and safety monitoring, internal and external audits of all operational units, and regular senior management reviews of developments. ∙ SHE management system that continually reinforces Group SHE policies and procedures. ∙ Dedicated SHE Board and SHE Operations Committee that review key performance indicators and improvement plans. ∙ Quarterly performance reviews by divisional management in all operating units. ∙ Independent external reviews of our SHE processes. Risk level/appetite H High risk M Medium risk L Low risk Change from previous year Increase Decrease No change N New Barratt Developments PLC Annual Report and Accounts 2023 75 Strategic Report G F Risk management continued Principal risks continued Investing in our people continued H Attracting and retaining high-calibre employees Risk level: M Velocity: Slow Risk appetite: L Responsibility: Executive Committee Risk description Increasing competition for skills may mean we are unable to recruit and/or retain the best people. Having sufficient skilled employees is critical to delivery of the Group’s strategy of volume growth whilst maintaining excellence in all of our other strategic priorities. Underlying all priorities I Information technology Risk level: M Velocity: Rapid Risk description Failure of any of the Group’s key systems, particularly those for financial and customer information, surveying and valuation, through a successful cyber attack or lack of investment leading to outdated systems, could restrict operations and disrupt progress in delivering strategic priorities. Response/mitigation ∙ Comprehensive HR programmes covering Key risk indicators Employee engagement score. apprenticeships, graduate development, succession planning and training academies. ∙ Personal development plans for all employees. ∙ Development of a hybrid working model. ∙ Monitoring of employee turnover, absence statistics and independent feedback from exit interviews. ∙ Annual employee engagement survey to measure employee satisfaction. ∙ Remuneration benchmarking against competitors. ∙ Diversity and Inclusion Strategy and policy. Risk appetite: L Responsibility: Risk Committee Response/mitigation ∙ Regular external reviews to reduce the risk of successful cyber attacks, including vulnerability and penetration tests by third parties. Key risk indicators Customer service, gross and operating margin, PBT, ROCE, EPS. ∙ Group-wide compliance and policies on passwords and transferring data to third parties. ∙ Mandatory information security training programme for all employees. ∙ Adoption of the recognised NIST control framework. ∙ Cyber security insurance policy. ∙ Continued investment in IT infrastructure. ∙ IT disaster recovery plan. ∙ Development of critical process business continuity plans. 76 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F J Environmental, social and governance Risk level: M Velocity: Moderate Risk appetite: L Risk description In the short to medium term, if the Group does not further enhance its sustainable business practices to respond to loss of biodiversity, water usage reduction and climate change regulations, as well as meeting its social and governance responsibilities relating to modern slavery and human rights, this will result in a failure to meet customer and investor expectations. Response/mitigation ∙ Board Sustainability Committee to oversee the business’ response to climate risks. ∙ Committed to reducing the Group’s carbon emissions, including those from its completed homes and supply chain. ∙ Review of Future Homes Standard, effective in 2025, to adapt and plan for compliance. ∙ Climate risk and opportunities continually being embedded within everyday business operations. ∙ Progressed scenario analysis to determine the resilience of the Group’s business model under different climate-related scenarios. Responsibility: Sustainability Committee Key risk indicators Carbon intensity, waste intensity, health and safety audits. In line with our sustainability goals on page 48 and 49. K Business resilience and continuity Risk level: M Velocity: Rapid Risk appetite: M Responsibility: Executive Committee Risk description Inability to continue the business due to a major unexpected incident or event out of our control, such as a natural disaster, global pandemic or UK epidemic, or disruption to national infrastructure, could cause significant disruption to the Group’s business operations, employees, customers, supply chain, or other third party. Response/mitigation ∙ Development of business continuity plans for critical business processes. Key risk indicators Total indebtedness/surplus, IT testing, KPS’s. ∙ Stress-testing of the Group’s available financing facilities to ensure resilience to a sudden economic shock. ∙ Formation of the Business Resilience Steering Group. Risk level/appetite H High risk M Medium risk L Low risk Change from previous year Increase Decrease No change N New Barratt Developments PLC Annual Report and Accounts 2023 77 Strategic Report Strategic Report G G F F Climate-related risks and opportunities Leading the industry in response to climate change Understanding the future To plan for how the business will operate in a future climate, we must first understand what that future may be. The outcomes from climate change, both the physical impacts and the regulatory response, are uncertain, so we have updated our scenario analysis to understand how each possible outcome will affect our industry, the homes we build and our customers. See page 88 for our scenario analysis See page 83 for the most significant risks and opportunities that will arise from these scenarios This analysis guides our strategy to ensure we continue to provide value to all of our stakeholders in the new trading environment Guiding our business Our climate is changing, and so is the world in response. We want to be at the forefront of the UK’s climate strategy and make sure our business is well positioned for the future. Page 80 shows how the response to climate change is governed in our business Pages 82 to 87 detail how we assess the risks and opportunities that may arise as society and the environment evolve 78 Barratt Developments PLC Annual Report and Accounts 2023 Aligning our operations to net zero carbon Our analysis shows that reducing our greenhouse gas emissions is not only important for the planet, but also for protecting the profitability of our business. First, we must lead by example. We are working to better understand our carbon footprint (through the data monitoring improvements highlighted on page 94) and working towards our science-based targets (see page 98). Our greatest impact, and our greatest opportunity to affect change, is within our supply chain. We are working with our partners to understand and reduce their emissions. Strategic Report Strategic Report G G F F Homes for the future As detailed on page 47, the provision of new homes is essential for the nation to achieve its net zero targets and our customers are increasingly conscious of their energy efficiency and the resilience of the homes they buy to changes in climate. We are meeting these challenges by leading the industry in researching technologies and developing house designs with the future in mind. Building regulations, Energy House and Zed House – see page 34 Overheating adjustments – see page 47 Local weather adaptation – see page 82 A sustainable business model The business has a duty to its stakeholders to ensure that it can operate sustainably over the long- term. Our scenario analysis allows us to stress-test the resilience of our business model to climate change. Page 89 shows the financial effect on the business and on page 90 we conclude that our planning has made us resilient to all outcomes However, we want to do more and our pathway to transition to a more sustainable business is shown on page 91 Helping our customers Families are already feeling the effect of rising energy costs and higher interest rates on mortgages. Energy efficient homes can reduce costs and unlock access to green mortgages for our customers. Our work with lenders on green mortgage opportunities is discussed on page 31 Our home energy efficiency targets, and progress against them, are on page 47 Barratt Developments PLC Annual Report and Accounts 2023 79 Strategic Report G F Climate-related risks and opportunities continued CLIMATE GOVERNANCE Leading the business in its climate response The Board has ultimate responsibility for overseeing our response to climate change. The Chief Executive is the Board member who holds individual responsibility. The Sustainability Committee, chaired by the Chief Executive, is the Board sub-committee responsible for debating, reviewing and scrutinising our sustainability and climate change strategy, monitoring its implementation and the approval of plans to mitigate risks and leverage opportunities. Implementing strategy The Sustainability Committee approves and oversees initiatives to react to the climate-related risks and opportunities and assists the wider Board in integrating climate thinking into the Group’s wider strategy. Actions taken in the year included: ∙ approval of the net zero transition pathway (page 91); ∙ oversight of improvements to climate data collection and monitoring (page 98); ∙ review by the Chief Financial Officer of the climate-related scenario (pages 88 to 89) analysis; ∙ advising on the appropriate metrics and targets to monitor and drive the achievement of our climate goals; and ∙ monitoring performance in those metrics (pages 96 to 98). Other climate-related responsibilities delegated to sub- committees of the Board include: ∙ design of incentives to achieve our climate targets (Remuneration Committee, page 137); ∙ SHE-related risk and compliance (SHE Committee, page 133); and ∙ integrity of disclosure (Audit Committee, page 124). Remuneration Committee (page 137) Designs the Group’s remuneration policy to incentivise performance against climate-related targets, as detailed on page 96. Monitors performance against targets and approves remuneration accordingly. SHE Committee (page 133) Monitors the effect of climate-related SHE risks, such as the impact of weather patterns on our workforce, and compliance with certain site- based environmental initiatives, such as waste reduction. Audit Committee (page 124) Monitors the integrity of climate- related disclosures and data reporting through internal and external assurance of the reporting of climate-related metrics and ensures compliance with external climate- related reporting requirements. Risk Committee Evaluates the Group’s internal control policies and procedures over the identification, assessment, and reporting of climate-related risks. Reviews the Group’s overall risk profile, examining climate-related risks in the context of the Group’s other principal risks and its significance to strategy. The structure of the Group’s governance is shown in detail on page 114. Staying informed Climate understanding and the world’s response to it continue to evolve. To ensure that the Group’s short-, medium-, and long-term strategies are responsive to climate change risks, the sub-committee aims to stay up to date with evolving climate change developments. During the year, the Sustainability Committee received the following updates relating to climate change: ∙ The Chair of the Energy Transitions Commission delivered a presentation on environmental economics, the potential impact of carbon pricing, and the difficulties in transition to net zero for hard to abate sectors. ∙ The Group Sustainability team took the committee through a number of working sessions advising on the available approaches to managing the Group’s emissions. This included analyses of various elements of the net zero transition pathway, international best practice examples, internal carbon pricing and carbon offsetting. The Committee also continues to be attended by an independent expert. During the climate risk assessment process, and on an ongoing basis through the Sustainable Operations Group, senior management also receive updates on the current and emerging climate understanding to ensure the organisation is well briefed when developing responses to climate challenges. 80 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Taskforce for Climate-related Financial Disclosures (TCFD) The Group aims to be the leading national sustainable housebuilder and our TCFD programme is a reflection of that intent. Our strategy and approach to risk management includes scenario analyses and assessing the potential financial impacts of climate change risks and opportunities on the business. As we have worked through our assessment, the Group has used internal subject matter experts, as well as external advisers to support robust and thorough analysis. Our established targets and metrics are shown in this report, though we expect these to continue to develop over time as our understanding of climate change risk evolves. TCFD area Governance Strategy Risk management Metrics and targets Page reference to content 42 90 82 96 The Company can state that in accordance with Listing Rule 9.8.6 R, these Annual Report and Accounts include climate- related financial disclosures consistent with 11 out of 11 TCFD recommendations and recommended disclosures. Assurance Deloitte has provided independent third-party limited assurance in accordance with the International Standard for Assurance Engagements 3000 (ISAE 3000) and Assurance Engagements on Greenhouse Gas Statements (ISAE 3410) issued by the International Auditing and Assurance Standards Board (IAASB) over the TCFD on pages 80 to 98 and selected metrics on page 96. Deloitte’s full unqualified assurance opinion, which includes details of the selected metrics assured, can be found at www.barrattdevelopments.co.uk/building- sustainably/our-publications-and-policies/publications. Barratt Developments PLC Annual Report and Accounts 2023 81 Strategic Report G F Climate-related risks and opportunities continued CLIMATE RISK MANAGEMENT The outcome of climate change is uncertain and will depend on the world’s success in limiting the rise in global temperatures, as well as the specific regulatory responses where we and our supply chain operate. The effects will be wide ranging, including the physical impacts of new weather patterns (physical risks) and the regulatory, social, and economic effects of transitioning to a low carbon economy (transition risks). Opportunities may also arise as the country looks to industry leaders to drive sustainable developments and provide homes fit for the future. As the climate changes, Barratt will need to adapt to ensure we can continue to deliver the homes our customers need within the changing environment. These changes offer both opportunities and risks to Barratt, which overall the Group identifies as a principal risk built into its risk management process detailed on page 83. Climate-related risks relevant to each region or function are considered in individual bottom-up risk assessments. These include climate-related legislation or regulations that are applicable to their field, for example the Future Homes Standard for building regulations. In addition, all climate risks and opportunities are considered together as part of the assessment of Group-level risks. A review of all the potential effects of climate outcomes on our business requires an understanding of the climate predictions and the collective knowledge of our business experts. We therefore undertake a thorough annual risk and opportunities assessment in addition to our risk management process, as detailed here: Climate risk and opportunities assessment process Identify We identify the possible outcomes of climate change by considering varying levels of global response and resultant change in weather patterns. The scenarios considered are shown on page 83. Consider Impact The possible climate outcomes are shared with business leaders and local management, who are asked to consider the impact of these circumstances on the business. All risks are included in a climate risk register. Review The risks and opportunities identified are discussed in workshops of internal subject matter experts, local and Group senior management and external climate experts, using the benefit of our housebuilding experience to determine which risks and opportunities are most likely to manifest and have the highest potential impact. In FY23 we were able to call upon the strategic land expertise of Gladman for the first time. The most relevant risks and opportunities are listed on pages 84 to 87. These are reported to the Risk Committee. Highest potential impact risks and opportunities Emerging risks and opportunities After further consultation with business experts, we identify the underlying data and assumptions required to estimate the financial impact of the risks and opportunities. We estimate the unmitigated financial impact under each climate outcome in the short, medium and long term. The financial effects are considered individually and in aggregate through our climate-related risk & opportunities register and scenario analysis on pages 84 to 87 and 89 respectively. Low impact risks and opportunities are subject to a high-level assessment to consider those that should be subject to future monitoring. External experts are also engaged to highlight any emerging risks that have not been identified, including any new or potential regulations. We consider whether any should be subject to detailed modelling in the next cycle. The results of the risk assessment are reviewed by senior management and the Sustainability Committee to inform Group strategy going forward, as detailed on page 90. Risk assessment criteria The likelihood and potential impact of each risk are rated in line with the Group’s risk assessment process, shown in the Risk assessment criteria table on pages 84 to 87. The impact assessment reflects the estimated profit impact of a risk/opportunity within the financial year and climate scenario in which the financial impact is likely to be most severe. Where the profit impact of a long-term obligation would be recognised up front, the financial impact is spread over the period that it will be realised for this purpose. Our definition of a substantial financial impact of over £50m is within the range set by our statutory auditor over recent years for Group financial materiality. This assessment considers short-term (2025), medium-term (2030), and long-term (2040-2050) time horizons. This range of time horizons considers a longer period than our usual operational cycle and has been selected to align to our existing science-based emissions reduction targets, whilst capturing transitional and physical risks that manifest over the longer term. The short-term timeframe aligns with our owned land bank, while the medium- to long-term encompasses our strategic land options and promotion agreements. 82 Short term Medium term Long term Risk assessment timeframes 2023 2025 Scope 1&2 SBTi Future Homes Standard 2030 Scope 3 SBTi Barratt zero carbon home targets Barratt target to achieve net zero by 2040 2050 Paris Agreement and UK target for net zero Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Climate outcome scenarios The potential climate outcomes considered this year when reviewing climate risks and opportunities ranged from a sustainable transition scenario that limits global warming to 1.5°C, to an adaptation scenario where emissions continue on the current pathway, which leads to around 4°C warming, such that they cover both high physical and high transition risks. Qualitative assessments for each of these climate scenarios are outlined below. Together with the quantitative analyses summarised on page 89, these narratives provide a holistic view on the potential impacts to Barratt in each of these climate outcomes. 1.5°C Sustainable transition We have used the IEA’s “Net Zero Emissions by 2050” (NZE2050) to model a long-term orderly transition to a low carbon economy occurring over the long term as sufficient regulatory action is taken to limit the global temperature rise to the Paris goal of 1.5°C by 2100, resulting in significant transition risks, while minimising physical risks. 2.0°C Disorderly transition We have developed a bespoke scenario, adjusting IEA’s “Net Zero Emissions by 2050” model such that it reflects a disorderly transition, whereby limited regulation is in place until 2030, requiring extreme policies to be introduced from this date to limit warming to 2°C by 2100. This sudden, disorderly transition to a low carbon economy, occurring over the medium term, results in maximum transition risk, while limiting physical risks to a low level. 4.0°C Adaptation Global policy shifts away from prevention and towards adapting to a new climate, leading to a global temperature rise of 4°C by 2100, giving rise to maximum physical risks. Velocity of regulatory environment Significant Delayed then significant Low Increasingly stringent building regulations go beyond the Future Homes Standard, placing greater emphasis on reducing embodied carbon and resource intensity within the home. Additionally, local planning authorities increasingly require developments to exceed building regulations, placing greater emphasis on sustainable communities. The Future Homes Standard is introduced as planned, but building and planning regulations steeply increase sustainability requirements from 2030. While regulations such as the Future Homes Standard still come in as planned, the demand for sustainable developments from planning authorities eases and carbon pricing reduces. Customer engagement with climate action Proactive There is increased customer demand for green homes, which is supported by the availability of green mortgage products, enabling customers to benefit from the improved affordability of energy efficient new homes. Reactive Until 2030 customer demand and the availability of green finance for low carbon homes remain at current levels, but these also increase sharply from 2030 onwards. Inactive Consumers typically continue to lead energy intensive lifestyles with little demand for resource efficiency measures in new homes. Supply chain engagement with climate Proactive Reactive Inactive The transition to net zero is supported by supply chains, which offer innovative low carbon solutions, encouraged by high carbon prices associated with carbon intensive materials/ processes. Technological progress is fast, though may require additional upskilling for employees and sub-contractors. To discourage the use of high carbon materials, significant increases in carbon prices are implemented from 2030 onwards. Similarly, the increased demand for sustainable materials and technologies also drive steep increases in costs from 2030. Supply chain action to reduce emissions is minimal, with limited innovation in low carbon alternatives to existing materials. Global supply chains are also susceptible to severe weather resulting in risk of delays, as well as indirectly driving up prices as demand for raw materials increases from less affected areas. Physical impact Low Low High The impacts of physical risks such as overheating and flooding continue at manageable levels, with existing/planned regulation and planning requirements sufficient to manage these impacts. The impacts of physical risks such as overheating and flooding continue at manageable levels, with existing/planned regulation and planning requirements sufficient to manage these impacts. Increased frequency of severe weather leads to increased disruption on site, giving rise to risk of damage as well as delays. Increased risks of flooding and water scarcity drive up demand for land in relatively less affected areas of the UK, raising land prices in these areas. Additional cooling solutions are required in homes at risk of overheating in the worst affected areas. Barratt Developments PLC Annual Report and Accounts 2023 83 Strategic Report G F Climate-related risks and opportunities continued CLIMATE-RELATED RISKS AND OPPORTUNITIES Risk rating Maximum unmitigated Financial Statements impact Timeframe Short Medium Long Scenario sensitivity Our ongoing response Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation We continue to engage Government at ministerial level on a range of critical sustainability issues, as well as directly with relevant senior officials, via the UK Net Zero Buildings Council. We also support the Net Zero All Party Parliamentary Group and input into conversations around supply chain challenges to meet future energy demand for energy efficiency measures. We were the first national housebuilder to implement science-based targets for our scope 1 and 2 and scope 3 emissions, allowing us to take a leadership role in driving down emissions. We have commissioned a carbon price exposure analysis to establish its potential impact and have identified opportunities for mitigation through our net zero transition pathway on page 91. Through market research, product testing, university and research partnership, prototype test houses, and grant endorsed trials, we examine low carbon products, systems and processes for our housing types. We have accelerated these programmes through the Zed House and Energy House 2.0 to ensure a full view of available technology. Our specialised divisional land teams, as well as the Gladman team, possess extensive local knowledge and strong relationships with landowners which are vital to ensure we remain the developer of choice. To support further engagement and ensure our sustainability credentials are recognised when we bid for land, we have developed a sustainability toolkit for use by our land and planning teams. This includes detailed information on our approach to the Future Homes Standard, zero carbon homes, biodiversity and socio-economic outcomes. We are aware of the growing significance of water scarcity in the UK, which has resulted in a new climate-related risk. We are constantly communicating internally with our innovation, utilities and infrastructure teams performing water scarcity scenario analysis on land and regions that will be affected across the UK. Water recovery systems and net water consumption are important mitigating variables in our response. Transition risks Housing regulations Changes to house specifications required due to Government legislation designed to reduce home emissions, for example the Future Homes Standard, including varying standards across the UK. Carbon pricing Increasing material and sub-contractor costs due to Government legislation designed to reduce emissions, for example carbon taxation on suppliers/increased demand for low-carbon materials. New technologies Implementation of new technologies in homes and new methods of construction, requiring high capital investment and upskilling of labour. Planning requirements Increasing planning or site infrastructure requirements from Government and local authorities result in reduced viability of land in certain regions. Water scarcity Increased water scarcity in areas of proposed developments leading to a lack of consistent water supply for new homes. H H H H M Increased build cost of sales by £5m-£205m Increased build cost of sales by £50m-£620m Increased build cost of sales by £10m-£30m Increased build cost of sales by £25m-£75m Increased build cost of sales by up to £5m Risk level /appetite H High risk M Medium risk L Low risk 84 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Scenario sensitivity key Low High Maximum unmitigated Timeframe Risk rating Financial Statements impact Short Medium Long Scenario sensitivity Our ongoing response Transition risks Housing regulations Changes to house specifications required due to Government legislation designed to reduce home emissions, for example the Future Homes Standard, including varying standards across the UK. Carbon pricing Increasing material and sub-contractor costs due to Government legislation designed to reduce emissions, for example carbon taxation on suppliers/increased demand for low-carbon materials. New technologies Implementation of new technologies in homes and new methods of construction, requiring high capital investment and upskilling of labour. Planning requirements Increasing planning or site infrastructure requirements from Government and local authorities result in reduced viability of land in certain regions. Water scarcity Increased water scarcity in areas of proposed developments leading to a lack of consistent water supply for new homes. H H H H M Increased build cost of sales by £5m-£205m Increased build cost of sales by £50m-£620m Increased build cost of sales by £10m-£30m Increased build cost of sales by £25m-£75m Increased build cost of sales by up to £5m Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation We continue to engage Government at ministerial level on a range of critical sustainability issues, as well as directly with relevant senior officials, via the UK Net Zero Buildings Council. We also support the Net Zero All Party Parliamentary Group and input into conversations around supply chain challenges to meet future energy demand for energy efficiency measures. We were the first national housebuilder to implement science-based targets for our scope 1 and 2 and scope 3 emissions, allowing us to take a leadership role in driving down emissions. We have commissioned a carbon price exposure analysis to establish its potential impact and have identified opportunities for mitigation through our net zero transition pathway on page 91. Through market research, product testing, university and research partnership, prototype test houses, and grant endorsed trials, we examine low carbon products, systems and processes for our housing types. We have accelerated these programmes through the Zed House and Energy House 2.0 to ensure a full view of available technology. Our specialised divisional land teams, as well as the Gladman team, possess extensive local knowledge and strong relationships with landowners which are vital to ensure we remain the developer of choice. To support further engagement and ensure our sustainability credentials are recognised when we bid for land, we have developed a sustainability toolkit for use by our land and planning teams. This includes detailed information on our approach to the Future Homes Standard, zero carbon homes, biodiversity and socio-economic outcomes. We are aware of the growing significance of water scarcity in the UK, which has resulted in a new climate-related risk. We are constantly communicating internally with our innovation, utilities and infrastructure teams performing water scarcity scenario analysis on land and regions that will be affected across the UK. Water recovery systems and net water consumption are important mitigating variables in our response. Barratt Developments PLC Annual Report and Accounts 2023 85 Strategic Report G F Climate-related risks and opportunities continued CLIMATE-RELATED RISKS AND OPPORTUNITIES continued Risk rating Maximum unmitigated Financial Statements impact Timeframe Short Medium Long Scenario sensitivity Our ongoing response Physical risks Overheating in homes Changes to house specifications required to mitigate long-term shift in climate patterns, such as prolonged increased temperatures in summer. Flood mitigation New site infrastructure required to mitigate extreme weather events, for example flood barriers and balancing ponds. Weather disruption Disruption to build activity due to increased frequency of severe weather, being heat, cold or precipitation, or damage to construction sites from extreme weather events. Supply availability Reduced supply availability (for instance timber) as a consequence of long-term shift in climate patterns and extreme weather events (e.g. wildfires, flooding) where the supply is sourced. Opportunities Demand for and affordability of green homes Eligibility for green mortgages and cost savings from energy efficiency allow for a premium to be charged on new homes. Green developments Increased land buying and local partnership opportunities through strong low-carbon credentials and offer of low-carbon developments, for instance partnering with councils to deliver low carbon homes. Cost of capital Barratt’s sustainability performance opens green financing opportunities, providing access to lower interest rates. Sustainable practices Proactive adoption of low-emission materials and processes, ahead of regulation, provides a cost advantage and improves reputation. L M L L H H L L Increased build cost of sales by up to £35m Increased build cost of sales by up to £5m Increased build cost of sales and decreased revenue by up to £5m Increased build cost of sales by up to £5m Increased revenues by £30m-£320m Decreased land cost of sales by £30m-£70m Decreased finance costs by up to £2m Decreased build cost of sales by up to £10m Risk level /appetite H High risk M Medium risk L Low risk 86 Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Barratt has created an industry-leading project that will test the effects of climate change and look at ways that the homes of the future can withstand more extreme weather conditions. Known as Energy House 2.0, the specially-built climate chamber recreates temperatures ranging from -20˚C to +40˚C, as well as simulating wind, rain, snow and solar radiation. This research will inform us of how various overheating adaptation technologies perform. Flood risk assessments are a key part of our land appraisals. We are proactively mitigating this risk through ongoing programmes of work, continual horizon scanning and engaging with key stakeholders to conduct extensive research through highly skilled internal and external experts. We closely monitor weather forecasts to ensure worker safety and prepare or adjust build schedules as appropriate. A crisis management plan is in place for extreme weather events. Modern Methods of Construction (MMC), such as timber frame, allow for parts of the construction process to occur offsite, increasing build speed and reducing exposure to the elements before it is sealed. Mitigation is largely through MMC, building efficiency and supply chain engagement. We regularly engage with our suppliers on availability of materials and sustainable sourcing both directly and through our Supply Chain Sustainability School. We purchase 99.84% of our timber from FSC or PEFC certified sources and consider supply sustainability at tender and contract renewal stage. The management of sustainability and climate change risks and opportunities in the supply chain is intrinsic to our operations and procurement framework. We are working directly with mortgage lenders to develop enhanced mortgage products that recognise the advantages of our new build homes. During FY23, we collaborated with The Leeds Building Society to support the launch of a new green mortgage product which recognised the advantages inherent in our new homes and has the potential to unlock up to a 10% uplift in lending. Moreover, through Government engagement and notably through the Future Homes Hub, Barratt’s Head of Mortgage Lender Relations chairs the “Valuation Group”, which is considering how the value of sustainable benefits of new homes can be recognised in the mortgage valuation process. We engage with landowners regularly via our land and planning and dedicated public land function. In the past year, we have seen increased direct engagement with landowners on sustainability, with the Group Sustainability Director attending three presentations with national and regional landowners to spotlight on sustainability. Within our Building Sustainably Framework, we outline our commitment to “unlocking green lending and finance”, including “exploring the potential of new green finance products for our business”. We have linked our Revolving Credit Facility (RCF) to sustainability performance through a sustainability-linked loan mechanism – see page 45. We previously conducted detailed comparative studies of timber waste in partnership with our timber frame company, Oregon Timber Frame and other key suppliers. This involved a close examination of the origin of the waste created in the building lifecycle, the type of waste and wood type. Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Scenario sensitivity key Low High Maximum unmitigated Timeframe Risk rating Financial Statements impact Short Medium Long Scenario sensitivity Our ongoing response Physical risks Overheating in homes Changes to house specifications required to mitigate long-term shift in climate patterns, such as prolonged increased temperatures in summer. Flood mitigation New site infrastructure required to mitigate extreme weather events, for example flood barriers and balancing ponds. Weather disruption Disruption to build activity due to increased frequency of severe weather, being heat, cold or precipitation, or damage to construction sites from extreme weather events. Supply availability Reduced supply availability (for instance timber) as a consequence of long-term shift in climate patterns and extreme weather events (e.g. wildfires, flooding) where the supply is sourced. Opportunities Green developments Increased land buying and local partnership opportunities through strong low-carbon credentials and offer of low-carbon developments, for instance partnering with councils to deliver low carbon homes. Cost of capital Barratt’s sustainability performance opens green financing opportunities, providing access to lower interest rates. Sustainable practices Proactive adoption of low-emission materials and processes, ahead of regulation, provides a cost advantage and improves reputation. L M L L H L L Increased build cost of sales by up to £35m Increased build cost of sales by up to £5m Increased build cost of sales and decreased revenue by up to £5m Increased build cost of sales by up to £5m Decreased land cost of sales by £30m-£70m Decreased finance costs by up to £2m Decreased build cost of sales by up to £10m Demand for and affordability H of green homes Eligibility for green mortgages and cost savings from energy efficiency allow for a premium to be charged on new homes. Increased revenues by £30m-£320m Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Sustainable transition Disorderly transition Adaptation Barratt has created an industry-leading project that will test the effects of climate change and look at ways that the homes of the future can withstand more extreme weather conditions. Known as Energy House 2.0, the specially-built climate chamber recreates temperatures ranging from -20˚C to +40˚C, as well as simulating wind, rain, snow and solar radiation. This research will inform us of how various overheating adaptation technologies perform. Flood risk assessments are a key part of our land appraisals. We are proactively mitigating this risk through ongoing programmes of work, continual horizon scanning and engaging with key stakeholders to conduct extensive research through highly skilled internal and external experts. We closely monitor weather forecasts to ensure worker safety and prepare or adjust build schedules as appropriate. A crisis management plan is in place for extreme weather events. Modern Methods of Construction (MMC), such as timber frame, allow for parts of the construction process to occur offsite, increasing build speed and reducing exposure to the elements before it is sealed. Mitigation is largely through MMC, building efficiency and supply chain engagement. We regularly engage with our suppliers on availability of materials and sustainable sourcing both directly and through our Supply Chain Sustainability School. We purchase 99.84% of our timber from FSC or PEFC certified sources and consider supply sustainability at tender and contract renewal stage. The management of sustainability and climate change risks and opportunities in the supply chain is intrinsic to our operations and procurement framework. We are working directly with mortgage lenders to develop enhanced mortgage products that recognise the advantages of our new build homes. During FY23, we collaborated with The Leeds Building Society to support the launch of a new green mortgage product which recognised the advantages inherent in our new homes and has the potential to unlock up to a 10% uplift in lending. Moreover, through Government engagement and notably through the Future Homes Hub, Barratt’s Head of Mortgage Lender Relations chairs the “Valuation Group”, which is considering how the value of sustainable benefits of new homes can be recognised in the mortgage valuation process. We engage with landowners regularly via our land and planning and dedicated public land function. In the past year, we have seen increased direct engagement with landowners on sustainability, with the Group Sustainability Director attending three presentations with national and regional landowners to spotlight on sustainability. Within our Building Sustainably Framework, we outline our commitment to “unlocking green lending and finance”, including “exploring the potential of new green finance products for our business”. We have linked our Revolving Credit Facility (RCF) to sustainability performance through a sustainability-linked loan mechanism – see page 45. We previously conducted detailed comparative studies of timber waste in partnership with our timber frame company, Oregon Timber Frame and other key suppliers. This involved a close examination of the origin of the waste created in the building lifecycle, the type of waste and wood type. Barratt Developments PLC Annual Report and Accounts 2023 87 Strategic Report G F Climate-related risks and opportunities continued Next steps Physical risks in the wider supply chain The Group currently considers the impact of climate change on supply chain disruption in timber. However, working with others, we are investigating the potential physical impact of climate change on our supply chain, expanding our existing coverage to other key materials. The findings of this assessment are expected to be shared later in FY24. Standing water flooding The Group’s current assessment of physical risk considers potential increases in both river and coastal flooding at a development level. However, at the time of modelling, projections for standing water flooding to the required granularity were not available. These projections are expected to be available for FY24, allowing the Group to update its viability assessment. This will allow the Group to ensure its current flood risk assessment procedures will remain appropriate in the medium and long-term. Land viability The variance maps below illustrate our assumed ability to pass climate-related costs onto land vendors through land prices. Under the “Adaptation” scenario, our limited exposure to transition risk and proactive measures to minimise physical risk suggest that land viability would not be significantly impacted within the modelled timeframes. However, the maps for the “Sustainable transition” and “Disorderly transition” scenarios highlight regions, such as the North East, where residential land prices are less resilient. Without taking action to reduce our exposure to transition risks, we may face limitations in passing through land costs in these areas, which could potentially result in lower margins. It is important to note that this assessment does not account for any mitigating actions taken or consider the impact of the UK Government’s “levelling up” agenda. CLIMATE SCENARIO ANALYSIS Modelling methodology The Group’s extended forecasts (as considered in its viability review and impairment assessments) are based on the International Energy Agency’s “Stated Policies” model, whereby global climate commitments are met in full and on time, leading to a global temperature rise of 2.7°C by 2100, giving rise to both physical and transition risks. For the UK, this includes the Ten Point Plan, the 2020 Energy White Paper and achievement of the 2021 net zero transition targets. This forms the basis of our financial planning, as discussed on page 82. We conducted an assessment of climate-related risks by analysing a sample of our existing land bank and supply chain sites. We utilised local climate data, obtained at a resolution of 90m2, based on the latest IPCC CMIP6 global climate models. This enabled us to project potential impacts under each of our time horizons and climate scenarios (defined on pages 82 and 83 respectively), considering indicators such as cold, flood, heat, precipitation, and wind. The projections obtained were utilised to evaluate the potential unmitigated impact on our divisions and supply chain under each climate scenario. We considered the specific vulnerabilities and risks associated with our business model, including the capacity to pass on industry-wide development costs to land vendors. As such, we assumed that the land price paid for a site could be reduced up to the extent it remained above the price that a landowner could achieve for an alternative use, assumed to be the land cost per acre for industrial use, as estimated by the Valuation Office Agency. This comprehensive assessment provides us with valuable insights into the potential risks and impacts that our divisions and supply chain may face due to climate change. By integrating this information into our strategic decision-making processes, we are better positioned to address climate-related risks and identify opportunities for sustainable development. The unmitigated financial impact and scenario sensitivities for each of the key climate-related risk and opportunities are presented in the risk table on page 84. While quantitative climate scenario analysis is a valuable risk management tool, to ensure a comprehensive understanding of climate-related risks and opportunities, we have complemented quantitative analysis with qualitative assessments of each climate scenario. Page 83 provides an overview of the wider impact of each scenario. Regional maps by scenario showing trading margin impact Sustainable transition Disorderly transition Adaptation Extent of the margin impact in 2050 0.0% 10% 88 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Overall financial impact Variance in profit before tax between climate scenarios and Stated Policies The below chart illustrates our best endeavour estimates of the potential unmitigated variance to profit before tax under each climate scenario compared to the “Stated Policies” baseline. See the risk table on page 84 for detail of our responses to each climate-related risk, which will improve financial performance. 300 250 200 150 100 50 0 -50 -100 -150 -200 2025 2030 2050 Stated Policies Sustainable Transition Disorderly Transition Adaptation Short term (to 2025) Medium term (2025 to 2030) Long term (2030 to 2050) Sustainable Transition Carbon prices increase in line with current policy commitments. Slow uptake of green mortgage products. Disorderly Transition Carbon prices increase in line with current policy commitments. Minimal uptake of green mortgages. FHS is introduced from 2025 as planned. Carbon pricing increases from $90/ tCO2e to $140/tCO2e. Increased take-up of green mortgages. Land acquisitions are increasingly conditional on enhanced sustainability credentials. Industry-wide costs start to be reflected in the land bidding process. FHS is introduced from 2025 as planned, with additional building regulations introduced in 2030. Carbon pricing increases from $87/tCO2e to $135/tCO2e. Majority of mortgage sales use green mortgages. Land acquisitions are increasingly conditional on enhanced sustainability credentials. Industry-wide costs start to be reflected in the land bidding process. Additional building regulations introduced from 2030 onwards. Increased demand for sustainability and smart technologies in homes. Carbon pricing increase steadily to $250/tCO2e by 2050. Majority of mortgage sales use green mortgages. Land acquisitions are increasingly conditional on enhanced sustainability credentials. Further building regulations are introduced from 2040. Increased demand for sustainability and smart technologies in homes. Carbon pricing continues to increase sharply to $291/tCO2e by 2050. Land acquisitions are increasingly conditional on enhanced sustainability credentials. Adaptation Carbon prices rises are significantly lower than current policy commitments. Carbon prices decrease significantly to below 2023 levels. Limited opportunities. Limited financial impact of physical risks, due to proactive mitigations currently in place. Impact of severe weather intensification outweighed by reduced carbon pricing and regulatory requirements. One off costs associated with additional mitigation measures. Increased investment in flood defences in certain regions. Barratt Developments PLC Annual Report and Accounts 2023 89 Strategic Report G F Climate-related risks and opportunities continued WHAT IT MEANS Strategic impact Our analysis indicates that whilst climate change will come at a cost under all scenarios and timeframes, our business model is expected to remain profitable in each case. This holds true even when assuming we take no additional mitigating actions beyond those already incorporated into our business plan. While undesirable, the adaptation scenario is shown to have the lowest financial impact on the Group. The physical impacts of climate change on the Group are manageable, testament to the proactive measures we are already taking such as design changes to prevent overheating, and conducting flood risk assessments prior to bidding for land. A sustainable transition, though better for the climate, brings higher transition costs. However, due to its potential opportunities, this scenario is likely to be more advantageous than if climate policies continue as currently planned. Due to its disruptive nature, the Group faces its greatest impact under a disorderly transition, particularly through steep carbon pricing hikes from 2030 onwards. However, our analysis indicates our business remains profitable even under this worst-case scenario. In order to be best positioned to thrive in whichever climate scenario we face, this analysis highlights key areas in which we must continue to progress. Impact on the Financial Statements Our scenario analysis shows that the financial impact of climate change will increase over time as physical changes or transitionary regulation intensify. Its financial relevance is not limited to the future; climate change is already a factor in our financial planning and our future forecast, both of which affect the financial information we are reporting today. Going concern and long-term viability In preparing these Annual Report and Accounts, we must assess whether there are any material uncertainties over the ability of the business to continue to operate as a going concern (see note 1 to the Financial Statements on page 188. We must also assess the prospects of the business over the longer term for disclosure in our Viability Statement (see page 99). To do this, we stress-tested our financial forecasts for the impact of our principal risks manifesting to a severe but plausible level over the three-year period to 30 June 2026. As part of this, we assumed that the Group would experience climate-related transition risk in line with the Sustainable transition scenario, including the effects of the Future Homes Standard and carbon pricing. It was determined that, even when climate risk manifests alongside our other high-impact principal risks, the Group remains able to meet its commitments and continue trading over the review period. Site profitability The expected costs of compliance with Parts F and L of the Building Regulations, applicable from 15 June 2022, and design changes required to mitigate overheating in homes have been factored into the estimated costs to complete of developments in line with the accounting policy described in note 3 to the Financial Statements on page 191. These costs are reflected in the carrying values of inventories and the margins recognised for developments for which future completions will be affected. 90 Given our supply chain accounts for 67% of our value chain emissions (see pages 92 to 93 for more detail), the Group’s greatest exposure to climate-related risk is through rising carbon prices. It is imperative for us to work with our supply chain to reduce embodied carbon in the materials and services we procure, mitigating the impact of carbon prices. See detail on our progress to date in our transition pathway on page 91. Increasingly stringent building regulations associated with reducing emissions and improving resilience to rising temperatures is another key risk, which will require us to update home designs and construction techniques. Examples of how we are responding to this risk are showcased in our concept eHome2 on page 34 and detail of how we are adapting house designs is provided on page 34. Recent rises in energy costs and the increasing importance of sustainable living to our customers mean that we must leverage our sustainability expertise to provide energy-efficient homes on green developments at affordable prices. We are proactively promoting green mortgages with our lender partners to ensure that mortgage terms reflect the energy savings from living in our homes (see page 31). In order to monitor and assess progress towards reducing our exposure to climate-related risks and maximising our opportunities we have identified several metrics and targets, detailed on page 96. The Group operates under a three-year forecasting cycle. All known material climate-related impacts are factored into the forecast and site-specific climate considerations are reflected in our assessments of site profitability. In preparing the Financial Statements for the year, the financial impact of climate change has been reflected as follows: Land acquisitions The Group uses the latest flood risk assessments when reviewing potential land acquisitions or options for strategic sites. If any sites require additional flooding mitigation, this is factored into our viability assessments, tender offers and forecast margins for those sites. The carrying value of land and work in progress is assessed at the year end as described in note 16 to the Financial Statements on page 207. Our assessment of changes in flood risk under our climate scenarios has not identified any sites within our current portfolio for which the cost of enhanced flood defences would result in an impairment. Goodwill and intangible assets Each year, we review the carrying value of goodwill and intangible assets with an indefinite useful life held on the balance sheet. To do this, we calculate the present value of forecast future cash flows, as described in note 10 to the Financial Statements on page 200. The cash flows forecast for years three to five reflect the likely outcome of announced policies, as modelled in the Group’s climate scenario analysis for FY25, and extrapolated to perpetuity, thereby reflecting the short to medium-term effect of climate change in the valuation. Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F TRANSITION PATHWAY 99% of our value chain emissions arise upstream and downstream of our operations. We have a science-based target to reduce our scope 3 emissions intensity by 24% by 2030 compared to 2018 levels and an ambition to be net zero across our full value chain by 2040. Our carbon transition programme is fundamental to achieving this ambition. The programme describes the co-ordinated activity designed to ensure we achieve our targets and how we see our business decarbonising over time. Achieving our targets will greatly reduce our exposure to climate-related risks in high-transition-risk scenarios and maximise our potential to take advantage of climate-related opportunities. Reducing both direct and indirect emissions will minimise our exposure to the potentially significant carbon pricing increases that are anticipated if global temperature rises are to be limited to sustainable levels. For a further breakdown of our greenhouse gas emissions and commentary of performance in the year see page 97. Our direct operations We are empowering divisional teams to understand and take action to reduce their carbon emissions. See page 98 for detail on how we are using carbon and energy dashboards to achieve this. To date this has contributed to the reduction of 23.7% of our absolute scope 1 and 2 emissions since 2018, against a target of 29%. Whilst our direct operations represent only 1% of our full value chain emissions, we continue to show sector leadership in driving emissions reductions through efficiency programmes and the targeting of lower emission energy sources. HVO is synthesised from 100% renewable materials such as vegetable and animal oils, reducing net greenhouse gas emissions by up to 90%. Our decision to expand its use followed a comprehensive best practice review, covering environmental, social and ethical impacts, and a detailed viability assessment as an alternative to conventional diesel. Our rigorous due diligence includes sourcing from ISCC-certified waste palm oil as well as RFAS-verified feedstocks, ensuring best practices. We remain vigilant, continuously monitoring complex supply chains for emerging sourcing risks to adjust our HVO purchasing strategy accordingly. 70% of telehandlers with Stage V engines at 30 June Ensuring all plant on Barratt sites is the most fuel efficient we can obtain. We lease construction machinery (telehandlers) with the latest energy efficient diesel engines, upgraded as leases are renewed; and monitor telehandler usage to prevent idling and to promote efficient use. 87% of electricity on REGO-backed renewable tariffs Connecting sites to the grid using renewable electricity contracts, and where diesel generators are unavoidable, reducing the amount of time these are used on sites; and continuing to apply best practice energy efficiency at plots, show homes and offices. 16% of total site fuel consumed was HVO Expanding the use of HVO (Hydrotreated Vegetable Oil) in our on-site plant as part of the transition to alternatives such as the use of electric plant. 32% of generators were hybrids at 30 June In trials conducted by Barratt, using hybrid generators was found to save over 20% of fuel compared to a conventional generator. 66% of company car fleet vehicles were EVs or plug-in hybrids at 30 June We have a target in place for 100% of company car fleet free of diesel and petrol cars by 2030 with no further diesel cars offered from the end of June 2022 and no petrol cars offered from end of June 2024. By 2028, owing to the natural cycle of fleet replacement, there will be no petrol fleet cars at Barratt. For a detailed overview of our scope 1 and 2 decarbonisation programme see our website. Barratt Developments PLC Annual Report and Accounts 2023 91 Strategic Report G F Climate-related risks and opportunities continued TRANSITION PATHWAY continued Decarbonising the value chain With scope 3 emissions representing 99% of our value chain emissions, the key to finding solutions is through genuine collaboration and the sharing of knowledge and insights between us and our suppliers, as well as sector-wide groups we lead or participate in. Alignment with the Future Homes Standard will play a significant role in decarbonising our downstream emissions and the choices that the Group can make in respect of materials choices (see page 34) for detail sustainable homes of the future case study. We have analysed our full value chain and developed a transition pathway. However, we recognise there are uncertainties around reductions of scope 3 emissions including: measurement of supply chain emissions, sectoral commitments, national policy, and technological advancements. Going forward, we will continue to work through these issues with our partners and will update our transition pathway as needed. Future work will be underpinned by the ongoing development of models and tools that allow us to continue to factor in underlying assumptions such as sector decarbonisation, identification of priority initiatives for action, and increasing direct measurement of supply chain partners emissions. 100% 99% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Key Scope 1 and 2 (1%) Grid decarbonisation* (3%) Building standards Building techniques (32%) (7%) Diesel substitution Main contractors Bricks & blocks Timber (3%) (3%) (1%) (1%) 2023 2025 2030 92 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Value Chain – assessing our impacts We have assessed and reported our value chain impacts using the Environmentally Extended Input Output Methodology (EEIO), which is recognised in the Greenhouse Gas Protocol technical guidance for calculating scope 3 emissions published by the World Resources Institute and the World Business Council for Sustainable Development. EEIO is based on the amount spent on products and services, multiplying this by a greenhouse gas factor for each individual product or service. For more detail on our methodology, please refer to our website www. barrattdevelopments.co.uk/building-sustainably/our- publications-and-policies/publications. We currently use EEIO (as above) but recognise the opportunity to improve on the accuracy of this and have over the last two years developed a programme to begin the transition to a hybrid methodology to determine our scope 3 emissions. We’re making good progress – to date, we have engaged with 11 subcontractors and 20 suppliers covering groundworks and several of the critical sectors referred to in the table below, representing an estimated 20% of our total value chain emissions. We also recognise the importance of national policy on our decarbonisation pathway for example we currently assume a proportion of our reductions will come from the decarbonisation of the grid. We therefore engage with central government on a regular basis to share our insights (see page 64). Value chain Scope 1 and 2 Homes in use: 32% To read more about our sustainable homes, see page 46 Site preparation and building techniques (excluding materials): 10% Construction materials: 57% 1% 3 e p o c S % 9 9 Concrete & cement Lime & gypsum (plasterboard) Additional materials Material choices (5%) (7%) (18%) (22%) Notes: Groundwork raw materials have moved into construction materials. Anticipated contribution to value. Chain emissions shown in brackets. * Grid decarbonisation initially assessed as contributing 3%. This is combined with homes in use from 2030. 2040 Barratt Developments PLC Annual Report and Accounts 2023 93 Strategic Report G F Climate-related risks and opportunities continued TRANSITION PATHWAY continued Improving supply chain data and information During the year we have continued to collaborate with our supply chain to improve the quality of specific supplier emissions data so that we can capture our scope 3 performance more accurately. This has allowed us to develop a greater understanding of supplier carbon reduction strategies, which is proving invaluable in driving action where it is needed most. A key area of focus going forward is therefore to drive a more granular understanding of our supply chain emissions, using data collected directly from our partners. Our analysis to date gives us a clear view of where we need to focus our efforts: 75% of supplier-related emissions in our value chain arise from around 70 suppliers; whilst 50% of subcontractor- related emissions are estimated to arise from a similar number. The contribution of key sectors to the Group transition pathway We recognise that some partners in our value chain, by the very nature of the products they manufacture, have higher emissions associated with their activities. The decarbonisation of these critical sectors is a fundamental part of our carbon reduction pathway for scope 3. During the year we therefore analysed the wider commitments of relevant sectors, to identify specific activities our own transition pathway is reliant on and to facilitate a more direct engagement programme in the coming years. This will allow us to track and monitor the most important emissions pathways, and to encourage action where needed. Grid decarbonisation The UK government has committed to a decarbonised grid by 2035. This, tied in with future building standards, the cessation of gas boilers in new homes, and the Group having homes that can be zero carbon in use from 2030 would see a significant reduction in our downstream carbon emissions. This would require government to deliver on its goals by deploying sufficient solar and wind, along with other low or zero carbon energy sources, and driving overall grid efficiencies. Future home standards (FHS) and building techniques From 2025, the FHS will require new homes to produce at least 75% less carbon emissions from homes compared with 2013 building regulations. This contributes a reduction of around a third of total value chain emissions from 2030 because of the stringent energy efficiency requirements. We continually work to improve the energy efficiency of our homes and are adapting our home designs in response to current regulations and the subsequent changes within the Future Homes Standard. In FY23, 99.2% (FY22: 98.8%) of our home completions were EPC rated A or B. For more detail see pages 46 to 47. Additionally, a key element to both our MMC and carbon reduction strategy is the delivery of an increased share of timber frame homes. Timber frame provides an efficient method of construction with lower levels of embodied carbon, and we delivered 5,578 homes using MMC equating to 32% of our total home completions (see page 33 for further details). Alternative fuels during groundworks and site preparation Our groundworks supplier partners utilise diesel-powered equipment. As with our own approach to plant on site, we anticipate that heavier plant used in site preparation will continue to move to the most efficient engines available, use HVO as a transition fuel in the short term, and, over the longer term beyond 2030, move to the use of batteries. Beyond this, some manufacturers are investigating hydrogen fuel cells, though this is still a nascent technology. Materials choices Investigations into low carbon building materials has continued this year, for example we have trialled bricks with lower material volumes in our Kent Division, which in turn lowers the embodied carbon content. This is an illustration of the opportunities that could be scaled through supply chain engagement. We continue to investigate materials which contribute to lowering the embodied carbon of our homes. Supply Shocks and Uncertainties Recent significant events such as the arrival of COVID-19 or the invasion of Ukraine have been of macroeconomic significance and had a significant impact on supply chains globally, with the Group seeing rapid inflation in the price of materials and the cost of energy for example. Due to the spend-based nature of the EEIO methodology, this naturally has an impact on the calculated size of our value chain emissions and is another driver for moving to a hybrid model incorporating direct measurement. Agile management of our transition pathway will be vital in the coming years to allow us to respond to supply shocks and balance out shortfalls in one area with additional reductions driven through other sectors. 94 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Supply chain actions under investigation Critical sectors Key carbon reduction levers Concrete and cement (including mortars) ∙ Move to renewables and lower carbon products. ∙ Waste management and circularity, decreasing use of virgin materials and lowering energy required in production. ∙ Modern methods of construction (MMC) and innovative products to reduce volumes required. Bricks and blocks ∙ Reduced volume and higher recycled content bricks. ∙ Kilns fired with renewable energy, including hydrogen and syngas. Lime and gypsum (plasterboard) Ceramics (including roof tiles for example) ∙ Increased use of renewable energy. ∙ Increased use of recycled materials and reduction in volume of virgin materials. ∙ Increased use of gasification of biomass, industrial heat pumps, hybrid drying, and extended tunnel kilns. Hydrogen as an alternative to gas and heat recovery. ∙ Increased recycled content and reuse of “waste” materials to avoid use of virgin products and lower embodied carbon. Plastics (including pipework and windows for example) ∙ Recycling of plastic and encourage large scale adoption of green plastics and bioplastics. ∙ Promote usage of waste plastic in innovative products, e.g. plastic concrete. Timber ∙ Waste management and circularity, decreasing use of virgin materials and lowering energy required. ∙ Alternative building materials e.g. cross-laminated timber elements where appropriate. Ferrous metals (including steel) ∙ Updated production such as direct reduced iron and smelting reduction. ∙ Move towards hydrogen-based steel making. ∙ Promote usage of green steel. Main Contractors – direct purchase of materials Additional materials across our operations ∙ Identification of products with lower embodied carbon. Adoption of products with Environmental Product Declarations. ∙ All the above initiatives will likely contribute, especially where products are made from multiple materials. Barratt Developments PLC Annual Report and Accounts 2023 95 Strategic Report G F Climate-related risks and opportunities continued On track Achieved Monitor Below target Target not met METRICS AND TARGETS To monitor progress of our response to risks and opportunities, management monitor several indicative performance metrics. We are focused on reducing the emissions of the homes we build, to offer our customers even better energy efficiency as well as resilience to climate change. We acknowledge the current obstacles to effectively reducing value chain emissions, including the lack of data, and inconsistent standards, and we therefore anticipate greater progress will be made over the medium- to long-term. Whilst we face headwinds in the short term, our immediate plans for improvements in data collection and stakeholder engagement will drive our performance towards these goals. Metric Scope 1 & 2 (market-based) greenhouse gas emissions (tCO2e) Scope 3 (market-based) greenhouse gas intensity (tCO2e/100m2) Average DER for completed properties (kgCO2/m2/yr) Risk/ Opportunity Carbon pricing Carbon pricing Description As per our “Disorderly Transition” scenario (outlined on page 83), external carbon prices could reach up to $291 per tCO2e by 2050. The Group monitors its exposure to carbon pricing through its direct and indirect greenhouse gas emissions, as its energy usage and emissions of suppliers act as indicators of the activity that may be subject to future increases in regulatory costs. To ensure we achieve emissions reductions in line with a 1.5°C transition, we have committed to SBTi approved targets across our value chain, measuring direct and indirect emissions against the baseline year of 2018. Details of how we will achieve these targets are presented in the transition pathway on pages 91 to 95. Housing regulations; Demand for and affordability of green homes With over a fifth of UK emissions coming from its homes, reducing emissions from residential buildings is a priority for the UK’s decarbonisation strategy. This includes reducing the emissions generated in new build homes, which is reflected in building regulations such as the Future Homes Standard, which will require a reduction in the Dwelling Emissions Rate (DER) of 75-80% compared to 2013 building regulations. Use of offsite- based products and systems in homes constructed New technologies; Weather disruption Percentage of home completions in year achieving an A or B EPC rating Demand for and affordability of green homes Modern methods of construction utilising offsite production reduce build time and increase resilience to severe weather. In FY22 we accelerated our ambition and updated our 2025 target to apply offsite- based products and systems to 30% of homes. Low running costs associated with energy efficiency of new homes is an important consideration for homebuyers, with the average new Barratt home unlocking savings of up to £2,200 per annum compared with older homes. Therefore, maintaining at least 99% of our homes at an EPC A or B rating will support us in benefiting from the opportunities available for energy-efficient new homes. Target performance Target performance Target performance Target performance Target performance 23,186 169.35 12.91 30% 99% FY23 performance FY23 performance FY23 performance FY23 performance FY23 performance 24,909* 242.13 16.02* 32% 99% 32,657 25,074 24,909 23,186 222.83 219.27 242.13 15.89 15.89 16.02 169.35 12.91 27% 32% 30% 99% 99% Baseline year: 2018 Baseline year: 2018 Baseline year: 2022 Target year: 2025 Target year: 2025 Target year: 2030 Target year: 2025 Target status Key Baseline performance FY22 FY23 Target performance 96 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F On track Achieved Monitor Below target Target not met As per the climate risk register presented on page 84, our greatest exposure to climate change is through transition risks, particularly those related to building regulations and carbon pricing. All our residential properties are subject to incoming building regulations, but we are investigating means to monitor adherence to building regulations further. We are also investigating the implementation of internal carbon pricing to allow future emissions to inform decision making. Relatively few of our assets or business activities are vulnerable to physical risks since our land appraisal process already considers physical risks such as flooding. Therefore, rather than applying an overall percentage of business activities subject to physical risks, we deem it more appropriate to monitor exposure to physical risks through risk-specific metrics. To that end, we are looking to implement monitoring of overheating and weather disruption over the next 12 months. Further industry-wide metrics are included within our SASB disclosure on our website and cross-industry metrics are included in the five-year record on page 239. Greenhouse gas emissions Our greenhouse gas emissions are presented below. A further breakdown of our value chain emissions and our plans to decarbonise in line with our 2040 net zero ambition are presented on page 92. Greenhouse gas emissions Scope 1 Scope 2 Total gross scope 1 & 2 emissions Scope 1 & 2 energy consumption Carbon intensity (scope 1 & 2 emissions per 100m2 of legally completed build area) Scope 3 category 1: Purchased goods & services Scope 3 category 11: Use of sold products Other scope 3 emissions Total gross scope 3 emissions Scope 3 carbon intensity (scope 3 emissions per 100m2 of legally completed build area) Total gross scope 1, 2 & 3 emissions tCO2e Market based tCO2e Location based tCO2e Market based tCO2e Location based tCO2e 2023 2022 23,580* 23,234 1,329* 1,840 5,515* 24,909 4,802 25,074 2021 26,769 2,496 5,973 29,265 2020 20,323 1,640 4,260 21,963 2019 27,169 3,413 5,162 30,582 2018 27,577 5,080 6,716 32,657 29,095 28,036 32,742 24,583 32,331 34,293 MWh 139,718* 128,189 141,945 102,966 127,434 127,496 Market based tCO2e/100m2 1.60* 1.53 1.78 1.80 1.78 1.90 Location based tCO2e/100m2 1.86* 1.71 1.99 2.02 1.89 1.99 tCO2e tCO2e tCO2e tCO2e 2,332,213 2,395,642 1,923,397 2,019,509 2,305,017 2,421,559 1,217,738* 1,244,317 1,352,982 930,797 1,311,087 1,273,346 229,378 241,921 144,890 178,479 217,907 160,785 3,779,329 3,881,879 3,421,269 3,128,785 3,834,011 3,855,690 tCO2e/100m2 242.13 236.67 208.12 256.52 222.96 222.83 Market based tCO2e Location based tCO2e 3,804,238 3,906,953 3,450,534 3,150,748 3,864,593 3,888,347 3,808,424 3,909,915 3,454,011 3,153,368 3,866,342 3,889,983 Scope 1, 2 and 3 GHG emissions have been measured in accordance with the operational control method of the GHG Protocol. All scope 1 and 2 GHG emissions arise in the UK. Emission factors come from BEIS “UK Government Conversion Factors for Company Reporting 2022”. Scope 1 & scope 2 energy consumption comprises scope 1 energy consumption of 110,996 MWh* and scope 2 energy consumption of 28,722 MWh*. Other scope 3 emissions is comprised of category 2: capital goods; category 3: fuel & energy related activities (6,234 tCO2e)*; category 4: upstream transportation & distribution; category 6: business travel (4,016 tCO2e)*; category 7: employee commuting; and category 12: end of life treatment of sold products. Deloitte have provided independent third-party limited assurance in accordance with the International Standard for Assurance Engagements 3000 (ISAE 3000) and Assurance Engagements on Greenhouse Gas Statements (ISAE 3410) issued by the International Auditing and Assurance Standards Board (IAASB) over selected metrics in the tables and footnotes above and across identified with an *. Deloitte’s full unqualified assurance opinion, which includes details of the selected metrics assured, our full Carbon Reporting Methodology Statement, our ESG Basis of Reporting and a full breakdown of scope 3 GHG emissions, see our website www.barrattdevelopments.co.uk/building-sustainably/ourpublications-and-policies/publications. Barratt Developments PLC Annual Report and Accounts 2023 97 Strategic Report G F Climate-related risks and opportunities continued Greenhouse gas emissions continued Scope 3 restatement Greenhouse gas emissions Scope 3 category 1: Purchased goods & services Other scope 3 emissions Total gross scope 3 emissions Scope 3 carbon intensity (scope 3 emissions per 100m2 of legally completed build area) Total gross scope 1, 2 & 3 emissions tCO2e tCO2e tCO2e tCO2e/ 100m2 Market Based Location Based tCO2e tCO2e 2022 (as published) Updates to EEIO factors 2022 (restated) 2021 (as published) Updates to EEIO factors 2021 (restated) 2020 (as published) Updates to EEIO factors 2020 (restated) 2,131,408 264,234 2,395,642 1,983,082 (59,685) 1,923,397 2,020,341 (832) 2,019,509 220,814 21,107 241,921 148,189 (3,299) 144,890 177,919 560 178,479 3,596,538 285,341 3,881,879 3,484,253 (62,984) 3,421,269 3,129,057 (272) 3,128,785 219.27 17.40 236.67 211.95 (3.83) 208.12 256.54 (0.02) 256.52 3,621,612 285,341 3,906,953 3,513,518 (62,984) 3,450,534 3,151,020 (272) 3,150,748 3,624,574 285,341 3,909,915 3,516,995 (62,984) 3,454,011 3,153,640 (272) 3,153,368 The estimation of scope 3 emissions from our supply chain applies industry-specific Environmentally Extended Input Output (EEIO) factors against supplier spend. These factors are updated annually based on macroeconomic indicators. During the year, The World Bank issued retrospective updates to these macroeconomic indicators affecting 2022, 2021 and 2020. As such, the EEIO factors for these years have been updated, with the impacts outlined in the table above. For information and progress on our scope 1 & 2 and scope 3 carbon reduction initiatives and how we plan to decarbonise across our operations and value chain, see our transition plan on page 91. How we are building our climate data framework The Group has set out a roadmap for further ESG reporting improvements, which includes the monitoring of climate-related metrics. To support this, we have identified three ESG data strategy priorities to (i) automate data collection; (ii) enhance controls over ESG data; and (iii) provide actionable insights through dashboard reporting. To support action to achieve emissions-related remuneration targets (detailed on page 158), local management now receive regular data on emissions performance, benchmarking their divisions against other regions and allowing for the identification of high and low performing sites. We are currently developing further data reporting that will show the impact of specific equipment usage at the site level to further drive energy-efficient behaviours. This will also allow for the monitoring of initiatives detailed in our transition pathway, leading the path towards net zero. Our data priorities will be embedded across the Sustainability Framework by the end of FY24. This is a rapidly evolving area and our roadmap to automated and actionable ESG data reporting will be updated periodically to take into consideration new priorities for data collection as they become clearer through regulatory drivers or voluntary targets. Driving performance Performance against the Group’s climate-related targets is reported to the Sustainability Committee, a sub-committee of the Board. In January 2023 we converted our £700m revolving credit facility to a sustainability-linked loan. The performance measures are (1) science-based target aligned scope 1 & 2 emissions reductions; (2) waste intensity reduction; and (3) improving the sustainability of our homes by reducing the average Dwelling Emission Rate. To drive the implementation of our climate-related targets, scope 1 and 2 greenhouse gas reduction is included as a performance measure for the LTPP awarded to Executive Directors and senior managers, accounting for 15% of the award. Full details of the 2022 award to Executive Directors are presented in the Remuneration Report on pages 137 to 168. Our scope 1 & 2 (market-based) absolute emissions decreased by 0.7% in the year, representing an overall decrease of 23.7% compared to our 2018 baseline, reflecting steady progress towards our science-based target of a 29% reduction by 2025. However, scope 1 & 2 (market-based) intensity increased by 4.4% in the year, primarily due to timing differences between what was built versus handed over. Despite reductions achieved in scope 1 & 2 (market-based) emissions, we are mindful that our direct energy consumption has increased by 9.0% in the year. While our efforts on initiatives such as substitution of diesel with HVO and adoption of renewable electricity tariffs have resulted in significant emissions savings, underlying energy requirements have increased. In response, we are prioritising energy reduction activities and are supporting this with enhanced carbon emissions reporting to local divisions, providing greater visibility of energy usage on sites to enable them to drive a reduction in energy consumption and cost. Scope 3 absolute emissions decreased by 2.6% in the year, primarily driven by a reduction in upstream emissions from purchased goods & services, which we calculate using a spend- based method, particularly susceptible to high price inflation in some carbon-intensive sectors of the supply chain. See page 94 for a summary of how we are working with key suppliers to obtain quantity-based emissions data that is more representative of the materials we source from them. Like scopes 1 & 2, the lower volume of properties handed over in the year also had an impact, and therefore scope 3 intensity increased by 2.3% in the year. 98 Barratt Developments PLC Annual Report and Accounts 2023 Strategic Report G F Viability Statement Going concern In determining the appropriate basis of preparation of the Financial Statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future. After making enquiries and having considered forecasts and appropriate sensitivities, the Directors have formed a judgement, at the time of approving the Financial Statements, that there is reasonable expectation that the Group has adequate resources to continue to operate for the foreseeable future, being at least 12 months from the date of signing of these Financial Statements. (More information on the going concern judgement can be found in note 1 to the Financial Statements.) Therefore, the Directors continue to adopt the going concern basis in the preparation of these Financial Statements. Viability statement In accordance with the Code, the Directors have assessed the prospects and financial viability of the Group over the longer term, considering both its current position and circumstances, and the potential impact of its principal risks. The Group’s business model is presented on pages 14 to 15 and its future prospects are primarily monitored through the risk management processes detailed on page 71. Assessment period For the long-term Viability Statement, the Directors consider that a three year review period is appropriate. This period is aligned to our operating framework of a 3.5 years owned land bank, and the time frame over which the majority of our risks have the potential to manifest. Additionally, the Group’s bottom-up planning and forecasting cycle, which considers a wide range of information relating to present and future business conditions, including those which impact on expected profitability, cash flows and funding requirements, covers three years. As environmental and climate change risks become more significant, the potential for moving towards five year review period will be considered for future viability assessments. The Group’s business plan reflects the anticipated effects of the current economic environment. The Group is forecast to remain profitable and in compliance with its financial covenants throughout the forecast period. Principal risks The Group continues to be subject to its principal risks, which are detailed on pages 73 to 77. This Viability Statement considers the impact that these risks might have on its ability to meet its targets in current market conditions over the review period. The current economic environment presents significant macroeconomic uncertainties, most notably around interest rates and their consequent impacts on UK economic growth and housing affordability, as well as consumer confidence and spending. The risks that were considered relevant, for which the impacts were applied in aggregate, were as follows: Principal risk Impact modelled A E Economic environment Supply chain resilience A decline in demand, leading to a 10% reduction in private average selling prices compared to FY23 levels throughout FY24 and FY25 followed by a 3% recovery in FY26, and a fall in sales volumes of 25% in FY24 followed by a 5% recovery in FY25 and FY26. A further increase in material and labour costs of 3% arising from shortfalls in supply and inflationary pressures. C,G J Government regulation and political risk; Safety, health and environment Environmental, social and governance A Building Safety Levy of £1,500 per private plot for potential additional safety costs that could be imposed by the UK Government. Climate-related transition risk will manifest to a greater degree than forecast, consistent with a 1.5oC global temperature rise, including early implementation of the Future Homes Standard and increased carbon pricing, with the impact being seen from FY25. An additional cost per plot of £5,500 has been included. Group resilience to risk impact modelled Geographic and product diversity allows for flexibility in response to market conditions whilst the diverse land bank allows for selective development of future sites. Key supplier audit programme, centralised procurement and long-standing relationships ensure continuity of supply. Robust cost control through well-monitored build programmes. Strong balance sheet and net cash position along with good cost control through well monitored build programmes. Mitigating actions to risk impact modelled In response to lower volumes, a reduction in uncommitted land investment combined with a reduction in the level of production and therefore work in progress, as well as a reduction in overhead base. Redesign of developments to emphasise cost savings. Central procurement review of supply agreements with significant agreements fixed in advance. As an industry-wide cost, any such levy will likely be factored into future land bids over the medium term. Continuous investment in new technologies and engagement with the wider supply chain, ensuring responsibly sourced materials. For further details regarding climate change risks, refer to the TCFD disclosures on pages 78 to 98. For the transition pathway to achieve net zero by 2040 and mitigating exposure to carbon pricing, see page 91. Barratt Developments PLC Annual Report and Accounts 2023 99 Strategic Report G F Viability Statement continued Viability Statement continued Outcome of assessment To assess the Group’s resilience to adverse outcomes, its forecast performance over the three-year period was sensitised to reflect a series of scenarios based on the Group’s principal risks and the downside prospects for the UK economy and housing market presented in the latest external economic forecasts. This assessment included a reasonable worst case scenario in which the Group’s principal risks manifest to a severe but plausible level. Under the described scenario, the Group is able to operate within its current facilities, meet its liabilities as they fall due, and remain in compliance with its financial covenants in the assessed period. The Group has a policy of maintaining a £150m headroom on its available facilities and would remain in compliance with this policy throughout the viability review period. Under the scenario, the Group would undertake mitigating actions in response to the challenging circumstances modelled. This would primarily involve a reduction in investment in land and work in progress in line with the fall in expected sales, and would not compromise the Group’s ability to grow over the long term. The Directors have also carried out reverse stress testing to determine the market conditions in which the Group would cease to be able to operate under its current facilities within the three-year review period. The Group’s base forecast was sensitised to an immediate reduction in average selling prices from 1 July 2023 by a set percentage up to the point at which the Group breached its covenants or headroom policy. A second stress test was performed in which the base forecast was sensitised to an immediate reduction in sales volumes from 1 July 2023 by a set percentage up to the point at which the Group breached its covenants or headroom policy. A reduction in uncommitted land spend of 50% was included as a mitigating action in both stress tests. It was determined that a reduction in average selling price of c. 31% or a reduction in sales volumes of c. 74% would result in a breach. The Directors consider such sustained falls in average selling price or sales volumes to be extremely unlikely. Mitigations Furthermore, in such challenging economic circumstances, additional options would be available to ensure that the Group would retain the flexibility to react to further risks or opportunities, including: (i) further reductions in uncommitted land spend; (ii) redesign of developments to emphasise cost savings; (iii) suspension of discretionary bonus payments; (iv) reduction or suspension of dividend payments; (v) disposal of interests in joint ventures to partners; and (vi) sale of land or unsold stock at discounted value. As these actions could affect the long-term solvency and growth prospects of the Group, they would only be used to meet immediate requirements. Nonetheless, their availability in addition to the actions modelled demonstrates that the Group has further flexibility to respond to challenges as they arise. Based on this review, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment. Over the longer term, climate change will present an increasing risk to the Group. In response to this, and in line with the recommendations of the Taskforce on Climate-related Financial Disclosures, the Board has undertaken a review of the climate- related risks and opportunities that may affect the business out to 2050, including the modelling of the Group’s resilience under several climate-related scenarios. The results of this review, as well as the action being undertaken to ensure the business is well positioned to thrive in the new physical, socio-economic and regulatory environment, are set out on pages 78 to 98. Looking forward, significant macro-economic challenges, most notably persistent inflation and a higher interest rate environment, will impact the housebuilding sector in the medium term. The Directors consider that the Group can demonstrate its resilience to these challenges with its well- capitalised balance sheet, strong net cash balance and a solid forward sales position going into FY24. The Strategic Report on pages 2 to 100 was approved by the Board and signed on its behalf by David Thomas Chief Executive Officer 5 September 2023 100 Barratt Developments PLC Annual Report and Accounts 2023 Corporate Governance S Strategic Report Corporate Governance G F F Corporate Governance Contents Board of Directors and Company Secretary Executive Committee Regional Managing Directors Corporate Governance Report Nomination Committee Report Audit Committee Report Safety, Health and Environment Committee Report Remuneration Report Other statutory disclosures Statement of Directors’ Responsibilities 102 106 107 108 116 124 133 137 169 171 Barratt Developments PLC Annual Report and Accounts 2023 101 Corporate Governance S Corporate Governance F Board of Directors and Company Secretary Our Board Focused on promoting the success and long-term sustainable value of the Group. H E C G 102 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Board Skills and experience All Directors are expected to devote the necessary time to fulfil their responsibilities and duties to the Company, with the highest standards of integrity. Each Director has demonstrable experience, skills and knowledge which complement the skills and experience of other Board members and enhance Board effectiveness. A summary of the Directors’ skills is set out on this page, with further details together with their previous experience on pages 104 and 105. Total Skill Housebuilding Property Industry Retail Public Policy Marketing Governance Finance/Accounting Legal Employment/HR Sustainability Digital Financial services A B F D I Barratt Developments PLC Annual Report and Accounts 2023 103 S Corporate Governance F Board of Directors and Company Secretary continued C. Steven Boyes Chief Operating Officer and Deputy Chief Executive H S W Appointed: Steven joined the Board as an Executive Director in July 2001, Chief Operating Officer in July 2012 and Deputy Chief Executive in February 2016. He is responsible for the Group’s housebuilding operations and the newly acquired land promotion business, Gladman Developments Limited. Skills and qualifications: Steven has over 40 years’ experience in the housebuilding industry, having joined as a junior quantity surveyor in 1978. He progressed through the business to assume the roles of Technical Director and Managing Director of Barratt York, before being appointed Regional Director for Barratt Northern in 1999. Steven was previously a Trustee of the UK Green Building Council. External appointments: Steven holds no external appointments. D. Mike Scott Chief Financial Officer E. Katie Bickerstaffe Non-Executive Director D Appointed: Mike joined the Board as an Executive Director and Chief Financial Officer in December 2021. Skills and qualifications: Mike has extensive experience in the housebuilding sector and is a Fellow of the Institute of Chartered Accountants in England and Wales. He was previously Chief Financial Officer of Countryside Properties PLC, having joined as Group Financial Controller in 2014. Prior to this, Mike held a number of senior finance roles at J. Sainsbury Plc, including latterly as Head of Investor Relations, and spent 11 years at PwC. External appointments: Mike holds no external appointments. A N R S Appointed: Katie joined the Board as a Non-Executive Director on 1 March 2021 and took over as Chair of the Remuneration Committee with effect from 4 May 2021. Skills and qualifications: Katie brings extensive business transformation experience together with considerable digital expertise. She was a Non-Executive Director at Marks and Spencer Group PLC, and previously Executive Chair of SSE Energy Services, where she led its separation from SSE plc and subsequent sale to OVO Group Ltd. She was also a Non-Executive Director of SSE Plc and Chair of its Remuneration Committee until 2018. Prior to this, she worked in a variety of general management roles in retail and manufacturing businesses. External appointments: Katie was appointed as Co-Chief Executive of Marks and Spencer Group PLC in May 2022 and is also a Non- Executive Director of the England and Wales Cricket Board, where she was appointed the Senior Independent Director in May 2023. A. Caroline Silver Chair B. David Thomas Chief Executive D S W Appointed: David joined the Board as an Executive Director and Group Finance Director in July 2009, and was appointed Chief Executive in July 2015. Skills and qualifications: David brings significant leadership and finance experience acquired over several years in senior positions, and is an Associate of the Institute of Chartered Accountants in England and Wales. He was previously Group Finance Director and Deputy Chief Executive of The GAME Group plc, and Group Finance Director at Millennium and Copthorne Hotels plc. He has also held senior financial roles with House of Fraser plc and Forte plc. David stepped down as a trustee of the Barratt Developments PLC Charitable Foundation in April 2023. External appointments: David is a Non-Executive Director of the HBF, Chair of the Future Homes Hub, a representative on the Green Jobs Delivery Group, a member of the Net Zero Buildings Council and a Senior Adviser to the Construction Leadership Council. N R Appointed: Caroline joined the Board on 1 June 2023, succeeding John Allan as Non-Executive Chair on 30 June 2023. She became Designated Non-Executive Director for Workforce Engagement in July 2023. Skills and qualifications: Caroline brings a wealth of knowledge and experience to the Board across a number of commercial, financial, investment banking, governance and board leadership roles. Caroline was Chair of PZ Cussons PLC until 31 March 2023 and was Non-Executive Director of Meggitt PLC and M&G PLC. She served on the Board of the London Ambulance Service NHS Trust and as a trustee of the Victoria and Albert Museum. She spent over 30 years in the investment banking sector, holding senior corporate finance and M&A positions at Morgan Stanley and Merrill Lynch, and until 2020, was a partner and managing director at Moelis & Company. Caroline started her career as a Chartered Accountant at PwC. External appointments: Caroline is currently a Non-Executive Director at Tesco PLC, BUPA and Intercontinental Exchange, Inc. She is also a member of the International Advisory Board of Adobe Inc, a member of the V&A Foundation, and Chair of the Audit Committee of the National Film and Television School. Other Directors who served during FY23 John Allan Non-Executive Chairman N R John joined the Board as a Non-Executive Director in August 2014 and became Chairman in November 2014. He stepped down as Chairman and as a Non-Executive Director on 30 June 2023, having served nine years on the Board. 104 John brought significant board, business and retail experience gained from both the commercial and financial sectors. John was Chairman of Tesco PLC until 16 June 2023, President of the CBI from 2018 to 2020, stepping down to become Vice President until October 2021. He was CEO of Exel PLC and, when it was acquired by Deutsche Post in 2005, he joined the board of Deutsche Post, becoming CFO in 2007 until his retirement in 2009. John was also chair of Dixons Retail plc and, following its merger with Carphone Warehouse, was deputy chair and senior independent director of Dixons Carphone until 2015. He had previously held a number of other non-executive directorships of Worldpay Group PLC (where he was previously Chair), National Grid plc, the UK Home Office Supervisory Board, 3i plc, PHS Group plc, Connell plc, Royal Mail plc, Wolseley plc and Hamleys plc, and chair of London First. John is currently Chair of the Council at Imperial College. Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F A N Audit Committee Nomination Committee R Remuneration Committee D Disclosure Committee H Safety, Health and Environment Committee S Sustainability Committee W Workforce Forum Chair of Committee F. Jasi Halai Non-Executive Director G. Jock Lennox Senior Independent Director H. Chris Weston Non-Executive Director I. Tina Bains Company Secretary D S Appointed: Tina was appointed to the role of Company Secretary in January 2016. Skills and qualifications: Tina joined the Group in 2008 as Assistant Company Secretary, and was promoted to the role of Deputy Company Secretary in 2011. Prior to this, Tina held various Company Secretarial positions within the private and professional services sectors including TMF Corporate Secretarial Services Limited and Ernst & Young LLP. Tina is a Fellow of the Corporate Governance Institute. External appointments: Tina is a Trustee of the Barratt Developments PLC Charitable Foundation. A N R S Appointed: Jasi joined the Board on 1 January 2023. Skills and qualifications: Jasi brings considerable financial and business skills and experience which complement those of other Board members. She is a Chartered Management Accountant and holds an MSc in investment management from the CASS Business School. Before being appointed to the Board of 3i Group plc, she held a variety of posts there, most recently as Group Financial Controller. She was also a Non-Executive Director and Chair of the Audit Committee at Porvair Plc until January 2023. External appointments Jasi is currently Chief Operating Officer and an Executive Director of 3i Group plc, and is also a member of the 3i Executive, Investment, Group Risk and ESG Committees. A N R S Appointed: Jock joined the Board as a Non-Executive Director in July 2016 and became Senior Independent Director on 4 May 2021. Skills and qualifications: Jock, a Chartered Accountant, brings significant business and finance experience to the Board. He was Chairman of Hill and Smith Holdings plc and Enquest plc, stepping down from both positions in 2019. Jock was previously Senior Independent Director of Oxford Instruments plc and Non-Executive Director and Chairman of the Audit Committees of Dixons Carphone plc and A&J Mucklow Group plc. He spent 30 years with Ernst & Young LLP, holding several leadership positions in the UK and globally, including 20 years as a partner. External appointments: Jock was appointed Chairman of Johnson Service Group PLC in May 2021. He is also currently Chair of the Audit Committee Chairs’ Independent Forum, and has indicated his intention to step down from this role during September 2023. A N R H Appointed: Chris joined the Board as a Non-Executive Director on 1 March 2021 and took over as Chair of the Safety, Health and Environment Committee with effect from 4 May 2021. Skills and qualifications: Chris brings to the Board considerable commercial experience, driving performance and growth, including as former Chief Executive Officer at Aggreko Limited and as Managing Director, International Downstream at Centrica plc. Chris joined Centrica after a successful career in the telecoms industry working for Cable & Wireless Plc and One. Tel. Until June 2023, Chris was also a Non-Executive Director on the board of the Royal Navy. External appointments: Chris was appointed a Non-Executive Director of Sportquest Holidays Ltd in August 2023. Nina Bibby Non-Executive Director A N R Nina joined the Board as a Non-Executive Director in December 2012 and did not stand for re-election at the 2022 AGM. Nina brought a wealth of marketing experience to the Board. She was formerly Chief Marketing Officer at O2 (Telefonica UK) until July 2021, and Global Chief Marketing Sharon White Non-Executive Director A N R W Sharon joined the Board as a Non-Executive Director in January 2018 and became Designated Non-Executive Director for Workforce Engagement in May 2021. She stepped down from these positions on 30 June 2023. Sharon brought to the Board over 25 years’ experience in the public sector, combined with Officer at Barclaycard, the payments subsidiary of Barclays plc, until 2013. Previously Nina had been Senior Vice President, Global Brand Management at InterContinental Hotels Group plc, and Commercial Strategy Director at Diageo plc. Nina is currently Senior Vice President of Consumer Segment Marketing at Verizon. Policy Unit, the World Bank and various Government departments including the Department for International Development, the Department of Work and Pensions and the Ministry of Justice. strong employee stakeholder experience, as Chairman of the John Lewis Partnership, the UK’s largest employee-owned business. Her previous roles included Chief Executive of Ofcom and Director General, Public Spending and Second Permanent Secretary to HM Treasury. She had also held roles at the British Embassy in Washington, the No 10 Barratt Developments PLC Annual Report and Accounts 2023 105 S Corporate Governance F Executive Committee A B C Executive Committee The Executive Committee currently comprises of: David Thomas Chief Executive Steven Boyes Chief Operating Officer and Deputy Chief Executive Mike Scott Chief Financial Officer Tina Bains Company Secretary Bukky Bird Group Sustainability Director Tim Collins Group Corporate Affairs Director Jeremy Hipkiss Group Customer and Change Director Biographies for David, Steven, Mike and Tina can be found on pages 104 and 105. The biographies for Bukky, Tim and Jeremy are as follows: A. Tim Collins Group Corporate Affairs Director B. Bukky Bird Group Sustainability Director C. Jeremy Hipkiss Group Customer and Change Director Tim is responsible for the Group’s internal and external communications and public affairs. He is also a Trustee of the Barratt Developments PLC Charitable Foundation. Bukky is responsible for the Group’s sustainability strategy and its delivery. She is a member of the Sustainability Committee. Career and experience: Tim joined the Group in 2014 as a regional Head of Communications, before becoming Group Head of Corporate Communications in 2016. He was appointed to his current role and joined the Executive Committee in September 2022. Tim brings significant political and industry experience, having held the roles of Deputy Director of Communications at the Conservative Party, Chief of Staff to the Shadow Housing Minister and Deputy Director External Affairs at the HBF. Tim has a Law degree from University College London. Career and experience: Bukky joined the Group in 2020 and was appointed to the Executive Committee in September 2022. She brings a breadth of experience acquired from leadership roles in strategy, sustainability, business transformation, engineering, construction and retail operations. She was previously Chief of Staff to the Group CEO at Tesco PLC, as well as the Engineering and Sustainability Director, and before that she worked at WSP Group PLC where she held senior commercial and technical roles. Bukky is a qualified Mechanical Engineer and also holds a Master’s degree in Environmental Design and Engineering, both from UCL. Jeremy is responsible for the Group’s customer journey, including sales, marketing and customer experience strategy and delivery. In addition, Jeremy has executive responsibility for IT and business change. He is also a member of the Sustainability Committee and a Trustee of the Barratt Developments PLC Charitable Foundation. Career and experience: Jeremy joined the Group in 2008 and has wide experience in customer experience, marketing and retail operations, having held a similar role at the Spirit Group. Prior to that, Jeremy worked for Allied Domecq PLC and Marston’s PLC, having graduated in economics from the University of Leeds. 106 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Regional Managing Directors A B C D E F G H The Group operates through six geographic housebuilding regions, along with a commercial division, Wilson Bowden Developments, and a land promoter Gladman Developments. The Regional Managing Directors, Managing Director of Wilson Bowden Developments and Managing Director of Gladman Developments are as follows: A. Doug McLeod Regional Managing Director – Scotland B. Mike Roberts Regional Managing Director – Northern C. David Hesson Regional Managing Director – Central D. Mark Bailey Regional Managing Director - East Doug is responsible for the Group’s operations in the Scotland Region, which consists of three divisions and our timber frame operation at Oregon. Career and experience: Doug joined the Group in January 1974. Formerly Regional Director of Barratt Scotland and Managing Director of Barratt North Scotland, he was appointed to his current role in January 2017. Mike is responsible for the Group’s operations in the Northern Region, which consists of five divisions. He is also responsible for the Group’s commercial function. Career and experience: Mike joined the Group in June 2004. Formerly Managing Director of Barratt North East, he was appointed to his current role in January 2017. David is responsible for the Group’s operations in the Central Region, which consists of five divisions. From July 2022, he took over responsibility for Barratt Partnerships and is also responsible for Group Major Projects. Mark has assumed responsibility for the Group’s operations in the East Region following Richard Brooke’s retirement on 31 December 2022. The region consists of six divisions and BD Living, our wardrobe manufacturing factory. Career and experience: David joined the Group in March 2020 as Regional Director, and was appointed to his current position in April 2021. Career and experience: Mark joined the Group in 2012 as Managing Director for the Kent Division, having previously worked at Redeham Homes which he owned and where he was Managing Director. He was appointed Regional Director of the Southern Region in October 2016 and then Group Projects Managing Director in July 2022. Mark was appointed as Regional Managing Director – East in January 2023. E. Victoria Hesson Managing Director – Gladman Developments F. Russell Glimstead Regional Managing Director – West G. Gary Ennis Regional Managing Director – London and Southern H. Nick Richardson Managing Director – Wilson Bowden Developments Vicky joined Barratt on the acquisition of Gladman Developments, the land promotion business acquired by Barratt in January 2022. In addition to Gladman, she also provides advice on the Group’s wider strategic land holdings. Career and experience: Vicky has over 20 years’ experience in the housebuilding industry and has held various roles within other housebuilders prior to joining Gladman in 2013. She has a degree in Architecture and a Master’s degree in Town and Regional Planning and is a Chartered Member of the Royal Town Planning Institute. Russell is responsible for the Group’s West Region, which consists of four divisions. Career and experience: Russell joined the Group in 2007 following the acquisition of Wilson Bowden plc. Formerly Managing Director of Barratt Bristol, he was appointed to his current role of Regional Managing Director for the West Region in July 2022. Gary is currently responsible for the Group’s operations in the London and Southern Regions, consisting of six divisions (two in London and four in Southern). Career and experience: Gary joined the Group in 1995. Formerly Managing Director of Barratt North London, he was appointed Regional Managing Director of Southern in January 2006 and of London in October 2016. Nick is responsible for the Group’s commercial business, Wilson Bowden Developments. Career and experience: Nick joined Wilson Bowden plc in 1991 and was appointed to his current role in 1999. Nick joined the Group in 2007 following the acquisition of Wilson Bowden plc. Nick is a Chartered Surveyor. Barratt Developments PLC Annual Report and Accounts 2023 107 S Corporate Governance Corporate Governance F Corporate Governance Report Introduction and overview Governance at a glance Corporate Governance Statement of Compliance The Company is subject to the Code, which was issued by the FRC in 2018. The Code can be found on the FRC’s website, www.frc.org.uk. The Board confirms that, throughout the year ended 30 June 2023, and as at the date of this report, the Company has applied all of the principles and complied with all relevant provisions set out in the Code, except for Provision 38 (Executive Directors’ pension contributions). As set out on page 138 the Company complied with this provision with effect from 1 January 2023 and is therefore now fully compliant. This report, together with the reports from the Nomination, Audit, SHE and Remuneration Committees and the other statutory disclosures, provides details of how the Company has applied the principles of the Code (pages 102 to 171). The Company has also complied with the relevant requirements of the FCA’s Disclosure and Transparency Rules and the FCA’s Listing Rules, BEIS’s Directors’ Remuneration Reporting Regulations and Narrative Reporting Regulations and the FRC’s Guidance on Risk Management, Internal Control and Related Financial and Business Reporting. The Company’s Board diversity statement and associated data is included in the Nomination Committee Report on page 120. Highlights During the year, the Board: ∙ agreed the recruitment of a new Chair and Non-Executive Director; ∙ agreed a 604 unit private rental transaction with CITRA Living; ∙ established a new purpose and values for launch in FY24; ∙ reviewed capital structure and completed a share buyback programme; ∙ monitored progress on the Diversity and Inclusion strategy; and ∙ signed the Building Safety Long Form Agreement and the Scottish Safer Buildings Accord. Caroline Silver Chair 108 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Key stats Gender diversity 62+ Male Female Independence T 13+ 62.5% 37.5% Board tenure T 62+ 12.5% 37.5% 0-3 years 3-6 years 6+ years Chair Executive Directors Independent Non-Executive Directors 50.0% 62.5% 0.0% 37.5% Board and Committee attendance During FY23 the Board held ten meetings. Attendance by each Director while they were a member is set out in the table below. The Board, led by Jock Lennox as Senior Independent Director, also attended three additional meetings during the year to discuss the acceleration of the planned Chair Succession1. Attendance at each of the Board Committee meetings is shown on page 116 (Nomination Committee), page 124 (Audit Committee), page 133 (SHE Committee) and page 137 (Remuneration Committee). Attended Did not attend Board John Allan – Chair Caroline Silver2 – Chair David Thomas – Chief Executive Steven Boyes – Chief Operating Officer and Deputy Chief Executive Mike Scott – Chief Financial Officer Katie Bickerstaffe – Non-Executive Director Jasi Halai3 – Non-Executive Director Jock Lennox – Senior Independent Non-Executive Director Chris Weston3 – Non-Executive Director Nina Bibby4 – Non-Executive Director Sharon White5 – Non-Executive Director 1 John Allan did not attend any meetings or parts thereof at which his succession was being discussed and stepped down from the Board on 30 June 2023. 2 Caroline Silver joined the Board on 1 June 2023 and took over as Chair on 30 June 2023. 3 Jasi Halai (who was appointed on 1 January 2023) and Chris Weston were unable to attend the January Board meeting due to a prior commitment. Prior to the meeting, Jasi and Chris provided their views on the meeting agenda which were shared with the other Board members during the meeting. Following the meeting they were briefed on the business of the meeting and any decisions taken. 4 Nina Bibby did not offer herself for re-election and stepped down from the Board at the AGM in October 2022. 5 Sharon White stepped down from the Board on 30 June 2023. Sharon was unable to attend the June meeting due to another commitment. Prior to the meeting Sharon provided her views on the meeting agenda which were shared with the other Board members during the meeting. Following the meeting Sharon was briefed on the business of the meeting and any decisions taken. Barratt Developments PLC Annual Report and Accounts 2023 109 38 + 37 + 50 + 0 + 38 + T S Corporate Governance F Corporate Governance Report continued Implementation of the Code Section of the Code Board leadership and company purpose The Board: i. is responsible for the long-term sustainable success of the Company, determines purpose, values and strategy and models the Group’s culture; ii. ensures the necessary resources are available to the Group; and iii. engages with stakeholders to inform its decisions. Division of responsibilities The Chair 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. 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. 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. 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. 110 How we have applied the Code Further information This section details the main activities and outcomes of the Board in FY23 and how governance contributes to strategy. The Nomination Committee Report describes management of conflicts of interest. The Group’s purpose, strategy, Section 172 Statement and information on stakeholder engagement (including engagement with shareholders and employees) are set out in the Strategic Report. The Group’s culture and values are set out in this report. Pages 111 Page 118 Pages 2 to 70 Page 112 This section outlines: ∙ Board balance, the division of responsibilities and delegations; and Pages 113 to 114 ∙ Chair and Non-Executive Director independence. Page 115 Membership of and attendance at the Board is given in Governance at a glance, and for the committees in the introductions to each of the relevant committee reports. Pages 109, 116, 124.133 and 137 This section details: ∙ the main activities of the Nomination Committee and their outcomes; Page 116 ∙ the process for Board appointments, succession planning and promotion of diversity and inclusion; and Pages 117 to 121 ∙ Board and committee evaluation actions and outcomes. Information on the composition of the Board can be found in Governance at a glance and the Nomination Committee Report. Pages 122 to 123 Pages 109 and 116 This section summarises: ∙ the main activities of the Audit Committee and their outcomes; Page 127 ∙ the significant issues the Audit Committee considered regarding Page 127 and 128 the Financial Statements and how they were addressed; ∙ systems for risk management and internal control and the Pages 129 and 130 Audit Committee’s review of their effectiveness; and ∙ the Audit Committee’s assessment of the independence and Pages 130 to 132 effectiveness of the external audit process and the reappointment of the external auditor. The Directors’ Statement of Responsibility for a fair, balanced and understandable Annual Report and Accounts can be found at the end of the Directors’ Report. Page 171 The Board’s assessment of the Group’s emerging and principal risks and information on how these are being managed, together with the Viability and Going Concern Statements, can be found in the Strategic Report. Pages 71 to 100 This section sets out: ∙ information on the Group’s remuneration policy; ∙ how it was operated during FY23, including performance- based remuneration outcomes, and how independent judgement and discretion, if any, was applied; and Pages 142 to 154 Pages 159 to 163 ∙ how the remuneration policy will be applied in FY24. Pages 156 to 158 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Strategic priorities Strategic principles Great places Investing in our people Leading construction Customer first 1 Keeping people safe 4 Safeguarding the environment 2 Being a trusted partner 5 Ensuring the financial health 3 Building strong community of the business relationships Main activities undertaken during the financial year The Board follows an annual agenda to ensure that all key matters are allocated adequate time for discussion. The routine duties of the Board are detailed in the schedule of matters reserved to the Board (which can be found on the Company’s website at www.barrattdevelopments.co.uk/investors/corporate-governance). A description of the key non-routine activities of the Board during the year and how these contributed to the delivery of strategy are as follows: Key activities and discussions in FY23 and outcomes Purpose, strategy, values and culture Link to strategic priorities and principles: 1 2 5 Link to risk: C J Considered and approved proposals for a new Purpose and Values for the Group for launch in FY24. Reinstated regional visits following COVID and attended sites within the London and Central regions. The Board met with Senior Management and site and sales office employees who provided an overview of the regional, divisional and site operations respectively. This enabled the Board to gain a better understanding of how culture is embedded in the business, and the challenges they face on a day-to-day basis. Considered the outcome of a review of its Modern Slavery and Human Trafficking Statement, approved the statement for publication and requested further work was undertaken to obtain positive confirmation the policies were being adhered to across the Group. The statement can be found on the home page of the Barratt website at www.barrattdevelopments.co.uk. Considered progress on diversity and inclusion within the business and discussed ways in which this can be further embedded in the business including establishing challenging targets for executive and senior management remuneration. As part of its discussions on driving sales within the current market conditions, the Board explored opportunities within the private rental sector. Accordingly, it agreed a contract to sell 604 homes to Citra Living, a subsidiary of Lloyds Bank, see page 26 for further details. Business performance and resourcing Link to strategic priorities and principles: 1 2 4 5 Link to risk: A B D F K Approved multiple investments in land. Further information can be found on pages 26 and 27. Monitored the progress of the Sustainability Committee in embedding sustainability in the Group’s culture and strategy. Reviewed business resilience in light of the uncertain market conditions and agreed a number of mitigating activities (further information can be found on page 53. Reviewed the SHE plan of work, enforcement agency interventions, site monitoring, and IIR. Key areas of future focus were agreed and are set out on pages 133 to 136. Discussed Non-Executive Director succession, and the acceleration of the planned Chair succession. Approved the appointment of a new Non-Executive Director and Chair Designate, on the recommendation of the Nomination Committee. Reviewed the existing Revolving Credit Facility and agreed to extend it to 2025, linked to internal sustainability targets. Discussed the allocation of capital and dividend policy and agreed and completed a share buyback programme to return up to £200m of surplus capital to shareholders. Risk management and internal controls Link to strategic priorities and principles: Reviewed the Company’s appetite for risk, identified emerging risks and reassessed the impact and likelihood of principal risks and uncertainties affecting the business. Agreed for management to co-operate with the CMA on their market study into land banking and planning, and to attend four deep dive sessions to provide the CMA with a better insight into the areas of land banks, planning, competition and management companies. Following signature of the Building Safety Pledge to address fire safety issues on buildings 11 metres and above in FY22, carefully considered the implications of entering into the Building Safety Pledge – Long Form Agreement and determined that it was in the best interests of the Company and its stakeholders to do so. Signed up to the Scottish Safer Building Accord, committing to remediate life-critical fire safety works in buildings over 11 metres that we have developed or refurbished over the last 30 years in Scotland. 1 2 3 5 Link to risk: F G I Stakeholder engagement Link to strategic priorities and principles: Reviewed relationships with stakeholders and their views and focus for engagement going forward. Reviewed the customer journey and suggested a number of elements for possible change. Considered how to support employees through the cost of living crisis and agreed monetary support for all employees below senior leadership level to the end of June 2023. Undertook a corporate broker tender, and appointed UBS as joint corporate broker with Credit Suisse Group AG. Following the merger of our joint brokers later in the year, appointed Barclays Bank PLC as joint broker in June 2023. Further details of engagement with our key stakeholders can be found on pages 54 to 65. 1 2 5 Link to risk: C E H Principal risks A Economic environment E Supply chain resilience B Land and planning F Legacy properties C Government regulation and political risk D Construction quality and innovation G Safety, health and environment H Attracting and retaining high- calibre employees I J Information technology Environmental, social and governance K Business resilience and continuity Barratt Developments PLC Annual Report and Accounts 2023 111 S Corporate Governance F Corporate Governance Report continued Board leadership and company purpose Culture in the workplace The Board sets the culture and tone from the top. It is responsible for ensuring that the right culture is embedded throughout the business, including in our dealings with stakeholders. It derives from our Vision and Purpose, which has been undergoing a review with the outcome due to be announced later in FY24. A strong culture that furthers our purpose, and is firmly embedded across the workforce, underpins our success through the following values agreed by the Board. Our culture Do the right thing Ensure what we do is in line with our policies and procedures, and in the interests of our stakeholders. Customer focus Strive to meet the expectations and needs of our customers, both internal and external. Resilience and adaptability Look for innovative ways to improve efficiencies across the organisation and recognise there is always room for improvement. Be willing to change the way we do things to meet the requirements of stakeholders and those set by legislation or regulation. Pride in what we do Aim to operate in a way that satisfies the expectations of our stakeholders particularly in terms of quality and service. Culture in action: We have always believed leaseholders should not have to pay for necessary remediation to fix building safety issues, caused by the design, construction or refurbishment of their buildings. Following our signing last year of the Building Safety Pledge, we joined the first wave of developers to sign the Scottish Safer Buildings Accord developer commitment letter, further details of which can be found on pages 68 and 221. We have developed a model with the government to support the resettlement of Afghan refugees with 19 homes identified in tranche 1, and tranche 2 launched since the end of FY23. We are discussing ways to encourage other housebuilders to participate in the model. Further information on how we look after the interests of our stakeholders can be found on pages 57 and 58. Culture in action: During FY23, we continued to monitor the impact of rising mortgage rates on our customers. Consequently, we adjusted the level of incentives on offer in order to better serve customers facing cost of living challenges. We also relaunched the Key Worker Deposit Contribution scheme, which was due to come to an end this year. We continue to engage with mortgage providers on Green mortgages, which would reward customers for purchasing our houses which are all EPC rated B or above. We have recently announced an agreement with Citra to develop a further 604 much needed high quality sustainable homes for private rental Further details can be found on page 26. Culture in action: Customer demand for housing declined during FY23, and after satisfying the forward order book in the first half of the year, our teams switched their focus to carefully managing build cost inflation and maintaining disciplined investment in work in progress to match the fall in market demand. Culture in action: We have won multiple awards throughout FY23 for quality and service, including an HBF 5 star rating for the 14th consecutive year, and 96 NHBC Pride in the Job awards. These are detailed on page 15. We are particularly proud to be leading the industry in sustainability, including participation in the eHome2 project researching and testing new methods of construction to sustainably mitigate the effects of climate change. How the Board measures and assesses culture The Board measures and assesses culture using both internal and external KPIs, as follows: ∙ Safety, health and the environment – there is zero tolerance towards breaches relating to the health and safety of our employees, suppliers, sub-contractors and the general public. The Group is also conscious of the impact that its operations have on the environment. The Board is updated regularly on health, safety and environmental matters, and on any new or ongoing investigations and their outcomes. The SHE Audit compliance KPI, which underpins the quality and service annual bonus performance measure, is set out on page 17, and other environmental and safety targets are detailed on pages 16 and 17. ∙ Customer satisfaction – this is assessed using customer care survey responses and recommendation scores (KPIs can be found on page 16), which form part of the annual bonus performance measures for Executive Directors, and awards such as the HBF 5 star rating and NHBC Pride in the Job awards (details of which can be found on page 15), all of which are regularly reported to the Board. ∙ Employee engagement survey – a survey is conducted annually to assess how the business is meeting the expectations of its employees. It also contains several culture-related questions, to monitor and assess how well the culture is embedded. The results of the survey are reviewed by the Executive Committee and Senior Management team, as well as by the local teams, with key findings reported to the Board. The outcome of our latest employee engagement survey is detailed on page 35. ∙ Employee retention – our employees are our greatest asset. It is important that we do everything that we can to retain them, and this is one of the pillars of our people strategy. The Board monitors employee leaver numbers and reasons, and the steps being taken to attract, recruit and retain employees. ∙ Policies and procedures compliance – core governance policies are reviewed annually by the Board with employees required to regularly complete a variety of e-learning modules. Completion levels are reported to the Board. Business policies, processes and procedures are reviewed regularly. Our internal audit team conduct regular reviews of compliance with policies, processes and procedures, and test that they remain up to date. The team’s findings are reported to the Audit Committee and ultimately to the Board. The internal audit team also provides updates to the Audit Committee on any matters raised via the Group’s whistleblowing procedure (see page 130). 112 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Board balance Board roles and their responsibilities Chair Caroline Silver ∙ Leads the Board in the achievement of its objectives, sets its agenda and chairs its meetings. ∙ Shapes the culture in the Boardroom. ∙ Responsible for the effectiveness of the Board and its governance. Senior Independent Director Jock Lennox The following are in addition to his role and responsibilities as an Independent Non-Executive Director. ∙ Available to shareholders, when required, to address any material issues or concerns which the Chair and/or Chief Executive have failed to resolve. ∙ Facilitates the effective contribution of Non-Executive Directors and constructive relations between Executive and Non-Executive Directors. ∙ Available to shareholders, when required, to listen to their views to gain a balanced understanding of their issues and concerns. ∙ Ensures the Board receives accurate, timely and clear information. ∙ Responsible for arranging inductions and continued development for the Directors. ∙ Evaluates the performance of the Chair, at least annually, with the Non-Executive Directors, and leads the process for the Chair’s succession. ∙ Ensures effective communication with shareholders and other stakeholders, and participates in corporate relations activities. ∙ Acts as a sounding board for the Chair and, if necessary, an intermediary for the other Directors. Chief Financial Officer Mike Scott ∙ Develops and implements the Group’s financial strategy and policies. ∙ Responsible for the management of the finance, tax, internal audit, treasury and investor relations functions. ∙ Supports the Chief Executive with his corporate relations responsibilities with shareholders and other stakeholders. ∙ Manages the Group’s relationship with the external auditor. ∙ Manages the Group’s relationships with its lending banks. ∙ Chairs the Risk Committee. ∙ Co-chairs the Workforce Forum. Chief Executive David Thomas ∙ Develops the Group’s strategy for the enhancement of long-term shareholder return taking into account the needs of the Group’s stakeholders. ∙ Leads the implementation of the Group’s strategy approved by the Board. ∙ Responsible for the day-to-day leadership and management of the operational activities of the Group in accordance with overall strategy and policy as determined by the Board. ∙ Chairs the Executive Committee through which he carries out his duties. ∙ Oversees corporate relations with shareholders and other stakeholders. ∙ Responsible to the Board for sustainability policies and practices of the Group. ∙ Co-chairs the Workforce Forum. Chief Operating Officer and Deputy Chief Executive Steven Boyes ∙ Responsible for the Group’s operations. ∙ Day-to-day responsibility for safety, health and environment issues, promoting the well-being of employees. ∙ Responsible for our procurement function and our land promoter business. ∙ Responsible for ensuring stakeholder requirements are appropriately addressed. ∙ Chairs the Operations Committee meetings, the other members of which include the Regional Managing Directors. ∙ Co-chairs the Workforce Forum. Independent Non-Executive Directors Katie Bickerstaffe, Jasi Halai, Jock Lennox and Chris Weston1 ∙ Provide an appropriate level of scrutiny, and constructively challenge the Executive Directors, holding management to account and ensuring the needs of stakeholders are appropriately considered. ∙ Using the broad range of their experience and external perspective, provide specialist advice and an independent perspective in developing strategy. ∙ Monitor the implementation of the Group’s strategy within its risk and control framework and ensure the integrity of financial reporting. ∙ Ensure that recruitment and succession planning is appropriate and mindful of diversity and balance. ∙ Review and refresh Remuneration Policy in the context of stakeholder interests, and ensure it is implemented appropriately. 1 Nina Bibby and Sharon White were Independent Non-Executive Directors during the year but stepped down on 17 October 2022 and 30 June 2023 respectively. Caroline Silver was an Independent Non-Executive Director from 1 June 2023 to 30 June 2023 when she succeeded John Allan as Chair. Company Secretary Tina Bains ∙ Supports the Chair and Chief Executive in fulfilling their duties especially in respect of induction, training and Board and Committee effectiveness evaluations. ∙ Available to all Directors for advice and support. ∙ Keeps the Board regularly updated on governance matters and best practice. ∙ Ensures Group policies and procedures are maintained and updated on a regular basis. ∙ Attends and maintains a record of the matters discussed and approved at Board and Committee meetings. Barratt Developments PLC Annual Report and Accounts 2023 113 S Corporate Governance F Corporate Governance Report continued Division of responsibilities Decisions, matters reserved to the Board and delegated authorities The Board makes decisions on strategy and on items set out in the matters reserved for it. It also delegates various operational decisions to several Board and management committees (see below). The schedule of matters reserved to the Board and the Terms of Reference of the Board Committees are available on the Company’s website at www.barrattdevelopments.co.uk/investors/corporate-governance. As sustainability is integral to the strategy of the business, details of the Sustainability Committee including members, attendance and actions, can be found in the Strategic Report on page 42. Board Committee Group Management Committee Audit Committee ∙ Monitors the integrity of the Group’s Financial Statements and formal announcements on its financial performance, including reviewing financial reporting judgements contained within them. ∙ Advises the Board on whether the Group’s Annual Report and Accounts are fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group’s position and performance, business model and strategy. ∙ Provides oversight of non-financial information, including sustainability. ∙ Reviews the Group’s internal financial controls and its systems for internal control and risk management. ∙ Monitors and reviews the independence, objectivity and effectiveness of the external auditor and the internal audit function, and reviews and recommends to the Board the reappointment, remuneration and terms of engagement of the external auditor. ∙ Develops and implements the Group’s policy on the engagement of the external auditor to supply non-audit services. Remuneration Committee ∙ Designs and implements the Group’s overall remuneration strategy and policy, ensuring alignment with purpose and strategy. ∙ Sets the remuneration and determines the outcomes for the Executive Directors and Senior Management. ∙ Monitors performance of long and short-term incentive schemes against both financial and non-financial targets. ∙ Considers the remuneration and related policies, of the wider workforce when determining Executive Directors and Senior Management’s remuneration and incentives. Nomination Committee ∙ Monitors the composition of the Board and its Committees to ensure a balance of skills, experience and knowledge, and their progressive refreshment. ∙ Reviews succession plans for Board and Senior Management to ensure there is a diverse pipeline. ∙ Promotes diversity of Board Directors and Senior Management. ∙ Undertakes annual effectiveness evaluations of the Board, its committees and individual Directors. Disclosure Committee ∙ Comprising any two of the Chief Executive, Chief Financial Officer and the Company Secretary, meets as required to ensure that the Company remains compliant with the requirements of the UK Market Abuse Regime. Safety, Health and Environment Committee ∙ Focuses on the prevention and mitigation of key operational risks relating to SHE. ∙ Monitors compliance with the SHE management system. ∙ Oversees direction and implementation of SHE policies and procedures. Sustainability Committee ∙ Reviews and scrutinises sustainability strategy and its implementation by the business. ∙ Reviews and approves plans by the business to mitigate risks and leverage opportunities relating to sustainability and climate changes. ∙ Develops and implements ESG policies and monitors compliance against these. ∙ Scrutinises sustainability performance incentives for consideration by the Remuneration Committee. ∙ Advises the Board on the appetite and tolerance with respect to ESG risks. ∙ Oversees carbon emission science-based targets and recommends changes where necessary. 114 Risk Committee ∙ Reviews the effectiveness of the Group’s internal control policies and procedures for the identification, assessment and reporting of risks. ∙ Assesses individual key risks on a rolling basis (including the identification of the Group’s principal and emerging risks) together with the appropriateness of any mitigations. Land Committee ∙ Reviews and approves all land acquisition and disposal proposals across the Group. ∙ Refers proposals to the Board for approval depending on the value of the land acquisition or its complexity, e.g. joint venture arrangements. Treasury Operating Committee ∙ Reviews the Group’s treasury arrangements and approval of changes to debt facilities. ∙ Obtains Board approval for certain types of facility and where the facility is above the levels delegated to the Treasury Operating Committee. Allotment Committee ∙ Approves the allotment of shares within dilution limits and within the authorities obtained from shareholders. Operations Committee ∙ Manages operational performance. Safety, Health and Environment Operations Committee ∙ Develops the SHE strategy for the Group. ∙ Ensures that SHE policies and procedures are adequately implemented and adhered to. ∙ Monitors the effectiveness of the Group’s SHE systems. ∙ Keeps up to date with changes in legislation surrounding SHE matters. Board Chief Executive Executive Committee Chief Operating Officer Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Board independence All of our Non-Executive Directors were independent in character and judgement during the financial year, which is vital for them in carrying out their respective roles effectively. Caroline Silver was considered to be independent on appointment to the Board and on taking the role of Chair. This year’s review of Directors’ conflicts of interest confirmed that none of the Non-Executive Directors have any business or other relationship with the Group (or other outside interests) that might influence their independence or judgement. None of the Non-Executive Directors, or the Chair, has been an employee of any Group company or had a material business relationship with them. None of them has close family ties with any of the Company’s advisers, Directors or senior employees, or holds cross-directorships or has significant links with other Directors. None of them represents a significant shareholder. The Board meets the Code requirement for at least half the Board (excluding the Chair), to be independent (as defined by the Code) Non-Executive Directors. A breakdown of the independence of the Board members is shown on page 109. The Chair and each of the Non-Executive Directors have demonstrated their commitment to the business during the year, through their attendance at several unscheduled Board calls convened at short notice to discuss a variety of issues requiring decisions outside the normal scheduled meetings. The Chair and the Non-Executive Directors meet regularly without the Executive Directors being present, usually prior to or immediately following Committee meetings, and five of these meetings have been held during the financial year. Internal controls and risk management The Board monitors and regularly reviews the effectiveness of the Group’s risk management and internal control systems, including controls related to the material financial, operational and compliance performance (see the Audit Committee Report on pages 124 to 132). The internal audit team has developed a risk framework for all business functions, which has been approved by the Audit Committee. This framework forms the basis of the internal control audit plan for the year ahead, which tests if key controls are being applied effectively in each operating division. Material issues identified during internal audits and follow-up action plans are reviewed by the Executive Directors and by the Board. Any necessary actions are immediately taken to remedy any significant failings in the internal control system. Further details of the work undertaken by internal audit can be found on page 130. The Group’s system of internal control is designed to manage risks that may impede the achievement of the Group’s business objectives, and identify and appropriately manage activities where there is a high risk of corruption (including bribery) amongst employees, partners or intermediaries, 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 issues can be identified promptly and appropriate remedial action taken. Further details can be found in the risk management section of the Strategic Report (pages 71 to 100). The Group operates internal controls to ensure that the Group’s Financial Statements are reconciled to the underlying financial ledgers. A review of the consolidated accounts and Financial Statements is completed by management to ensure that the financial position and results of the Group are appropriately reflected. The Board has not identified, nor been advised of, any failings or weaknesses that it has determined to be significant. Therefore, a confirmation of necessary actions has not been considered appropriate. Fair, balanced and understandable The Board has considered and reflected on whether the Annual Report and Accounts are fair, balanced and understandable. As part of its considerations, the Board has: ∙ reflected on the feedback shareholders provided on our 2022 Annual Report and Accounts; ∙ set aside adequate time to review and discuss significant areas of the 2023 Annual Report and Accounts, assessing its tone, balance and language, while being mindful of the requirements of the Code and the need for consistency between the narrative section of the Annual Report and the Financial Statements; and ∙ considered the recommendation from the Audit Committee that the report was “fair, balanced and understandable”. The process undertaken by the Audit Committee to support the Board’s assessment can be found on page 129. The Board endorses the recommendation of the Audit Committee that the FY23 Annual Report and Accounts are fair, balanced and understandable, and its formal statement on this is contained within the Statement of Directors’ Responsibilities on page 171. On behalf of the Board Caroline Silver Chair 5 September 2023 Barratt Developments PLC Annual Report and Accounts 2023 115 S Corporate Governance Corporate Governance F Nomination Committee Report Board composition, succession and evaluation Our approach to Board and Committee appointments, succession and evaluation Committee membership and attendance1 There were three meetings held during the year ended 30 June 2023. The table below shows the attendance of each Director whilst a member of the committee. Attended Did not attend Meetings attended Committee members Caroline Silver1 John Allan2 Katie Bickerstaffe Jasi Halai3 Jock Lennox Chris Weston3 Nina Bibby4 Sharon White5 Caroline Silver Chair of the Nomination Committee Focus in the reporting year ∙ Undertook a robust recruitment process for the appointments of both Jasi Halai and Caroline Silver. ∙ Assessed the skills and diversity on the Board and its Committees. ∙ Reviewed the succession plans for the Executive Directors and Senior Management. Priorities for FY24 ∙ To further assess the composition (including size and diversity) of the Board and its Committees. ∙ Ensure completion of Caroline Silver’s induction process. 1 Caroline Silver joined the Board and the Committee on 1 June 2023 and took over as Chair of the Committee with effect from 30 June 2023, and no Committee meetings have taken place since then. 2 John Allan did not attend any meetings or parts thereof where his succession was being discussed. 3 Jasi Halai (who was appointed on 1 January 2023) and Chris Weston were unable to attend the January meeting due to a prior commitment. Prior to the meeting, Jasi and Chris provided their views on the meeting agenda which were shared with the other Committee members during the meeting. Following the meeting they were briefed on the business of the meeting and any decisions taken. 4 Nina Bibby did not offer herself for re-election and stepped down from the Board at the AGM in October 2022. 5 Sharon White stepped down from the Board on 30 June 2023. 116 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Statement from the Chair of the Nomination Committee I am pleased to present my first Nomination Committee Report having taken over as Chair from John Allan on 30 June 2023. It has been a busy year for the Nomination Committee with a number of changes taking place with the composition of the Board. I would like to thank John Allan and Jock Lennox for steering the Committee through each of these. Full details of the recruitment processes can be found on pages 119 and are summarised below. The Nomination Committee has throughout FY23 acted in accordance with its Terms of Reference (see page 118) as delegated to it by the Board. The responsibilities of the Nomination Committee are summarised on page 118. Board changes and succession planning Following a thorough recruitment process the Nomination Committee appointed Jasi Halai as a Non-Executive Director with effect from 1 January 2023. Jasi succeeds Nina Bibby who, having completed nine years of service, stepped down from the Board at the AGM in October 2022. In addition, the Nomination Committee undertook a robust recruitment process to appoint me as a Non-Executive Director and Chair to take over from John Allan, who stepped down from the Board on 30 June 2023. This search was led by Jock Lennox, and John Allan did not attend any meetings whilst his succession was being discussed. I would like to take this opportunity to thank Jock for chairing the additional meetings held to discuss and come to a decision on the acceleration of the planned Chair’s succession and for guiding Board members through the process seamlessly. As announced in January 2023, Sharon White stepped down earlier than expected as a Non-Executive Director on 30 June 2023, in order to reduce her non-executive commitments. Sharon made a significant contribution to the Board during her five years with us, including in the last few years as the Designated Non-Executive Director for Workforce Engagement. I will be taking over as the Designated Non-Executive Director for Workforce Engagement. We are pleased that Nigel Webb has agreed to join the Board as a Non-Executive Director with effect from 1 October 2023. Nigel brings a wealth of experience and knowledge in property, construction and land which complement the existing skills on the Board and address some of the skills gaps identified. The Nomination Committee will continue to undertake detailed work on succession planning at Board, Senior Management and junior levels to ensure we have a sufficiently diverse pipeline and the right skills and experience to drive our strategy forward. Skills and experience of the Board As part of the recruitment process for the new Non-Executive Director and the new Chair, the Nomination Committee reviewed the composition, skills, experience and diversity of the Board and its Committees. This highlighted the need to identify candidates with skills in, amongst other areas, financial experience to support the Chair of the Audit Committee, which both Jasi Halai and I possess. A further review of skills was carried out during FY23, and it was agreed that any further recruitment would focus on land/construction, which will be addressed with the appointment of Nigel Webb. and experience but also female and ethnic representation. The Nomination Committee and the Board were therefore disappointed when more than 20% percent of votes were cast against the re-election of John Allan at the 2022 AGM. Having engaged with those shareholders who voted against, it was evident that this was due to the fall in the level of female representation on the Board following Nina Bibby’s departure. They did however acknowledge that had they been aware of the recruitment process ongoing at the time, the shortlist for which consisted entirely of female candidates, they would have voted in favour of the resolution. As set out earlier in my statement, since the October 2022 AGM, various changes have been made to the composition of the Board. With my appointment as Chair and of Jasi Halai as a Non-Executive Director, we meet the recommendations to have a woman in a senior Board position (Chair, CEO, CFO or SID) and to have at least one member on the Board from a minority ethnic background (as defined by the FTSE Women Leaders Review and the Parker Review). Our female representation reached 40% on 1 June 2023, when I joined the Board. As a result of the early departures of Sharon White and John Allan, our female representation on the Board is currently at 37.5%. At the point of making an offer to Nigel Webb to join as a Non- Executive Director, the Nomination Committee was conscious that female representation on the Board would fall to 33.33%. The Nomination Committee, and subsequently the Board, decided that Nigel was the best candidate for the role given that he possesses the skills, knowledge and experience in property, construction and land which complement those of the existing Board members. We are however fully committed to meeting the recommendation to have at least 40% female representation on the Board by the end of 2025. This is a key priority for the Nomination Committee and the Board. Information on the Board’s diversity targets as required by the UK Listing Rules, together with accompanying numerical data, is set out on page 120. In addition, the Nomination Committee has reviewed its Board diversity policy, which applies to the Board and its committees, to ensure it remains fit for purpose. The Nomination Committee also ensured that the Board considered whether diversity and inclusion across the wider business was being progressed satisfactorily. This review included talent succession and attraction, and the business’ credentials as a diverse and inclusive employer. Further information on the Company’s progress on diversity and inclusion initiatives can be found on pages 120 and 121 and in the Strategic Report on pages 35 and 36. FY24 priorities Our key priorities for FY24 are the continued focus on succession planning and training, particularly given the recent changes to the Board. From FY24 onwards, it has been agreed that diversity and inclusion at all levels across the business will be a matter for the Board to monitor directly rather than through the Nomination Committee. The respective Terms of Reference have been updated accordingly. Further details of the work undertaken by the Nomination Committee during the year are set out on the following pages. Diversity and inclusion The Nomination Committee fully understands the importance of having diversity on the Board, not only in terms of skills Caroline Silver Chair of the Nomination Committee 5 September 2023 Barratt Developments PLC Annual Report and Accounts 2023 117 S Corporate Governance F Nomination Committee Report continued Nomination Committee role and activity FY23 Membership and attendance at meetings The membership of the Nomination Committee and the attendance at each of its scheduled meetings is set out on page 116. The majority of Committee members are considered independent by the Company and in accordance with the Code. Their biographies and qualifications are shown on pages 104 and 105. Role and main activities undertaken by the Committee during the financial year The Nomination Committee’s responsibilities are set out in its Terms of Reference, which can be found on the Company’s website at www.barrattdevelopments.co.uk/investors/corporate-governance. In addition to its annual tasks, such as the review of its Terms of Reference, effectiveness and approval of this report, the Committee carried out the following work during the year: Priorities Governance Work carried out and outcomes Reviewed the need for training and development in areas identified by Board members including, but not limited to, digital security and technology, Government relations, ESG/Climate. Composition and Succession Considered candidates and proposed the appointment of an additional Non-Executive Director and Chair designate. Considered succession plans for Non-Executive Directors, Executive Directors, Executive Committee and Regional Managing Directors, taking into account the need for diversity. Further information can be found above. Directors’ conflicts of interest The Board has authorised the Nomination Committee to oversee the process for reviewing and making recommendations to the Board concerning any actual or potential conflicts of interest that may arise for any Board member, including details of any terms and conditions that it deems necessary to impose on any authorisation given. Throughout FY23, the Company Secretary maintained a register of Directors’ conflicts of interest. A summary of this register was reviewed at each Board meeting so that it continues to remain accurate and current. The full register is reviewed annually by the Nomination Committee, and recommendations are made to the Board regarding any changes to the authorisations that may be required. The Board, when authorising any conflict or possible conflict of interest, does not count in the quorum the Director whose conflict or possible conflict is being discussed and reserves the right to exclude a Director from a meeting whilst a conflict or possible conflict is being considered. The Board may revoke or vary any authorisation at any time. The procedures have operated effectively during the year. Board changes and succession planning Succession planning is a live topic at Board and Nomination Committee meetings. All appointments and succession plans are objective, based on merit and the need to promote diversity. For Non-Executive Directors, the Nomination Committee annually reviews the length of service for each, to determine if a new appointment needs to be made. The Nomination Committee takes into account the cyclicality of the business, as lessons gained through one property cycle can be useful during the next. For Executive Directors, the Nomination Committee will annually discuss the succession plans for the other Executive Directors and Senior Management below Board level with the Chief Executive. This process helps to identify suitable individuals who could be able to fill senior managerial or Board positions in the future and to determine and address their development needs. As part of their development, senior managers are invited to attend part of a Board meeting to present on their specialist area. This also enables the Board to assess the quality of internal talent, and the individual to get a greater understanding of the workings of the Board. Succession plans are in place across the business for the wider workforce and our work on developing our employees is set out in the Strategic Report on pages 35 to 39. When considering succession plans, the Board remains cognisant of the need to ensure that there is a diverse range of individuals included in the plan. The business continues to promote diversity and inclusion from within, and further details of the work that has been undertaken in this area can be found on pages 35 to 39. 118 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Board appointment process Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 The Nomination Committee reviewed the length of tenure of each Non-Executive Director, determined the gaps in experience and considered the existing balance of gender, ethnicity and social backgrounds on the Board to help identify the need to recruit. With Nina Bibby stepping down in October 2022 and John Allan due to complete nine years’ service in August 2023, the Nomination Committee agreed to continue the process to identify and appoint at least one Non-Executive Director and a new Chair. The Nomination Committee reviewed and approved an outline brief and role specification, and appointed Russell Reynolds1, to identify suitable candidates from a diverse pool of individuals. The Nomination Committee delegated authority to two sub- committees to select candidates for a shortlist. The first was led by John Allan (for the Non-Executive Director) and the second by Jock Lennox (for the Chair). The short-listed candidates met with the respective sub-committee of the Nomination Committee, with the preferred candidates going on to meet the remaining members of the Board. The Nomination Committee agreed the preferred candidates for each position, based on the range of skills, experience and knowledge that complemented those of the existing Board members and recommended the same to the Board. The Board considered each candidate on their merits and approved the appointment of Jasi Halai as a Non- Executive Director with effect from 1 January 2023 and Caroline Silver as a Non-Executive Director and Chair Designate with effect from 1 June 2023. 1 Russell Reynolds Associates are occasionally requested to assist the Company with searches for senior management positions. They have no other connection with the individual Directors or the Company. Russell Reynolds Associates is accredited by the Enhanced Voluntary Code of Conduct for Executive Firms for its support to FTSE 350 Boards in increasing gender diversity. It is also a Co-Founder of The 30% Club, an advocate for improved gender balance on boards. Specific guidance was given to Russell Reynolds Associates to ensure diversity within the candidate long and short lists whilst identifying candidates who had the relevant skills and experience required on the Board. Induction Jasi Halai has been through a detailed induction process and Caroline Silver is part way through hers. The induction process was designed to give each of them a good understanding of the business and how it operates to help them fulfil their respective roles effectively. As part of this, they received a comprehensive induction pack, and had meetings with each of: ∙ the other Board members; ∙ the Company Secretary; ∙ members of the Executive Committee; ∙ the Regional Managing Directors and teams (at the Regional offices); ∙ heads of key Group functions; ∙ key external corporate advisers; and ∙ the external auditor. Their inductions also included site visits, and details of other opportunities available as part of the induction process. John Allan met with Jasi Halai to listen to her views and feedback on the induction process, which was seen to be comprehensive and well structured. Jock Lennox and/or the Company Secretary will meet with Caroline Silver to gain her views on her induction process once completed. Q&A with Caroline Silver - Chair and Jasi Halai - Non-Executive Director We asked both Caroline Silver and Jasi Halai about their experience of joining Barratt. What skills and experience do you bring to the role? Caroline: I have considerable experience in chairing boards to obtain the best from colleagues, working together in a challenging yet supportive way. I am experienced in helping shape strategy and vision and my financial background is helpful. I bring lots of experience in working with investors. Jasi: I bring particular expertise in finance and accounting, with financial planning and analysis to the role. How have you found the induction process? Caroline: It is well organised. I am spending time with every member of the leadership team and am enjoying getting out and about across the business, meeting colleagues and better understanding the culture of the business and the challenges they face. Jasi: Extremely welcoming, insightful and effective. I have been pleasantly surprised by how Barratt delivers. Its people take pride in what they do and this has been very evident not only through the Board and Committee meetings I have attended but also through the site visits I have conducted. What were your first impressions of the business when you were approached? Caroline: When I was first approached for the role, I knew very little about housebuilders. As I looked, I saw a company that leads the industry, in terms of quality, customer and sustainability and is operationally and financially strong. Jasi: I was impressed by Barratt’s 60- year history, and its focus on innovation in construction. I was also interested in Barratt’s commitment to building sustainably for people, nature and places, whilst providing sustainable financial returns for shareholders. What made you decide to join the business? Caroline: I was impressed with the diversity of background and experience on the Board and the Non-Executive Directors’ understanding and involvement. It was clear the executive team are professional, experienced, purpose driven with high integrity and committed to the long-term success of the Company. This was key for me. The key advisers I met endorsed the impression I had of a financially and operationally sound company, with a great team and plenty of ambition. Jasi: Barratt’s vision and impact, its contribution to the UK economy and the communities in which it operates. Barratt creates great places to live, leaving a legacy in every project it delivers, and its regeneration projects are commendable. Barratt Developments PLC Annual Report and Accounts 2023 119 S Corporate Governance F Nomination Committee Report continued Reappointment and re-election of Directors Non-Executive Directors are appointed by the Board for up to three three-year terms subject to annual shareholder re-election and a particularly rigorous review prior to a third term being agreed. Non-Executive Directors will normally step down from their position on the Board and its Committees at the AGM following their ninth anniversary. The length of tenure of Board members is shown on page 109. Each of the Directors has been subject to a formal performance evaluation process during the year, as set out on page 123. The Nomination Committee and the Board are satisfied that each Director continues to be effective in, and demonstrates commitment to, their respective roles. All Directors will be standing for election or re-election at the forthcoming AGM. Biographical details of each of the Directors are set out on pages 104 to 105 of this report, along with reasons why their contribution is, and continues to be, valuable to the Company’s long-term sustainable success, and can also be found in the Notice of the 2023 AGM. Diversity and inclusion Board diversity During the year, the Board reviewed its policy on diversity and inclusion. The objective of the policy is to ensure that diversity is reflected within the composition of the Board and throughout the business in its broadest sense, including gender, ethnicity, age, disability, religious belief, sexuality, social class, education experience and ways of thinking. The policy aims for continuous improvement at Board and Senior Management level on all these elements of diversity and to identify the most suitable candidate to join the Board having regard to the individual’s skills, experience and knowledge. It also seeks to ensure that, in managing any senior appointment and in succession planning more broadly, the Nomination Committee has regard to the recommendations of the Parker and the McGregor-Smith reviews on ethnicity and race and the benefits of diversity, including gender, ethnicity, social background and cognitive and personal strengths. A copy of our Board diversity policy can be found at: www.barrattdevelopments.co.uk/sustainability/ our-policies. A full explanation of the diversity on the Board and the steps being taken to improve our position are set out in the Nomination Committee Chair’s report on page 117. In accordance with the Listing Rules, the following tables detail the diversity profile of the Board and the Executive Committee as at 30 June 2023. This data was collated from our HR database which has been populated using information provided by each individual employee, including Non-Executive Directors. Individuals are asked to select from a series of options on both sex/gender and ethnicity including the below options. Diversity information for employees below the Executive Committee can be found on pages 35 to 39. Reporting table on sex/gender representation as at 30 June 20231 Men Women Not specified/prefer not to say Number of Board members Percentage of the Board Number of senior positions on the Board (CEO, CFO, SID and Chair) Number in executive management Percentage of executive management 5 3 0 62.5 37.5 0 3 1 0 5 2 0 71.4 28.6 0% Reporting table on ethnicity representation as at 30 June 20231 White British or other White (including minority-white groups) Mixed/Multiple Ethnic Groups Asian/Asian British Black/African/Caribbean/Black British Other ethnic group, including Arab Not specified/prefer not to say Number of Board members Percentage of the Board Number of senior positions on the Board (CEO, CFO, SID and Chair) Number in executive management Percentage of executive management 7 0 1 0 0 0 87.5 0 12.5 0 0 0 4 0 0 0 0 0 5 0 1 1 0 0 71.4 0 14.3 14.3 0 0 1 A full explanation regarding diversity is provided in the Chair’s Statement on page 117 of this report. 120 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Diversity and inclusion throughout the business The Nomination Committee and the Board recognise the importance of a diverse workforce, at all levels of seniority. Promoting diversity at Senior Management level, and more generally across the workforce, remains an objective for David Thomas, our Chief Executive. David, together with the new Group HR Director, will continue to support the Group Head of Diversity and Inclusion, to drive the agenda forward in this area and undertake a full review of the overall strategy for 2025. The Group’s aim is for its employee profile to mirror that of the communities in which it operates and provide an inclusive culture, where everyone can thrive. Further information on the Group’s progress on diversity and inclusion can be found on pages 35 to 39. The main objectives, how they are implemented and progress towards them are set out below. Objectives Implementation Progress Talent: HR processes that support a wide range of skills and backgrounds Ensure we have a detailed understanding of our people Review the HR lifecycle activity and ensure it is inclusive Tailored support programmes and early careers Leadership: Role models & allies – leading the change Leading inclusivity workshops Support difference – Employee network sponsorship Reverse mentoring A deep dive of data has been undertaken to identify our levels of representation by grade, role and function for all divisions and Group Service Centre teams. This is reported monthly and reviewed in a quarterly scorecard to track change. We also review HR lifecycle data by gender, ethnicity, sexual orientation and disability, from application through employee engagement and exit interview data, to ensure a full understanding of the employee experience for all. Across the HR lifecycle we have made changes to ensure a more inclusive approach, including a review of our preferred supplier list for resourcing agencies, embedding Dignity & Respect into all our talent and early career programmes, a review and update of family friendly policies and externally delivered exit interviews. Catalyst, a female support programme, has run for another successful year and has been joined by Spotlight our support programme for ethnic minority colleagues. Employees are encouraged to self nominate and the sessions are externally facilitated. All Regional and Managing Directors have received face-to-face workshops, with external facilitation on creating Dignity and Respect for all and how they create psychological safety. Each of our Employee Networks has an Executive Committee member as their sponsor, who supports the activities and objectives of the respective group. Both our gender and ethnicity support programmes include mentoring, which is an opportunity for both our leadership mentors and the programme mentees to share and learn. We were delighted to take part in the inaugural 30% Club, Change the Race Ratio programme, which includes cross-organisational mentoring for high potential talent by the Chief Executive. Shift attitudes: Support our people’s understanding to create the right experience for all Hear the employee voice Role models and celebrations Zero tolerance on lack of dignity & respect We have five Employee Network groups, offering a range of activities from webinars, leading discussions, marking of key events and signposting support – Gender, Ethnicity & Religion, Disability, Families (including Carers) and LGBT+. Each network is sponsored by a member of the Executive Committee. We have updated our policy, embedding zero tolerance and shared this through the business via a range of communication channels. Please refer to pages 51 and 55 to 56 for more information on the workforce forum. Barratt Developments PLC Annual Report and Accounts 2023 121 S Corporate Governance F Nomination Committee Report continued Board and Committee evaluation Each year, the Board undertakes a formal and rigorous annual evaluation of its own performance and that of its Committees and individual Directors. Every three years, the Board undertakes an externally facilitated evaluation. The last one was carried out in 2022. This year’s evaluation was carried out internally by the Company Secretary. The next external evaluation is scheduled to be carried out for FY25. Progress on FY22 evaluation Progress made against the outcomes of the internal Board evaluation undertaken in FY22 is set out below: The Board FY22 outcomes Strategy Diversity and inclusion Board papers To hold a strategy day for Directors. To further embed Diversity and Inclusion throughout the organisation. To further shorten and standardise papers for Board and Committee meetings. Progress made in FY23 The format for a strategy day has been agreed. However, due to the change in Chair this will take place in FY24. Agreed our Diversity and Inclusion strategy to 2025, and supported its rollout across the Group. Requested annual updates on the progress being made as well as regular review of the strategy to ensure it remains fit for purpose. The Company Secretary, with support from the Chief Executive and the Chair, has worked with paper authors to streamline content and make better use of Executive summaries. This process will continue to evolve during FY24. Key areas of improvement for the Committees Nomination Committee FY22 outcomes Succession for all Directors, but in particular the Executive Directors, and members of Senior Management remains a key priority. Progress made in FY23 Established an action plan and allocated more time to succession planning. Audit Committee Remuneration Committee Consider increasing the number of Audit Committee meetings held during the year. Consider increasing the number of private meetings with the Chief Financial Officer (who is relatively new to the business and whose agenda is evolving), and with the Head of Internal Audit due to the increased level work being undertaken around internal controls and assurance in readiness for the implementation of the audit reform recommendations. Kept under review the time allocated to agenda items to ensure that the Committee had adequate time to consider and discuss each item appropriately. Increased the number of private meetings with each of the Chief Financial Officer and the Head of Internal Audit to two per financial year. Consider if there are any ways in which the Committee could change their overall approach to remuneration to better support the long-term sustainability of the business. During the year, with support from PwC, the Committee has continually considered how to improve its approach to remuneration, in particular, how it can best support and retain employees within this cyclical business. Board and Committee evaluation process for FY23 Online questionnaires issued to Board and Committee members, and also to those who attend Committee meetings on a regular basis. The Company Secretary reviewed the responses received and prepared a consolidated report for each of the Board and its Committees to consider. The reports were shared with each of the respective chairs. Results were presented and discussed at the June or August Board and Committee meetings. Actions for improvement were agreed for the next financial year, as set out below. Stage 1 Stage 2 Stage 3 Stage 4 Stage 5 122 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F FY23 Board effectiveness evaluation outcomes Overall, the results of the evaluation were positive and showed that the Board continues to be run effectively. It is seen as being cohesive and comprising the appropriate balance of experience, skills and knowledge to implement the Group’s strategy over the short term. Board meetings operate in a spirit of openness, fostered by the Chairman, in which Directors are able to challenge and discuss openly ideas of importance to the Group, its strategy and risk. Key areas of improvement for the Board Board composition FY23 outcomes Actions for FY24 To ensure that the Board continues to have the appropriate skills, experience and diversity to help drive the Group’s strategy forward. To continue to work closely with the Nomination Committee in assessing the skills, experience and diversity required on the Board. Strategy Diversity & Inclusion To review the existing strategy, market evolution and future direction of the business. The Board to re-consider strategy and future direction on an ongoing basis as the market evolves. Focus on further developing the Group’s Diversity & Inclusion agenda and increasing diversity on the Board and throughout the business. Support the Group Head of Diversity and Inclusion to drive the Diversity & Inclusion agenda through setting challenging yet achievable targets which will promote engagement and focus on this area across the business. The Committees Nomination Committee Audit Committee Remuneration Committee FY23 outcomes Continue to focus on Board, Executive Directors and Senior Management succession. Actions for FY24 To continue to assess the skills and experience required on the Board and its Committees and make changes to their composition as deemed appropriate, being mindful of the requirements for diversity on the Board. To continue with the succession planning meetings with the Chief Executive. To hold additional deep dive and training sessions to support the Committee’s understanding of current and emerging topics, including the impact of potential changes to the various governance and audit landscape. To continue to consider the structure of meetings to ensure that there is sufficient time allocated to address changes that may be required to the Committee’s remit in response to the implementation of any governance and audit proposals during FY24 or beyond. To determine an agenda of deep dive and training sessions for FY24. To review the annual agenda taking into account potential changes to the Committee’s remit that may be required and determine if the current structure remains fit for purpose. Consider ways to streamline the metrics used for short and long- term incentive schemes. To revisit the rationale for including the metrics within the short and long-term incentive schemes and ensure that they continue to align to the Group’s strategy and ultimately remain fit for purpose. Any changes to the metrics for Executive Directors’ incentive schemes to be discussed with shareholders and voting proxy agencies prior to the change being put into effect. Evaluation of individual Directors The evaluation of the effectiveness of John Allan as Chairman was conducted by the Senior Independent Director with assistance from the Company Secretary in May 2023. John was seen as being supportive but challenging, managing meetings with professionalism and ensuring each Director had the opportunity to express their views. Despite his other commitments, John was seen to be available and flexible, maintaining a high level of engagement with the Company, management and members of the Board. During FY23, the Chairman held one-to-one meetings with each Director to assess the effectiveness of their contributions, the appropriateness of their experience and the effectiveness with which they utilised that experience in furthering the Company’s strategy. Any areas of improvement or training and development were agreed. There were no issues of any substance arising from these meetings. This report forms part of the Corporate Governance Report and is signed on behalf of the Nomination Committee by: Caroline Silver Chair of the Nomination Committee 5 September 2023 Barratt Developments PLC Annual Report and Accounts 2023 123 S Corporate Governance Corporate Governance F Audit Committee Report Audit, risk and internal control Our approach to managing risk Committee membership and attendance There were four Audit Committee meetings held during the year ended 30 June 2023. The table below shows the attendance of each Director whilst a member of the Committee. Attended Did not attend Meetings attended Committee members Jock Lennox Katie Bickerstaffe Jasi Halai1 Chris Weston Nina Bibby2 Sharon White3 1 Jasi Halai was appointed on 1 January 2023, and was unable to attend the January Committee meeting due to a prior commitment. Prior to the meeting, Jasi provided her views on the meeting agenda which were shared with the other Board members during the meeting. Following the meeting, she was briefed on the business of the meeting and any decisions taken. 2 Nina Bibby did not offer herself for re-election and stepped down from the Board at the AGM in October 2022. 3 Sharon White was unable to attend the June meeting due to another commitment. Prior to the meeting Sharon provided her views on the meeting agenda which were shared with the other Committee members during the meeting. Following the meeting Sharon was briefed on the business of the meeting and any decisions taken. Jock Lennox Chair of the Audit Committee Focus in the reporting year ∙ Further strengthened our approach to risk management and internal control. ∙ Continued to assess the impact of the changing business environment. ∙ Monitored and assessed the accounting for and control over provisions for legacy buildings. Priorities for FY24 ∙ Review the annual cycle of work for the Committee in view of the extending reporting requirements. ∙ Continue to scrutinise control and provisions for legacy buildings. ∙ Continue to consider the implications of any changes in the housing market. 124 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Statement from the Chair of the Audit Committee I am pleased to present the Audit Committee’s report for the year ended 30 June 2023. This sets out our work and how our responsibilities in relation to audit, risk and internal control have been implemented. In performing our duties, we have complied with the requirements of the Code and followed FRC best practice guidance. We work closely with our finance and internal audit teams, and with Deloitte LLP, our external auditor, which helps us to ensure that our internal control processes remain robust and continue to adapt, our financial reporting remains clear, and our critical accounting judgements and key sources of estimation uncertainty are appropriate. Areas of focus FY23 In last year’s report, I set out our priorities for this year and I am pleased to update these as follows: Risk management and internal control During the year, the Committee continued to support the Chief Financial Officer, Mike Scott, in embedding the Group’s risk management strategy, including a reassessment of the Group’s principal risks, details of which can be found on pages 71 to 77. We have continued to monitor the rollout of the Group’s Risk & Internal Control framework (BRICk), as well as further projects to improve the internal control environment and business continuity planning and develop further the risk management process. This included updating our Group & Operational Finance Policy and BRICk, to further enhance our Internal Controls over Financial Reporting (ICoFR). The linkage of principal risks with mitigating controls and related assurance mapping is now a key foundation to the work of the Committee and the reporting undertaken on risk and control. Restoring Trust in Audit and Corporate Governance The Committee has continued to monitor the developments in the debate around Corporate Reporting and Audit Reform. The debate’s progress has been slow, nevertheless we have kept an eye on the potential for change and sought to build constructive ideas into the reporting and work of the Committee. Our draft Audit and Assurance Policy continues to evolve and the principles are guiding our approach to assurance on sustainability and non-financial statement reporting. The potential for further developments will be kept under review. Legacy Properties At each meeting management has updated the Committee on its assessment of the Group’s exposure to the risks derived from both fire safety relating to external wall systems (EWS) and the remediation required to reinforced concrete frames. In particular, careful consideration was given to whether any of the increased costs recorded in the year should have been recognised in the prior year, following which the Committee concluded that they all related to FY23. Further, in view of the identification of new developments requiring investigation relating to reinforced concrete frames, the Committee received a report from management on the associated cause and costs. The Committee agreed the scope of an assessment of the controls in this area to be undertaken in the coming months. Estimating the cost to remediate EWS and reinforced concrete frames continues to be a highly judgemental and complex area as the Group undertakes to fulfil its commitment to do the right thing. The Committee’s priority is to ensure that the level and use of the relevant provisions and the related disclosures, including being classified as adjusted items, remain appropriate. Key areas of focus for FY24 We will continue to monitor and assess the potential impact of the changes for Governance and Audit emanating from the Audit Reform debate. We welcome the consultation on the changes proposed to the UK Corporate Governance Code and will be considering the cost of implementing these as we comment. We will continue to assess the provisions for legacy properties, in particular the judgements underpinning the provisions and their utilisation. We will receive the report from management on their further assessment of controls relating to reinforced concrete frames and consider any recommendations for improvement. In light of the continuing increase in reporting and scrutiny over reporting on financial performance, risk, controls and, sustainability, we will review the annual cycle of the Committee and consider whether any enhancements or adaptations would be beneficial. Jock Lennox Chair of the Audit Committee 5 September 2023 Barratt Developments PLC Annual Report and Accounts 2023 125 S Corporate Governance F Audit Committee Report continued Role and activity of the Audit Committee Membership and attendance at meetings Details of the members and attendance at each of the Committee’s scheduled meetings is shown on page 124, and the biographies and qualifications of the members are shown on pages 104 and 105. In compliance with the Code, the Committee is comprised exclusively of Non-Executive Directors, and each member is considered to be independent by the Company. The Chairman of the Board is not a member of the Audit Committee. The Board is satisfied that Jock Lennox and Jasi Halai have recent and relevant financial experience. Jock is a Chartered Accountant who has previously chaired several other listed companies’ audit committees. He has also been the Chair of the Audit Committee Chairs’ Independent Forum since 2016. Jasi Halai, Chief Operating Officer and an Executive Director at 3i Group plc, whom we have recently welcomed to the Audit Committee, is a Chartered Management Accountant and has held a variety of posts at 3i, most recently as Group Financial Controller. She was also a NED and Chair of the Audit Committee at Porvair plc. As part of the effectiveness review, details of which can be found on page 123, the Nomination Committee was satisfied that the Audit Committee has the appropriate skills and experience relevant to the sector in which the Group operates. In addition, the Company Secretary, Head of Internal Audit, Group Director of Finance, Chair of the Board, Chief Executive, Chief Operating Officer, Chief Financial Officer and representatives from our external auditor, attended each of the Committee meetings. Other Executives and senior managers attended when appropriate for specific agenda items. After each meeting, the Chair of the Committee reported to the Board on the business undertaken by the Committee and made recommendations to the Board as appropriate. The Committee met the Chief Financial Officer, the Head of Internal Audit and the external auditor separately and independently of management. In addition, the Chair of the Committee separately meets with the external auditor and key management and senior financial managers outside formal meetings. Role and main activities undertaken by the Committee during the financial year The main role of the Committee is to assist the Board in fulfilling its governance obligations relating to the Group’s financial and non-financial reporting practices and its internal control and risk management framework. It follows an annual work programme to ensure that its roles and responsibilities are completed throughout the year. In agreeing the annual programme, the Committee considers the external environment, internal operation of the business and regulatory changes to ensure that all the main priorities are included. The Committee’s responsibilities are set out in its Terms of Reference, which can be found on the Company’s website at www.barrattdevelopments.co.uk/investors/corporate- governance. In addition to the tasks it carries out annually, the Committee carried out the following work during the year: 126 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Priorities Work carried out and outcomes Integrity of Financial Statements and announcements Considered management’s analysis of the costs associated with legacy properties and their presentation in the Financial Statements, concluding that they remain appropriately provided and disclosed. This included matters in relation to EWS; in England following the signing of the LFA in March 2023, in Scotland following the signing of Scottish Accord in May 2023, and also our commitments in Wales, each with differing commitments affecting their presentation in the accounts. In addition, matters in relation to the reinforced concrete frame review were considered and scrutinised. Particular consideration was given to management’s analysis that the increased costs appropriately relate to the current year, with which the Committee agreed. Considered the carrying value of goodwill and concluded that no impairment was required. Reviewed the level of third party assurance over the Group’s non-financial published information, including TCFD and certain climate-related information, and confirmed that it was appropriate. Reviewed the Annual Report and Accounts to ensure it appropriately messages the performance of the business. Ensured the style and messaging is an appropriate evolution from the prior Financial Statements and announcements, whilst being in line with the wider Board strategies & communications and the Group’s statutory requirements. Considered the use of APMs to ensure they properly reflected the underlying trading performance of the Group during the year and concluded that the APMs and the associated disclosures were appropriate. Risk management and Internal control systems Monitored improvements to the Group’s Risk Management Framework to strengthen the Risk Committee. This included the reassessment of the Group’s Principal Risks as set out on pages 71 to 77. Monitored the progress of a Controls Optimisation Project to optimise, rationalise and improve our internal control framework and key internal controls across the business. Considered the new Group & Operational Finance Policy and BRICk and the ongoing programme of work to develop and enhance our Internal Controls over Financial Reporting (ICoFR). Received a report from management on the cause and cost of the recent experience related to reinforced concrete frames and agreed the scope of an assessment of the controls in this area to be undertaken in the coming months. In light of uncertainties in the housing market during FY23, reviewed sensitivity analyses on a range of possible outcomes, including in sales rates and average selling prices and their impacts on the business as a going concern, its viability, and reviews of goodwill, land and work in progress for potential impairment. Internal audit Following the IIA assessment last year, the Committee reviewed progress against the recommendations, and reviewed the internal quality self-assessment carried out by the internal audit function against IIA standards for FY23, and concluded that the internal audit function continues to be effective. Challenged how the methodology for delivering significant business change projects should be assessed and how it was being applied, resulting in a review of the broader business change strategy and relevant roles and responsibilities. Approved the annual review and updates to the Risk Assurance Map setting out the assurance provided by each of the three lines of defence over the effective management of the Group’s principal risks. Reviewed the output of the annual fraud risk assessment including management controls in place to mitigate the risks identified. External audit Reviewed the outcome of the Group’s external audit quality indicator assessment. Oversaw the induction of the new Deloitte lead audit partner. The Chair of the Audit Committee met with the Deloitte audit team to discuss their audit plan and risk assessment. Governance Reviewed an update to the finance strategy presented by the Chief Financial Officer, advising on improvement options. The Committee will continue to monitor the finance strategy as it evolves. Reviewed the new Document Retention Policy, including piloting the implementation of software to facilitate the identification of data which could be at risk of being outside policy. FY23 Financial Statements Significant issues considered during the financial year The issues considered by the Committee to be the most significant (due to their potential impact on the performance of the Group’s activities) in relation to the Financial Statements during the financial year are set out below. Barratt Developments PLC Annual Report and Accounts 2023 127 S Corporate Governance F Audit Committee Report continued FY23 Financial Statements continued Significant issues considered during the financial year continued 1. Critical accounting judgements and key sources of estimation uncertainty These are set out in the table below and on the following page. 2. Going concern The Committee: ∙ concurred with management’s conclusion, and recommended to the Board, that the Company and the Group continue to be a going concern and that the Financial Statements should be prepared on a going concern basis; ∙ using the Group’s business plan, assessed the Group’s available facilities, headroom and banking covenants; ∙ reviewed management’s detailed analysis, which included forecasts, scenarios and sensitivities; ∙ considered the going concern requirements of the Code to ensure compliance; and ∙ continued to monitor market conditions to ensure any appropriate adjustments are reflected. The Committee also reviewed management’s viability assessment of the Group and agreed that it was appropriate. Further details on the Group’s going concern and viability assessments can be found in note 1 on pages 188 and 189, and the Group’s Going Concern and Viability Statements can be found on pages 99 and 100. 3. Financial reporting The Committee reviewed the integrity of the Financial Statements of the Group and the Company, and all formal announcements relating to the Group and Company’s financial performance. This process included the assessment of the following primary areas of judgement and took into account the views of our external auditor. Significant issues considered by the Committee relating to the Financial Statements for FY23 comprise: Issue External auditor challenge Management response The external auditor attended valuation meetings, performed Group-level analytical reviews, and undertook other audit procedures to challenge the margin recognised for the year. Margin recognition Development costs are allocated, on a site by site basis, between homes built in the current and future years. The Group’s site valuation process determines the profit margin for each site. This requires the estimation of future sales prices and costs to complete. Further detail is given in note 3 on page 191. The Committee considered: ∙ feedback from senior management regarding their attendance at valuation meetings and their assurances on the efficiency and consistency of the approach on valuation throughout the business; ∙ management’s assumptions and estimates in the assessment of margin recognition based on site performance, in particular, sales prices and build cost, given the dynamic inflationary environment; ∙ ongoing enhancements made to the valuation internal control process following completion of the rollout of the new commercial valuation system and also BRICk internal controls framework; and ∙ the results of the Group’s internal audit reviews across the business. Audit Committee comments Based on this, the Committee was comfortable with the process and controls adopted by management around the estimation of future income and costs to complete, and thus the process by which the Group’s inventory is valued and the margin recognised. Costs associated with legacy properties Estimations of cost provisions relating to remedial work associated with EWS and reinforced concrete frames, on legacy buildings, have been appropriately provided for and disclosed. This is against the backdrop of Government guidance, industry regulation, and interpretation thereof, continuing to evolve, requiring the Group to adjust its response, similarly as the Group’s experience of the scope and cost of remediation also evolves. Further detail is given in note 4 on page 192 and note 20 on pages 212 to 214. 128 The external auditor challenged the completeness of the basis for the estimated costs, the scope of buildings, contingency, assumptions relating to cost inflation, estimated timing of spend and discount rate. Following the inclusion of further costs associated with EWS legacy properties as an adjusted item in the FY23 Income Statement, the Committee has reviewed and challenged the provision, assessing its utilisation and continued adequacy, and has agreed that the increase has been appropriately judged, recorded in the correct period, and that accompanying financial and contingent liability disclosures fairly reflect the associated risks and opportunities. Based on this, the Committee was comfortable with the process and controls adopted by management around the disclosures and estimation of costs and provisions associated with legacy properties. The Managing Director of the Building Safety Unit attended the Audit Committee at both half and full year end to further appraise the Committee, whilst also allowing the Committee to question and scrutinise as necessary. Following the recognition of further reinforced concrete costs, the Committee considered the appropriateness of the costs recognised and the related disclosure, and whether such costs had been recognised in the appropriate financial year. Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Fair, balanced and understandable considerations and conclusions The Committee received a draft of the Annual Report and Accounts prior to its August 2023 meeting, together with supporting material from management and the external auditor. At the meeting, it considered and assessed the process undertaken in drafting the 2023 Annual Report and Accounts to determine whether it was fair, balanced and understandable. ∙ financial and management reporting systems under which financial and operating performance is planned on a three- year basis and budgeted annually. Financial and operating performance is consistently reviewed against budget and forecasts at divisional, regional and Group levels on a monthly basis, variances are explored and, where appropriate, changes made; and the information is used in the preparation of the Annual Report and Accounts; Considerations ∙ Feedback provided by shareholders on the FY22 Annual Report and Accounts. ∙ Assurances provided in respect of the financial and non-financial management information. ∙ The balance between statutory and adjusted performance measures. ∙ The internal processes underpinning the Group’s reporting governance framework and the reviews and findings of the Group’s external legal advisers and external auditor. ∙ A report from the Company Secretary, which confirmed that: i) the process involved collaboration between various parts of the Group, including the Group Finance team, Company Secretariat, Group Communications, Investor Relations and the Sustainability team; ii) the Annual Report and Accounts had been reviewed by the Executive Directors; and iii) the Company had received confirmation from its external advisers that the Annual Report and Accounts adhered to the requirements of the Companies Act, the Code, the Listing Rules and other relevant regulations and guidance. Conclusions The Committee concluded that the Annual Report and Accounts for the year ended 30 June 2023: ∙ clearly, comprehensively and accurately reflect the Group and Company’s performance in the year under review; ∙ contain an accurate description of the business model; ∙ appropriately reflect the Group and Company’s purpose, strategy and culture; ∙ includes consistent messaging and clear linkage between each of its sections; and ∙ includes KPIs, which are consistent with the business plan and remuneration strategy. Accordingly, the Committee recommended to the Board that the FY23 Annual Report and Accounts are fair, balanced and understandable. The Board’s formal statement on the Annual Report and Accounts being fair, balanced and understandable is contained within the Statement of Directors’ Responsibilities on page 171. Internal controls and the risk management process The Committee monitors the Group’s risk management and internal control systems, including their effectiveness, on behalf of the Board. The key aspects are as follows: ∙ a clear organisational structure with defined levels of authority and responsibility at all levels of the business; ∙ identification and review of principal operational risk areas to ensure they are embedded in the Group’s monthly management reporting system as routine aspects of managerial responsibility. Details of the risk management system and the principal risks are set out on pages 71 to 77; ∙ assessment of compliance with internal control and risk management systems, including a consideration of controls over non-financial risks. This assessment is supported by the Group’s internal audit team, which is responsible for undertaking a risk-assessed annual audit plan, ad hoc audits and reporting to the Committee, and, if necessary, the Board, on the operation and effectiveness of those systems and any material failings. Following the recognition of additional reinforced concrete frame provisions, the Committee will review the control environment over complex building design in FY24; ∙ mapping of assurance procedures to the Group’s principal risks, to ensure that the mitigating controls are sufficiently robust; and ∙ consideration and approval of the Group’s tax position and strategy. The Group’s operations and financing arrangements expose it to a variety of financial risks that include the effects of changes in borrowing and debt profiles, Government policy, market prices, credit risks, liquidity risks and interest rates. There is a regular, detailed system for the reporting of daily cash balances and forecast cash flows from operations to Senior Management, including Executive Directors, to ensure that risks are promptly identified and appropriate mitigating actions taken. These forecasts are further stress tested at a Group level on a regular basis. In addition, the Group has in place a risk management programme that seeks to limit the adverse effects of the other risks on its financial performance, for example limiting its exposure to institutions with high credit ratings. Financing activities are delegated by the Board to a centralised Treasury Operating Committee. Group Treasury operates according to treasury policies that are approved by the Board and the Treasury Operating Committee. Development of an Audit and Assurance Policy The Committee and the Board support the publication of an Audit and Assurance Policy in order to bring greater transparency to the assurance it receives in order to gain comfort over the Group’s management of risks, and over the accuracy of its reporting of both financial and non-financial information. During the year, the Committee reviewed a number of items which support our Audit and Assurance Policy. These included: ∙ a risk assurance map setting out assurance already in place, using the three lines of defence model, to identify any gaps or areas where improvement in assurance is required; Barratt Developments PLC Annual Report and Accounts 2023 129 S Corporate Governance F Audit Committee Report continued Development of an Audit and Assurance Policy continued ∙ assurance mapping over the Group’s published financial and non-financial information which was reviewed and updated during the year. The Board made the decision to again appoint Deloitte to provide additional independent assurance over certain aspects of the Group’s climate-related disclosures, including TCFD and certain other non-financial information; and ∙ the completion of the annual detailed fraud risk assessment exercise to identify, consider, and assess fraud risks in place across the Group and the associated controls and assurance in place to mitigate and manage these. The Committee will continue to monitor the development and formalisation of the assurance in place across the Group’s risks, key internal controls over financial reporting and financial and non-financial published information, with the view to publishing the Audit and Assurance policy in due course. Whistleblowing The Group has a clear whistleblowing policy and procedure, which is communicated to the workforce. Concerns can be raised by employees with managers, or can be reported by anyone, anonymously if necessary, to a confidential and independent hotline. The hotline is available 24 hours a day, with any matters raised being notified to internal audit immediately by email. Matters requiring urgent attention (including corruption, human rights abuse and personal safety) are notified to the Head of Internal Audit by phone immediately, including outside business hours. The Head of Internal Audit reviews matters raised, and ensures each matter is investigated or refers them to other relevant functions across the business, such as the Safety, Health and Environment or HR teams, to investigate as appropriate. Any substantive issues are raised with the Chair of the Audit Committee as they arise. The Head of Internal Audit also updates the Committee on all significant whistleblowing incidents at each of its meetings. The Committee reviews the overall procedure, investigations and outcomes, as well as the availability and frequency of use of the whistleblowing hotline. The Chair of the Committee updates the Board on whistleblowing reports and investigations on a regular basis, and the Board reviews the whistleblowing arrangements and discusses the most significant issues as appropriate. Internal audit Information regarding internal audit matters considered by the Committee are set out in the table of work carried out on page 127. During the year, the Head of Internal Audit completed all recommendations and improvements from the IIA EQA which was undertaken during the previous year. This included the pilot of a guest auditor programme which allowed individuals from across the business to support the internal audit team with specialist technical knowledge and expertise in auditing certain areas of the business. The trial of the programme was successful, providing additional insight and knowledge to support assurance, and the programme will therefore continue to operate for the next year. The Head of Internal Audit conducted a self-assessment during the year in order to assess the effectiveness of the function against the required IIA standards and governance requirements and reported the results to the Committee, who concluded that the function continued to operate effectively. 130 The Committee again considered the reporting line of the Head of Internal Audit, and confirmed that it continued to be comfortable with the existing reporting line to the Chief Financial Officer given that the Head of Internal Audit had regular formal meetings with the Chief Executive and any issues are reported to the Chief Executive in a timely manner. They were also comfortable with the independent relationship between the Head of Internal Audit, the Chair of the Committee and the wider Committee. The Committee confirmed that they would continue to keep this reporting line under review. External audit Audit performance and effectiveness The Committee annually reviews the external audit plan and process. This year it again approved the audit of key risk areas earlier in the year to reduce pressure on the busy financial reporting period after year end. In FY22 Deloitte was appointed, after a thorough tender and interview process, to provide assurance over our TCFD and certain non-financial disclosures. The appointment and fees associated with this work are in accordance with our Auditor Independence and Non-Audit Fees Policy. In forming its conclusion on performance and effectiveness of the external audit, the Committee reviewed amongst other matters: Feedback from all stakeholders on the external audit. The external auditor’s fulfilment of the agreed audit plan for FY23. Reports highlighting the material issues and critical accounting judgements and key sources of estimation uncertainty that arose during the conduct of the audit. The external auditor’s objectivity and independence during the process, including its own representation about its internal independence processes. The challenges raised by the external auditor during the audit. The Chair of the Committee met with the leaders of the external audit team to assess their experience and understanding of Barratt, which were considered appropriate. In assessing the effectiveness and performance of the external auditor, the Committee also approved the Group’s approach to assessing audit quality. As in FY22, a questionnaire was circulated covering five significant audit areas. A wide range of internal stakeholders were included across the Group’s senior leadership. All areas were rated as good, with some challenges identified in project management. The Deloitte team expect to address the highlighted areas of focus in FY24. Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F During the audit, the external auditor challenged management’s judgements and assertions on the following matters in particular: ∙ margin recognition; ∙ valuation and completeness of provisions related to legacy developments (EWS and reinforced concrete frames); and ∙ valuation and completeness of completed development provisions. The Committee’s response to these can be found in the relevant section of the table of significant issues considered by the Committee relating to the Financial Statements on page 128. The FY21 audit was subject to an Audit Quality Review, the progress of which was regularly reported to the Chair of the Committee, and has now been completed. The Chair of the Committee received a full copy of the findings of the AQR team and has discussed these with Deloitte. Some matters were identified as requiring improvement and the Committee has agreed an action plan with Deloitte to ensure these have been addressed in the audit of the Company’s FY23 Financial Statements. The Committee concluded that the external audit process as a whole had been conducted robustly, the external audit team selected to undertake the audit had done so thoroughly and professionally, and the external auditor had applied sufficient experience and understanding of the housebuilding industry, consulted with experts as necessary, and is of sufficient size to conduct the audit. Deloitte’s performance as external auditor to the Group during FY23 was therefore considered to be satisfactory. In addition, the Committee was satisfied that management had provided the external auditor with appropriate access to Barratt’s own people, systems, records and supporting information, whilst acting professionally and with appropriate challenge, enabling the audit to be conducted effectively. Auditor independence and non-audit fees The Company’s Policy on auditor independence and non-audit fees is available at www.barrattdevelopments.co.uk/investors/ corporate-governance. With effect from 1 July 2021, the policy caps non-audit fees at 70% of the average audit fees over the previous three years. The Committee continually monitors the ratio of non-audit to audit fees to ensure that it does not exceed this cap. For FY23, non-audit fees (including audit-related assurance services) for the Company and its subsidiaries and JV’s were £230k, representing 24.3% of the total audit fee. Non-audit fees based on the average of the previous three years’ audit fees were 26.5%. Further details of the audit and non-audit fees incurred by the Group can be found in note 3 on page 192. The non-audit fees were for work undertaken by the external auditor for the review of the half year report and also assurance provided over TCFD and certain non-financial disclosures included in our FY23 results. This Policy also sets out the duties of the Committee relating to the protection of the objectivity and independence of the external auditor. The pre-approval levels and conditions required for different non-audit services that might be required from the external auditor, together with prohibited services, are detailed in the Policy. It also sets out restrictions on the recruitment of employees from the external auditor. The Policy was reviewed and updated in 2023, and is in line with the auditor independence rules of the FRC’s Revised Ethical Standard 2019 and includes the FRC’s whitelist of permitted non-audit services. There are no conflicts of interest between the members of the Committee and the external auditor. The Committee requires written confirmation annually from the external auditor that it remains independent. For FY23, the external auditor provided a comprehensive report to the Committee verifying that it had performed its audit and audit-related services in line with independence requirements and explaining why it believed that it remained independent within the requirements of the applicable regulations and its own professional standards. The report also explained why the ratio of audit to non-audit fees, and the extent and type of non-audit services provided, was appropriate. The Committee conducted its own review and endorsed the external auditor’s conclusions on compliance with the Policy and independence of the external auditor. Accordingly, the Committee was satisfied that both the work performed by the external auditor, given its knowledge of the Group, and the level of non-audit fees paid to it, were appropriate and did not raise any concerns in terms of our external auditor’s independence. Total audit and non-audit fees FY23 (£000) £1,311 43 186 230 FY22 (£000) £1,189 852 680 37 262 210 FY21 (£000) £751 35 — 411 305 Company audit Subsidiaries audit Audit related services Other services Barratt Developments PLC Annual Report and Accounts 2023 131 S Corporate Governance F Audit Committee Report continued Auditor rotation timeline 2007 Deloitte appointed 2017 Deloitte reappointed following competitive tender 2027 Competitive tender unless particular circumstances require an earlier tender External audit continued External audit tender Deloitte was first appointed as external auditor to the Group in 2007, and was reappointed following a competitive tender in FY17. The Company has therefore complied with the provisions of the Statutory Audit Services for Large Companies Market Investigation (Mandatory Use of Competitive Tender Processes and Audit Committee Responsibilities) Order 2014 issued by the CMA on 26 September 2014. Jacqueline Holden replaced Claire Faulkner as lead audit partner with effect from the FY23 audit following a period of transition. Jacqueline was selected after an interview process involving the Chair of the Committee, supported by the then acting Chief Financial Officer. The external audit team’s second audit partner was rotated for the FY20 audit and remains in place. Under current regulations, the Company is not due to re-tender its audit until 2027. Given the continuing effectiveness of Deloitte in its role as external auditor, the Committee currently believes it is in the best interests of shareholders for Deloitte to remain in role and for a competitive tender process to be completed in time for the FY27 audit. The Committee will, however, continue to monitor Deloitte’s performance as external auditor and make recommendations accordingly. The Group has appointed UHY Hacker Young LLP as the auditor for certain of its subsidiaries and JVs with effect from the FY23 audit. This appointment followed a rigorous tender process. The timing of this audit work follows completion of the Group audit and therefore has no bearing on the scope of Deloitte’s audit. As well as realising some efficiency, this step provides the opportunity for one of the so called challenger audit firms to gain experience. Assessment of the external auditor Having considered the external auditor’s performance, the Committee recommended to the Board that the external auditor remains independent, objective and effective in its role and therefore should be reappointed for a further year. On the recommendation of the Committee, the Board is putting forward a resolution at this year’s AGM to reappoint Deloitte as external auditor for a further year. The recommendation of reappointment of Deloitte is free from influence by a third party and no contractual term of the kind mentioned in Article 16(6) of the Audit Regulation has been imposed on the Company whereby there would be a restriction on the choice to certain categories or lists of auditors. This report forms part of the Corporate Governance Report and is signed on behalf of the Audit Committee by: Jock Lennox Chair of the Audit Committee 5 September 2023 132 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance Corporate Governance F Safety, Health and Environment Committee Report Our approach to managing safety, health and the environment Committee membership and attendance There were two meetings held during the year ended 30 June 2023. The table below shows the attendance of each Director whilst a member of the committee. Attended Did not attend Meetings attended Committee members Chris Weston Steven Boyes Vince Coyle1 1 Vince Coyle is Group Safety, Health and Environmental Director. Chris Weston Chair of the Safety, Health and Environment Committee Focus in the reporting year ∙ Continued to monitor IIR and launched a further campaign focusing on the prevention of slips, trips and falls. ∙ Considered enhancements to existing safe systems of work such as working at height and activities involving ground workers. ∙ Assessed the SHE culture within our business via a SHE Climate survey. Priorities for FY24 ∙ Continue to take action to improve our IIR. ∙ Further enhance activities around mental well-being and occupational health. ∙ Keep under review the requirements of the Building Safety Act and adapt accordingly. ∙ Continue to review our impact on the environment and how we mitigate against this. Barratt Developments PLC Annual Report and Accounts 2023 133 S Corporate Governance F Safety, Health and Environment Committee Report continued insufficient pedestrian/plant segregation being available at the location where the incident occurred. We were fined £8,000 and the sub-contractor £32,000. We took immediate action after the incident to address the circumstances that led to the breaches identified, including reinforcing our policy on site induction, and ensuring that contractors take appropriate steps to segregate workers from their plant movements. We continue to monitor these on a regular basis. We recognise the importance of ensuring all who work on our sites have an effective induction and hold the relevant competencies for the role they are undertaking. Therefore this year we have further developed our successful Induction Manager App to enhance the process. This has proved effective in ensuring all individuals attending our sites are clear on what we will provide and do, and what is expected from them. We have also continued with our positive engagement with key members of our supply chain in reviewing safe systems of work and developing enhanced controls for their work activities. During FY23 we further assessed the SHE culture within our business via a SHE Climate survey sent to employees, sub-contractors and suppliers, which was created by the Health and Safety Laboratories for the purposes of benchmarking Health and Safety culture in comparison with organisations across a number of sectors. The overall results were encouraging. We scored above the benchmark (compared with 130 companies in all sectors) in all eight categories, which placed us in the top 5% of comparator companies. A particular strength that was noted, was health and safety communication and Management’s commitment to always act on safety concerns which is very encouraging. Detailed action plans are now being developed across the business to address those areas where there is room for further improvement with progress being monitored by the Committee. We intend to repeat the survey bi-annually going forward, and will endeavour to increase the participation from our supply chain in further surveys. FY24 key priorities Injury prevention remains a key area of focus for the business, with the aim of improving our IIR. There are further changes that we will be looking to make in terms of mental wellbeing and managing occupational health, and we are working with the HR team to improve business knowledge and awareness. The new Building Safety Act encompasses wide-ranging statutory requirements for high risk buildings and other elements of the built environment and we are looking closely at the detailed competency requirements included already and those arising from the anticipated secondary legislation. We are also committed to minimise the risks to the environment and so in FY24 a key focus area will be continuing to review and enhance our silt water management controls to ensure that contamination events are prevented. I would like to thank the SHE team, our employees and sub-contractors for the great work that they undertake each day to keep our people safe. Chris Weston Chair of the SHE Committee 5 September 2023 Statement from the Chair of the SHE Committee I am pleased to present this report as Chair of the SHE Committee. The health and safety of our workforce, customers and the public, and the protection of the environment around our developments, remain a fundamental priority for the Group and is embedded within the day-to-day operations of the business. Overall, our site teams continue to be recognised for achieving high standards of health and safety. Our culture and approach has been further verified by achieving champion status as part of an assessment by Building Safer Futures, a non-profit organisation set up as part of the drive for improvements to building safety in the construction industry. FY23 areas of focus Injury and ill health prevention has remained a key area of focus for the business throughout the year. Following the reduction in the Group IIR in FY22, and despite the ongoing action plan for continuous improvement, the IIR has unfortunately increased this year from 262 per 100,000 persons in FY22 to 289 in FY23. Our analysis indicates that the primary contributing factor is slips and trips, which is reflected industry wide, and a further campaign has been put in place which is described below. We have continued to review all working practices and considered enhancements to existing safe systems of work, especially around working at height and those activities involving ground workers. With effect from 1 July 2022, all ride-on dumpers of six tonnes or more operating on our sites were required to have an enclosed cab to protect the operator. We have worked closely with our sub-contractors to ensure that this new requirement can be adhered to. During the year, a hearing took place in relation to an incident involving an employee of one of our sub-contractors that occurred within our West Scotland division in 2017. A dumper collided at low speed with the sub-contractor’s employee. The sub-contractor had not presented their employee to our site team for an induction on their first day, but based on strict liability and the fact the individual had not been inducted, we accepted responsibility as the Principal Contractor for this technical breach. In addition, both Barratt and the sub-contractor pleaded guilty to 134 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Role and activities of the SHE Committee Membership and attendance at SHE Committee meetings The membership of the SHE Committee and the attendance at each of its scheduled meetings is set out on page 133. Only members of the SHE Committee have the right to attend meetings, however, other individuals may be invited, at the request of the Chair, to attend all or part of any meeting where it is deemed appropriate. Role and main activities undertaken by the Committee during the financial year The SHE Committee’s activities continue to remain focused on the prevention and mitigation of the key operational risks relating to health and safety, and the protection of the environment. By receiving reports and challenging those tasked with SHE performance where necessary, the SHE Committee helps the business to improve its SHE standards. It supports and oversees the direction and implementation of SHE Policy and procedures which encourage efficient working practices, prevention of injury and illness, and support our continuous improvement strategy and ongoing sustainability of the Group. The SHE Committee continues to work closely with the SHE Operations Committee, which is responsible for the implementation and oversight of the Group’s overall SHE improvement strategy on a day-to-day basis. The SHE Operations Committee reports directly to the SHE Committee. The Group Construction and SHE Director presents SHE update reports to each of these Committees and to the Board. The SHE Committee has at least one joint meeting with the SHE Operations Committee each financial year. In addition, the SHE Committee Chair is now invited to attend all SHE Operations Committee meetings. This enables the Committee and its Chair to enhance its understanding of the operational issues faced by the workforce, and to discuss them, and ways to improve them, directly with those responsible for day-to-day SHE management. The SHE Committee’s responsibilities are set out in its Terms of Reference, which can be found on the Company’s website at www.barrattdevelopments.co.uk/investors/corporate-governance. In addition to the tasks carried out annually, such as a review of its Terms of Reference and approval of this report, the SHE Committee carried out the following work during the year: Priorities Work carried out and outcomes IIR Continued to monitor SHE performance targets, key performance indicators and IIR, all of which are available on pages 17 and 24. Launched the campaign for increased Near Miss reporting in January 2023, to enable the business to have greater depth of insight into emerging risks and trends. Considered, developed and launched a new SHE campaign to focus on slip, trip and fall incidents. SHE training and compliance Reviewed the outcome of a benchmarking exercise with HBF members on our Drugs and Alcohol Policy and approach to testing, which showed our Policy was robust compared to others in the industry, and agreed a number of changes on testing. Considered and approved the detailed plan of work for the integration of Oregon and Gladman into Barratt SHE management. Considered the outcome of the HSE Safety Climate survey, and agreed the actions arising from it. Reviewed the new Health and Wellbeing strategy and requested a review of how to measure its effectiveness. Considered and agreed a new policy on the arrangements in place for the security and protection of our construction sites. Sponsored a review of the documentation site managers are required to complete during the lifecycle of a project and agreed a number of efficiencies which were implemented in FY23. SHE management system Our SHE management system continues to be accredited to the international standards ISO 14001 and 45001. We have reviewed the processes which site management are required to undertake and have received considerable feedback from site teams. Where possible, we have either enhanced the practical use of apps or amended forms. We are focused on having an effective process for near miss reporting. It is essential in our view to consider incidents that may not have caused injury or damage but had the potential to do so. This helps us to ensure that mitigations are in place to try and prevent these incidents from occurring again and from becoming an injury or causing damage. Health and Safety Climate survey The Health and Safety Climate survey was undertaken during the year with over 1,600 surveys completed and over 8,000 individual comments captured. Our health and safety culture in particular was considered to be very strong, with positive comments regarding health and safety leadership and the strength of poster campaigns on site. Areas for improvement included simplifying the format and presentation of our SHE procedures and control forms, and ensuring that all members of the workforce pay enough attention to health and safety matters. Additional actions arising from the survey included reviewing our pre-start processes to ensure health and safety continues to be embedded from commencement and that we continue to learn from incidents through an effective communications process. Specific Regional action plans are also being developed and progress is being tracked through the SHE Operations Committee. Barratt Developments PLC Annual Report and Accounts 2023 135 S Corporate Governance F Safety, Health and Environment Committee Report continued Integration of Oregon and Gladman Having consistent Health and Safety Standards across all of our Group Companies is very important. We have therefore worked with both the Oregon and Gladman teams on their Health and Safety integration which was completed for both organisations in FY23. Both organisations have now implemented SHE training requirements which are consistent with the rest of Group; they are capturing incident and near miss information using the incident app and are also being audited through the annual Divisional audit programme. They also both took part in the recent Safety Climate Survey. Health and Safety training We continue to develop our e-learning packages to support our existing training provision. The number of slips and trips has been a primary contributing factor to the IIR and a number of these have involved employees in sales roles. We have therefore, this year, launched a Sales e-learning module to ensure new sales team colleagues are familiar with our controls and that the sales environment is safe for colleagues and customers. The majority of slip incidents continue to be in construction. In co-ordination with other housebuilders, we are introducing a campaign on prevention of slip/trip injuries given that there has been an industry-wide trend in an increase in these types of incidents and therefore a common goal to improve. Induction is a key control, and it is a mandatory requirement for individuals to complete the induction process and for a record to be maintained on our platform. Based on feedback from our site teams, we launched a new two-stage site induction process, requiring site workers to review a video highlighting our expectations of them and what they should expect from us. Competency cards are increasingly using smart technology, verifiable against the scheme database. Accessibility to the assessment at the end of the induction has been increased through the use of sub-titles and translations for those whose primary language is not English. A full programme of Board visits and site visits by individual Board Directors has recommenced, with two sites visited by the full Board. The aim is for each Director to visit at least one site a year. It is also important to us that we are engaging with our high risk contractors. Ongoing work with groundworkers includes SHE seminars in each division every six months, and we have now extended this to include our scaffolding contractors. Occupational health and wellbeing The Group continues to promote occupational and mental health for all employees and others working on our sites. With support from the Group HR team, employees were given access to a variety of webinars, e-learning modules and newsletters, all of which contained guidance on staying healthy both physically and mentally. Further details of our health and wellbeing initiatives are given on page 38. Environmental protection We have a management system in place that is compliant with environmental standards. Prior to commencing on site, we undertake an assessment of the local environment and put plans in place to prevent contamination of any adjacent watercourses. These plans and controls are reviewed monthly and action is taken where enhancements or maintenance of the controls are required. We are also committed to further minimise the risks to the environment and so a key focus area will be to enhance our policies and procedures, in particular our surface water management plans, whilst continuing to ensure that they are effective and are closely monitored by our Operational teams. This report forms part of the Corporate Governance Report and is signed on behalf of the SHE Committee by: Chris Weston Chair of the SHE Committee 5 September 2023 136 Barratt Developments PLC Annual Report and Accounts 2023 Corporate Governance S Corporate Governance F Remuneration Report Annual Statement from the Chair of the Remuneration Committee Our approach to remuneration Katie Bickerstaffe Chair of the Remuneration Committee Focus in the reporting year ∙ Deferred bonus alignment with best practice and shareholder expectations. ∙ Review of Remuneration Policy. ∙ Remuneration outcomes for FY23. ∙ Remuneration targets for FY24. Priorities for FY24 ∙ Monitor Executive Directors’ and Senior Management’s performance against targets. ∙ Keep metrics used for short- and long-term incentives under review. ∙ Induct new Group HR Director to the workings of the Committee. Committee membership and attendance There were four meetings held during the year ended 30 June 2023. The table below shows the attendance of each Director whilst a member of the committee. Attended Did not attend Meetings attended Committee members Katie Bickerstaffe John Allan Caroline Silver1 Jasi Halai2 Jock Lennox Chris Weston Nina Bibby3 Sharon White4 1 Caroline Silver was appointed to the Board and the Committee on 1 June 2023. 2 Jasi Halai was appointed to the Board and the Committee on 1 January 2023. 3 Nina Bibby did not offer herself for re-election and stepped down at the AGM in October 2022. 4 Sharon White was unable to attend the June 2023 Committee meeting due to a prior commitment. Prior to the meeting, Sharon provided her views on the meeting agenda which were shared with the other Board members during the meeting. Following the meeting Sharon was briefed on the business of the meeting and any decisions taken. Barratt Developments PLC Annual Report and Accounts 2023 137 S Corporate Governance F Remuneration Report continued Annual Statement from the Chair of the Remuneration Committee continued Statement from the Chair of the Committee I am pleased to present my report to you as Chair of the Committee. When considering the FY24 remuneration outcomes for the Executive Directors and in considering the targets for FY24, the Committee took into account, amongst other factors, the performance of the Group in FY23 and the market conditions in which the Group has operated (as explained in the Chief Executive’s Statement on page 23, and the Marketplace section on pages 20 and 21). Remuneration Policy Our existing remuneration policy was approved for a period of three years at our 2020 AGM and expires this year. As such, we will be presenting a slightly revised policy to shareholders for approval at our 2023 AGM. During the year, the Committee undertook an in-depth review of the current policy considering a number of factors including the expected economic environment over the next policy period, our strategy, and our experience with the current policy. Following discussions, the Committee believes that overall the policy remains broadly fit for purpose. It is therefore proposing that the only significant change to the policy, as previously communicated, will be with regards to bonus deferral for Executive Directors and Senior Management. Currently, under the rules of the existing DBP, any bonus earned in excess of 100% of salary is deferred into shares. To bring the policy in line with shareholder expectations and best practice we will, from the date of the 2023 AGM, defer a fixed percentage of any bonus earned. Accordingly, for FY24, we have agreed that one-third of any bonus earned will be deferred into shares. This is in line with current arrangements under which an individual who is able to earn a bonus equivalent to 150% of salary defers one-third of their bonus at maximum. Our proposal therefore ensures that the same proportion of the annual bonus continues to be deferred when maximum opportunity is achieved, but also ensures that one-third of any bonus earned will be deferred for achievement below maximum. The rules of a new DBP which will be used to implement this new approach to deferral will be presented to shareholders at the 2023 AGM for approval. Other minor amendments have been made to the policy to provide further clarity in respect of potential performance metrics used within the annual bonus and to ensure that the policy remains in line with best practice. We believe that with these changes, the Remuneration Policy is fit for purpose and aligns the interests of our Executive Directors with those of our shareholders and with our business strategy. It also continues to drive appropriate behaviours for the long-term success of the Company. Details of these changes can be found on page 142. FY23 performance and reward The business has continued to deliver a strong operational and a good financial performance throughout the year. In particular, we achieved 17,206 total home completions (FY22: 17,908), despite the challenges posed by the increase in interest and mortgage rates and the continuing significant cost of living pressures faced by our customers. The Board is extremely grateful for the hard work and dedication of our teams and partners over the past year, despite these challenges. The outcome for the FY23 annual bonus scheme was 40.1% of maximum, with no bonus earned in respect of the adjusted PBT performance target. The 2020 LTPP award will vest at 19.6%. Further details can be found on page 161. The Committee carefully considered the incentive outcomes within the context of the underlying performance of the business, and ultimately decided that the outcomes were reflective of business performance. As a result, the Committee has not used any discretion to determine these outcomes and it has not adjusted any of the performance targets during the year. 2022 LTPP As highlighted in last year’s report, the Committee was mindful of the view of shareholders and proxy voting agencies that remuneration committees should seek to reduce the number of shares granted under a long-term performance award, where the Company’s share price has fallen substantially since the previous grant, to avoid potential windfall gains for Executive Directors. As such, at the time of grant of the 2022 LTPP, the Committee agreed to apply a reduction of 15% to the normal level of the award to avoid windfall gains given the decline in the Company’s share price since the previous grant in October 2021. Pensions With effect from 1 January 2023 the cash supplements in lieu of pension paid to David Thomas and Steven Boyes were reduced from 25% of base salary to a level equivalent to the wider workforce (currently 10% of base salary), in line with our previous commitments and the guidance from the IA. Mike Scott’s cash supplement was set at 10% of base salary from the date of his appointment. FY24 remuneration Cost of living support We remain conscious that the cost of living continues to be high and is impacting our employees. In January 2023, we decided to pay a further £1,000 salary supplement, in equal monthly instalments to each of our employees below our senior leadership team (95% of our employees) for the six months to 30 June 2023. With effect from 1 July 2023, we ceased the salary supplement but applied a 4% inflationary increase for all employees below Board level, with a tiered additional increase, up to 6%, for those who received the salary supplement, meaning that on average a 5.3% salary increase was awarded to the wider workforce. FY24 salary Having regard to the changes implemented for employees as set out above, and to the benchmarking data provided by PwC, the Committee decided to increase Executive Directors’ salaries by 4%, which is lower than the average increase of 5.3% awarded to the wider workforce. The Committee believes that this increase is justified given the continued strength of our operational and financial performance, the ongoing competitive landscape we face across the sector, and to ensure alignment between the Executive Directors and the wider workforce. The Committee further believes that this level of increase is appropriate given the current economic circumstances in which we are operating. Furthermore, the Committee is comfortable that salary levels remain in line with peers. During the year, a committee of the Board comprising the Chair and the Executive Directors reviewed the Non-Executive Directors’ fees and concluded that an increase of 4% should also apply to the Non-Executive Directors’ base fee, and to their fees as members and chairs of the relevant committees. An increase of 4% was also applied to Caroline Silver’s fee as Chair to reflect that she took over as Chair earlier than anticipated and to ensure that her fee remained in line with that of John Allan’s. These increases are in line with those made to the base salaries of the Executive Directors and below that applied to the base salaries of the wider workforce. 138 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F FY24 annual bonus and 2023 LTPP The performance measures for the FY24 annual bonus scheme are set out on page 156 together with the rationale for selecting them. The key change is the introduction of a Diversity & Inclusion target to reflect our business focus in this area. This target replaces the Trading Outlets measure. The Committee is of the view that the actual targets for the annual bonus are commercially sensitive and will therefore disclose these with performance against them, in the FY24 Remuneration Report, in line with market practice. The 2023 LTPP will be awarded to all eligible participants, including the Executive Directors, later this year. Under our Remuneration Policy, the Committee can make awards of up to 200% of salary to Executive Directors. The Committee continues to believe that TSR, Absolute Adjusted EPS, Underlying ROCE and GHG Emissions Reduction remain the most appropriate measures to align the Group’s performance with strategy and the interests of stakeholders. Due to the continued uncertainty in market conditions at the time of approving this Remuneration Report, the Committee has not been able to finalise the financial targets for its incentive schemes. We anticipate that the financial targets will be agreed by no later than the end of November 2023. The details of the non-financial targets for the 2023 LTPP can be found on page 157 and the strategic KPIs for each can be found on pages 16 to 17. The rules of the LTPP are due to expire in November 2023 having been in place for a period of ten years. A new set of rules will therefore be presented for shareholder approval at the 2023 AGM. Shareholder engagement I wrote to our 20 largest institutional investors and the proxy voting agencies in May 2023 to gain feedback on the proposed changes to the Remuneration Policy, the remuneration outcomes for FY23 and our proposals for FY24. We received feedback from shareholders representing 10.3% of our issued share capital. The key topic of discussion was the introduction of the Diversity and Inclusion targets, whereby shareholders recommended that we ensure that these targets are measurable and aligned to the Group’s strategy in this area. The Committee confirms that this feedback has been taken into account when setting the specific Diversity and Inclusion targets and in determining how performance will be assessed. All shareholders who responded were very supportive of the FY23 outcomes, the FY24 remuneration proposals and the changes proposed to the Policy. Employees and remuneration Our 2022 Gender Pay Gap report was published in December 2022, along with our first Ethnicity Pay Gap report which we chose to publish voluntarily as part of our commitment to becoming a more diverse and inclusive business. Details of the reports, where to find them on our website and our work on improving diversity and reducing these pay gaps can be found on pages 37 to 39. We continue to seek the views of our Workforce Forum on our approach to pay for employees and Executive Directors during the year. Further details on the Workforce Forum and the matters it discussed during the year can be found on page 55. We continue to make an annual award of Barratt shares to employees below Senior Management to recognise their dedication, commitment and loyalty. Further details can be found on page 37. Reporting Our Remuneration Report for the year ended 30 June 2023 comprises three parts: this Annual Statement, our full Remuneration Policy, and the Annual Report on remuneration. Details of how we have applied the relevant requirements of the Code can be found throughout this Remuneration Report. Conclusion Throughout the year, the Remuneration Policy operated as intended in terms of Company performance and quantum, and in line with the Code. The Committee believes that the decisions it has taken in respect of FY23 pay outcomes and its proposed approach to remuneration for FY24 are in the best interests of its shareholders, align with the Group’s strategy, reflect the wider business and economic environment and are fair, reasonable and appropriate. I therefore hope that you will support the updated Remuneration Policy and the Annual Report on Remuneration, which will be proposed at the AGM in October 2023. On behalf of the Committee and the Board, I would like to thank you for your continued support of our remuneration framework. Katie Bickerstaffe Chair of the Remuneration Committee 5 September 2023 Our remuneration strategy It is the motivation and engagement of our employees which makes our business operationally and financially strong. It is therefore imperative that our remuneration strategy appropriately rewards our employees for their performance against the Group’s key performance indicators, whilst delivering sustainable shareholder value. Our Remuneration Policy therefore aims to: ∙ promote the long-term sustainable success of the Company and be fully aligned with the performance and strategic objectives of the Group to enhance shareholder value; ∙ attract, retain, motivate and competitively reward Executive Directors and Senior Management with the requisite experience, skills and ability to support the achievement of the Group’s key strategic objectives in any financial year; ∙ take account of pay and employment conditions of employees across the Group whilst reflecting the interests and expectations of shareholders and other stakeholders; ∙ reward the delivery of profit and the achievement of the return on capital employed target, whilst ensuring that Executive Directors and Senior Management adopt a level of risk which is in line with the risk profile of the business as approved by the Board; ∙ ensure that there is no reward for failure and that termination payments (if any) are limited to those that the Executive Director (or member of Senior Management) is legally entitled to; and ∙ ensure that in exercising its discretion, the Committee robustly applies the aims above. In developing its Remuneration Policy, the Committee has regard to: ∙ the Group’s purpose and strategic priorities, and ensuring that targets support the achievement of these; ∙ the performance, roles and responsibilities of each Executive Director and members of Senior Management; ∙ arrangements that apply across the wider workforce, including average base salary increases and pension contributions; ∙ information and surveys from internal and independent sources; and ∙ the economic environment and underlying financial performance of the Group. Barratt Developments PLC Annual Report and Accounts 2023 139 S Corporate Governance F Remuneration Report continued Remuneration overview The overview below outlines the remuneration outcomes for Executive Directors for FY23, together with the minimum, on-target and maximum (with and without share price growth) opportunities for FY24, the FY23 targets set for variable remuneration and our performance against them, and the alignment of our FY23 incentive performance measures with strategy. Full details can be found in the Annual Report on remuneration on pages 155 to 168. Details of Executive Directors’ shareholding requirements and whether they have been met are given in Table 16 on page 164. Executive Directors’ Remuneration Policy scenarios for FY24, and FY23 single figure outcomes £ 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 949 4,708 53% 3,873 43% 2,411 35% 26% 1,756 32% 27% 1,950 35% 26% 771 3,804 53% 3,130 43% 2,897 53% 2,383 43% 1,418 32% 27% 1,483 35% 26% 583 32% 27% 928 500 0 100% 39% 24% 20% 100% 40% 25% 20% 100% 39% 24% 20% Minimum Chief Executive On-target Maximum Maximum plus 50% share price growth Single figure FY23 Minimum Chief Operating Officer and Deputy Chief Executive On-target Maximum Maximum plus 50% share price growth Single figure FY23 Minimum Chief Financial Officer On-target Maximum Maximum plus 50% share price growth Single figure FY23 Fixed pay Annual bonus LTIP Notes: Minimum pay is fixed pay only (i.e. salary + benefits + pension). On-target pay includes fixed pay, 50% of the maximum bonus (equal to 75% of salary) and 50% vesting of the LTPP awards (with grant levels of 200% of salary). Maximum pay includes fixed pay and assumes 100% vesting of both the annual bonus and the LTPP awards. Maximum pay plus 50% share price growth is the same as maximum pay for fixed pay and annual bonus but assumes a 50% increase in the share price over the performance period for the LTPP. All amounts have been rounded to the nearest £1,000. Salary levels (which are the base on which other elements of the package are calculated) are based on salaries as at 1 July 2023. The value of taxable benefits is the cost of providing those benefits in the year ended 30 June 2023. The Executive Directors are also permitted to participate in HMRC tax advantaged all-employee share plans, on the same terms as other eligible employees, but they have been excluded from the above graph for simplicity. The LTPP awards allow participants to receive dividend equivalents but these are excluded from the scenario chart, other than for the single figure bar. The CFO’s replacement LTPP awards that are due to vest in October 2023 are included as LTPP in the FY23 remuneration. Dividend equivalents have been included for the LTPP single figure bar. FY23 performance pay outcomes Annual bonus outcome Further details are set out on pages 160 and 161 in the Annual Report on Remuneration. Target Profit before tax and adjusted items Capital employed Quality and service (with health and safety underpin) Threshold £1,015m Target £1,090m Maximum £1,165m Actual £884m £1,815m £1,815m £1,715m Actual £1,733m (i) Number of divisions achieving minimum 94% SHE monitoring inspections gate on a rolling 12 months’ performance basis, (ii) For 75% of this element, divisions achieving minimum 90% for the HBF 8-week National New Homes Customer Satisfaction survey; and (iii) for the remaining 25% of this element, number of divisions achieving minimum 82% for NHBC 9-month Customer Satisfaction Survey. Divisions achieving 90% 8 week score: 23 Divisions achieving 82% 9 month score 16 Weighting Outcome achieved 82.5% 15% 0% 13.6% 22.5% 16.5% Reduction of total waste generated (waste intensity) 4.87 tonnes 4.82 tonnes 4.77 tonnes Actual 4.31 tonnes per 100m2 legally completed build area Trading outlet openings 98 openings 103 openings 108 openings 15% 15% 15% 15% Actual 130 openings 140 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F LTPP vesting outcome Further details, including the share price used to calculate the estimated value, any value of share price increases and the value of dividend equivalents, are set out in Table 12 on page 162 of the Annual Report on Remuneration. David Thomas Steven Boyes Mike Scott Shares awarded Number 282,004 223,183 67,681 Percentage of award vesting EPS 0% 0% 0% ROCE 13% 13% 13% TSR 6.6% 6.6% 6.6% Total 19.6% 19.6% 19.6% Shares vesting Number 55,272 43,743 13,265 Estimated value £000 299 237 69 Alignment of FY23 incentive performance measures with strategy Strategic priorities Customer first Great places Leading construction Investing in our people Anticipate our customers’ evolving needs by continuously improving the homes and places we build. Secure good value land and planning consents where people aspire to live. Deliver highest quality homes, focus on excellence, embrace MMC. Attract and retain the best people, invest in their development. Annual bonus How our incentive structures are aligned to delivering the strategic priorities ∙ Customer service ∙ Adjusted PBT ∙ Adjusted PBT ∙ Adjusted PBT ∙ Sustainability ∙ Capital Employed ∙ Capital Employed ∙ Sustainability ∙ Sustainability ∙ Customer service ∙ Customer service ∙ Sustainability ∙ Diversity & inclusion LTPP ∙ Sustainability ∙ ROCE ∙ ROCE ∙ Sustainability ∙ Adjusted EPS ∙ TSR ∙ Sustainability ∙ Adjusted EPS ∙ Sustainability Barratt Developments PLC Annual Report and Accounts 2023 141 S Corporate Governance F Remuneration Report continued Directors’ Remuneration Policy The Company’s current Directors’ Remuneration Policy (the “2020 Policy”), was approved by shareholders at the 2020 AGM. A new Remuneration Policy will therefore be presented for approval by shareholders at the AGM in October 2023 (the “2023 Policy”). We consulted with our major shareholders and the main institutional voting agencies on the proposed minor changes to our Remuneration Policy and its proposed implementation for FY24. If approved by shareholders, the 2023 Policy will take effect from the date of the 2023 AGM and remain in force for three years unless changes are required. The full version of the 2020 Policy can be found on pages 127 to 130 of the 2020 Annual Report and Accounts, which is available on our website at www.barrattdevelopments.co.uk/investors. A description of how the Company implemented the 2020 Policy in FY23 can be found on pages 159 to 163. Changes to Remuneration Policy The Committee is only proposing minor changes to the Remuneration Policy, with all other aspects remaining unchanged. The minor amendments are to reflect best practice and governance requirements only. The table below summarises these changes. Area of policy Changes to 2023 Remuneration Policy from the 2020 Remuneration Policy Annual bonus Underlying policy is unchanged, however minor drafting changes have been made to provide further clarity in respect of potential performance metrics. DBP Under the 2020 Policy, bonuses up to 100% of base salary are paid in cash with any bonus earned in excess of this (up to a maximum of 50% of base salary) deferred into shares under the DBP. To bring the policy in line with shareholder expectations and best practice it is proposed that, with effect from FY24, a fixed portion of at least one-third of any bonus earned by Executive Directors will instead be deferred into shares for a period of three years. Shareholding requirements Underlying policy is unchanged, however minor wording changes have been made to bring this policy in line with best practice. Policy table The proposed 2023 Policy is set out below. Details of how the proposed 2023 Policy will be applied for FY24 are set out on pages 156 to 158. Purpose and link to Company’s strategy Base salary How operated in practice Maximum opportunity Description of performance metrics To help promote the long-term success of the Company. Normally reviewed annually and fixed for 12 months with any increases usually effective from 1 July. To reward individuals based on the scope of the role. The Committee considers: ∙ individual responsibilities, skills, experience and performance; To attract and retain high calibre Executive Directors to deliver the Group’s strategy. To provide a competitive salary relative to comparable companies in terms of size and complexity. ∙ the level of pay increases awarded across the Group (with the exception of promotions); ∙ the size and responsibility of the role; ∙ economic and market conditions; and ∙ the performance of the Group. The Committee, when setting salaries, takes into account salary levels for similar positions in the housebuilding sector and within companies of a similar size to the Group. The Committee has the discretion to vary salaries in the event there are changes to any of the above within the 12-month period for which salaries have been fixed. Salaries are paid monthly in arrears. There is no prescribed maximum annual increase. N/A The Committee is guided by the general increase for the broader UK employee population but on occasions may need to recognise changes in the role and/or duties of a Director; movement in comparator salaries; and salary progression for newly appointed Directors. The Committee retains the right to approve a higher increase in exceptional cases, such as major changes to the Executive Director’s role/duties; new recruits; or internal promotions to the position of Executive Director whose salary was set lower than the market level for such a role and a higher increase is justified as the individual becomes more established in the role. In these circumstances a full explanation of the increases awarded will be provided in the Annual Report on Remuneration. 142 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Purpose and link to Company’s strategy Benefits (taxable) To help promote the long-term success of the Company. How operated in practice Maximum opportunity Description of performance metrics Benefits normally include: ∙ company car; There is no formal maximum. Benefits are provided based on market rates. N/A To attract and retain high calibre Executive Directors. ∙ private medical insurance; ∙ some telephone costs; and To remain competitive in the marketplace. ∙ contributions towards obtaining independent financial, tax and legal advice. Other benefits offered to the wider workforce will also be offered to Executive Directors on the same basis. The Committee does have the discretion to offer other benefits it deems appropriate to secure the appointment of a new Executive Director or retain an Executive Director (including relocation benefits) and to ensure that the benefits package for existing Executive Directors remains competitive in the UK market. Pension To help promote the long-term success of the Company. In accordance with legislation, Executive Directors are enrolled into a workplace pension. To attract and retain high-calibre Executive Directors. If Executive Directors choose to opt out of the workplace pension they can elect to either: To remain competitive in the marketplace. ∙ participate in the Company’s money purchase pension plan; or ∙ receive a salary supplement. Executive Directors are also eligible to receive an insured lump sum of up to five times pensionable salary on death in service. Steven Boyes remains a deferred member of the defined benefit section of the Group’s pension scheme, which closed to new entrants in 2001 and future accrual of defined benefits for current members ceased to be offered on 30 June 2009. The scheme was bought out by an insurer during FY21. N/A Defined contribution scheme or salary supplement not exceeding the Company’s contribution rate available to the majority of the wider workforce, currently 10% of base salary. Legacy: Steven Boyes participated in the defined benefit scheme: 1/60 accrual rate and a retirement age of 65. Barratt Developments PLC Annual Report and Accounts 2023 143 S Corporate Governance F Remuneration Report continued Directors’ Remuneration Policy continued Policy table continued Purpose and link to Company’s strategy How operated in practice Maximum opportunity Description of performance metrics The potential annual maximum bonus is 150% of base salary. The level of bonus payable at threshold is set annually but will not exceed 20% of potential maximum bonus (30% of salary). 50% of the potential maximum bonus (75% of salary) is payable for achievement of on-target performance. Annual bonus To motivate and reward Executive Directors for the achievement of demanding financial and non-financial objectives and key strategic measures over the financial year. Variable remuneration allows the Group to manage its cost base by giving it the flexibility to react to changes in the market and any unforeseen events. The Committee has absolute discretion as to whether or not to award a bonus and as to the level of bonus to be awarded up to the prescribed maximum. The Committee annually sets financial and non-financial performance targets by taking account of the Company’s goals and budget for the relevant financial year. Group and individual performance against these targets is measured at the end of the financial year and the level of bonus payable is calculated at that point. This also takes into account the underlying financial and operational performance of the business relative to the sector (as noted in the column to the right). Up to two-thirds of any bonus earned is paid in cash and at least one-third of any bonus earned is deferred into shares under the DBP for a period of three years. The Committee retains the discretion to decide whether or not to pay an annual bonus to an Executive Director who has handed in their notice and to determine, in respect of any employee who is a “good leaver”, whether any annual bonus earned should be paid in cash and not deferred into shares. Where the Committee believes that performance does not warrant the level of bonus determined, it may use its discretion to reduce the award (possibly to nil) as it deems appropriate. No Executive Director has any contractual right to receive a bonus. Annual bonus is not pensionable. The performance targets set are stretching whilst having regard to the nature and risk profile of the Company, its strategy and the interests of its shareholders. When setting bonus targets, the Committee considers the effect of corporate performance on ESG risks and sustainability issues generally to ensure that remuneration structures do not inadvertently motivate irresponsible behaviour. The focus of the performance targets is to deliver profit growth and to ensure that the Company has an adequate land bank acquired within the constraints of its Balance Sheet commitments. Performance measures may include, but are not limited to: ∙ financial items (e.g. profit before tax, margin growth, net debt/land creditors; and land commitment), with a weighting greater than or equal to 50%; and ∙ non-financial items (e.g. quality and service, health and safety, diversity and inclusion objectives; and personal objectives). The Committee has the discretion to: ∙ choose appropriate measures for each award; ∙ vary the elements of each of these items, including targets, and the weightings of each component on an annual basis; and ∙ ensure that they remain aligned to the strategy of the business and to market conditions. 144 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Purpose and link to Company’s strategy DBP At least one-third of any annual bonus earned is deferred into shares and held in this plan for a period of three years and is normally subject to a continued employment condition. The aim is to encourage long-term focus and to further align interests with those of shareholders and discourage excessive risk taking. LTPP To motivate and reward Executive Directors and Senior Management for the delivery of the long-term performance of the Group. To facilitate share ownership by Executive Directors to align their interests with those of our shareholders. How operated in practice Maximum opportunity Description of performance metrics No performance conditions apply to the vesting of awards other than a continued employment condition. Deferred shares are normally granted in the form of a conditional award (but may also be granted as nil or nominal cost options or forfeitable awards in accordance with the rules of the DBP). Deferred shares will normally accrue dividend equivalents in cash or shares, which may be on a reinvestment basis, and which are subject to the same terms, including vesting date, as the deferred share award. Malus and clawback can be applied in certain circumstances to both the cash and deferred element of the bonus. For full details see pages 148 and 149. At least one-third of any bonus paid is deferred into an award over shares under the DBP, unless the Committee determines otherwise in the case of a “good leaver”. The Committee retains the discretion to adjust the proportion of bonus deferred in exceptional circumstances. In accordance with the rules of the LTPP, the Committee has the discretion to grant an award up to 200% of base salary to each of the Executive Directors in respect of any financial year of the Company. LTPP awards: ∙ are normally granted annually in the form of conditional awards or nil-cost options at no cost to the Executive Director (but may also be granted as nominal cost options or forfeitable awards in accordance with the rules of the LTPP); ∙ are at the discretion of the Committee, taking into account individual performance and the overall performance of the Group; ∙ are subject to the achievement of stretching performance conditions measured over three financial years with a subsequent two-year post-vesting holding period. Awards may therefore only be realised on conclusion of the five-year combined period; and ∙ may, at the discretion of the Committee, accrue dividend equivalents in cash or shares, which may be on a reinvestment basis, and which are subject to the same terms, including vesting date and holding period, as the LTPP award. Any accrued dividend equivalent will be pro-rated, depending on the level of award vesting. Malus and clawback can be applied in certain circumstances to the LTPP award. For full details see pages 148 and 149. Any LTPP awards are subject to performance conditions, which are stretching and aligned with the Group’s strategy and the interests of shareholders. Financial performance conditions will have a weighting of at least 50%. The performance conditions are set on the basis that they: ∙ are realistic and attainable; ∙ are for the long-term benefit of the Group; and ∙ do not encourage inappropriate business risks. The Committee has the discretion to determine the weighting of each performance condition on the grant of an LTPP award. No more than 25% of an award will vest at threshold performance (0% will vest below the threshold level) increasing pro-rata to 100% vesting for maximum performance. Overall, the Committee must be satisfied that the underlying financial and non-financial performance of the Group over the performance period warrants the level of vesting as determined by applying the above targets. If the Committee is not of this view, then it is empowered to reduce the level of vesting (potentially to nil). Barratt Developments PLC Annual Report and Accounts 2023 145 S Corporate Governance F Remuneration Report continued Directors’ Remuneration Policy continued Policy table continued Purpose and link to Company’s strategy How operated in practice Maximum opportunity Sharesave To promote long- term share ownership amongst all employees of the Group in a tax-efficient way. To link employee benefits to the performance of the Group. To aid retention of employees. Under the standard terms, employees must have completed the requisite length of service as at the invitation date to be eligible to participate in the Sharesave. Save up to the maximum monthly amount as specified by legislation or HMRC and as approved by the Committee and the Board. The Committee reserves the right to amend contribution levels to reflect changes made by HMRC or the Government from time to time. Employees can elect to save between a minimum of £5 and the maximum monthly savings limit as approved by the Committee and the Board within the limits prescribed by legislation and HMRC, for a period of three or five years. Subject to the rules of the Sharesave, at the end of the savings period the employee has six months in which to exercise their option. Shareholding requirements Description of performance metrics Continued employment for the duration of the scheme and “good” and “bad” leaver provisions in line with the rules of the Sharesave. N/A N/A To further align the interests of Executive Directors to those of shareholders. Executive Directors are required to build and retain a shareholding equivalent to 200% of base salary in the Company’s shares within five years of the shareholding requirement coming into force or the Executive Director being appointed to the Board, whichever is the later. The share price used for the purposes of determining the value of the shares is that prevailing on 30 June of the given year. The Committee reserves the right to amend the percentage holding required by the Chief Executive and the other Executive Directors depending on market conditions and best practice guidance. Executive Directors are also subject to a post-cessation shareholding requirement of 200% of their salary or their actual level of shareholding at cessation of employment if lower (based on their salary and the share price at the date of cessation of employment). The Committee has implemented suitable measures to ensure continued enforcement of the shareholding requirement during the post-cessation shareholding period. The Committee retains the discretion to waive the post- cessation shareholding requirement in exceptional circumstances. Details of the Executive Directors’ shareholdings can be found in Table 16 on page 164. 146 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Purpose and link to Company’s strategy How operated in practice Maximum opportunity Description of performance metrics Non-Executive Directors’ fees (including the Chair) To attract and retain high quality and experienced Non-Executive Directors (including the Chair). The remuneration of the Non-Executive Directors is set by the Board on the recommendation of a committee comprising the Chair and the Executive Directors. The Board sets the remuneration of the Chair. Non-Executive Director fees must remain within the aggregate limit approved by shareholders from time to time. N/A The current aggregate limit is £1,000,000. The Chair and the Non-Executive Directors’ fees are reviewed annually and are normally set by reference to the level of fees paid to the Chairs and Non- Executive Directors serving on boards of similarly sized, UK-listed companies, taking into account the size, responsibility and time commitment required of the role. The Chair’s and Non-Executive Directors’ fees are paid in cash, monthly in arrears. Neither the Chair nor the Non-Executive Directors participate in any performance- related schemes (e.g. annual bonus or incentive schemes) nor do they receive any pension or private medical insurance or taxable benefits other than the potential to receive gifts at the end of a long-standing term of appointment. Expenses incurred by the Chair and the Non-Executive Directors in the performance of their duties for the Company (including taxable travel and accommodation benefits in connection with travelling to a permanent workplace) may be reimbursed or paid for directly by the Company, as appropriate. Additional fees are payable to the Chairs of the Audit, the Remuneration and the SHE Committees, the Senior Independent Director, the Designated NED for Workforce Engagement and for membership of Board Committees. Additional fees may be paid where, in exceptional circumstances, the normal time commitment is significantly exceeded. Barratt Developments PLC Annual Report and Accounts 2023 147 S Corporate Governance F Remuneration Report continued Directors’ Remuneration Policy continued Performance conditions and target setting The Committee annually reviews the performance measures and targets taking into consideration a number of factors including the performance of the Group throughout the previous financial year, internal and external forecasts and consensus figures for the performance period and the Group’s strategy. The annual bonus scheme is measured against key financial (Adjusted PBT and Capital Employed) and non-financial metrics (quality and service, health and safety, and diversity and inclusion). Both the financial and non-financial measures are aligned to our strategy, and allow individuals to focus on the key factors that will help drive short and long-term operational and financial success of the business. The LTPP is assessed against measures that, focus on delivering attractive cash returns to our shareholders, align the Group’s performance with strategy and the interests of stakeholders and encourage efficiency throughout the business. Value delivered to shareholders is recognised through relative TSR, which is measured against both the 50+/50- FTSE group and a housebuilder index. This ensures that strong returns are delivered against an appropriate size group of companies and an index of our peers. Adjusted EPS and underlying ROCE ensure that we are efficiently and effectively managing the business, whilst aligning the Executive Directors with the interests of shareholders. GHG emissions reduction targets ensure we remain on track to achieve our published sustainability commitments. Targets are set within the context of both internal and external forecasts and are designed to be appropriate within the context of the Group’s strategic objectives and historical and expected performance levels. The performance targets are designed to be sufficiently stretching in order to ensure that maximum payout is only achieved for delivering exceptional performance. Guidelines on responsible investment disclosure In line with the IA’s Guidelines on Responsible Investment Disclosure, the Committee is satisfied that the incentive structure and targets for Executive Directors do not raise any ESG risks by inadvertently motivating irresponsible or reckless behaviour. The Committee considers that no element of the remuneration package will encourage inappropriate risk taking within the Company. Committee discretion The areas of the Policy over which the Committee has discretion are included in the policy table set out on pages 142 to 147. However, we have summarised the key discretions below: ∙ amendment of salary or the award of higher increases in exceptional circumstances; ∙ variation of benefits offered to secure new appointments or retain existing Executive Directors; ∙ whether or not to make a bonus award and whether payment should be made to anyone who has handed in their notice to leave the business; ∙ what performance conditions should be attached to annual bonus and LTPP awards and the weighting of each to be applied; ∙ determining the timing of awards and/or payments, including grant, vesting or release dates; ∙ determining the quantum of awards and/or payments (within the limits set out in the policy table on pages 142 to 147); ∙ determining the application of dividend equivalents, whether they should be issued in shares, including on a re-investment basis, or cash and retaining the ability to adjust the amount paid; ∙ determining the extent of vesting based on the assessment of performance or such other factors as it considers appropriate; ∙ the settlement of any share awards in cash in exceptional circumstances; ∙ making the appropriate adjustments required in certain circumstances (e.g. change of control, rights issues, corporate restructuring events, and special dividends); ∙ determining “good leaver” status for incentive plan purposes and applying the appropriate treatment, including the timing of any vesting; ∙ determining the extent to which malus and/or clawback should apply to any award; ∙ determining the level of post-cessation shareholding the Executive Directors need to hold; and ∙ determining the exceptional circumstances under which the post-cessation shareholding requirements can be waived. If an event occurs which results in the annual bonus plan or LTPP performance conditions and/or targets being deemed no longer appropriate (e.g. a material acquisition, divestment or wider market or economic circumstances that the Committee deem relevant), then the Committee will have the ability to adjust appropriately the measures and/or targets, and/or to alter the weighting of the measures. The Committee also has the discretion to increase or decrease any annual bonus or LTPP awards (potentially reducing them to nil) in the event that the formulaic outcome is not reflective of overall Company performance or aligned with the underlying financial and/or non-financial performance of the Group, or where environmental incidents, health and safety incidents or other wider economic or market circumstances warrant an adjustment to the final outcome in order to determine a reasonable and appropriate result. The Committee also retains discretion to adjust LTPP vesting outcomes to avoid windfall gains in the event the share price has fallen materially before a given award is made. Any exercise of discretion will be fully explained in the corresponding year’s Remuneration Report. Malus and clawback Malus and clawback is applicable to any annual bonus paid or deferred for a period of three years beginning on the date of the award and to any share awards granted under the LTPP for a period of five years beginning on the date of the award. In the case of malus, the Committee may, at any time prior to the payment of any bonus or any deferred or LTPP shares becoming vested shares, decide to reduce the amount of bonus to be paid and/or reduce the number of deferred or LTPP shares (including to nil) on such basis as it considers to be fair, reasonable and proportionate where, in the opinion of the Committee, there are exceptional circumstances. In the case of clawback, the Committee may decide that the individual to whom the payment was made and/or deferred and/or LTPP shares were granted shall be subject to clawback, on such basis as it considers to be fair, reasonable and proportionate, if in relation to the bonus paid and/or the deferred or LTPP shares that have vested, in the opinion of the Committee there are exceptional circumstances. 148 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Exceptional circumstances include (without limitation): a. b. c. a material misstatement in the published results of the Company or Group or any member of the Group; an error in assessing any applicable performance conditions or the amount of bonus to be paid and/or the number of deferred or LTPP shares subject to an award; the assessment of any applicable performance conditions and/or the amount of bonus to be paid and/or the number of deferred or LTPP shares subject to an award being based on inaccurate or misleading information; d. serious misconduct on the part of an individual(s); e. f. a breach by the individual of any restrictive, confidentiality, or non-disparagement covenants or other similar undertakings, whether contained in the individual’s employment contract and/or settlement agreement and/or any other agreement between the individual and any member of the Group; where, as a result of an appropriate review of accountability, the Committee determines that an individual(s) has caused wholly or in part a material financial loss for the Group as a result of: − − reckless, negligent or wilful actions or omissions; or inappropriate values or behaviour; g. material breach of health and safety or environmental regulations; h. material failure of risk management; i. j. a member of the Group is censured by a regulatory body or suffers, in the Committee’s opinion, a significant detrimental impact on its reputation, provided that the Committee determines that, following an appropriate review of accountability, an individual(s) was responsible for, or had management oversight over, the actions, omissions or behaviour that gave rise to that censure or detrimental impact; or the Company or entities representing a material proportion of the Group become insolvent or otherwise suffer a corporate failure so that ordinary shares in the Company cease to have material value, provided that the Committee determines, following an appropriate review of accountability, that an individual(s) should be held responsible (in whole or in part) for that insolvency or failure. Where clawback is to be applied, the Committee may determine that: ∙ any bonus will be retrospectively recalculated and, if bonus monies have been paid, the relevant individual(s) will be required to reimburse the Company for an amount up to the total amount of the original net bonus paid less any bonus that the Committee determines would have been paid regardless of the event in question; ∙ that the number of deferred or LTPP shares be retrospectively recalculated. If the deferred or LTPP shares have been granted, the number of shares awarded will be reduced accordingly. If the deferred or LTPP shares have vested and shares have been issued or transferred to the individual(s), they will be required to repay the value of the relevant number of shares based on the Company’s closing share price as at the date the shares were issued; and ∙ malus will be applied to an alternative unvested award to satisfy a clawback event on a vested/released award. Recruitment of Executive Directors The Committee’s approach to recruitment remuneration is to pay no more than is necessary to attract candidates of the appropriate calibre and experience needed for the role. The remuneration package for any new recruit will take into account the skills and experience of the individual, the market rate for a candidate of that experience and the importance of securing the relevant individual. Internal pay relativities and the terms and conditions of employment of the new and existing Executive Directors will be considered to ensure fairness between them. The Committee will determine the remuneration for any new Executive Directors in accordance with the Remuneration Policy then in force and will take into consideration each of the following elements: Salary and benefits – the Committee will take into account market data for the scope of the job, the remuneration for the relevant role, the salaries of and benefits provided to existing Executive Directors, the new Executive Director’s experience, location and current base salary and benefits package. In the event an Executive Director is recruited at below market levels, their base salary may be re-aligned over a period of time (e.g. two to three years) subject to their performance in the role. The Committee may also agree to cover relocation costs if it deems it appropriate. Pension – Executive Directors will be auto-enrolled from the date of recruitment unless they opt out. If an Executive Director chooses to opt out they may elect to receive a pension supplement in cash. The Committee has discretion to determine the level of pension supplement to be awarded to the Executive Director, up to a maximum which is equivalent to the percentage normally offered to the wider workforce. Alternatively, the Executive Director may choose to join the defined contribution money purchase pension plan provided they meet all of the eligibility criteria. The Executive Director also has the option to receive some of their pension entitlement in cash and have the remainder contributed to the defined contribution money purchase pension plan, provided this does not, in aggregate, exceed the agreed percentage. Annual bonus and LTPP – new Executive Directors may be able to participate in the annual bonus scheme and the LTPP on terms to be considered by the Committee on a case by case basis. Any award made to a new Executive Director will usually be on the same terms as set out in the policy table on pages 144 and 145. The level of the award will be no greater than that made to existing Executive Directors (150% of salary for the annual bonus and 200% of salary for the LTPP) and will be pro-rated based on the number of weeks remaining outstanding of the relevant performance period. Buyout of existing entitlements – the Committee may also consider buying out existing entitlements that an individual would forfeit on leaving their current employer, again this would be reviewed on a case by case basis. In determining any potential awards to be granted to a new recruit, the Committee will consider the relative levels of certainty and balance of fixed to variable compensation in the forfeited package in totality, including salary, benefits and other components. The Committee would however in all cases seek validation of the value of any potential entitlement that is being forfeited and take into account the proportion of any performance period remaining of the award, the type of award (i.e. cash or shares) and the performance achieved (or likely to be achieved). Replacement share awards, if any, will seek to reflect (to the extent possible) the value, degree of conditionality and form of award of the entitlement forgone. Barratt Developments PLC Annual Report and Accounts 2023 149 S Corporate Governance F Remuneration Report continued Directors’ Remuneration Policy continued Recruitment of Executive Directors continued In structuring any buyouts, existing arrangements will be used where possible, however, the Company may also make use of the flexibility provided by the UKLA Listing Rules to make awards without prior shareholder approval. Buyouts may therefore fall outside normal policy maximum levels. Where an individual is recruited internally to the position of Executive Director, the Company will seek to honour any pre-existing contractual commitments, taking into account the remuneration of the existing Executive Directors. Executive Directors’ service contracts Details of the Executive Directors’ service contracts are included in Table 1 below and their remuneration for FY23 is shown in Table 7 on page 159. The Company’s policy is for Table 1 – Executive Directors’ service contracts all Executive Directors’ (including new appointments) service contracts to be for a rolling 12-month period, which can be terminated by 12 months’ notice given by either the Company or by the Executive Director at any time. The service contract normally entitles an Executive Director to the provision of a company car, annual medical screening, permanent health insurance, private medical insurance, some telephone costs, contributions to the cost of obtaining independent financial and tax advice and payment of legal fees on cessation of employment. The Committee regularly reviews contractual terms for Executive Directors to ensure that they continue to reflect best practice. All Executive Directors’ appointments and subsequent reappointments are subject to election and annual re-election by shareholders at the Company’s AGM. Executive Director David Thomas Steven Boyes Mike Scott Service contract date 16 January 2013 21 February 2013 28 June 2021 Date of appointment 21 July 2009 1 July 2001 6 December 2021 Notice period 12 months 12 months 12 months The service contracts for Executive Directors are available for inspection by any person at the Company’s registered office during normal office hours and on the Company’s website: www.barrattdevelopments.co.uk/investors. Executive Directors’ policy on payment on loss of office There are no specific provisions for compensation on early termination (except for payment in lieu of holidays accrued but untaken) or loss of office due to a change of ownership of the Company. The Committee reserves the right to make additional payments where such payments are made in good faith: (a) in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or (b) by way of settlement or compromise of any claim arising in connection with the termination of an Executive Director’s office or employment. The Committee may also provide a contribution towards reasonable legal costs and the provision of outplacement services. The Committee will apply mitigation against any contractual obligations as it deems fair and reasonable and will seek legal advice on the Company’s liability to pay compensation. The Committee may also seek to reduce the level of any compensation payable and will take into account, amongst other factors, the individual’s and the Group’s performance; the Director’s obligation to mitigate their own loss; and the Director’s length of service when calculating termination payments. The Committee reserves the right to phase any such payments if it deems that it is appropriate to do so. Any amount that the Committee decides to pay an Executive Director will be based on the main elements of executive remuneration namely, base salary, annual bonus and LTPP (subject to the Committee’s discretion), benefits and pension. Regarding salary, benefits and pension, there will be no compensation in the event of termination by the Company due to gross misconduct. In other circumstances, Executive Directors may be entitled to receive notice pay or payment in lieu of notice. The Committee also takes into account the rules of the annual bonus and LTPP schemes when determining any payments for loss of office as follows: Annual bonus – in accordance with the provisions contained within the service contracts, Executive Directors are not usually entitled to any bonus payments (other than in circumstances where they are deemed by the Committee as a “good leaver”, which includes, but is not limited to, redundancy, retirement, ill health, disability, death or any other circumstances which the Committee may decide), unless they remain employed and are not under notice as at the payment date. The default position will be that such payment will be pro-rated depending on the proportion of the bonus period worked by the relevant individual unless the Committee decides otherwise. Any bonus payment to the leaving Executive Director will normally be paid entirely in cash. The Committee retains the ultimate discretion to make bonus payments and determine the basis on which they are made and their value, taking into account the individual circumstances of the departure, the treatment of other incentive awards and the performance of the individual. Deferred bonus – if the Executive Director is deemed to be a “good leaver” (as defined above), their deferred share awards will vest on the normal vesting dates unless the Committee, in its discretion, determines that they will vest on an earlier date (other than in the case of death when deferred share awards will vest immediately, unless the Committee, in its discretion, determines that they will vest on the normal vesting dates). In all other cases, the award of deferred shares will lapse immediately on the date that the Executive Director’s employment with the Company ends and there is no entitlement to any compensation for the loss of shares. In the case of vested nil-cost options, any leaver, other than an employee who has been summarily dismissed) may exercise their option within 12 months of their cessation date. 150 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F LTPP – under the rules of the LTPP, unless the Executive Director is deemed by the Committee to be a “good leaver” (as defined on page 150) any unvested LTPP awards held by them will lapse on cessation of their employment. For “good leavers”, the Committee would normally pro-rate the number of awards for time, measuring performance over the original performance period and vesting shares at the end of the vesting period. The Committee has discretion to test performance at an earlier date, shorten the vesting period and/or disapply time pro-rating. Any exercise of discretion would be explained in full to shareholders in the following year’s Remuneration Report. Following the vesting of each award, the normal post-vesting holding period will apply, unless the Committee determines otherwise. Corporate events In the event of a change of control of the Company, the Committee may determine that: ∙ annual bonus awards for the year during which the change of control occurred may either continue to be determined on the basis of the whole year or may be pro-rated to the date of the change of control; ∙ unvested deferred bonus awards will vest on the change of control, unless the Committee agrees with the acquiring company that they will be exchanged or replaced with equivalent awards over shares in another company, continuing to their normal vesting date; and ∙ unvested LTPP awards will vest on the date of the change of control, subject to time pro-rating (unless the Committee considers it appropriate to disapply time pro-rating) and the Committee’s assessment of the extent to which the performance conditions have been achieved on such basis as it may determine, unless the Committee agrees with the acquiring company that they will be exchanged or replaced with equivalent awards over shares in another company, continuing to their normal vesting date and subject to the same or equivalent performance conditions. In the event of a demerger, distribution (other than an ordinary dividend) or other transaction which would affect the current or future value of any award, the Committee may allow awards to vest on the same basis as for a change of control described above. Alternatively, an adjustment may be made to the number of shares if considered appropriate. Differences between Executive Directors’ and employees’ remuneration The following differences exist between the Company’s Policy for Executive Directors’ remuneration as set out in the Policy table on pages 142 to 147 and its approach to the payment of employees generally: ∙ a lower level of maximum annual bonus opportunity may apply to employees other than the Executive Directors. All employees, including Executive Directors, are subject to similar performance targets; however, the weightings against the various targets may vary; ∙ for the Executive Directors and some members of Senior Management, up to two-thirds of any bonus earned is paid in cash and the remainder is deferred into shares under the DBP for a period of three years; ∙ Executive Directors and some members of Senior Management may opt to receive a cash supplement in lieu of pension. The cash supplement or employer’s contribution rate for all Executive Directors will be at the maximum rate of employer’s contribution for the wider workforce, currently 10%; ∙ Executive Directors are able to participate in the LTPP. A number of select employees at Senior Management level may also be invited to participate in the LTPP at the Committee’s discretion, with grants based on a combination of performance share awards and restricted share awards; and ∙ in July 2023, and over the previous five financial years, employees below Senior Management have been awarded a smaller number of shares under an employee long-term incentive plan. This award was not available to Senior Management or Executive Directors. In general, these differences arise from the development of remuneration arrangements that are market competitive for the various categories of individuals. They also reflect the greater emphasis placed on performance-related pay for Executive Directors. Performance scenario charts Performance scenario charts setting out policy minimum, on-target, maximum and maximum plus 50% share price growth for FY24, are shown on page 140, along with the single figure outcome for FY23. The figures are split by the different elements of pay. Non-Executive directorships Subject to Board approval, Executive Directors are permitted to accept one Non-Executive directorship outside the Company and retain any fees received from such a position. Board approval will not be given for any Non-Executive position where such appointment would lead to a material conflict of interest or would have an effect on the Director’s ability to perform their duties to the Company. Chair and Non-Executive Directors’ letters of appointment The Chair and each of the Non-Executive Directors are appointed for an initial three-year term under terms set out in a letter of appointment. Their appointments can be terminated by the Board without compensation for loss of office subject to the notice periods in their respective letters of appointment. The notice periods, applicable from either party, are three months for the Chair and one month for each of the Non-Executive Directors. The Chair and each of the Non-Executive Directors usually serve a second three-year term subject to performance review and can serve a further term of three years subject to rigorous review by the Chair and the Nomination Committee. Barratt Developments PLC Annual Report and Accounts 2023 151 S Corporate Governance F Remuneration Report continued Directors’ Remuneration Policy continued Chair and Non-Executive Directors’ letters of appointment continued Details of the letters of appointment for the Chair and Non-Executive Directors being proposed for election or re-election at the forthcoming Annual General Meeting are set out in Table 2 below. Their letters of appointment are available for inspection by any person at the Company’s registered office during normal office hours and are available on the Company’s website: www.barrattdevelopments.co.uk/investors. Table 2 – Non-Executive Directors’ letters of appointment Non-Executive Director Katie Bickerstaffe Jasi Halai Jock Lennox Caroline Silver Chris Weston Date elected/ re-elected at AGM 17 October 2022 N/A 17 October 2022 N/A 17 October 2022 Date first appointed to the Board Date last reappointed to the Board Unexpired term at 30 June 2023 1 March 2021 1 January 2023 1 July 2016 1 June 2023 1 March 2021 N/A N/A 1 July 2022 N/A N/A 8 months 30 months 24 months 35 months 8 months Gifts to Directors on leaving employment The Committee reserves the discretion to approve gifts to long-serving Directors who are retiring or who are “good leavers” e.g. those leaving office for any reason other than dismissal or misconduct. The value of the gift for any one Director shall be limited to a maximum of £5,000 (excluding any tax or VAT liability). Where a tax or VAT liability is incurred on such a gift, the Committee has the discretion to bear the cost of such liability on behalf of the Director in addition to the maximum limit. Legacy arrangements The Committee reserves the right to make any remuneration payments and/or payments for loss of office (and to exercise any discretions available to it in connection with such payments) notwithstanding that they are not in line with the 2023 Policy set out above where the terms of the payment were agreed (i) before the date the Company’s first remuneration policy came into effect; (ii) before the 2023 Policy came into effect, provided that the terms of the payment were consistent with the remuneration policy in force at the time they were agreed; or (iii) at a time when the relevant individual was not a Director and, in the opinion of the Committee, the payment was not in consideration for the individual becoming or having been a Director of the Company. For these purposes “payments” includes the Committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the payment are “agreed” at the time the award is granted. Process for determining the Remuneration Policy The process used to formulate the remuneration policy was as follows: Stage 1 Remuneration consultant benchmarks best practice to help the Committee determine areas of focus. Stage 2 Remuneration consultant and management provide detailed insight into the areas of focus to determine how the policy might be amended and implemented annually over its life. Stage 3 Committee discusses and approves the proposed policy, taking into account the remuneration of the wider workforce. Stage 4 Chair of the Committee consults with shareholders and main investor representative bodies to obtain their views. Stage 5 Feedback from the consultation is considered by the Committee and a final updated policy is approved. Stage 6 Final policy is disclosed in the Annual Report and Accounts and presented to shareholders for approval at the AGM. As part of this process, the Committee considers the budgeted salary increases and other remuneration arrangements and employment conditions for all employees when determining remuneration for the Executive Directors. It is expected that future salary increases for the Executive Directors will be no more than that given to the wider workforce, except in exceptional circumstances, such as where a recently appointed Executive Director’s salary is increased to reflect their growth in the role over time or where significant additional responsibilities are added to the role. As a key principle, management provides the Committee with visibility of the potential impact of proposed changes to the Executive Directors’ Remuneration Policy on the wider employee population. 152 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F How the Committee has addressed the requirements of the Code in determining Directors’ Remuneration Policy and practices Code requirement Clarity – remuneration arrangements should be transparent and promote effective engagement with shareholders and the workforce. Simplicity – remuneration structures should avoid complexity and their rationale and operation should be easy to understand. Variable remuneration for any year is set out clearly in the prior year’s Annual Report, together with performance targets (unless they are deemed to be commercially sensitive). Outcomes are aligned with strategic objectives through the use of appropriate performance targets, which align them with shareholder interests and the Group’s strategy and provide for the long-term success of the Company, in the interest of the workforce and other stakeholders. The Company operates a UK market standard approach to remuneration which is familiar to stakeholders. Performance targets are readily understandable and published as part of the year-end results. Risk – remuneration arrangements should ensure reputational and other risks from excessive rewards, and behavioural risks that can arise from target-based incentive plans, are identified and mitigated. The Committee has discretion to ensure that variable pay outcomes are in line with Company and individual performance. Share awards are subject to post vesting holding periods, and malus and clawback as set out on pages 148 and 149. Predictability – the range of possible values of rewards to individual Directors and any other limits or discretions should be identified and explained at the time of approving the policy. Proportionality – the link between individual awards, the delivery of strategy and the long-term performance of the company should be clear. Outcomes should not reward poor performance. Alignment with culture – incentive schemes should drive behaviours consistent with company purpose, values and strategy. Minimum, on-target and maximum outcomes for Directors are shown annually in this report (see page 140). Limits and discretions for each type of reward are explained in the policy table which can be found on pages 142 to 147. The Company’s incentive plans reward the successful implementation of strategy through the alignment of performance targets with strategic KPIs. The performance underpin which applies to both the annual bonus and LTPP outcomes ensures that poor performance is not rewarded. The Committee also has discretion to override formulaic outcomes. Our remuneration strategy ensures that performance targets do not encourage inappropriate behaviours. The targets that are selected help align the interests of the workforce with those of the Company’s purpose and strategy as illustrated on page 141. Statement of consideration of pay and employment conditions elsewhere across the Group The level for all employees’ salaries is determined with reference to the rate of inflation, salaries for similar positions throughout the industry and general themes and trends in respect of remunerating employees. In determining the Policy for Executive Directors’ remuneration, and in determining the annual increase in base salary, the Committee takes into consideration the pay and employment conditions of all employees across the Group. While the Company did not explicitly consult with employees when drawing up the Policy, during the year, the Workforce Forum discussed remuneration strategy, including executive reward strategy, and was asked for feedback for management. The Company also operates a Sharesave scheme and makes conditional awards of shares to all employees. This enables all employees to become shareholders in the Company, and to comment on the Group’s Policy in the same way as all of our other shareholders. To build the Committee’s understanding of reward arrangements applicable to the wider workforce, it is provided with data on the remuneration structure for senior management levels below the Executive Directors, as well as corresponding comparison benchmarking information for each role. In addition, the Group provides a number of ways in which employees can ask questions and give feedback on such matters should they so wish. This includes the Employee Communications mailbox, personal development reviews, the Workforce Forum, a dedicated Workforce Forum email address and an email address for employees to directly contact the Designated Non-Executive Director for Workforce Engagement. Details of engagement with the workforce, including on executive remuneration are provided in the Stakeholder engagement section of the Strategic Report on page 55. The Committee reviews this feedback, which provides further context in relation to pay and conditions throughout the organisation. These valuable insights were considered when the Committee developed the 2023 Policy. Barratt Developments PLC Annual Report and Accounts 2023 153 S Corporate Governance F Remuneration Report continued Directors’ Remuneration Policy continued Statement of consideration of shareholder views Each year we update our major shareholders on the Committee’s application of the Policy and our performance in advance of the publication of our Annual Report and Accounts. The Committee takes into account shareholder feedback received from this exercise and any additional feedback received during any meetings from time to time, as part of the Company’s annual review of the Policy. In addition, the Committee will seek to engage directly with major shareholders and their representative bodies should any material changes be proposed to the Policy. In May 2023, we consulted with our major shareholders and the main institutional voting agencies over the proposed minor changes to the Policy, and no areas of concern were raised. Details of the votes cast for and against the resolution to approve last year’s Remuneration Report can be found in Table 22 on page 168. 154 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Annual Report on Remuneration In this section, we provide an overview of the Committee and its advisers, as well as how the proposed Policy will be applied in FY24 and how the current Policy has been implemented throughout FY23, together with the resulting payments to Directors. The Annual Report on Remuneration will be subject to an advisory vote at the 2023 AGM. Membership and attendance at Committee meetings Membership of the Committee comprises all of the Non-Executive Directors, and attendance at each of its scheduled meetings during the year is set out on page 137. The Committee is chaired by Katie Bickerstaffe. The Executive Directors are not members of the Committee and no Director or senior manager is present at the Committee’s meetings when their own remuneration is being considered. Advisers to the Remuneration Committee In carrying out its principal responsibilities, the Committee has the authority to obtain the advice of external independent remuneration consultants and is solely responsible for their appointment, retention and termination. In line with best practice, the Committee assesses annually whether the appointment remains appropriate or if it should be put out to tender. The last such tender took place in 2017, resulting in PwC being appointed as the advisers to the Committee with effect from 1 January 2018. PwC is a signatory to the Remuneration Consultants Group’s Code of Conduct. As part of the annual review and reappointment process, the Committee satisfied itself that PwC remained objective and independent during the year. In addition to remuneration advice, PwC also provides taxation, consultancy, corporate finance and internal audit services to the Group. PwC is also currently the independent adviser to the Sustainability Committee and advises our Business Safety Unit. PwC has no current connections with the Company (save as described in this section) nor with any individual Directors. During the year, the Committee has taken advice from PwC on best practice in executive remuneration and benchmarking. The Chair of the Committee also sought advice from PwC, independent of management, on various matters to be discussed at committee meetings particularly regarding the review of Policy. The fees payable to PwC are based on an annual fixed fee for a specified service with anything outside this scope being charged on a time and disbursement basis. PwC’s fees for services provided to the Committee during the year under review were £189,567 (FY22: £130,200). The Committee also receives input into its decision making from the Chief Executive, the Company Secretary, and the Group HR Director, none of whom were present at any time when their own remuneration was being considered. Role and main activities undertaken by the Committee during the financial year The Committee’s role is to determine and agree the Policy for Executive Directors and Senior Management whilst taking into account the remuneration of the wider workforce. It follows an annual work programme which was fully completed during the year. The Committee’s responsibilities, as delegated by the Board, are formally set out in its written Terms of Reference, which are available from our website at www.barrattdevelopments.co.uk/investors/corporate-governance. Details of the annual evaluation of the Committee’s performance can be found on page 123 and key activities undertaken in the year are set out in the table below: Priorities Work carried out and outcomes Executive Directors’ remuneration With assistance from its remuneration consultants, the Committee reviewed the Policy approved by Shareholders at the 2020 AGM, discussed and agreed a number of proposed changes (see page 142). Considered salaries of Executive Directors and Senior Management for FY24 in the context of the remuneration of the wider workforce. The outcome of this review is set out on page 156. Considered and agreed amendments to the structure of the bonus scheme for FY24; considered the structure of the 2023 LTPP and determined it remained appropriate (see pages 156 to 158 for further details). Discussed future performance measures and targets for both the annual bonus and LTPP plans and agreed to introduce a Diversity & Inclusion measure for the FY24 annual bonus. Discussed and approved publication of the 2022 Gender and Ethnicity pay gap reports. Considered whether the Group’s current remuneration structures remained appropriate and support the future strategy of the business, including the potential introduction of a restricted share plan, which was agreed for Senior Management below Board level. Governance Undertook benchmarking for the new Chair’s fees, prior to her appointment. The Committee revisited the new Chair’s fee in June 2023 and agreed an increase (see page 158) to reflect the acceleration of her succession to the position of Chair. Considered severance agreements in relation to a member of senior management. Barratt Developments PLC Annual Report and Accounts 2023 155 S Corporate Governance F Remuneration Report continued Annual Report on Remuneration continued Statement of implementation of the Remuneration Policy for FY24 Executive Directors’ remuneration for FY24 will be based on the Remuneration Policy to be proposed at the October 2023 AGM, subject to approval by shareholders. This is set out on pages 142 to 154. Base salary The Committee reviewed the salaries of the Executive Directors in June 2023, taking into account their individual performance during the year, the annual salary review for other employees in the Group where average salary increases were at 5.3%, and the multiplier effect of an increase in base salary on the Directors’ package as a whole. The Committee also took into account the performance of the Company and ensured that after any increase the salaries would remain within the range for similar sized companies and the housebuilding sector. Accordingly, the Committee believed that it was justified in awarding a salary increase of 4% for each of the Executive Directors, which is below the average salary increase awarded to the wider workforce. The Executive Directors’ salaries with effect from 1 July 2023 will therefore be: Table 3 – Executive Directors’ salaries Executive Director David Thomas Steven Boyes Mike Scott Salary with effect from 1 July 2023 £000 Salary with effect from 1 July 2022 £000 836 674 514 803 648 494 Pension Each of the Executive Directors will continue to receive a pension contribution (or cash supplement) which is in line with the wider workforce, currently 10% of base salary. Annual bonus Executive Directors and Senior Management will participate in the Group’s annual bonus scheme in accordance with the Policy. The Committee has agreed to include a new Diversity & Inclusion measure for FY24. Diversity & Inclusion is a key strategic priority for the business. The Committee and the Board recognise the need for the business to reflect the communities within which it operates. Whilst steps have been taken to improve diversity & inclusion within the Company, the Committee believes that further focus is required to drive this agenda forward. A key area that can help us to do this, is to ensure that we are attracting, and recruiting from, a diverse range of candidates. The Committee is of the view that the individual annual bonus performance targets are commercially sensitive. Therefore, in line with market practice, these will be disclosed, with performance against them, in next year’s Remuneration Report. The performance measures, their reasons for selection and the maximum bonus payment against each of them expressed as a percentage of salary for FY24 will be: Table 4 – FY24 annual bonus performance measures Weighting (% of salary maximum) 82.5 15.0 22.5 Financial Performance measures Definition Reason for selecting Profit after all finance costs/income and the Group’s share of the profits from its joint ventures, excluding adjusted items. Rewards outperformance against stretching targets and is a key measure of our performance. Average net assets calculated by a three point average excluding goodwill and intangibles, tax, net cash/(debt), retirement benefit assets/obligations, derivative financial instruments, land, land creditors, trade payables and legacy property provisions. Ensures efficient use of available capital. A three stage assessment is applied: (i) A Division must achieve a minimum SHE monitoring inspections gate on a rolling 12 months’ performance basis, to be considered for the customer service element; (ii) To earn any bonus for this element, the Division must achieve a minimum score for the HBF 8-week National New Homes Customer Satisfaction survey; and (iii) If the minimum score for the 8 weeks survey is achieved, the Division will be considered for a further proportion of this element if they achieve the minimum score for the NHBC 9-month Customer Satisfaction survey. Ensures a focus on quality and service to our customers without compromising the health and safety of our employees, customers, suppliers, sub-contractors and members of the public. Adjusted profit before tax Capital employed Non-financial performance measures Quality and service (with a health & safety underpin) 156 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Diversity and inclusion To change our attraction and recruitment process to ensure that we have more diverse pools of talent to recruit from which results in enhanced diversity being recruited into the business. Reduction of waste Reduction of site waste (tonnes of waste for every 100m2 of legally completed build area). Total bonus achievable as a % of salary To focus individuals on ensuring that, as part of any recruitment process, they identify a shortlist of candidates which will help further improve diversity within the business. Focus individuals on reducing the amount of construction waste intensity, which is a key element of our overall carbon reduction and sustainability strategy. 15.0 15.0 150.0 1 1 One-third of any bonus earned will be deferred into shares and held in the DBP. Dividend equivalents will accrue against any shares deferred into the DBP. The Committee will continue to have an overriding discretion in respect of any bonus payment in accordance with its Policy. In addition, any bonus awarded for FY24 will be subject to the malus and clawback provisions set out in detail on pages 148 and 149. LTPP The Committee intends to grant an LTPP award to Executive Directors later this year (“2023 LTPP”). Under the Remuneration Policy and the rules of the LTPP, the award can be up to 200% of base salary. The Committee remains mindful of the need to avoid windfall gains for Executive Directors, as evidenced by its decision to reduce the quantum of the 2022 LTPP award grant. There has been little movement in the share price since October 2022 and therefore the Committee is minded to grant an award of up to 200% of base salary. The Committee will however monitor the share price up until the day before the grant to determine the final quantum of the 2023 LTPP. In addition, the Committee recognises that the 2023 LTPP award should be subject to performance targets which are stretching and challenging whilst aligned with the short and long-term performance of the Group and its strategy, as well as the interests of shareholders. During the financial year, the Committee agreed the performance conditions and their respective weightings for the 2023 LTPP. These are set out in the table below. Having discussed potential target ranges for each of the financial performance conditions, the Committee agreed that, due to the continuing uncertain market conditions at the time of approving the Remuneration report, it would be prudent to defer the finalisation of the financial targets until later in the year. The Committee anticipates that this will be by no later than December 2023. The non-financial targets are set out in the table below. Full details for the targets for each performance condition will be announced at the time of granting the 2023 LTPP, and in next year’s Remuneration Report. Table 5 – 2023 LTPP performance measures Performance condition and definition Reason selected Weighting (of total award) 15% Below Threshold (0% Vesting) Below median Threshold (25% Vesting) Maximum (100% Vesting) Median Upper Quartile To ensure that the comparator group remains current and relevant whilst factoring in the continued movement in the Company’s market capitalisation. TSR against the FTSE: The Company’s TSR over the Performance Period must be at least at the median of a ranking of the Total Shareholder Return of each of the members ranking 50 above and 50 below the Company in the FTSE Index at the start of the Performance Period (1 July 2023 to 30 June 2026) based on market capitalisation as at the day before the start of the Performance Period. TSR against a housebuilder index1: The Company’s TSR over the Performance Period must be at least the Index average of the Housebuilder Index over the same period. Absolute Adjusted EPS for the financial year ending 20262: 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. 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 To ensure efficient and effective management of our business and align interests with those of shareholders. 15% TBC TBC TBC Barratt Developments PLC Annual Report and Accounts 2023 157 S Corporate Governance F Remuneration Report continued Annual Report on Remuneration continued Statement of implementation of the Remuneration Policy for FY24 continued LTPP continued Table 5 – 2023 LTPP performance measures continued Performance condition and definition Reason selected To ensure efficient and effective management of our business and align interests with those of shareholders. Underlying ROCE for the financial year ending 20262: 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. GHG emissions reduction3: Reduction of our absolute scope 1 and 2 (operational) GHG emissions by 29% by 2025 (from 2018 levels) and to net zero by 2040. 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. Weighting (of total award) Below Threshold (0% Vesting) Threshold (25% Vesting) Maximum (100% Vesting) 40% TBC TBC TBC 15% 29% reduction 33% reduction 38% reduction 1 The housebuilder index will comprise: Bellway, Berkeley Homes, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group. 2 Targets will be based on current corporation tax rates. 3 Further information on scope 1 and 2 GHG emissions can be found in the Strategic Report, pages 97 and 98. For the TSR, EPS and Underlying ROCE performance targets, vesting will be on a straight-line basis between threshold and maximum. For the GHG performance target, vesting will be on a straight-line basis between 29% and 33% reduction, and on a straight-line basis between 33% and 38% reduction. In addition, all LTPP awards are subject to a two-year post-vesting holding period and an overriding Committee discretion, as set out in the Policy table on page 146. The 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. Non-Executive Directors’ fees During the year, a committee of the Board comprising the Chair and the Executive Directors reviewed Non-Executive Directors’ fees and concluded that an increase of 4% should apply to all fees paid to the Non-Executive Directors. This increase is in line with the salary increase awarded to the Executive Directors and lower than the salary increase awarded to the wider workforce. Caroline Silver became Chair on 30 June 2023 on a fee of £350,000, broadly in line with that paid to John Allan at that time, and also received a 4% increase from 1 July 2023 to reflect her taking on the role as Chair earlier than previously anticipated. The annual fees payable to the Chair and Non-Executive Directors with effect from 1 July 2023 will therefore be: Table 6 – Non-Executive Directors’ fees Role Chair1 Non-Executive Director base fee Committee membership (per committee) Chair of Audit Committee Chair of Remuneration Committee Chair of Safety, Health and Environmental Committee Senior Independent Director Designated NED for Workforce Engagement2 Fee as at 1 July 2023 £000 Fee as at 1 July 2022 £000 364 70 3 18 18 18 18 0 353 67 3 17 17 17 17 10 1 The Chair’s fee as at 1 July 2022 is that of John Allan, and as at 1 July 2023 is Caroline Silver’s. 2 Sharon White received £10,000 in respect of her work as Designated Non-Executive Director up until 30 June 2023 when she stepped down from the Board. Caroline Silver took over this role on 1 July 2023 and will not receive any additional fees for this position. 158 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Directors’ remuneration outcomes for the year ended 30 June 2023 Single figure of remuneration The total remuneration for each of the Directors who served during the financial year ended 30 June 2023 is set out in Tables 7 and 8. The salary for all Directors is the amount received in the year. Table 7 – Executive Directors’ single figure of remuneration (audited) Base Salary £000 Benefits (taxable)2 £000 Annual bonus 3 £000 LTPP £000 Sharesave 6 £000 Pension benefits £000 Replacement Award 7 £000 Total8 remuneration £000 Total8 fixed remuneration £000 Total8 variable remuneration £000 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 2022/23 4 2021/22 5 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 2022/23 2021/22 David Thomas Steven Boyes Mike Scott1 6 5 803 780 29 28 483 1,151 300 578 — 141 195 — — 1,756 2,738 973 1,003 783 1,735 648 494 629 277 31 9 390 297 928 237 458 — 113 157 — — 1,418 2,208 402 69 53 — — 49 28 — 160 928 929 791 561 817 314 627 1,391 366 615 Total 1,945 1,686 68 1,170 2,481 606 1,089 — 11 303 380 — 160 4,102 5,875 2,325 2,134 1,776 3,741 30 18 77 1 Mike Scott was appointed a Director on 6 December 2021, and his remuneration for 2021/22 therefore reflects only a partial year. 2 Benefits (taxable) include the provision of a company car or car allowance, private medical insurance, some telephone costs and contributions towards obtaining independent financial and tax advice, and are provided based on market rates. 3 Annual bonus for 2021/22 includes amounts deferred for David Thomas and Steven Boyes (see Table 10 on page 161). 4 Performance conditions for the LTPP were tested after 30 June 2023. 19.6% of the award granted to each of the Executive Directors is due to vest in October 2023 (see Tables 11 and 12 on pages 161 and 162 for further details). The market price of the shares has been calculated based on an average market value over the three months to 30 June 2023 £4.71 per share). None of the value of the award is attributable to share price growth. 5 In accordance with regulatory requirements, the values in this column have been re-calculated using a share price of £3.56 per share being the market value of the shares on the vesting date, 24 October 2022, as opposed to the market price of £4.94 per share calculated based on an average market value over the three months to 30 June 2022 disclosed in last year’s Remuneration Report. 6 The Sharesave shares granted in 2016 for David Thomas and 2018 for Steven Boyes, which matured on 1 July 2021, were subject to a continued employment condition and completion of a savings contract. There are no performance conditions for Sharesave shares. The value is calculated using the difference between the exercise price and the mid-market closing price of a share on the date of maturity. The relevant prices were £4.82 and £6.792 for David Thomas’ options, and £4.49 and £7.112 for Steven Boyes’ options. 7 Details of Mike Scott’s Replacement Awards were shown on page 120 of the 2022 Annual Report. The value shown in the Replacement Award column relates to the Deferred Bonus shares which vested in December 2022. The value of the replacement LTPP awards vested in October 2022 and vesting in October 2023 are included in the relevant LTPP columns. 8 The total remuneration figures in the last three columns of the above table may not add up to the sum of the component parts, due to rounding. Table 8 – Non-Executive Directors’ single figure of remuneration (audited) John Allan1 Caroline Silver2 Nina Bibby2 Katie Bickerstaffe Jasi Halai2 Jock Lennox Chris Weston Sharon White Total Fees £000 Benefits (taxable) £000 Total £000 2022/23 2021/22 2022/23 3 2021/22 4 2022/23 2021/22 405 7 22 93 40 110 93 86 856 343 — 75 92 — 109 92 85 796 1 — 4 — — — — — 5 2 — — — — — — — 2 406 7 26 93 40 110 93 86 861 345 — 75 92 — 109 92 85 798 1 John Allan’s Fees include £52,470 paid in lieu of notice after he stepped down from the Board with effect from 30 June 2023. 2 Caroline Silver and Jasi Halai were appointed to the Board with effect from 1 June and 1 January 2023 respectively, and Nina Bibby stepped down on 17 October 2022. Their fees therefore reflect a partial year. 3 Benefits (taxable) for 2022/23 for John Allan include £1,068 expenses incurred in attending the Company’s main corporate office and for Nina Bibby relate to gifts, including tax payable on them, presented to her on leaving the business. 4 Benefits (taxable) for 2021/22 include expenses incurred in attending the Company’s main corporate office of £1,648 for John Allan. Barratt Developments PLC Annual Report and Accounts 2023 159 S Corporate Governance F Remuneration Report continued Annual Report on Remuneration continued Directors’ remuneration outcomes for the year ended 30 June 2023 continued Annual bonus For FY23, the business was focused on managing costs, with a strong emphasis on building sustainably whilst maintaining high customer service levels. The bonus measures were set accordingly. Financial targets were set taking into consideration internal and external consensus forecasts. Further information on how we measure progress against the waste reduction target is set out on page 17. As in previous years, Executive Directors had the potential to earn an annual bonus of up to 150% of base salary based on the attainment of Group performance targets which are linked directly to the Group’s strategy, part of which is deferred into shares (see page 161). The Group performance targets and performance against them for FY23 are set out in Table 9 below. The Committee considers that the outcome reflects a fair, reasonable and appropriate level of reward, and the overall performance of the Group during FY23, and therefore no discretion was exercised in relation to the bonus outcomes. It is also aligned to the bonus outcomes for the wider workforce below Senior Management. Potential bonus weighting % of salary Actual performance achievement Bonus achieved % of salary Bonus outcome % of maximum 16.5% 41.25% 82.5% 7.5% 15% 22.5% £884m 0% 0% £1,733m 13.6% 9.1% 16.5% 11.0% SHE gate: 29/29 divisions 8-week score: 23/29 divisions 9-month score: 16/29 divisions Table 9 – Annual bonus (audited) Bonus target Strategic objective Targets Adjusted profit before tax1 To support profitability. Threshold: £1,015m Capital employed1 To incentivise improvement of capital management. Quality and Service (with health and safety underpin) To ensure a focus on quality and service to our customers without compromising the health and safety of our employees and other stakeholders. Target: £1,090m Maximum: £1,165m Minimum and Target: £1,815m Maximum: £1,715m A three stage assessment is applied: (i) A Division must achieve SHE audit monitoring inspections gate on a rolling 12 months’ performance basis of 94%, to be considered for the customer service element; (ii) To earn 75% of this bonus element, the Division must achieve 90% or higher “recommend” score for the HBF 8-week National New Homes Customer Satisfaction survey; and (iii) To earn the remaining 25% of this bonus element, the division must achieve 82% or higher score for the NHBC 9-month Customer Satisfaction survey. Construction Waste Reduction To reduce construction waste intensity compared with FY22. (Measured in tonnes of waste for every 100m2 of legally completed build area). Threshold: 4.87 tonnes Target: 4.82 tonnes Maximum: 4.77 tonnes Trading outlets Total outcome To open the optimum number of trading outlets to ensure growth and delivery of our business plan. Threshold: 98 Target: 103 Maximum: 108 1 See definitions in Table 4 on page 156. 3% 4.31 tonnes 15.0% 10.0% 7.5% 15% 3% 130 outlets 15.0% 10.0% 7.5% 15% 60.1% 40.1% 160 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Executive Directors’ deferred bonus For FY23 there was no bonus earned in excess of 100% of salary there will be no deferral into shares. See Table 10 below for details of the FY23 bonus earned. When any bonus is earned in excess of 100% of salary, the number of shares that will be awarded will be calculated based on the average closing share price for the first five dealing days following the date on which the Group publishes its annual results, and will be announced via the Regulatory Information Service when the shares are awarded. Deferred shares are held for a period of three years from the date they are awarded, subject normally to continued employment. Table 10 – Executive Directors’ deferred bonus (audited) FY23 deferred bonus FY22 deferred bonus Salary payable % 60.1 60.1 60.1 Annual bonus £000 % of salary paid in cash % Bonus paid in cash £000 483 390 297 60.1 60.1 60.1 483 390 297 % of salary deferred into shares % Bonus deferred into shares £000 % of salary deferred into shares % Bonus deferred into shares £000 0 0 0 0 0 0 47.5 47.5 0 2 371 299 0 Number of shares 1 88,632 71,495 0 David Thomas Steven Boyes Mike Scott 1 The number of conditional shares awarded during the year was calculated at a share price of £4.1802, being the average of the mid-market closing prices of the shares for the first five dealing days following the date of the final FY22 results announcement for the Company. 2 For the FY22 bonus, Mike Scott was appointed a Director of the Company part way through the year. Mike’s percentage bonus outcome was 147.5%. This was applied to his annual base salary for FY22 and pro-rated to the number of calendar days he was employed in the year. The value of his bonus outcome did not exceed 100% of his annual base salary and therefore none of his bonus was deferred into shares. Long-Term Performance Plans Vesting of 2020 LTPP (included in FY23 single figure of remuneration) The 2020 LTPP award was based on a three-year performance period to 30 June 2023 and will vest in October 2023. The award is subject to three performance conditions, 20% EPS, 40% ROCE and 40% TSR (half of which is measured against a 50+/50- FTSE comparator group and the other half against a housebuilder index). The resulting vesting levels are as follows: Table 11 – Vesting of 2020 LTPP (audited) Metric EPS (20%) Performance condition EPS growth for the financial year ended 30 June 2023. Underlying ROCE (40%) To increase underlying ROCE for the financial year ended 30 June 2023. Threshold (25% vesting) Maximum (100% vesting) 76p 19% Actual 56.3p1 Portion of award vesting 0% 19.3% 13.0% TSR (FTSE) (20%) TSR against the 50 companies above and below the Company in the FTSE index measured over three financial years with a three-month average at the start and end of the performance period. Median ranking of 47.0 (TSR of 24.1%) TSR (Housebuilder)2 (20%) TSR of at least the Index average of a housebuilder Index measured over three financial years with a three-month average at the start and end of the performance period. Unweighted Index average (TSR of 7.8%) Total level of award vesting 88p 22% Upper quartile ranking of 24.0 (TSR of 49.6%) Rank of 55.5 (TSR of 10.6%) Unweighted Index average + 8% p.a. (TSR of 33.7%) Between Threshold and Maximum (TSR of 10.6%) 0% 6.6% 19.6% 1 The basic EPS of 53.2 pence has been re-based using the same rate of corporation tax and number of shares as was used in setting the 2020 LTPP targets. The re-based basic EPS used for the purpose of determining vesting, which is directly comparable to the 2020 targets, is 56.3 pence. 2 The Housebuilder Index comprises: Bellway, Berkeley Homes, Countryside Partnerships, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group. On 11 November 2022, Countryside Partnerships was acquired by Vistry Group. At the time, both companies were members of the Housebuilder Index Comparator Group. The TSR performance for Countryside Partnerships has therefore been calculated based on the performance of Countryside Partnerships up to the date of the merger and then by tracking Vistry Group’s performance thereafter. The Committee considered the underlying financial performance of the Group and was satisfied that given the continued strong performance in the Group’s financial results, the level of vesting was justified. There was no share price appreciation, and no discretion was exercised in relation to the share price. The Committee believes that the vesting level achieved is fair, reasonable and appropriate. No Committee discretion was exercised in relation to the LTPP vesting outcome. The 2020 LTPP has accrued dividend equivalents in accordance with the rules of the scheme. The amount of dividend equivalent to be paid, in cash, on vesting will be pro-rated in line with the number of shares that vest. The gross number of shares to be released to each of the Executive Directors and the gross value of the dividend equivalents are as follows: Barratt Developments PLC Annual Report and Accounts 2023 161 S Corporate Governance F Remuneration Report continued Annual Report on Remuneration continued Directors’ remuneration outcomes for the year ended 30 June 2023 continued Long-Term Performance Plans continued Table 12 – 2020 LTPP vesting outcomes (audited) Executive Director David Thomas Steven Boyes Mike Scott3 Number of shares at grant 282,004 223,183 67,681 Number of shares to lapse 226,732 179,440 54,416 Total number of shares to vest1 Estimated value of vested shares2 £000 55,272 43,743 13,265 260 206 62 Value of dividend equivalents earned on vested shares2 £000 39 31 7 Total estimated value2 £000 3004 237 69 1 The relevant number of shares will be released to each participant as soon as is practicable following the vesting date. The awards are subject to a two-year post-vesting holding period commencing 1 July 2023. 2 The estimated values of the vested shares and the dividend equivalents are based on the average share price during the three months to 30 June 2023 (£4.71 per share). There was no share price appreciation from the date the shares were awarded. 3 The shares granted to Mike Scott were replacement awards, further details of which can be found on page 120 of the FY22 Annual Report and Accounts. 4 The “Total estimated value” figure for David Thomas does not add up to the sum of the component parts due to rounding. LTPP granted during the year (2022 LTPP) During the year, the Committee granted the 2022 LTPP to Executive Directors. The 2022 LTPP, is subject to four performance conditions, 30% TSR (half of which is measured against a 50+/50- FTSE comparator group and the other half against a Housebuilder Index), 15% Adjusted EPS, 40% Underlying ROCE and 15% reduction of GHG emissions. Further information on how GHG emissions and progress against this target are measured is given on pages 97 and 98. The levels of vesting against TSR and GHG emissions will be measured over a three-year period commencing 1 July 2022, and against EPS and ROCE for the financial year ending 30 June 2025. On completion of the performance period, assuming that shares vest, they will be subject to a further two-year holding period. The Committee determined to reduce the usual grant size of the awards to avoid windfall gains given the fall in the Company’s share price since the previous grant in October 2021. The basis of the awards was reduced from 200% to 170% of salary, representing a reduction of 15% of the usual basis of the awards. Table 13 – 2022 LTPP (audited) Executive Director Type of award David Thomas Conditional award Steven Boyes Conditional award Mike Scott Conditional award Basis of award granted 170% of salary £803,400 170% of salary £648,062 170% of salary £494,400 Share price at date of grant 1 £ Number of shares over which award was granted 4.438 307,746 4.438 248,243 4.438 189,382 Face value of award £000 1,366 1,102 840 % of face value that would vest at threshold performance Vesting determined by performance over 25 25 25 Three financial years to 30 June 2025 1 Based on the average of the closing prices, as derived from the London Stock Exchange daily official list, for each of the dealing days in the period of three months ending on 11 October 2022, being the day before the date of the awards. The targets applicable to the 2022 LTPP are as set out in Table 15. Performance to date of 2021 and 2022 LTPP awards The following tables show the targets set on grant for each of the in-flight LTPP awards together with performance to date. For the 2021 LTPP the potential level of vesting is based on performance measured over two years to 30 June 2023: Table 14 – 2021 LTPP award performance against targets Performance target TSR FTSE1 (15%) TSR Housebuilder2 (15%) EPS (15%) Underlying ROCE (40%) GHG emissions reduction (15%) Below threshold (0% vesting) Below median Below unweighted index average <79 pence <19.0% Threshold (25% vesting) Median Unweighted index average 79 pence 19.0% Maximum (100% vesting) Upper quartile Unweighted index average +8% p.a. 87 pence 22.0% Performance as at 30 June 2023 Below median Below median 56.3 pence 19.3% <20% reduction 25% reduction 30% reduction 23.7% Total level of award vesting 162 Level of vesting had the award vested as at 30 June 2023 0% 0% 0% 13.0% 2.8% 15.8% Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F For the 2022 LTPP the potential level of vesting is based on performance measured over one year to 30 June 2023: Table 15 – 2022 LTPP award performance against targets Performance target TSR FTSE1 (15%) TSR Housebuilder2 (15%) Adjusted EPS (15%) Underlying ROCE (40%) GHG emissions reduction (15%) Below threshold (0% vesting) Below median Threshold (25% vesting) Maximum (100% vesting) Performance as at 30 June 2023 Median Upper quartile Between threshold Below unweighted index average <73 pence <20.0% Unweighted index average 73 pence 20.0% Unweighted index average +8% p.a. 81 pence 23.0% and maximum Between threshold and maximum 70.6 pence 19.3% <25% reduction 30% reduction 35% reduction 23.7% Total level of award vesting Level of vesting had the award vested as at 30 June 2023 3.8% 14.9% 0% 0% 0% 18.7% 1 The comparator group for TSR FTSE is each of the members ranking 50 above and 50 below the Company in the FTSE Index. 2 The housebuilder Index comprises: Bellway, Berkeley Homes, Countryside Partnerships, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group. For the TSR, EPS and Underlying ROCE performance targets, vesting is on a straight-line basis between threshold and maximum. For the GHG performance target, vesting is on a straight-line basis between 20% and 25% reduction for the 2021 award, between 25% and 30% reduction for both awards, and between 30% and 35% for the 2022 award. The LTPP awards will accrue dividend equivalents in accordance with the rules of the scheme. The amount of dividend equivalent to be paid, in cash, on vesting will be pro-rated according to the number of shares that vest. The Committee has the discretion to adjust the number of shares vesting from each LTPP award if it considers that the vesting outcome is not sufficiently reflective of the underlying performance of the Company and to mitigate against any potential windfall gains for the Executive Directors. Statement of Directors’ shareholdings and share interests For the financial year ended 30 June 2023, Executive Directors were required to hold shares in the Company equivalent in value to 200% of salary. The Executive Directors are expected to meet this requirement no later than the fifth anniversary of joining the Board, with progress being made towards its achievement throughout the period. The share price used for the purposes of determining the value of the shares is by reference to the higher of the share price paid on acquisition or vesting and the share price at the close of business on the London Stock Exchange on 30 June or the date of leaving, as applicable. Participants who have not built up the required level of shareholding by the fifth anniversary of joining the Board, will not be eligible for inclusion in future share-based incentive schemes. In addition, they will not be allowed to sell any of the net of tax shares released from incentive schemes until they reach the levels specified, unless exceptional circumstances exist in the opinion of the Committee. The Committee retains discretion to adjust the length of time in which the required amount of shareholding needs to be accrued in order to adjust for events out of the Director’s control. The Committee reserves the right to amend the percentage holding required by the Executive Directors depending on market conditions and best practice guidance. At 30 June 2023, David Thomas and Steven Boyes had met their shareholding requirements and Mike Scott has until 6 December 2026 to meet his. Executive Directors are also subject to a two-year post-cessation shareholding requirement. They must hold the lower of their shareholding requirement (currently 200% of salary) or their actual shareholding on the date of leaving. The Committee has agreed that to ensure continued enforcement of the post-cessation shareholding requirement, a contractual agreement will be entered into by the Company and the relevant Executive Director at the point of leaving employment, under which the individual concerned will agree not to dispose of the shares prior to the completion of the post-cessation shareholding period. The interests of the Directors serving during the financial year and their connected persons in the ordinary share capital of the Company at the beginning and end of the year are shown in Table 16. No notification has been received of any change in the interests shown during the period 30 June 2023 to 5 September 2023 inclusive. Barratt Developments PLC Annual Report and Accounts 2023 163 S Corporate Governance F Remuneration Report continued Annual Report on Remuneration continued Statement of Directors’ shareholding and share interests continued Table 16 – Directors’ interests in shares as at 30 June 2023 (audited) Other shares held Options Shareholding requirements Interests subject to performance conditions (LTPP) Interests not subject to performance conditions (DBP) Interests in Sharesave options 1 Shareholding requirement % salary Current shareholding % salary 3 Shareholding requirement met? 814,120 652,413 374,779 140,770 112,758 0 5,373 6,056 2 4,128 200% 200% 200% 707% 486% 44% Yes Yes No The Chairman and Non-Executive Directors are not awarded incentive shares and are not subject to a shareholding requirement. Executive Directors David Thomas Steven Boyes Mike Scott Non-Executive Directors John Allan Caroline Silver Katie Bickerstaffe Jasi Halai Jock Lennox Chris Weston Sharon White Beneficially owned 1,297,576 700,739 52,050 94,235 — 7,508 — 10,000 — 363 1 All of these options were unvested at 30 June 2023. 2 During the year, Steven Boyes was granted 2,593 Sharesave options, exercisable for six months from 1 July 2026 at an option price of £3.47, representing a 20% discount on the average share price for the five business days immediately before the invitation to participate in the award (£4.336). The number of shares granted was based on the option price and the total savings amount forecast at the end of the respective savings periods. The face value of the options based on the average share price above was £11,243. There are no performance targets associated with this Sharesave option. 3 The share price used for the purposes of determining the value of the shares is £4.14 being the mid-market closing price on 30 June 2023. The value of DBP shares used is net of income tax and national insurance contributions which the Directors would have to pay on exercise. All conditional awards and share options are subject to an overriding Committee discretion, in that the Committee must be satisfied that the underlying financial performance of the Group over the performance period warrants the level of vesting as determined by applying the relevant targets. If the Committee is not of this view, it has the authority to reduce the level of vesting, including to nil, as it deems appropriate. Executive Directors’ pension arrangements The Company’s pension policy for Executive Directors is that on joining the Group they will be auto-enrolled unless they choose to opt out. On opting out, the Executive Director may choose to receive a cash supplement (which does not count for incentive purposes) and/or participate in the Company’s defined contribution money purchase pension plan. Each Executive Director has opted to receive a cash supplement in lieu of pension. Until 31 December 2022, David Thomas and Steven Boyes received an amount equal to 25% of base salary in line with market practice at the time of their appointment. This reduced to 10% from 1 January 2023 to be in line with that of the wider workforce. Mike Scott received an amount equal to 10% of base salary throughout FY23. Only the base salary element of a Director’s remuneration is pensionable. Details of cash supplements paid to the Executive Directors during the year can be found in Table 7 on page 159. Defined benefit section (audited) Steven Boyes is a deferred member of the defined benefit section of the Barratt Group Pension and Life Assurance Scheme (the Scheme), which was bought out by an insurer during FY21. As a result of the buyout, no employee (including Steven Boyes) has any current or prospective defined benefit pension or related benefit payable by the Group. Payments to former Directors (audited) Jessica White stepped down as a Director and Chief Financial Officer on 30 June 2021 and left the business on 31 July 2021. The Committee determined that, in line with the Policy and the rules of the relevant plans, Jessica would be treated as a good leaver. As set out in the FY21 Remuneration Report, Jessica held 91,908 shares under the 2019 LTPP. 54,501 of these shares vested on 24 October 2022. The awards were valued using a share price of £3.56 per share, being the market price of the shares on the vesting date. The value of the shares and dividend equivalents (paid in cash) was £194,024 and £29,214 respectively, such that the total value of the award on the vesting date was £223,238. No other payments have been made to former Directors during the year. 164 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Payments for loss of office (audited) John Allan stepped down from the Board with effect from 30 June 2023. He received his Chair fee from 1 July 2022 up to and including 30 June 2023 and taxable benefits and these amounts are shown in Table 8 on page 159. He received no pension contributions or variable remuneration. In addition, John was paid £52,470 in lieu of the balance of his three-month contractual notice period, given that he stepped down earlier than originally anticipated. No other remuneration payments were made by the Company to John Allan after he ceased to be a Non-Executive Director and Chair of the Board. No discretion has been exercised by the Committee. No other payments for loss of office have been made to former Directors during the year. Chief Executive’s relative pay Table 17 sets out: (i) the total pay, calculated in line with the single figure methodology; (ii) the annual bonus payout as a percentage of maximum; and (iii) long-term incentive vesting level for the Chief Executive over a ten-year period. Table 17 – Chief Executive’s pay Mark Clare Ten years to 30 June 2023 David Thomas 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 6,430 7,363 3,155 3,331 2,720 3,727 1,251 3,761 2,738 1,756 100.0 93.2 97.4 97.5 92.2 96.2 0 99.0 98.3 40.1 95.8 100.0 100.0 100.0 76.4 92.8 19.4 80.0 59.3 19.6 Chief Executive’s total pay (£000) Bonus outturn (as a percentage of maximum opportunity) LTI vesting (as a percentage of maximum award) TSR performance graph The graph below, prepared in accordance with the reporting regulations, shows the TSR performance over the last ten years against the FTSE 100 and against an unweighted index of listed housebuilders. The Board has chosen these comparative indices as the Group and its major competitors are constituents of one or both of these indices. The TSR has been calculated using a fair method in accordance with the regulations. Total Shareholder Return (value of £100 invested on 30 June 2013) ) £ ( e u l a V 350 300 250 200 150 100 50 0 266 196 177 June 2013 June 2014 June 2015 June 2016 June 2017 June 2018 June 2019 June 2020 June 2021 June 2022 June 2023 Housebuilder index FTSE 100 Barratt Developments Source: Datastream by Refinitiv Barratt Developments PLC Annual Report and Accounts 2023 165 Non-Executive Directors3 John Allan Nina Bibby Katie Bickerstaffe4 Jasi Halai4 Jock Lennox Caroline Silver4 Chris Weston4 Sharon White Average pay of all employees in Barratt Developments PLC Average pay of all employees in the Group5 S Corporate Governance F Remuneration Report continued Annual Report on Remuneration continued Annual percentage change in remuneration of Directors compared to employees Table 18 shows the percentage change in salary, taxable benefits and annual bonus set out in the relevant single figure of remuneration tables paid to each Director compared to that of the average pay of all employees of Barratt Developments PLC, the Group parent company, in respect of the financial years ended 30 June 2020 to 30 June 2023, compared with their prior years. Table 18 – Percentage change in remuneration FY23 FY22 FY21 FY20 Salary/ fees % change Benefits % change Annual bonus % change Salary/ fees % change Benefits % change Annual bonus % change Salary/ fees % change 1 Benefits % change Annual bonus % change Salary/ fees % change Benefits % change Annual bonus % change Executive Directors David Thomas Steven Boyes 2.9 3.0 3.6 (3.2) (58.0) (58.1) Mike Scott2 78.3 100 (26.1) 3.0 5.0 N/A 3.0 19.0 41.5 N/A 41.6 N/A 43.8 32.8 7.7 (25.0 ) N/A 100.0 0 0 N/A 0 N/A 0 0 2.5 4.4 N/A N/A N/A N/A N/A N/A N/A N/A N/A 2.2 2.2 N/A 2.5 1.6 N/A N/A 4.1 N/A N/A 3.2 (10.3 ) 11.1 N/A 100.0 100.0 N/A 0 0 N/A N/A 0 N/A N/A 0 N/A N/A N/A N/A N/A N/A N/A N/A 0.3 0.2 N/A 0 0 N/A N/A 0 N/A N/A 0 16.0 (12.2 ) N/A (100.0 ) (100.0 ) N/A (50.0 ) 0 N/A N/A 0 N/A N/A 0 N/A N/A N/A N/A N/A N/A N/A N/A 18.1 (70.7) 1.1 N/A 0.9 N/A 1.1 1.2 (50) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A (2.6) (12.1) (32.6) (1.1 ) (11.3 ) (3.2 ) 7.7 (3.5 ) 100.0 4.0 6.4 (100.0 ) 7.5 11.5 (39.5) 7.8 (2.1 ) (3.2 ) 0.4 2.1 100.0 0.8 (1.5 ) (100.0 ) 1 The percentage changes in salary and fees of the Directors for FY21 takes into account a temporary 20% voluntary reduction in base salary in April and May 2020 covering the period our construction sites were temporarily closed as a consequence of COVID-19. 2 Mike Scott was appointed as an Executive Director effective 6 December 2021, therefore no percentage change in remuneration is displayed for years prior to FY23, and therefore the change in fees reflects the annualised fees that would have been earned for FY22. 3 The changes in fees of the Non-Executive Directors reflect the introduction of additional fees for committee membership, and increases in fees for Committee Chairs which took place for FY22, and were set out in detail on page 102 of the FY21 Annual Report and Accounts. 4 Katie Bickerstaffe and Chris Weston were appointed to the Board part way through FY21, and Jasi Halai and Caroline Silver were appointed to the Board part way through FY23. No percentage change in remuneration is displayed for the years they joined, and the changes in fees reflect the annualised fees that would have been earned for FY21 and FY23 respectively. 5 Average pay using all employees in the Group is also provided, as a more meaningful figure, as the parent company employs only a very few senior employees. The figure represents the mean employee pay. Chief Executive pay ratio The table below compares the single total figure of remuneration for the Chief Executive with that of the Group employees who are paid at the 25th percentile (lower quartile), 50th percentile (median) and 75th percentile (upper quartile) of its UK employee population. Table 19 – Chief Executive pay ratio FY23 FY22 FY21 FY20 FY19 Method Option B Option B Option B Option B Option B 25th percentile pay ratio 45:1 81:1 115:1 40:1 123:1 Median pay ratio 32:1 63:1 94:1 32:1 88:1 75th percentile pay ratio 24:1 38:1 60:1 21:1 59:1 The remuneration figures for the employee at each quartile were determined with reference to the financial year ending 30 June 2023. 166 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Under Option B of The Companies (Miscellaneous Reporting) Regulations 2018, the latest available gender pay gap data (i.e. from 5 April 2023) was used to identify the best equivalent for three Group UK employees whose hourly rates of pay are at the 25th, 50th and 75th percentiles for the Group. The Committee is comfortable that this approach provides a fair representation of the Chief Executive to employee pay ratios and is appropriate in comparison to alternative methods, balancing the need for statistical accuracy with internal operational resource constraints. A full-time equivalent total pay and benefits figure for the FY23 financial year was then calculated for each of those employees. This was also sense checked against a sample of employees with hourly pay rates either side of the identified individuals to ensure that the appropriate representative employee is selected. The pay ratios outlined above were then calculated as the ratio of the Chief Executive’s single figure to the total pay and benefits of each of these employees. Each employee’s pay and benefits were calculated using each element of employee remuneration on a full-time basis, consistent with the Chief Executive. No adjustments (other than the approximate up-rating of pay elements to achieve full-time equivalent rates) were made, with the exception of annual bonuses where the amount paid during the year for the annual bonus and H2 bonus was used (i.e. in respect of FY22) as the FY23 employee figures had not yet been determined at the time this report was produced. No components of pay have been omitted. The table below sets out the salary and total pay and benefits for the three identified quartile point employees: Table 20 Salary Total pay and benefits 25th percentile (P25) Median (P50) 75th percentile (P75) £32,739 £38,954 £43,410 £54,158 £63,825 £73,414 The FY23 pay ratios are lower than last year due to a decrease in the Chief Executive’s single figure of remuneration compared to FY22 combined with an increase in the total pay and benefits for the P25, P50 and P75 employees. The decrease in CEO pay is a result of a lower vesting outcome of the 2020 LTPP award in comparison to the 2019 LTPP award that vested last year. The CEO annual bonus payout was also lower in FY23 compared to FY22. The median pay ratio has fluctuated since reporting began. This movement has primarily been driven by both changes in CEO pay outcomes and the impact of the pandemic on outcomes in recent years. The Committee considers that the median pay ratio is consistent with the relative roles and responsibilities of the Chief Executive and the identified employee. Base salaries of all employees, including our Executive Directors, are set with reference to a range of factors including market practice, experience and performance in role. The Chief Executive’s remuneration package is weighted towards variable pay (including the annual bonus and LTPP) due to the nature of the role. This also means that the ratio is likely to fluctuate depending on the outcomes of incentive plans in each year (as illustrated by the ratios to date). The Committee also recognises that, due to the nature of the Company’s business and the ways in which we employ our staff, the flexibility permitted within the regulations for identifying and calculating the total pay and benefits for employees, as well as differences in employment and remuneration models between companies, the ratios reported above may not be comparable to those reported by other companies. Relative importance of spend on pay The following table shows the Group’s actual spend on pay (for all employees) relative to dividends and profit from operations: Table 21 – Relative importance of spend on pay Employee costs (including Executive Directors) Profit from operations1 Dividend Distributions2 Share Buyback3 FY23 £m 527.2 707.4 327.6 201.3 FY22 £m 492.7 646.6 373.8 0 % change 7% 9% (12)% N/A 1 Profit from operations has been chosen as a metric to compare against as it shows how spend on pay is linked to the Group’s operating performance. The figure used is from the Consolidated Income Statement on page 182. 2 For FY22 this includes the interim and final dividends paid in May and November 2022. For FY23, this includes the interim dividend paid in May 2023, and the proposed final dividend for payment in November 2023, the value of which has been calculated based on the number of shares in issue as at 30 June 2023. 3 There were no share buybacks made during FY22. Barratt Developments PLC Annual Report and Accounts 2023 167 S Corporate Governance F Remuneration Report continued Annual Report on Remuneration continued Non-executive directorships Details of the Group’s policy on non-executive directorships held by Executive Directors is given in the Directors’ Remuneration Policy table on page 151. Neither Steven Boyes nor Mike Scott held any non-executive directorships with other companies during the year. David Thomas is a non-executive director of the HBF for which he does not receive a fee. He also participates in a number of groups connected with the UK construction industry (in particular sustainability), for which no fee is paid. Statement of shareholding vote at AGM The latest resolution to approve the Directors’ Remuneration Policy (a binding vote, to remain in place for three years following its approval by shareholders) and the resolution to approve last year’s Annual Report on Remuneration (an advisory vote) were proposed to shareholders at the 2020 and 2022 AGMs respectively. The following votes were received: Table 22 – Shareholder votes on Remuneration Votes cast in favour Votes cast against Total votes cast Votes withheld Vote on Remuneration Policy – 2020 AGM Vote on Remuneration Report – 2022 AGM Number of votes % votes cast Number of votes % votes cast 669,565,590 10,994,399 680,559,989 121,686 98.38 1.62 100.00 — 634,326,479 42,480,457 676,806,936 501,737 93.72 6.28 100.00 — This Remuneration Report was approved by the Board on 5 September 2023 and signed on its behalf by: Katie Bickerstaffe Chair of the Remuneration Committee 5 September 2023 168 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Other statutory disclosures Directors’ Report For the financial year ended 30 June 2023, the Strategic Report is set out on pages 1 to 52 and the Directors’ Report on pages 74 to 171. The table below sets out the location of information required to be disclosed in the Directors’ Report, which can be found in other sections of this Annual Report and Accounts and is incorporated by reference. Significant Shareholdings In accordance with the DTRs, all notifications received by the Company are published on the Company’s website, www.barrattdevelopments.co.uk, and via a Regulatory Information Service. As at 30 June 2023, the persons set out in the table below had notified the Company, pursuant to DTR 5.1, of their interests in the voting rights in the Company’s issued share capital: Page numbers Notifiable Interests at 30 June 2023 217 Information required FMR LLC BlackRock, Inc. Royal Bank of Canada Number of voting rights 1 64,722,680 56,413,704 30,554,688 % of total issued share capital 2 6.52 5.60 3.00 Nature of holding Indirect Indirect Direct Information required Arrangements under which a shareholder has waived or agreed to waive a dividend and details of the waiver1 Likely future developments in the business of the Group Financial instruments A description of the Company’s policies on employment of people with disabilities A description of the Company’s employee engagement and involvement practices Stakeholder engagement Greenhouse gas emissions Research and development activities 1 to 70 214 to 216 39 35 to 39 and 55 and 56 54 to 65 97 and 98 46 and 47 1 This item is a requirement of Listing Rule 9.8.4R. All other items are requirements of Schedule 7 of the Large and Medium-Sized Companies and Groups Regulations. Dividends An interim dividend of 10.2 pence per share was paid on 18 May 2023 to those shareholders on the register on 11 April 2023 (2022: 11.2 pence per share). The Directors recommend payment of a final dividend of 23.5 pence per share (2022: 25.7 pence per share) in respect of FY23. The final dividend will be paid, subject to shareholder approval at the 2023 AGM, on 3 November 2023 to shareholders on the register at close of business on 29 September 2023. Shareholders who wish to elect for the Dividend Reinvestment Plan should do so by 13 October 2023. If approved, the total dividend for FY23 will be 33.7 pence per share (2022: 36.9 pence per share). Annual General Meeting The 2023 AGM will be held at the offices of Linklaters LLP, One Silk Street, London EC2Y 8HQ on Wednesday 18 October 2023 at 12 noon. The notice convening the AGM is set out in a separate letter to shareholders. Political donations and expenditure The Company made no political donations during the year in accordance with its policy. In keeping with the Company’s approach in prior years, shareholder approval is being sought at the 2023 AGM, as a precautionary measure, for donations and/ or expenditure that may be construed as political by the wide definition of such terms provided under the Act. 1 Represents the number of voting rights last notified to the Company at 30 June 2023 by the respective shareholder in accordance with DTR 5.1. 2 Based on the Total Voting Rights as at the relevant notification dates. On 4July 2023, Royal Bank of Canada notified us that they no longer had a notifiable interest in the Company. At 6 September 2023, no further change in these holdings had been notified and no further notifications had been received. The Total Voting Rights of the Company, as announced on 31 August 2023, are 974,585,796. Appointment and removal of Directors The appointment and removal of Directors is governed by the Articles, the Act and related legislation. There shall be (unless otherwise determined by an ordinary resolution) no fewer than two and no more than 15 Directors appointed to the Board at any one time. Directors may be appointed by the Company by ordinary resolution or by the Board. In accordance with the Code and the Articles, at each AGM, all of the Directors shall retire from office at the date of the Notice of AGM and may offer themselves for reappointment by members. Directors may be removed before the expiration of their term of office by means set out in the Act and the Articles, including by special resolution. Powers of the Directors including in relation to the allotment of shares Subject to the Articles, the Act and any directions given by special resolution, the business of the Company is ultimately managed by the Board who may exercise all the powers of the Company, whether relating to the management of the business of the Company or otherwise. In particular, the Board may exercise all the powers of the Company to borrow money and to mortgage or charge any of its undertakings, property, assets and uncalled capital and to issue debentures and other securities and to give security for any debt, liability or obligation of the Company to any third party. At the AGM held on 17 October 2022, the Directors were given authority to allot shares up to an aggregate nominal value of £34,085,427 (representing approximately one-third of the nominal value of the Company’s issued share capital as at 6 September 2022), such authority to remain valid until the end of the 2023 AGM or, if earlier, until the close of business on 17 January 2024. A resolution to renew this authority will be proposed at the 2023 AGM. Barratt Developments PLC Annual Report and Accounts 2023 169 S Corporate Governance F Other statutory disclosures continued Directors’ indemnities and insurance Qualifying third-party indemnity provisions are in place for the Directors, former Directors and the Company Secretary, together with those who hold or have held these positions as officers of other Group companies or of associate or affiliated companies and members of the Executive Committee, to the extent permitted by law and the Articles, in respect of liabilities incurred in the course of performing their duties. In addition, the Company maintains directors’ and officers’ liability insurance for each Director of the Group and its associated companies. Capital structure The Company has a single class of share capital, which is divided into ordinary shares of 10 pence each. All issued shares are in registered form and are fully paid. Details of the Company’s issued share capital and of the movements in the share capital during the year can be found in note 23 on page 216. Shareholder voting rights and restrictions on transfer of shares All the issued and outstanding ordinary shares of the Company have equal voting rights with one vote per share. There are no special control rights attaching to them, save that the Trustees of the EBT may vote or abstain from voting on shares held in the EBT in any way they think fit and in doing so may consider both financial and non-financial interests of the beneficiaries of the EBT or their dependants. The Company is not aware of any agreements between holders of securities that may result in restrictions on the transfer of securities. The rights, including full details relating to voting of shareholders and any restrictions on transfer relating to the Company’s ordinary shares, are set out in the Articles and in the explanatory notes that accompany the Notice of the 2023 AGM. These documents are available on the Company’s website at www.barrattdevelopments.co.uk. Shareholder authority for purchase of own shares At the Company’s AGM held on 17 October 2022, shareholders authorised the Company to buy back up to an aggregate of 102,256,281 ordinary shares of 10 pence each (representing approximately 10% of the Company’s issued share capital). This authority is valid until the end of the 2023 AGM (at which a renewal of that authority will be sought) or, if earlier, until the close of business on 17 January 2024. Under the authority, there is a minimum and maximum price to be paid for such shares. Any shares that are bought back may be held as treasury shares or, if not so held, will be cancelled immediately upon completion of the purchase, thereby reducing the Company’s issued share capital. Following the excellent performance of the business throughout FY22 and our strong and resilient balance sheet, the Board approved a return of capital which is beyond the requirements for investment and growth in the business of £200m in FY23 through the implementation of a share buyback programme to reduce the share capital of the Company. 13,581,002 shares of 10 pence each were purchased during the year under a similar authority given at the Company’s AGM on 13 October 2021. 34,404,291 shares of 10 pence each were purchased during the year under the authority given at the Company’s AGM on 17 October 2022. All of the purchased shares have been cancelled. Articles of Association The Articles may only be amended by a special resolution of shareholders. The Articles were last amended at the Company’s AGM held on 14 October 2020. Approach to tax and tax governance For all taxes, it is the Group’s aim to ensure it accurately calculates and pays the tax that is due at the correct time. Whilst the Group does seek to minimise its tax liabilities through legitimate routine tax planning, it does not participate in aggressive tax planning schemes. The Group also seeks to be transparent in its dealings with HMRC and has regular dialogue with its representatives to discuss both developments in the business and the ongoing tax position. In accordance with UK legislation, we have published details of our tax strategy, and this can be found at www.barrattdevelopments.co.uk. The Chief Financial Officer retains overall responsibility for oversight of the tax affairs of the Group. Mike Scott, Chief Financial Officer, is the Senior Accounting Officer throughout the year ended 30 June 2023. The Senior Accounting Officer receives regular updates on tax matters. In addition, tax management and strategy are reviewed at least annually by the Audit Committee, with no changes proposed for the year ended 30 June 2023. Change of control The following significant agreements as at 30 June 2023 contained provisions entitling the counterparties to exercise termination and/or other rights in the event of a change of control of the Company: ∙ an RCF agreement containing change of control provisions which provide that, on a change of control of the Company, the relevant counterparties may require the Company to immediately repay all amounts outstanding and would not be obliged to fund any further drawdown of the facility (other than rollover loans); and ∙ a note purchase agreement in respect of the Group’s £200m privately placed notes containing change of control provisions which provide that, on a change of control of the Company, the noteholders may require the Company to prepay at par all outstanding amounts under the notes. In addition, the Company’s share plans contain provisions relating to a change of control. Outstanding awards and options would normally vest and become exercisable on a change of control subject to the satisfaction of any performance conditions at that time. The Company is not aware of any other significant agreements to which it is a party that take effect, alter or terminate upon a change of control of the Company. The Company does not have any agreements with any Director or employee that would provide compensation for loss of office or employment resulting from change of control following a takeover bid. On behalf of the Board Tina Bains Company Secretary 5 September 2023 170 Barratt Developments PLC Annual Report and Accounts 2023 S Corporate Governance F Statement of Directors’ Responsibilities Financial Statements and accounting records The Directors are responsible for preparing the Annual Report and Accounts including 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 are required to prepare the Group Financial Statements in accordance with United Kingdom adopted IAS. The Financial Statements also comply with IFRS as issued by the IASB. The Directors have also elected to prepare the Parent Company Financial Statements under United Kingdom adopted IAS. 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 Company and the Group and of the profit or loss of the Company and the Group for that period. IAS 1 requires that Financial Statements present fairly for each financial year the relevant entity’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the IASB’s “Framework for the preparation and presentation of financial statements”. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS. Directors are also required to: ∙ properly select and apply accounting policies; ∙ present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information; ∙ provide additional disclosures when compliance with the specific requirements in IFRS are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance; and ∙ make an assessment of the Company’s and the Group’s (as the case may be) ability to continue as a going concern. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s and the Group’s transactions on an individual and consolidated basis 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 comply with the Act. 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 corporate and financial information included on the Company’s website. Legislation in the UK governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions. Fair, balanced and understandable The Board considers, on the advice of the Audit Committee, that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Company and the Group’s position, performance, business model and strategy. Disclosure of information to auditor In accordance with Section 418 of the Act, the Directors confirm that, so far as they are each aware, there is no relevant audit information that has not been brought to the attention of the Company’s auditor. Each Director has taken all reasonable steps that they ought to have taken in accordance with their duty as a Director to make themselves aware of any relevant audit information and to ensure that the Company’s auditor is aware of that information. Directors’ Responsibility Statement The Directors confirm that, to the best of each person’s knowledge: a. the Group Financial Statements in the Annual Report and Accounts, which have been prepared in accordance with IAS in conformity with the requirements of the Companies Act 2006, and those of the Parent Company, which have been prepared in accordance with IAS in conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and Group taken as a whole; and b. the Annual Report and Accounts includes a fair review of the development and performance of the business and the position of the Company and the Group taken as a whole, together with a description of the principal risks and uncertainties they face. The Directors of the Company and their functions are listed on pages 104 and 105. By order of the Board. David Thomas Chief Executive 5 September 2023 The Directors’ Report from pages 102 to 171 inclusive was approved by the Board on 5 September 2023 and is signed on its behalf by Tina Bains Company Secretary Barratt Developments PLC Annual Report and Accounts 2023 171 Financial Statements S G Financial Statements Financial Statements Contents Independent Auditor’s Report Consolidated Income Statement and Statement of Comprehensive Income Statement of Changes in Shareholders’ Equity – Group Statement of Changes in Shareholders’ Equity – Company Balance Sheets Cash Flow Statements Notes to the Financial Statements Definitions of alternative performance measures and reconciliation to IFRS (unaudited) Five year record (unaudited) Glossary Integrated reporting approach Group advisers and Company information Key to financial icons Throughout the Financial Statements you will see these icons used; they represent the following: Group accounting policies Critical accounting judgements and key sources of estimation uncertainty 172 173 182 183 184 185 186 188 235 238 240 243 244 Notes to the Financial Statements 1. Basis of preparation 2. Revenue 3. Profit from operations 4. Adjusted items 5. Key management, employees and retirement benefit obligations 6. Net finance costs 7. Tax 8. Earnings per share 9. Dividends 10. Goodwill and intangible assets 11. Company investments in subsidiary undertakings 12. Investments in jointly controlled entities 13. Jointly controlled operations 14. Property, plant and equipment 15. Leases 16. Inventories 17. Trade and other receivables 18. Net cash 19. Trade and other payables 20. Provisions 21. Contract assets and liabilities 22. Financial instruments 23. Share capital 24. Merger reserve 25. Capital redemption reserve 26. Own shares reserve 27. Share-based payments 28. Non-controlling interests 29. Contingent liabilities 30. Related party transactions 31. Financial risk management 32. Business combinations and Group subsidiary undertakings 188 190 191 192 193 194 194 197 198 198 201 201 204 205 206 207 208 209 211 212 214 214 216 216 216 217 217 221 221 222 223 225 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Independent Auditor’s Report to the members of Barratt Developments PLC Report on the audit of the financial statements 1. Opinion In our opinion: ∙ the financial statements of Barratt Developments PLC (the ‘Company’) and its subsidiaries (the ‘Group’) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 30 June 2023 and of the group’s profit for the year then ended; ∙ the Group financial statements have been properly prepared in accordance with United Kingdom adopted international accounting standards; ∙ the Company financial statements have been properly prepared in accordance with United Kingdom adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and ∙ the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the Financial Statements which comprise: ∙ the Consolidated Income Statement and Statement of Comprehensive Income; ∙ the Group and Company Statements of Changes in Shareholders’ Equity; ∙ the Group and Company Balance Sheets; ∙ the Group and Company Cash Flow Statements; and ∙ the related notes 1 to 32. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom adopted international accounting standards and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. 2. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided to the Group and Company for the year are disclosed in note 3 to the Financial Statements. We confirm that we have not provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the Company. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 3. Summary of our audit approach Key audit matters The key audit matters that we identified in the current year were: ∙ Margin recognition; and ∙ Costs associated with legacy properties. Within this report, key audit matters are identified as follows: Increased level of risk Similar level of risk Decreased level of risk Materiality Scoping The materiality that we used for the Group Financial Statements was £45 million which represents 5.1% of adjusted profit before tax. Adjusted profit before tax is profit before tax and adjusted items as disclosed in the table following the Consolidated Income Statement and Statement of Comprehensive Income. Our scoping focused on the audit work of the two components, being housebuilding and joint ventures. All audit work was completed directly by the Group audit engagement team. Significant changes in our approach There were no significant changes to our audit approach, and it remains consistent with the prior year. Barratt Developments PLC Annual Report and Accounts 2023 173 S G Financial Statements Independent Auditor’s Report continued to the members of Barratt Developments PLC Report on the audit of the financial statements continued 4. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of accounting included: ∙ understanding the relevant controls relating to the assessment of the appropriateness of the going concern assumption; ∙ assessing the Group’s financing facilities including the nature of the facilities, repayment terms and compliance with loan covenants; ∙ challenging assumptions used in the going concern model by analysing the current and forecast performance of the Group, including working capital requirements by assessing management’s assumptions against market data; ∙ assessing the wider macro-economic environment over the going concern period, with respect to increasing interest and inflation rates and their impact on house price and build cost assumptions, and whether this has been appropriately reflected in the forecasts; ∙ evaluating management’s sensitivity analysis; ∙ assessing identified potential mitigating actions and the appropriateness of the inclusion of these in the going concern assessment; ∙ assessing the historical accuracy of forecasts; and ∙ assessing the appropriateness of the going concern disclosures in the financial statements. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group’s and Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. 174 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements 5. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 5.1. Margin recognition Key audit matter description How the scope of our audit responded to the key audit matter Key observations In FY23, adjusted margin was 21.2% (FY22: 24.8%). The Group’s valuation and cost allocation framework determines the total profit forecast for each site. This allows the land and build costs of a development to be allocated to each individual unit, ensuring the forecast margin per unit is equalised across a development. At each year-end, Group management considers if an adjustment for house prices and build cost assumptions is required. This cost allocation framework drives the recognition of costs, and hence profit, as each unit is sold, which is the key estimate in the Income Statement and is where fraud could potentially occur. For each development there is estimation uncertainty in: ∙ Estimating the inputs included within a site budget, including future revenues and costs to complete, in order to determine the level of profit that each unit of the development will deliver; ∙ Determining future house price inflation and build cost inflation; ∙ Appropriately allocating costs such as shared infrastructure relating to a development so that the gross profit margin (in percentage terms) achieved on each individual unit is equal; ∙ Recognising site contingencies and their impact on margin; and ∙ Recording the variation when a deviation from the initial budget occurs and ensuring such variations are appropriately recognised to those units impacted by the deviation. These estimates impact the carrying value of inventory in the balance sheet and therefore the profit recognised on each unit sold which aggregate to form the overall reported margin which is a key internal metric for the Group. Accordingly, we consider the recognition of cost per unit and therefore the appropriate margin to be a key audit matter. Refer to page 128 (Audit Committee Report) and notes 1 and 3 (financial statement disclosures including the related critical accounting judgements and key sources of estimation uncertainty). Our work included the following: ∙ Tested the relevant controls governing inventory costing which include site valuations, land acquisition feasibilities, expenditure and ongoing margin review; ∙ Visited a sample of sites and verified the work completed to date. On a sample basis, agreed the cost incurred to source documentation to verify work in progress; ∙ On a sample of sites, made enquiries with management to support their cost to complete estimates and obtained external supporting evidence regarding costs to complete; ∙ Evaluated key estimates in the margin calculation, such as the current and forecast macro-economic conditions such as future sales volumes, house prices and construction build costs; ∙ Analysed margins on a site-by-site and divisional basis to identify material movements in the site margins compared to prior year. We evaluated and assessed the material variances through enquiries with management and obtaining corroborative evidence; ∙ Used bespoke data analytic techniques to analyse costs to complete. This enabled us to analyse the cost category composition for each site and comparing to budgeted positions and Group averages. We performed enquiries and obtained corroborative evidence for exceptions identified; ∙ Analysed the cost per square foot of plots sold at a divisional level for the current year and compared this to cost per square foot in previous years, to analyse for any unusual trends which required corroboration from management; and ∙ Made enquiries of management regarding their assessment of the impact of climate change on the forecast costs to complete and house prices and assessed the reasonableness of their assumptions. Based on the procedures performed, we concluded that the Group’s cost allocation framework was reasonable for the intended purpose of recognising appropriate margins on plot completion. We concurred with the Group’s assessment that, given the current market, no further adjustments for house price and build cost assumptions are required to underlying site valuations and margins are materially appropriate. Barratt Developments PLC Annual Report and Accounts 2023 175 S G Financial Statements Independent Auditor’s Report continued to the members of Barratt Developments PLC Report on the audit of the financial statements continued 5. Key audit matters continued 5.2. Costs associated with legacy properties Key audit matter description How the scope of our audit responded to the key audit matter 176 There is ongoing challenge and public scrutiny in relation to fire safety and cladding related issues at legacy developments. The Group has recognised a number of provisions in relation to changing building regulations and remediation of structural defects identified. The provisions also include the expected cost to address necessary fire-safety issues on all buildings of 11 metres and above following the adoption of the UK Government industry pledge by Barratt in April 2022 and the signing of the Self-Remediation Terms and Contract in March 2023. As a result of the evolving regulatory environment, including the signing of the Self-Remediation Terms and Contract, we continue to identify an increased level of risk in relation to the Group’s obligations. We identified a key audit matter in relation to costs associated with legacy properties as the amount provided by the Group could be incomplete or not valued accurately for the remediation required. To date, there is limited actual evidence of the costs of remediation and the accounting for these provisions involves a number of key assumptions when estimating the future costs, and therefore this is identified as an area with a potential for fraud. The key judgements are: ∙ determining which buildings the Group has an obligation to remediate at the balance sheet date; ∙ the cost of the future works; ∙ the duration over which the costs will be incurred; and ∙ the discount and inflation rates applied. At the end of the financial year the Group holds provisions of £612.3m (2022: £479.5m) in relation to legacy properties. During the year, the Group incurred a charge of £258.2m (2022: £448.0m) and utilisation of £32.9m (2022: £20.3m) in relation to remediation costs. The additional provisions made have been recognised as an adjusted item and excluded from adjusted profit, as explained in note 4. Fire-safety regulations continue to evolve and the Group’s internal investigations are ongoing in relation to their legacy buildings, required remediation on a building by building basis and potential liabilities. We identified a risk around whether the charge for FY23 has been recorded in the appropriate accounting period. Refer to page 128 (Audit Committee Report) and notes 1, 20 and 29 to the Financial Statements, including the disclosures relating to this key source of estimation uncertainty. Our work included the following: ∙ obtained an understanding of controls relevant to the recognition and estimation of costs associated with legacy properties; ∙ assessed how the value of the provision has been determined and whether a present obligation to rectify the properties existed at the balance sheet date; ∙ challenged that the increase in estimated costs have been recorded in the appropriate accounting period by assessing that all reliable information that could reasonably be expected to have been obtained was reflected in the provision recorded in the prior accounting period and that the charge for the year is a consequence of new information that became available during FY23; ∙ validated a sample of cost estimates to underlying support such as third-party estimates, quotations or agreements in order to challenge management’s estimates; and ∙ assessed the associated disclosures, including consideration of costs classified as adjusted items. Specifically, in relation to the Self-Remediation Terms and Contract, we performed the following: ∙ performed an assessment of the Group’s legal liability through discussions with internal legal counsel and the Group’s internal building safety unit; ∙ performed an assessment of the application of UK laws in relation to responsibilities of freeholders; ∙ analysed buildings with potential legal liability by considering the Group’s portfolio of buildings against the commitments made under the Self-Remediation Terms and Contract; ∙ assessed the estimated liability by understanding and challenging management’s assumptions regarding the costs of remediation per plot, the number of plots to be remediated, the time period for the work to be completed and the discount factor applied to the overall provision; ∙ challenged the completeness of the provision, including the contingency, by testing the key assumptions including the number of buildings with potential legal liability and the estimated liability per unit; and ∙ assessed the disclosure included within the financial statements in relation to provisions and contingent liabilities, including the disclosure of the assumptions and associated sensitivities in relation to the key sources of estimation uncertainty. Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Report on the audit of the financial statements continued 5. Key audit matters continued 5.2. Costs associated with legacy properties continued Key observations Based on the procedures performed we concluded the provision recorded to be appropriate based on information available at 30 June 2023, however we observed a high level of estimation uncertainty in the assumptions applied. Accordingly, we are satisfied with the disclosure of this provision as a key source of estimation uncertainty within note 1 of the financial statements potentially subject to future change. 6. Our application of materiality 6.1. Materiality We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work. Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows: Materiality £45 million (2022: £50 million) £40.5 million (2022: £45 million) Group financial statements Company financial statements Basis for determining materiality Rationale for the benchmark applied Our determined materiality represents 5.1% (2022: 4.7%) of adjusted profit before tax. Adjusted profit before tax is profit before tax and adjusted items as disclosed in the table following the Consolidated Income Statement and Statement of Comprehensive Income. We consider adjusted profit before tax to be an important benchmark of the performance of the Group. Whilst not an IFRS measure, adjusted profit before tax is one of the key metrics for the Group. It excludes some of the volatility arising from adjusted items and accordingly we consider it the appropriate basis. Our basis for materiality was determined based upon 3% (2022: 3%) of the Company’s net assets capped at 90% (2022: 90%) of Group materiality. Net assets was used as the benchmark because it provides a stable basis and there are volatile earnings between periods. 6.2. Performance materiality We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements as a whole. Group financial statements Company financial statements Performance materiality 70% (2022: 70%) of Group materiality 70% (2022: 70%) of Company materiality Basis and rationale for determining performance materiality In determining performance materiality, we considered the following factors: ∙ Our risk assessment, including our assessment of the Group’s overall control environment and that we consider it appropriate to rely on controls over a number of business processes; and ∙ Our past experience of the audit, which has indicated a low number of corrected and uncorrected misstatements identified in prior periods. 6.3. Error reporting threshold We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £2.25 million (2022: £2.5 million), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements. 7. An overview of the scope of our audit 7.1. Identification and scoping of components Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and assessing the risks of material misstatement at the Group level. The entire Group is audited by one audit engagement team, led by the Senior Statutory Auditor. Controls are common across the Group and there are two identified components, housebuilding and joint ventures, which take into consideration all of the Group’s divisions, as well as the head office consolidation. Each component was set a specific component materiality, considering its relative size and any component-specific risk factors such as internal control findings and history of error. The component materialities applied were in the range £15.75 million to £29.93 million (2022: £17.5m to £33.2m). Both components have been subject to a full scope audit Barratt Developments PLC Annual Report and Accounts 2023 177 S G Financial Statements Independent Auditor’s Report continued to the members of Barratt Developments PLC Report on the audit of the financial statements continued 7. An overview of the scope of our audit continued 7.2. Our consideration of the control environment We obtained an understanding of the relevant internal controls over key audit matters, relating to margin recognition and legacy properties. We obtained an understanding of other relevant controls which we would expect in a housebuilder, namely those over land and work in progress and those over subcontractor and other expenses. We assessed entity level controls at a Group level relating to the risk assessment process, monitoring of internal controls and information systems. This resulted in a more granular review of management’s whistleblowing policy, code of ethics, HR and culture policy and fraud risk assessment. In the current year, we have tested controls relating to margin recognition, subcontractors, expenditure, land and work in progress. Based on our work performed we adopted a controls reliance approach to our testing in these areas. The Group IT landscape contains a number of IT systems, applications and tools used to support business processes and reporting. We enhanced our understanding of the Group’s IT controls and performed testing of General IT Controls (“GITCs”) of three key applications that support financial reporting processes, being TM1, COINs and Homebuilder, which included controls surrounding user access management and change management. Based on our work performed we adopted a controls reliance approach to GITCs of these applications. 7.3. Our consideration of climate-related risks As part of our audit we have made enquiries of management to understand the process they have adopted to assess the potential impact of climate change on the financial statements. As disclosed on page 77 the Group considers climate change to be a fundamental component of its environmental, social and governance principal risk within the business which in the medium term particularly impacts the Group’s ability to build homes that are considered fit for purpose as well as potentially incurring significantly increased costs. In the long term, climate change could cause significant disruption to operations. These risks are consistent with those identified through our own risk assessment process. Due to its medium to longer term impact, the Group has assessed the impact of climate change on the viability of the business, as disclosed within the Viability Statement on page 99. As part of our identification of key audit matters, we therefore assessed there to be an element of risk in relation to climate change as part of margin recognition. There is a risk that the forecast costs to complete do not include appropriate assumptions relating to climate change, for example, additional costs to ensure the homes meet customer and investor expectations. In addition to our procedures outlined in section 5.1 above, we have read the climate change related disclosures within the other information included in the annual report to consider whether they are materially consistent with the financial statements and our knowledge obtained during the audit. 8. Other information The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 178 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Report on the audit of the financial statements continued 9. Responsibilities of directors As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. 10. Auditor’s responsibilities for the audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements. A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. 11. Extent to which the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. 11.1. Identifying and assessing potential risks related to irregularities In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we considered the following: ∙ the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets; ∙ the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error; ∙ results of our enquiries of management, internal audit, internal legal counsel, the directors and the Audit Committee about their own identification and assessment of the risks of irregularities, including those that are specific to the Group’s sector; ∙ any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to: ∙ identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance; ∙ detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud; ∙ the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; ∙ the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuations, fraud and IT specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud. As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for fraud in the following areas: margin recognition and costs associated with legacy properties. In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override. We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we considered in this context included the UK Companies Act, Listing Rules, Building Safety Regulations and tax legislation. In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included environmental and health and safety regulations. Barratt Developments PLC Annual Report and Accounts 2023 179 S G Financial Statements Independent Auditor’s Report continued to the members of Barratt Developments PLC Report on the audit of the financial statements continued 11. Extent to which the audit was considered capable of detecting irregularities, including fraud continued 11.2. Audit response to risks identified As a result of performing the above, we identified margin recognition and costs associated with legacy properties as key audit matters related to the potential risk of fraud or non-compliance with laws and regulations. The key audit matters section of our report explains the matters in more detail and also describes the specific procedures we performed in response to those key audit matters. In addition to the above, our procedures to respond to risks identified included the following: ∙ reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations described as having a direct effect on the Financial Statements; ∙ enquiring of management, the Audit Committee, in-house and external legal counsel concerning actual and potential litigation and claims; ∙ performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud; ∙ reading minutes of meetings of those charged with governance, reviewing internal audit reports; and ∙ in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit. Report on other legal and regulatory requirements 12. Opinions on other matters prescribed by the Companies Act 2006 In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: ∙ the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and ∙ the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the directors’ report. 13. Corporate Governance Statement The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance Statement relating to the group’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit: ∙ the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on page 99; ∙ the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 99; ∙ the directors’ statement on fair, balanced and understandable set out on page 171; ∙ the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 72; ∙ the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on pages 71 and 72; and ∙ the section describing the work of the audit committee set out on page 127. 180 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements 14. Matters on which we are required to report by exception 14.1. Adequacy of explanations received and accounting records Under the Companies Act 2006 we are required to report to you if, in our opinion: ∙ we have not received all the information and explanations we require for our audit; or ∙ adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or ∙ the Company financial statements are not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. 14.2. Directors’ remuneration Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns. We have nothing to report in respect of these matters. 15. Other matters which we are required to address 15.1. Auditor tenure Following the recommendation of the Audit Committee, we were appointed by the shareholders at the Annual General Meeting held in 2007 to audit the financial statements for the year ending 30 June 2008 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments of the firm is 16 years, covering the years ending 30 June 2008 to 30 June 2023. 15.2. Consistency of the audit report with the additional report to the Audit Committee Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK). 16. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed. As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these Financial Statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides no assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS. Jacqueline Holden FCA (Senior statutory auditor) For and on behalf of Deloitte LLP Statutory Auditor London, United Kingdom 5 September 2023 Barratt Developments PLC Annual Report and Accounts 2023 181 S G Financial Statements Consolidated Income Statement and Statement of Comprehensive Income Year ended 30 June 2023 Notes 2 3 3 6 6 6 12 7 28 8 8 2023 £m 2022 £m 5,321.4 5,267.9 (4,346.5) (4,368.0) 974.9 (270.8) 140.0 (136.7) 707.4 23.8 (34.9) (11.1) 8.8 705.1 (174.8) 530.3 530.3 — 899.9 (256.4) 84.4 (81.3) 646.6 2.5 (30.1) (27.6) 23.3 642.3 (127.1) 515.2 515.1 0.1 53.2p 52.6p 50.6p 49.8p Profit before tax 2023 £m 705.1 2022 £m 642.3 Share of post-tax profit from joint ventures 2022 £m 23.3 2023 £m 8.8 23.7 — 32.5 4.3 181.9 437.5 — 27.6 (2.7) (25.0) 884.3 1,054.8 Continuing operations Revenue Cost of sales Gross profit Administrative expenses Part-exchange income Part-exchange expenses Profit from operations Finance income Finance costs Net finance costs Share of post-tax profit from joint ventures Profit before tax Tax Profit for the year being total comprehensive income recognised for the year Profit and total comprehensive income for the year attributable to the owners of the Company Profit and total comprehensive income for the year attributable to non-controlling interests Earnings per share from continuing operations Basic Diluted There was no other comprehensive income in either year. The notes on pages 188 to 234 form an integral part of these Financial Statements. Adjusted items: Reported profit Cost associated with legacy properties Legacy property recoveries Adjusted profit Notes 4 4 Gross profit Profit from operations 2023 £m 974.9 2022 £m 899.9 2023 £m 707.4 2022 £m 646.6 158.2 433.2 158.2 433.2 (2.7) (25.0) (2.7) (25.0) 1,130.4 1,308.1 862.9 1,054.8 182 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Statement of Changes in Shareholders’ Equity Group Share capital (note 23) £m Share premium £m Merger reserve (note 24) £m Capital redemption reserve (note 25) £m Own shares (note 26) £m Share- based payments (note 27) £m Group retained earnings due to share- holders of the Company £m Total Group retained earnings due to share- holders of the Company £m Non- controlling interests (note 28) £m Total equity £m At 1 July 2021 101.8 245.3 1,109.0 — (4.7) 27.6 3,972.0 3,994.9 1.1 5,452.1 Profit for the year being total comprehensive income recognised for the year ended 30 June 2022 Dividend payments (note 9) Distributions to non-controlling interests Issue of shares Share-based payments Purchase of own shares by EBT Transfers in respect of share options Tax on share-based payments — — — 0.4 — — — — — — — 8.1 — — — — — — — — — — — — At 30 June 2022 102.2 253.4 1,109.0 Profit for the year being total comprehensive income recognised for the year ended 30 June 2023 Dividend payments (note 9) Distributions to non-controlling interests Issue of share capital Buyback and cancellation of shares Share-based payments Purchase of own shares by EBT Transfers in respect of share options Tax on share-based payments — — — — (4.8) — — — — — — — 0.1 — — — — — — — — — — — — — — At 30 June 2023 97.4 253.5 1,109.0 — — — — — — — — — — — — — 4.8 — — — — 4.8 — — — — — (28.5) 6.2 — — 515.1 — (337.0) 515.1 (337.0) 0.1 515.2 — (337.0) — — 24.2 — (20.1) (2.7) — — — — 12.0 1.8 — — 24.2 (28.5) (1.9) (0.9) (0.4) — — — — — (0.4) 8.5 24.2 (28.5) (1.9) (0.9) (27.0) 29.0 4,163.9 4,165.9 0.8 5,631.3 — — — — — 530.3 — (360.0) 530.3 (360.0) — 530.3 — (360.0) — — — — — — (0.3) — (0.3) 0.1 — — (14.0) 17.8 — (201.3) — — (0.7) 10.2 — (18.3) (201.3) 10.2 (14.0) (1.2) — (201.3) 10.2 — (14.0) — (1.2) — — (0.1) 1.4 1.3 — 1.3 (23.2) 20.8 4,133.6 4,131.2 0.5 5,596.4 The notes on pages 188 to 234 form an integral part of these Financial Statements. Barratt Developments PLC Annual Report and Accounts 2023 183 S G Financial Statements Statement of Changes in Shareholders’ Equity Company Share capital (note 23) £m Share premium £m Merger reserve (note 24) £m Capital redemption reserve (note 25) £m Own shares (note 26) £m Share- based payments (note 27) £m Retained earnings £m Total retained earnings £m Total equity £m At 1 July 2021 101.8 245.3 1,109.0 Profit for the year being total comprehensive income recognised for the year ended 30 June 2022 Dividend payments (note 9) Issue of shares Share-based payments Purchase of own shares by EBT Transfers in respect of share options Tax on share-based payments At 30 June 2022 Profit for the year being total comprehensive income recognised for the year ended 30 June 2023 Dividend payments (note 9) Issue of share capital Buyback and cancellation of shares Share-based payments Purchase of own share for EBT Transfers in respect of share options Tax on share-based payments At 30 June 2023 — — 0.4 — — — — — — 8.1 — — — — — — — — — — — 102.2 253.4 1,109.0 — — — (4.8) — — — — — — 0.1 — — — — — — — — — — — — — 97.4 253.5 1,109.0 — — — — — — — — — — — — 4.8 — — — — 4.8 (4.7) 25.9 2,046.4 2,067.6 3,523.7 — — — — (28.5) 6.2 — 500.2 — (337.0) — — — 24.2 — — 6.4 (20.1) 500.2 (337.0) — 24.2 (28.5) (7.5) 500.2 (337.0) 8.5 24.2 (28.5) (7.5) — (1.0) 0.7 (0.3) (0.3) (27.0) 29.0 2,216.7 2,218.7 3,683.3 — — — — — (14.0) 17.8 — — 501.9 — (360.0) — — — (201.3) — — (6.7) 10.2 — (18.3) 501.9 (360.0) — (201.3) 10.2 (14.0) (7.2) 501.9 (360.0) 0.1 (201.3) 10.2 (14.0) (7.2) — 0.5 0.5 0.5 (23.2) 20.9 2,151.1 2,148.8 3,613.5 The notes on pages 188 to 234 form an integral part of these Financial Statements. 184 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Balance Sheets At 30 June 2023 Assets Non-current assets Other intangible assets Goodwill Investments in subsidiary undertakings Investments in jointly controlled entities Property, plant and equipment Right-of-use assets Deferred tax assets Trade and other receivables Current assets Inventories Trade and other receivables Current tax assets Cash and cash equivalents Total assets Liabilities Non-current liabilities Loans and borrowings Trade and other payables Lease liabilities Deferred tax liabilities Provisions Current liabilities Loans and borrowings Trade and other payables Lease liabilities Provisions Total liabilities Net assets Equity Share capital Share premium Merger reserve Capital redemption reserve Total retained earnings Equity attributable to the owners of the Company Non-controlling interests Total equity Group 2023 £m Notes 2022 £m 205.4 852.9 — 177.9 41.2 35.6 — 6.5 194.9 852.9 — 129.8 58.1 45.1 — 2.9 1,283.7 1,319.5 5,238.0 182.1 31.1 1,269.1 6,720.3 8,004.0 (200.0) (188.7) (33.1) (53.5) (477.9) (953.2) (3.4) (1,127.4) (13.1) (310.5) (1,454.4) (2,407.6) 5,596.4 97.4 253.5 1,109.0 4.8 4,131.2 5,595.9 0.5 5,291.6 237.0 9.9 1,352.7 6,891.2 8,210.7 (200.0) (240.5) (26.6) (45.1) (359.6) (871.8) (17.3) (1,414.4) (10.5) (265.4) (1,707.6) (2,579.4) 5,631.3 102.2 253.4 1,109.0 — 4,165.9 5,630.5 0.8 10 10 11 12 14 15 7 17 16 17 18 18 19 15 7 20 18 19 15 20 23 24 25 28 Company 2023 £m 2022 £m — — 3,090.1 — 6.1 4.2 2.6 76.1 3,179.1 — 15.9 1.6 1,005.0 1,022.5 4,201.6 (200.0) — (2.9) — — (202.9) — (383.9) (1.3) — (385.2) (588.1) 3,613.5 97.4 253.5 1,109.0 4.8 2,148.8 3,613.5 — — — 3,092.5 — 6.6 4.2 3.2 76.1 3,182.6 — 13.4 3.1 1,045.4 1,061.9 4,244.5 (200.0) — (3.1) — — (203.1) — (357.0) (1.1) — (358.1) (561.2) 3,683.3 102.2 253.4 1,109.0 — 2,218.7 3,683.3 — 5,596.4 5,631.3 3,613.5 3,683.3 The Financial Statements of Barratt Developments PLC (registered number 00604574) were approved by the Board and authorised for issue on 5 September 2023. Signed on behalf of the Board: Parent Company Income Statement In accordance with the provisions of Section 408 of the Companies Act 2006, a separate Income Statement for the Company has not been presented. The Company’s profit for the year was £501.9m (2022: £500.2m). David Thomas Chief Executive Mike Scott Chief Financial Officer The notes on pages 188 to 234 form an integral part of these Financial Statements. Barratt Developments PLC Annual Report and Accounts 2023 185 S G Financial Statements Cash Flow Statements Year ended 30 June 2023 Net cash inflow/(outflow) from operating activities (page 187) Investing activities: Purchase of property, plant and equipment Proceeds from the disposal of property, plant and equipment Consideration, net of cash acquired, paid on acquisition of subsidiaries Increase in amounts invested in jointly controlled entities Repayment of amounts invested in jointly controlled entities Distributions received from jointly controlled entities Proceeds from the disposal of other investments Dividends received from subsidiaries Interest received Net cash inflow/(outflow) from investing activities Financing activities: Dividends paid to equity holders of the Company Distribution made to non-controlling interest Purchase of own shares for the EBT Buy back and cancellation of shares Proceeds from issue of share capital Payment of dividend equivalents Loans and borrowings repayments Repayment of lease liabilities Net cash outflow from financing activities Net decrease in cash, cash equivalents and bank overdrafts Cash, cash equivalents and bank overdrafts at the beginning of the year Cash, cash equivalents and bank overdrafts at the end of the year Group Company Notes 14 12 12 12 9 28 15 2023 £m 465.5 (23.1) 0.1 — (18.1) 40.2 34.8 — — 21.5 55.4 (360.0) (0.3) (14.0) (201.3) 0.1 (1.2) — (13.9) (590.6) (69.7) 2022 £m 417.6 (29.9) 1.0 (205.6) (17.9) 9.9 16.5 1.4 — 2.2 (222.4) (337.0) (0.4) (28.5) — 8.5 (1.9) (5.3) (13.8) (378.4) (183.2) 2023 £m 20.0 (2.6) — — — — 0.1 — 500.0 19.8 517.3 (360.0) — (14.0) (201.3) 0.1 (1.2) — (1.3) (577.7) (40.4) 2022 £m (433.1) (1.4) — — — — — — 517.4 1.6 517.6 (337.0) — (28.5) — 8.5 — — (1.1) (358.1) (273.6) 1,335.4 1,518.6 1,045.4 1,319.0 18 1,265.7 1,335.4 1,005.0 1,045.4 The notes on pages 188 to 234 form an integral part of these Financial Statements. 186 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Reconciliation of profit from operations to cash flow from operating activities Notes Profit from operations Depreciation of property, plant and equipment Loss on disposal of property, plant and equipment Depreciation of right-of-use assets Amortisation of intangible assets Impairment/(reversal of impairment) of inventories Share-based payments expense/(credit) Imputed interest on long-term payables1 Imputed interest on lease arrangements Amortisation of facility fees Total non-cash items Decrease/(increase) in inventories Decrease/(increase) in receivables (Decrease)/increase in payables Increase in provisions Total movements in working capital and provisions Interest paid Tax paid Net cash inflow/(outflow) from operating activities 14 15 10 16 27 6 6 6 20 Group Company 2023 £m 707.4 6.1 — 12.3 10.5 4.7 10.2 (21.4) (1.2) (1.9) 19.3 48.9 60.4 (337.6) 163.4 (64.9) (10.4) (185.9) 465.5 2022 £m 646.6 6.2 3.2 13.0 4.3 (2.2) 24.2 (14.4) (0.9) (4.0) 29.4 (543.4) 20.8 (10.7) 415.1 (118.2) (10.7) (129.5) 417.6 2023 £m 8.2 3.1 — 1.3 — — (0.3) — — (1.9) 2.2 — (0.2) 37.5 — 37.3 (27.7) — 20.0 2022 £m 12.8 3.5 3.8 1.1 — — 9.0 — — (1.9) 15.5 — 5.8 (433.6) — (427.8) (33.6) — (433.1) 1 The Balance Sheet movements in land payables include non-cash movements due to imputed interest. Imputed interest is included within non-cash items in the statements above. The notes on pages 188 to 234 form an integral part of these Financial Statements. Barratt Developments PLC Annual Report and Accounts 2023 187 S G Financial Statements Notes to the Financial Statements Year ended 30 June 2023 1. Basis of preparation Introduction The Financial Statements for the Group and Company have been prepared in accordance with UK adopted IAS in conformity with the requirements of the Companies Act 2006 and in accordance with UK adopted IFRS. The Financial Statements have been prepared under the historical cost convention as modified by the revaluation of share-based payments. Group accounting policies The significant Group accounting policies are included within the relevant notes to the Financial Statements on pages 188 to 234. Critical accounting judgements and key sources of estimation uncertainty The preparation of Financial Statements in conformity with UK adopted IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on the Directors’ best knowledge of the amounts, actual results may ultimately differ from those estimates. The Directors have made no individual critical accounting judgements that have a significant impact upon the Financial Statements, apart from those involving estimations. The most significant estimates made by the Directors in these Financial Statements, which are the key sources of estimation uncertainty that may have a significant risk of causing a material difference to the carrying amounts of assets and liabilities within the next financial year, are: • Margin recognition — see note 3; and • Costs associated with legacy properties — see note 20. Basis of consolidation The Group Financial Statements include the results of Barratt Developments PLC (the Company), a public company limited by shares and incorporated in the United Kingdom, and all of its subsidiary undertakings, made up to 30 June. The Financial Statements of subsidiary undertakings are consolidated from the date that control passes to the Group, and up to the date control ceases. Control is achieved when the Group becomes entitled to the variable returns of the subsidiary and becomes exposed to its risks, and has the power to affect these risks and returns. Acquired entities are accounted for using the acquisition method of accounting. All transactions with subsidiaries and intercompany profits or losses are eliminated on consolidation. Going concern In determining the appropriate basis of preparation of the Financial Statements, the Directors are required to consider whether the Group and Company can continue to meet their liabilities and other obligations for the foreseeable future. The Group’s business activities, together with factors that the Directors consider are likely to affect its development, financial performance and financial position, are set out in the Strategic Report on pages 2 to 100. The material financial and operational risks and uncertainties that may affect the Group’s performance and their mitigation are outlined on pages 71 to 77, and financial risks including liquidity, market, credit and capital risks are outlined in note 30 to the Financial Statements. At 30 June 2023, the Group held cash of £1,269.1m and total loans and borrowings of £203.4m, consisting of £3.4m of overdrafts repayable on demand and £200.0m Sterling USPP notes maturing in August 2027. These balances, set against pre-paid facility fees, comprise the Group’s net cash of £1,069.4m, presented in note 18. Should further funding be required, the Group has a committed £700.0m RCF, subject to compliance with certain financial covenants, that matures in November 2027, with two further one-year extension periods through to November 2029, if agreed between the Group and its lenders. As such, in consideration of its net current assets of £5,265.9m, the Directors are satisfied that the Group has sufficient liquidity to meet its current liabilities and working capital requirements. Whilst the underlying fundamentals of the housing market remain attractive, uncertainty in the current market has increased. This has arisen from the ongoing impact of interest rate rises on mortgage affordability, industry-specific challenges such as further building safety costs or greenhouse gas emissions legislation along with material cost inflation and supply chain disruption. These, and other economic disruptions, could result in flat or negative economic growth, reduced buyer confidence, reduced mortgage availability and affordability, falls in house prices or land values and cost increases associated with raw materials, suppliers, subcontractors and employees. The Group’s financial forecasts reflect the outcomes that the Directors consider most likely, based on the information available at the date of signing of these Financial Statements. 188 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements 1. Basis of preparation continued Going concern continued To assess the Group’s resilience to more adverse outcomes, its forecast performance was sensitised to reflect a series of scenarios based on the Group’s principal risks and the downside prospects for the UK economy and housing market presented in the latest available external economic forecasts. This exercise included a reasonable worst-case scenario in which the Group’s principal risks manifest in aggregate to a severe but plausible level. This assumed that average selling prices fall by 10%, sales volumes fall by 25% and construction costs increase by 3% in addition to the base forecasts, in addition to the implementation of a building safety levy and the acceleration of regulatory changes to reduce indirect greenhouse gas emissions. The effects were modelled over the 12 months from the date of signing of these Financial Statements, alongside reasonable mitigation that the Group would expect to undertake in such circumstances, primarily a reduction in investment in inventories in line with the fall in expected sales and a 50% reduction in uncommitted land spend. In all scenarios, including the reasonable worst case, the Group is able to comply with its financial covenants, operate within its current facilities and meet its liabilities as they fall due. Furthermore, reverse stress testing was performed to determine the market conditions in which the Group would cease to be able to operate under its current facilities within 12 months from the date of signing these Financial Statements. Based on past experience and current economic forecasts, the Directors consider the possibility of this outcome to be remote and have identified mitigation that would be adopted in such circumstances. Accordingly, the Directors consider there to be no material uncertainties that may cast significant doubt on the Group’s ability to continue to operate as a going concern. They have formed a judgement that there is a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of signing of these Financial Statements. For this reason, they continue to adopt the going concern basis in the preparation of these Financial Statements. Application of accounting standards During the year ended 30 June 2023, the Group has applied accounting policies and methods of computation consistent with those applied in the prior year. During the year, the Group has adopted the following new and revised standards and interpretations that have had no impact on the Financial Statements: ∙ Annual improvements 2018 — 2020: Amendments to IFRS 1 permitting a subsidiary as a first time adopter to apply cumulative translation differences; amendment to IFRS 9 clarifying fees to include when applying the 10% test in assessing derecognition of financial liabilities; amendment to IFRS 16 to resolve confusion over the treatment of leasehold incentives; and the amendment to IAS 41 regarding removing the requirement to exclude cash flows for taxation when measuring fair value; ∙ Amendment to IAS 37: Specifying which costs to include in calculating the liability, specifically those costs related to fulfilling a contract; ∙ Amendments to IFRS 3: Updating a reference to the Conceptual Framework for Financial Reporting; and ∙ Amendment to IAS 16: Prohibiting deduction of sales proceeds from the cost of property, plant and equipment. Impact of standards and interpretations in issue but not yet effective At the date of approval of these Financial Statements, there were a number of standards, amendments and interpretations that have been published and are mandatory for the Group’s accounting periods beginning on or after 1 July 2023 and later periods. None of these are expected to have a material impact on the Group. The Group has not early adopted any standard, amendment or interpretation. Barratt Developments PLC Annual Report and Accounts 2023 189 S G Financial Statements 2. Revenue The Group’s revenue derives principally from the sale of the homes we build. Revenue from the sale of residential and commercial properties Revenue is recognised at legal completion in respect of the total proceeds of building and development. Revenue is measured at the fair value of consideration received or receivable and represents the amounts receivable for the property, net of discounts and VAT. Revenue on contracts recognised over time The Group considers all contracts with commercial customers and registered providers for affordable housing on a contract by contract basis and determines the appropriate revenue recognition based on the particular terms of that contract. For the majority of such contracts, there is a single performance obligation for which revenue is recognised at a point in time, when construction has been completed and control is transferred to the customer. The Group recognises revenue over time in relation to certain contracts with registered providers only in circumstances in which control of the associated land is transferred to the customer before or during construction. Revenue is only recognised from the point at which control of the associated land is transferred, considering the rights to economic benefit as well as legal title. Revenue is recognised because the construction activity enhances an asset that is controlled by the customer. Where the outcome of a contract on which revenue is recognised over time can be estimated reliably, revenue is recognised by reference to the stage of completion of contract activity at the balance sheet date. This is normally measured by surveys of work performed to date. The Group is satisfied that it is appropriate to measure performance by reference to surveys of work performed to date, because these surveys identify the extent to which benefits have been transferred to the customer. Variations to, and claims arising in respect of, such contracts are included in revenue to the extent that they have been agreed with the customer. Where the outcome of a contract on which revenue is recognised over time cannot be estimated reliably, revenue is recognised to the extent of contract costs incurred. When it is probable that the total costs on a contract will exceed total contract revenue, the expected loss is immediately recognised as an expense in the Income Statement. Other revenue Revenue from separate contracts related to the development of homes is recognised on completion of the performance obligation to which it relates and included in other revenue. Revenue from warranties is recognised on a straight-line basis over the warranty period. Revenue from commercial contract management fees is recognised in the period in which it becomes receivable and included within other revenue. Revenue from planning promotion agreements is recognised at the point at which contractual obligations are satisfied. An analysis of the Group’s continuing revenue is as follows: Revenue from private residential sales Revenue from affordable residential sales Revenue from commercial sales Revenue from planning promotion agreements Sundry revenue Residential completions1 Revenue 2023 number 12,456 3,922 — — — 16,378 2022 number 13,327 3,835 — — — 17,162 2023 £m 4,578.5 655.8 64.7 20.4 2.0 5,321.4 2022 £m 4,541.3 611.4 87.6 23.3 4.3 5,267.9 1 Residential completions exclude JV completions of 828 homes (2022: 746) in which the Group has an interest. Included within Group revenue is £192.7m (2022: £75.0m) of revenue from construction contracts on which revenue is recognised over time by reference to the stage of completion of work on the contracts (note 21). Of this amount, £4.0m (2022: £5.3m) was included in the contract liability balance at the beginning of the year. Revenue includes £274.5m (2022: £171.3m) of revenue generated where the sale has been achieved using part-exchange incentives. Proceeds received on the disposal of part-exchange properties are not included in revenue on the basis that they are incidental to the main revenue-generating activities of the Group. 190 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 3. Profit from operations Profit from operations includes all of the revenue and costs derived from the Group’s operating businesses. Profit from operations excludes finance costs, finance income, the Group’s share of profits or losses from JVs and tax. The Group’s principal activity is housebuilding. None of the other business activities undertaken by the Group, individually or in aggregate, account for more than 10% of the Group’s revenue, profit or total assets and do not meet the IFRS 8 thresholds for disclosure. The operating results of these activities are not presented separately to the Board. Therefore, no segmental information is presented in these Financial Statements. Margin recognition In order to determine the profit that the Group is able to recognise on its developments in a specific period, the Group allocates site-wide development costs between homes built in the current year and in future years. It also has to estimate costs to complete on such developments and make estimates relating to future sales price margins on those developments and homes. In making these assessments there is a degree of inherent uncertainty. The Group’s site valuation process determines the forecast profit margin for each site. The valuation process acts as a method of allocating land costs and construction work in progress costs of a development to each individual plot and drives the recognition of costs in the Income Statement as each plot is sold. Any changes in the forecast profit margin of a site from changes in sales prices or costs to complete are recognised across all homes sold in both the current period and future periods. This ensures that the forecast site margin achieved on each individual home is equal for all current year completions and future plots across the development. Management has performed a sensitivity analysis to assess the impact of a change in estimated future costs or forecast selling prices for developments on which sales were recognised in the year. A 3% increase in the forecast costs to complete would increase site-cost allocation in cost of sales in 2023 by £38.5m, resulting in a reduction in gross margin of 70 bps. A 3% increase in forecast private sales prices would reduce site-cost allocation in cost of sales in 2023 by £44.4m, resulting in an improvement in gross margin of 80 bps. Depreciation of right-of-use assets Right-of-use assets are depreciated in the Income Statement in equal instalments to the earlier of the end of the lease term or the end of the useful life of the asset. Part-exchange income and expenses Income on the sale of a part-exchange property is recognised at legal completion at the fair value of consideration received or receivable for the property. Part-exchange properties are recognised in inventories at the lower of cost, being their fair value at acquisition, and their net realisable value. The amount of any write-down of inventories to net realisable value, or reversal of a previous write-down, is recognised in the Income Statement in the period in which it occurs. The carrying amount of a part-exchange property is recognised as an expense in the period in which the related income is recognised. Maintenance costs are recognised in the Income Statement in the period in which they are incurred. Profit from operations is stated after charging/(crediting): Cost of inventories recognised as an expense in cost of sales Employee costs (including Directors) Adjusted items: Costs associated with legacy properties Amounts associated with legacy properties recovered from third parties Depreciation of property, plant and equipment Depreciation of right-of-use assets Notes 5 4 4 14 15 2023 £m 3,907.3 527.2 158.2 (2.7) 6.1 12.3 2022 £m 3,761.9 492.7 433.2 (25.0) 6.2 13.0 Profit from operations is stated after charging the Directors’ emoluments disclosed in the Remuneration Report on pages 137 to 168 and in note 5. The Group does not recognise income from supplier rebates until it can be calculated reliably and it is certain that it will be received from suppliers. During the year, £32.8m (2022: £31.5m) of supplier rebate income was included within profit from operations. Barratt Developments PLC Annual Report and Accounts 2023 191 S G Financial Statements 3. Profit from operations continued Administrative expenses Administrative expenses of £270.8m (2022: £256.4m) include sundry income of £16.7m (2022: £21.2m), which principally comprises management fees receivable from JVs, the sale of freehold reversions, forfeit deposits and ground rent receivable. Auditor’s remuneration The remuneration paid to Deloitte LLP, the Group’s principal auditor, is disclosed below: Fees payable to the Company’s auditor for the audit of the Company and Consolidated Financial Statements Fees payable to the Company’s auditor for the audit of the Company’s subsidiaries1 Total audit fees Audit-related assurance services2 Other services3 Total fees for other services Total fees related to the Company and its subsidiaries 1 A reduced number of subsidiaries are being audited by the Group auditor in the current year. 2 Audit-related assurance services comprise the review of the Interim Report. 2023 £000 852 186 1,038 43 230 273 1,311 2022 £000 680 262 942 37 210 247 1,189 3 Other services comprise assurance services over selected ESG metrics and compliance with the recommendations of the TCFD and review procedures over selected non-financial disclosures in the Annual Report. Details of the Group’s policy on the use of the Company’s principal auditor for non-audit services and auditor independence are set out in the Audit Committee Report on pages 130 to 132. No services were provided under contingent fee arrangements. In addition to the remuneration paid to the Company’s auditor for services related to the Company and its subsidiaries, the auditor received the following remuneration from JVs in which the Group participates: The audit of the Group’s JVs pursuant to legislation1 Total fees related to joint ventures 1 A reduced number of JVs are being audited by the Group auditor in the current year. 4. Adjusted items Adjusted items 2023 £000 80 80 2022 £000 227 227 In determining whether an item should be presented as an adjustment to IFRS measures, the Group considers items that are material to the Group in aggregate and have arisen from one-off or unusual circumstances that could not reasonably have been expected to arise from normal trading. If an item meets these criteria the Board then exercises judgement as to whether the item should be classified as an allowable adjustment to IFRS. Examples of events that may give rise to the classification of items as adjusted are charges or credits in respect of legacy properties, the restructuring of existing and newly acquired businesses, and certain government grants. The Directors use these adjusted measures, along with IFRS measures, to assess the operational performance of the Group as detailed in the key performance indicators section of the Strategic Report on pages 16 to 19. Costs incurred in respect of legacy properties Amounts in respect of legacy properties recovered from third parties Adjusted items in cost of sales Costs incurred in respect of legacy properties by joint ventures Total adjusted items 2023 £m 158.2 (2.7) 155.5 23.7 179.2 2022 £m 433.2 (25.0) 408.2 4.3 412.5 Cost associated with legacy properties: The adjusted costs in the year, associated with Group legacy properties, comprise additions to provisions of £262.0m, provision releases of £44.9m, revaluation of £58.9m and reimbursements recognised directly in the Income Statement of £2.7m. In addition £23.7m of costs in respect of JV legacy properties were incurred in the year. Further details of provisions movements are provided in note 20. 192 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 5. Key management, employees and retirement benefit obligations Key management and employees Key management personnel, as defined under IAS 24: ‘Related Party Disclosures’, have been identified as the Board of Directors, as the controls operated by the Group ensure that all key decisions are reserved for the Board. Detailed disclosures of individual remuneration, pension entitlements and share options for those Directors who served during the year are given in the audited sections within the Remuneration Report on pages 159 to 162. A summary of key management remuneration is as follows: Salaries and fees (including pension compensation) Social security costs1 Performance bonus Benefits Share-based payments2 Total 1 Excluded from the Executive Directors’ and Non-Executive Directors’ single figure of remuneration tables on page 159. 2 IFRS 2: ‘Share-Based Payments’ (credit)/charge attributable to key management. Total employee numbers and costs are as follows: 2023 £m 3.1 1.0 1.2 0.1 (0.3) 5.1 2022 £m 2.9 1.1 2.5 0.1 2.6 9.2 Average employee numbers (excluding sub-contractors and including Directors) Employee costs (including Directors): Wages and salaries including bonuses Redundancy costs Social security costs Other pension costs Share-based payments Employee costs for the year Group Company 2023 Number 2022 Number 2023 Number 2022 Number 7,031 6,564 490 412 Notes 27 Group 2023 £m 443.2 2.0 52.6 19.2 10.2 527.2 2022 £m 402.7 0.7 50.2 14.9 24.2 492.7 Company 2023 £m 47.8 0.4 6.8 2.1 (0.3) 56.8 2022 £m 45.2 0.2 8.3 1.6 9.0 64.3 The majority of the costs of the Company’s employees are charged to other Group companies. Retirement benefit obligations The Group operates several defined contribution pension schemes. Defined contribution schemes The Group’s contributions to the schemes are charged in the Income Statement in the year in which the scheme members become entitled to contributions. The Group operates defined contribution retirement benefit schemes for all qualifying employees, under which it pays contributions to independently administered funds. Contributions are based upon a fixed percentage of the employee’s pay and once these have been paid, the Group has no further obligations under these schemes. Contributions during the year: Group defined contribution schemes’ Consolidated Income Statement charge 2023 £m 19.2 2022 £m 14.9 At the balance sheet date, there were outstanding contributions of £2.8m (2022: £2.3m), which were paid on or before the due date. Barratt Developments PLC Annual Report and Accounts 2023 193 S G Financial Statements 6. Net finance costs Finance costs and income The Group recognises finance costs and income on bank borrowings, deposits and other borrowings in the Income Statement in the period to which they relate. Imputed interest on discounted assets, including land purchased on deferred terms and leased assets, is charged to the Income Statement over the period of settlement or lease period respectively. Recognised in the Consolidated Income Statement: Finance income: Finance income on short-term bank deposits Other interest receivable Finance costs: Interest on loans and borrowings Imputed interest on long-term payables Finance charge on leased assets Amortisation of facility fees Other interest payable Net finance costs 2023 £m (22.0) (1.8) (23.8) 9.3 21.4 1.2 1.9 1.1 34.9 11.1 The weighted average interest rates (excluding fees) paid in the year were as follows: USPP notes 7. Tax All profits of the Group are subject to UK corporation tax. Group Company 2023 % 2.8 2022 % 2.8 2023 % 2.8 2022 £m (1.9) (0.6) (2.5) 9.5 14.4 0.9 4.0 1.3 30.1 27.6 2022 % 2.8 The current year tax charge has been provided for, by the Group, at a standard effective rate, inclusive of RPDT, of 24.5% (2022: 20.0%) and by the Company at a standard effective rate of 20.5% (2022: 19.0%). The closing deferred tax assets and liabilities have been provided in these Financial Statements at a rate of 20.5% — 29.0% (2022: 19.0% — 29.0%) on the temporary differences giving rise to these assets and liabilities. Tax The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. 194 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 7. Tax continued Deferred tax Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax is measured on a non-discounted basis using the tax rates and laws that have then been enacted or substantively enacted by the balance sheet date, and is charged or credited to the Income Statement, except when it relates to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other comprehensive income or equity. Deferred tax liabilities are generally recognised for all taxable temporary differences and 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. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and interests in JVs, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to taxes levied by the same tax authority and the Group intends to settle its current tax assets and liabilities on a net basis. Tax recognised in the Income Statement The tax expense represents the sum of the tax currently payable and deferred tax. Analysis of the tax charge for the year Current tax: UK corporation tax on profits for the year RPDT for the year Adjustment in respect of previous years Deferred tax: Origination and reversal of temporary differences Adjustment in respect of previous years Impact of change in tax rates Impact of introduction of RPDT 2023 £m 147.2 26.0 (6.7) 166.5 1.8 7.2 (0.7) — 8.3 2022 £m 122.9 6.3 (8.2) 121.0 2.2 2.6 (1.2) 2.5 6.1 Tax charge for the year 174.8 127.1 Factors affecting the tax charge for the year The tax rate assessed for the year is higher (2022: lower) than the standard effective rate of corporation tax in the UK of 24.5% (inclusive of RPDT) (2022: 20.0%). The differences are explained below: Profit before tax Profit before tax multiplied by the standard rate of corporation tax of 24.5% (inclusive of RPDT) (2022: 20.0%) Effects of: Other items including non-deductible expenses and non-taxable income Additional tax relief for land remediation costs Adjustment in respect of previous years Impact of change in tax rates Impact of introduction of RPDT Tax charge for the year 2023 £m 705.1 172.7 4.5 (2.2) 0.5 (0.7) — 2022 £m 642.3 128.5 5.0 (2.1) (5.6) (1.2) 2.5 174.8 127.1 Barratt Developments PLC Annual Report and Accounts 2023 195 S G Financial Statements 7. Tax continued Tax recognised in equity In addition to the amount charged to the Consolidated Income Statement, a net current and deferred tax charge of £1.3m (2022: £0.9m) was recognised directly in equity. Deferred tax All deferred tax relates to the UK and is stated on a net basis as the Group has a legally enforceable right to set off the recognised amounts and intends to settle on a net basis. The Group recognised a net deferred tax liability with the following movements in the year: At 1 July 2021 Year ended 30 June 2022: Income Statement (charge)/credit Acquired with subsidiary undertaking Amounts taken directly to equity At 30 June 2022 Comprising: Deferred tax assets Deferred tax liabilities Year ended 30 June 2023: Income Statement (charge)/credit Amounts taken directly to equity At 30 June 2023 Comprising: Deferred tax assets Deferred tax liabilities Share options £m 8.6 (2.1) — (2.7) 3.8 3.8 — (0.9) (0.1) 2.8 2.8 — Brands £m (25.0) (4.0) (2.7) — (31.7) — (31.7) 0.1 — (31.6) — (31.6) Group Accelerated capital allowances £m 0.9 (0.4) — — 0.5 0.5 — (11.5) — (11.0) — (11.0) Customer contracts £m — Other (net) £m 6.6 — (24.7) — (24.7) — (24.7) 3.4 — (21.3) — (21.3) 0.6 — — 7.0 5.7 1.3 0.6 — 7.6 7.6 — Total £m (8.9) (6.1) (27.4) (2.7) (45.1) 10.0 (55.1) (8.3) (0.1) (53.5) 10.5 (64.0) The deferred tax liability in respect of indefinite life and other brands represents the amount of tax that would become due if the brands were sold at their book value. There is no intention to sell the indefinite life brands in the foreseeable future and it is not anticipated that any of the deferred tax liability in respect of the indefinite life brands will reverse in the 12 months following the balance sheet date. The deferred tax asset in respect of share schemes represents an estimate of the future tax deduction available on the exercise or vesting of awards under those schemes. While it is anticipated that an element of the remaining deferred tax assets and liabilities will reverse during the 12 months following the balance sheet date, at present it is not possible to accurately quantify the value of all of these reversals. In addition to the deferred tax liability shown above, the Group has not recognised a deferred tax asset of £9.6m (2022: £2.1m) in respect of capital and other losses amounting to £33.3m (2022: £10.0m) because these are not considered recoverable in the foreseeable future. 196 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 7. Tax continued Deferred tax continued The Company recognised a net deferred tax asset with the following movements in the year: At 1 July 2021 Year ended June 2022: Income Statement (charge)/credit Amounts taken directly to equity At 30 June 2022 Comprising: Deferred tax assets Year ended 30 June 2023: Income Statement (charge)/credit Amounts taken directly to equity At 30 June 2023 Comprising: Deferred tax assets 8. Earnings per share The earnings per share from continuing operations were as follows: Basic earnings per share Diluted earnings per share Adjusted basic earnings per share Adjusted diluted earnings per share Company Accelerated capital allowances £m 0.8 0.6 — 1.4 1.4 Share options £m 3.6 (1.3) (1.0) 1.3 1.3 (0.4) (0.5) — 0.9 0.9 — 0.9 0.9 Other (net) £m 0.3 0.2 — 0.5 0.5 0.3 — 0.8 0.8 2023 pence 53.2 52.6 67.3 66.5 Total £m 4.7 (0.5) (1.0) 3.2 3.2 (0.6) — 2.6 2.6 2022 pence 50.6 49.8 83.0 81.7 Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue during the year, excluding those held by the EBT that do not attract dividend equivalents and which are treated as cancelled. Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares in issue adjusted to assume conversion of all potentially dilutive share options from the start of the year. During the year, the Company has bought back and cancelled 47,985,293 of its own shares (2022: nil). The impact of this has been to increase basic earnings per share by 1.1 pence and diluted earnings per share by 1.2 pence. Adjusted basic and adjusted diluted earnings per share exclude the impact of adjusted items and any associated net tax amounts. Profit attributable to ordinary shareholders of the Company (£m) Adjusted items (£m) Tax on adjusted items (£m) Adjusted profit attributable to ordinary shareholders of the Company (£m) Weighted average number of shares in issue (million) Weighted average number of shares in EBT (million) Weighted average number of shares for basic earnings per share (million) Weighted average number of shares in issue (million) Adjustment to assume conversion of all potentially dilutive shares (million) Weighted average number of shares for diluted earnings per share (million) 2023 530.3 179.2 (39.3) 670.2 1,000.1 (3.8) 996.3 1,000.1 8.4 1,008.5 2022 515.1 412.5 (82.5) 845.1 1,021.9 (3.2) 1,018.7 1,021.9 12.4 1,034.3 Barratt Developments PLC Annual Report and Accounts 2023 197 S G Financial Statements 9. Dividends Amounts recognised as distributions to equity shareholders in the year: Final dividend for the year ended 30 June 2022 of 25.7p (2021: 21.9p) per share Interim dividend for the year ended 30 June 2023 of 10.2p (2022: 11.2p) per share Total dividends distributed to equity shareholders in the year Proposed final dividend for the year ended 30 June 2023 of 23.5p (2022: 25.7p) per share1 2023 £m 259.8 100.2 360.0 2023 £m 227.9 2022 £m 223.0 114.0 337.0 2022 £m 261.4 1 The cost of the proposed dividend is calculated based upon the number of shares ranking for dividend at the balance sheet date. The final dividend of 23.5 pence per share was approved by the Board on 5 September 2023 and has not been included as a liability as at 30 June 2023. 10. Goodwill and intangible assets Goodwill Goodwill arising on consolidation (see note 32 for the Group policy on consolidation) represents the excess of the fair value of the consideration over the fair value of the separately identifiable net assets and liabilities acquired. Goodwill arising on the acquisition of subsidiary undertakings and businesses is capitalised as an asset but reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination at acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. Any impairment loss is recognised immediately in the Income Statement and is not subsequently reversed. Cost At 1 July Arising on acquisition during the year At 30 June Accumulated impairment losses At 1 July and 30 June Carrying amount At 30 June Group 2023 £m 877.4 — 877.4 2022 £m 830.4 47.0 877.4 24.5 24.5 852.9 852.9 The Group’s goodwill relating to the acquisition of Wilson Bowden Limited in 2007 has a carrying value of £792.2m and goodwill relating to the 2019 acquisition of Oregon Timber Frame Limited has a carrying value of £13.7m, both relating to the housebuilding business. During the prior year, the Group acquired all of the share capital of Gladman Developments Limited. Goodwill of £47.0m arising on the acquisition was capitalised and allocated to the Group’s acquired land promotion business. No revision of the acquisition accounting for Gladman Developments Limited was necessary in the current year. 198 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 10. Goodwill and intangible assets continued Other intangible assets Brands The Group has capitalised, as intangible assets, brands that have been acquired. Acquired brand values are calculated using discounted cash flows. Where a brand is considered to have a finite life, it is amortised over its useful life on a straight-line basis. Where a brand is capitalised with an indefinite life, it is not amortised. The factors that contribute to the durability of brands capitalised are that there are no material legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of these intangible assets. Internally generated brands are not capitalised. The Group carries out an annual impairment review of indefinite life brand as part of the review of the carrying value of goodwill, by performing a value in use calculation, using a discount factor based upon the Group’s pre-tax weighted average cost of capital. Customer contract relationships The Group has capitalised, as intangible assets, acquired customer contract relationships. Customer contract relationships are valued at the present value of future cash flows and are amortised on a straight-line basis over ten years. Internally generated customer contract relationships are not capitalised. Customer contracts The Group has capitalised, as intangible assets, acquired customer contracts. Customer contracts are valued at the present value of future cash flows less contributory asset charges and are amortised on a straight-line basis in line with contract relationships at the acquisition date. Brands 2023 £m 118.7 — — 118.7 8.1 0.6 — 8.7 2022 £m 107.9 10.8 — 118.7 7.9 0.2 — 8.1 110.0 110.6 Group Customer contract relationships 2023 £m 2022 £m — — — — — — — — — 1.4 — (1.4) — 1.4 — (1.4) — — Customer contracts Total 2023 £m 98.9 — — 98.9 4.1 9.9 — 14.0 2022 £m — 98.9 — 98.9 — 4.1 — 4.1 2023 £m 217.6 — — 217.6 12.2 10.5 — 22.7 2022 £m 109.3 109.7 (1.4) 217.6 9.3 4.3 (1.4) 12.2 84.9 94.8 194.9 205.4 Cost At 1 July Acquired in the year Amounts written off At 30 June Amortisation At 1 July Amortisation in the year Amounts written off At 30 June Carrying amount At 30 June The Group does not amortise the housebuilding brand acquired with Wilson Bowden, being David Wilson Homes, valued at £100.0m, as the Directors consider that this brand has an indefinite useful economic life due to the Group intending to hold and support the brand for an indefinite period, and there are no factors that would prevent it from doing so. During the prior year, in its acquisition of Gladman Developments Limited, the Group acquired brands valued at £10.8m and customer contracts valued at £98.9m. The customer contracts are amortised on a straight-line basis over the expected life of the contracts; the brands acquired are amortised on a straight-line basis over a 20-year period. Barratt Developments PLC Annual Report and Accounts 2023 199 S G Financial Statements 10. Goodwill and intangible assets continued Impairment of goodwill and indefinite life brand The Group conducts an annual impairment review of goodwill and its indefinite life brand, David Wilson Homes. Impairment of goodwill and indefinite life brand Impairment reviews for goodwill and the Group’s indefinite life brand require an estimation of the value in use of the cash-generating units to which these assets are allocated. The value in use calculations require an estimate of expected future cash flows, including the anticipated growth rate of revenue and costs, and require the determination of a suitable discount rate to calculate the present value of the cash flows. The financial forecasts used reflect the outcomes that management considers most likely, based on the information available at the date of signing of these Financial Statements. Goodwill and indefinite life brand allocated to housebuilding An impairment review was performed at 30 April 2023 by comparing the value in use of the housebuilding business to the carrying value of its tangible and intangible assets and allocated goodwill. The value in use was determined by discounting the expected future cash flows of the housebuilding business. The cash flows until 30 June 2025 were determined using the Group’s approved detailed business plan and the cash flows for FY26 to FY28 were based on high level management projections based upon expected volumes, selling prices and margins, taking into account available land purchases and work in progress levels. The cash flows for subsequent years were extrapolated in perpetuity using an estimated growth rate of 1%, based upon the historical long-term growth rate of the UK economy. The key assumptions for the value in use calculation for the housebuilding business were: ∙ expected changes in selling prices for completed houses and the related impact on operating margin: these are determined on a site-by-site basis in the Group’s approved business plan dependent upon local market conditions and product type. For subsequent years, these have been estimated at a Group level based upon past experience and expectations of future changes in the market, considering external market forecasts; ∙ sales volumes: these are determined on a site-by-site basis in the Group’s approved business plan dependent upon local market conditions, land availability and planning permissions. For subsequent years, these have been estimated at a Group level based on past experience and expectations of future changes in the market, taking into account external market forecasts; ∙ expected changes in site costs to complete: these are determined on a site-by-site basis in the Group’s approved business plan dependent upon the expected costs of completing all aspects of each individual development. For subsequent years, these have been estimated at a Group level based on past experience and expectations of future changes in the market, taking into account external market forecasts; and ∙ discount rate: this is a pre-tax rate reflecting the Group’s target capital structure, risks appropriate to the housebuilding business and current market assessments of the time value of money. A rate of 15.0% (2022: 14.9%) is considered by the Directors to be the appropriate pre-tax discount rate. The result of the value in use exercise concluded that the recoverable value of goodwill and intangible assets allocated to the housebuilding business exceeded its carrying value by £1,176.0m (2022: £1,780.4m) and there has been no impairment. Goodwill allocated to land promotion An impairment review was performed at 30 June 2023 by comparing the value in use of the land promotion business to the carrying value of its tangible and intangible assets and allocated goodwill. The value in use was determined by discounting the expected future cash flows of the land promotion business. This is the first full year after the land promotion business was acquired by the Group. The operating cycle for the land promotion business extends over a longer period than the housebuilding business, with land sales completing at the point in an economic cycle that generates the most profit. Inventories held at the current date may generate cash inflows in the medium- to long-term and as a result, management’s forecasts extend up to ten years from the reporting date. It is therefore appropriate to consider projections over a longer period in the value in use calculation. Cash flows until 30 June 2032 were determined using the business’s approved forecast, dependent upon expected site permissions and best estimates for targeted site sales, anticipated spend and overhead inflation. Due to the sensitivity of cash flows of the land promotion business to the economic cycle, the cash flows for years subsequent to 2032 were based on an average sales receipts from the final five years of the forecast, adjusted for expected increases in cost, extrapolated in perpetuity using an estimated growth rate of 1%, based upon the historical long-term growth rate of the UK economy. Value in use assessments going forward will be completed over equivalent periods. The key assumptions for the value in use calculation were the expected sales values achieved under land promotion agreements, based on current market values for similar land, costs required to fulfil customer contracts, and the discount rate of 14.3% (2022: 15.0%), being a pre-tax rate reflecting the risks appropriate to the land promotion business and current market assessments of the time value of money. The result of the value in use exercise concluded that the recoverable amount of goodwill allocated to the land promotion business exceeded its carrying value by £13.1m (2022: £9.6m) and there has been no impairment. An increase in the discount rate of 60 bps would reduce the headroom of the recoverable amount over the carrying value to nil. 200 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 11. Company investments in subsidiary undertakings Company investments The Company’s interests in subsidiary undertakings are accounted for at cost less accumulated provision for impairment, which is reviewed annually. Where share-based payments are granted to the employees of subsidiary undertakings by the Company, they are treated as a capital contribution to the subsidiary and the Company’s investment in the subsidiary is increased accordingly. Cost: Cost at the beginning of the year (Decrease)/increase in investment in subsidiaries related to share-based payments At 30 June Impairment: At beginning of the year and at 30 June Net book value: At 30 June Company 2023 £m 3,180.1 (2.4) 3,177.7 2022 £m 3,175.6 4.5 3,180.1 87.6 87.6 3,090.1 3,092.5 Investments in jointly controlled entities 12. A jointly controlled entity (joint venture or “JV”) is an entity, including unincorporated entities such as partnerships, in which the Group holds an interest with one or more other parties where a contractual arrangement has established joint control over the entity. The Group has no associated entities. Jointly controlled entities Investments in jointly controlled entities are accounted for using the equity method of accounting. The Group’s share of the profit or loss of jointly controlled entities increases or decreases the carrying amount of the investment and long-term interests. Investments in JVs At the beginning of the year Increase in amounts invested in JVs Repayment of investments in JVs Dividends received from JVs Share of post-tax profit for the year from JVs At 30 June Group 2023 £m 177.9 18.1 (40.2) (34.8) 8.8 129.8 2022 £m 163.1 17.9 (9.9) (16.5) 23.3 177.9 There are no losses in any of the Group’s JVs that have not been recognised by the Group. During the year, the Company received a distribution of £0.1m from its JV, Rose Shared Equity LLP, which was subsequently dissolved. At the balance sheet date the Company had no investments in JVs. Barratt Developments PLC Annual Report and Accounts 2023 201 Percentage owned Voting rights controlled Country of registration Principal place of business S G Financial Statements Investments in jointly controlled entities continued 12. At 30 June 2023, the Group had interests in the following JVs: JV 51 College Road LLP Alie Street LLP1 Barratt Metropolitan LLP2 Barratt Wates (East Grinstead) Limited Barratt Wates (East Grinstead No.2) Limited1 Barratt Wates (Horley) Limited2 Barratt Wates (Lindfield) Limited Barratt Wates (Worthing) Limited BDWZest Developments LLP1 BDWZest LLP Blackhorse Road Properties LLP2 Brooklands Milton Keynes LLP DWH/Wates (Thame) Limited Enderby Wharf LLP Fulham Wharf LLP1 Fulham Wharf One Limited1 Fulham Wharf Two Limited1 Harrow View LLP Infinity Park Derby LLP Nine Elms LLP¹ Nine Elms One Limited1 50.0% 50.0% 75.0% 50.0% 50.0% 78.5% 50.0% 50.0% 50.0% 50.0% 51.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales Nine Elms Two Limited1 50.0% 50.0% England and Wales Old Sarum Park Properties Limited Queensland Road LLP1 Ravenscraig Limited² Ravenscraig Town Centre LLP Sovereign BDW (Hutton Close) LLP Sovereign BDW (Newbury) LLP Wembley Park Properties LLP² Wichelstowe LLP ZestBDW LLP 50.0% 50.0% 33.3% 50.0% 50.0% 50.0% 51.0% 50.0% 50.0% 50.0% 50.0% 33.3% 50.0% 50.0% 50.0% 50.0% 50.0% 50.0% England and Wales England and Wales Scotland England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales Principal activity Financial year end date Housebuilding 31 March* Housebuilding 31 March* Housebuilding Holding company Housebuilding Housebuilding Housebuilding Housebuilding 30 June 30 June 30 June 30 June 30 June 30 June Holding company 31 March* Holding company 31 March* Housebuilding Housebuilding Housebuilding Housebuilding 30 June 30 June 30 June 30 June Housebuilding 31 March* Dormant 31 March* Dormant 31 March* Housebuilding 31 March* Commercial development 30 June Housebuilding 31 March* Holds assets on trust Holds assets on trust 31 March* 31 March* Dormant 30 June Housebuilding 31 March* Commercial development 31 December* Dormant Dormant Housebuilding Housebuilding 30 June 30 June 30 June 30 June Housebuilding 31 March* Holding company 31 March* UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK UK * JV prepares Financial Statements which are non-coterminous with the Group in order to comply with the terms of their JV agreements and to align with the year ends and requirements of our JV partners. Judgements applied in determining the classification of joint arrangements 1. The Group’s interests in a number of the entities classified as JVs are held indirectly: Barratt Wates (East Grinstead) No. 2 Limited is a wholly owned subsidiary of the Group’s JV, Barratt Wates (East Grinstead) Limited, and is therefore, classified as a JV of the Group. BDWZest Developments LLP, Alie Street LLP, Queensland Road LLP, Fulham Wharf LLP and Nine Elms LLP form a group of limited liability partnerships jointly owned (directly or indirectly) by BDWZest LLP and ZestBDW LLP, both of which are JVs of the Group. Nine Elms One Limited and Nine Elms Two Limited are wholly owned subsidiaries of Nine Elms LLP, and Fulham Wharf One Limited and Fulham Wharf Two Limited are wholly owned subsidiaries of Fulham Wharf LLP. All of these entities are, therefore, classified as JVs of the Group. 2. The Group holds four JV investments (Barratt Wates (Horley) Limited, Barratt Metropolitan LLP, Wembley Park Properties LLP and Blackhorse Road Properties LLP) not in equal share, and one (Ravenscraig Limited) with more than one other party. However, in each case, the Group has equal voting rights and control over the activities of the companies with the other parties. In addition, the Group and the other parties to the agreements only have rights to the net assets of these companies through the terms of the contractual arrangements. These entities are therefore classified as JVs. 202 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements Investments in jointly controlled entities continued 12. Registered offices The registered office of all of the entities in the preceding table, with the exception of those listed below, is: Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire LE67 1UF. Enderby Wharf LLP: Here East, 13 East Bay Lane, 3rd Floor Press Centre, Queen Elizabeth Park, London E15 2GW. Sovereign BDW (Hutton Close) LLP and Sovereign BDW (Newbury) LLP: Sovereign House, Basing View, Basingstoke RG21 4FA. Ravenscraig Limited: 15 Atholl Crescent, Edinburgh EH3 8HA. Summarised financial information relating to these JVs is as follows: Harrow View LLP 2023 £m 2022 £m Blackhorse Road Developments LLP 2023 £m 2022 £m Barratt Metropolitan LLP 2023 £m 2022 £m Fulham Wharf LLP 2023 £m 2022 £m Brooklands Milton Keynes LLP 2023 £m 2022 £m Other JVs Group Total 2023 £m 2022 £m 2023 £m 2022 £m 62.2 71.8 47.8 41.1 104.5 20.4 — 45.4 60.5 57.0 51.9 38.4 326.9 274.1 (53.7) (58.5) (33.4) (29.4) (91.4) (17.0) — (46.0) (38.8) (37.5) (49.0) (31.9) (266.3) (220.3) — — 8.5 — — — — — 13.3 14.4 — — — — 11.7 — (3.3) (1.6) (42.3) — 9.8 — — 1.8 — (0.1) (42.4) — (5.9) (0.1) (6.6) — — — — — — — (45.6) (2.7) (0.7) (2.8) (7.5) (0.8) 21.7 19.5 — — 0.2 0.1 5.8 — 12.2 45.5 0.1 — 8.5 13.3 14.4 11.7 9.8 1.8 (42.4) (6.6) 21.7 19.5 0.3 5.8 12.3 45.5 4.2 6.6 7.3 6.0 7.4 1.3 (21.2) (3.3) 10.9 9.8 0.2 2.9 8.8 23.3 3.6 6.5 18.6 — — — — — 98.5 109.6 — — 3.9 — 42.1 109.7 136.6 30.6 40.5 — — — — — 11.8 15.6 — 8.7 0.8 1.3 34.8 16.5 23.6 118.0 83.7 376.3 436.1 — 9.6 9.7 9.6 9.7 (11.4) (20.7) (2.6) (6.2) (98.7) (135.4) (45.3) (18.3) (15.6) (21.6) (47.5) (31.5) (221.1) (233.7) Income Adjusted expenditure (Cost)/credit associated with legacy properties Interest payable Tax Profit for the year, being total comprehensive income Group share of profit for the year recognised in the Consolidated Income Statement Dividends received from JVs in the year Current assets Non-current assets Current liabilities Non-current liabilities — — Net assets of JVs 87.1 88.9 — 1.3 — 35.9 — 11.0 — 1.2 — — (14.7) 22.2 — — — 2.0 (43.5) (45.0) (43.5) (45.0) 36.6 16.9 121.3 167.1 Cash and cash equivalents included in the above net assets Group share of net assets recognised in the Consolidated Balance Sheet at 30 June 10.1 26.9 3.5 15.6 12.1 — 29.3 0.2 10.8 11.2 29.6 31.5 95.4 85.4 43.6 44.5 0.7 18.3 8.2 0.9 (7.4) 11.1 — 1.0 18.2 8.1 63.3 83.9 Adjusted expenditure is the total expenditure of the JV less adjusted items as defined in note 4. A reconciliation of the Group’s share of net assets to the carrying value of investments included in the Balance Sheet is presented below: Group share of the net assets of its JVs Group loans to JVs At 30 June Group 2023 £m 63.3 66.5 129.8 2022 £m 83.9 94.0 177.9 Barratt Developments PLC Annual Report and Accounts 2023 203 S G Financial Statements Investments in jointly controlled entities continued 12. The Group has made loans, net of loss allowances, of £66.5m (2022: £94.0m) to its JVs, which are presented within Group investments. The loss allowances for Group loans to JVs are equal to 12-month expected credit losses unless there has been a significant increase in credit risk since the date of initial recognition, in which case, the loss allowance is equal to the lifetime expected credit loss. A significant increase in credit risk is judged to have occurred if a review of available information indicates an increased probability of default. At 30 June 2023, the loss allowance is immaterial (2022: immaterial). Included within the Group’s share of net assets of JVs is a proportion of the loans to the JVs (net of fair value adjustments made in one JV), calculated using the Group’s ownership share, of £63.6m (2022: £90.3m). During the year, the Group entered into a number of transactions with its JVs in respect of funding and development management services (with charges made based on the utilisation of these services) in addition to the provision of construction services. Further details on these transactions are provided in note 30. The Group and Company have a number of contingent liabilities relating to their JVs. Further details on these are provided in note 29. The transfer of funds from the Group’s JVs to the Group is determined by the terms of the JV agreements, which specify how available funds should be applied in repaying loans and capital, and distributing profits to the partners. 13. Jointly controlled operations Jointly controlled operations The Group’s share of profits and losses from its investments in jointly controlled operations is accounted for on a direct basis and is included in the Income Statement. The Group’s share of its investments, assets and liabilities is accounted for on a directly proportional basis in the Group’s Balance Sheet. The Group enters into jointly controlled operations as part of its housebuilding and property development activities. The Company has no jointly controlled operations (2022: none). The Group has significant interests in the following jointly controlled operation: Joint operation Chapel Hill Share of profits and assets consolidated Principal place of business Principal activity 50.0%¹ UK Housebuilding 1 Subject to achieving forecast profitability, 50% of profits are attributable to the Group. 50% of assets are consolidated excluding land, land creditors and any part-exchange properties. The Group’s share of the joint operations’ income and expenses included in the Consolidated Income Statement during the year, and the assets and liabilities of the joint operations, which are included in the Group Balance Sheet, are shown below: Group share Income Sundry income/(expenses) Share of profit from joint operations Share of profits distributed by joint operations Current assets Current liabilities Share of net assets of joint operations Group 2023 £m — (0.3) (0.3) — 10.7 (0.7) 10.0 2022 £m — 0.3 0.3 (4.7) 11.1 (0.8) 10.3 204 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 14. Property, plant and equipment Property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Depreciation is provided to write off the cost of the assets on a straight-line basis to their residual value over their estimated useful lives. Residual values and asset lives are reviewed annually. Freehold properties are depreciated on a straight-line basis over 25 years. Freehold land is not depreciated. Plant is depreciated on a straight-line basis over its expected useful life, which ranges from one to seven years. Property under construction is carried at cost less any recognised impairment, and no depreciation is charged until the building is complete and ready for its intended use. Cost At 1 July 2021 Additions Acquired on acquisition of subsidiary Disposals At 30 June 2022 Additions Disposals At 30 June 2023 Depreciation At 1 July 2021 Charge for the year Disposals At 30 June 2022 Charge for the year Disposals At 30 June 2023 Net book value At 30 June 2022 At 30 June 2023 Group Plant and equipment £m Property £m 5.6 22.7 1.2 (0.4) 29.1 8.4 — 37.5 3.1 0.4 (0.1) 3.4 0.4 — 3.8 25.7 33.7 53.3 7.2 0.1 (6.9) 53.7 14.7 (1.6) 66.8 35.4 5.8 (3.0) 38.2 5.7 (1.5) 42.4 15.5 24.4 Company Plant and equipment £m Property £m 0.2 — — — 0.2 — — 0.2 0.2 — — 0.2 — — 0.2 — — 29.5 1.4 — (4.9) 26.0 2.6 — 28.6 17.0 3.5 (1.1) 19.4 3.1 — 22.5 6.6 6.1 Total £m 58.9 29.9 1.3 (7.3) 82.8 23.1 (1.6) 104.3 38.5 6.2 (3.1) 41.6 6.1 (1.5) 46.2 41.2 58.1 Total £m 29.7 1.4 — (4.9) 26.2 2.6 — 28.8 17.2 3.5 (1.1) 19.6 3.1 — 22.7 6.6 6.1 Property cost includes £nil (2022: £21.2m) in respect of a building under construction. Authorised future capital expenditure that was contracted but not provided for in these Financial Statements amounted to £3.5m (2022: £10.9m). Barratt Developments PLC Annual Report and Accounts 2023 205 S G Financial Statements 15. Leases Leases A right-of-use asset and a lease liability are recognised at the commencement date of a lease. The right-of-use asset is initially measured at cost comprising the initial amount of the lease liability plus payments made before the lease commenced and any direct costs less any incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement of the lease to the earlier of the end of the lease term or the end of the useful life of the asset. The right-of-use asset is also reduced for impairment losses, if any, and adjusted for certain remeasurements of the lease liability. The lease liability is initially measured at the present value of the lease payments at the commencement date discounted using the Group’s incremental borrowing rate of between 0% and 7%, and is subsequently measured at amortised cost using the effective interest method. The lease liability is remeasured when there is a change in the future lease payments, and a corresponding adjustment is made to the right-of-use asset. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of plant and machinery with a lease term of 12 months or less, and leases of low value including leases of office equipment. The lease payments associated with these leases are recognised as an expense on a straight-line basis over the lease term. The Group and Company lease assets including land and buildings, vehicles, plant and machinery, and office equipment. Information about leases for which the Group or Company is a lessee is presented below. Right-of-use assets Balance at 1 July 2022 Balance at 30 June 2023 Net additions during the year including remeasurements Group Company Land and buildings £m 25.1 28.4 9.7 Other £m 10.5 16.7 12.1 Total £m 35.6 45.1 21.8 Land and buildings £m 3.1 2.7 0.3 Other £m 1.1 1.5 1.0 Lease liabilities included in the Balance Sheet Current Non-current Group Company 2023 £m 13.1 33.1 46.2 2022 £m 10.5 26.6 37.1 2023 £m 1.3 2.9 4.2 Total £m 4.2 4.2 1.3 2022 £m 1.1 3.1 4.2 A maturity analysis of the contractual undiscounted cash flows associated with these lease liabilities is presented in note 31. Amounts recognised in the Income Statement Interest on lease liabilities Depreciation of right-of-use land and buildings Depreciation of other right-of-use assets Expenses relating to short-term and low-value leases Group 2023 £m 1.2 6.4 5.9 34.5 2022 £m 0.9 7.8 5.2 32.6 The total Group cash outflow for leases in the current year was £48.4m (Company: £1.3m) (2022: £45.9m (Company £1.1m)), of which £13.9m (Company: £1.3m) (2022: £13.8m (Company: £1.1m)) related to the repayment of lease liabilities recognised in the Balance Sheet. 206 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 16. Inventories Inventories Inventories are valued at the lower of cost and net realisable value. Land held for development, including land in the course of development, is initially recorded at cost. Where, through deferred purchase credit terms, the carrying value differs from the amount that will ultimately be paid in settling the liability, this difference is charged as a finance cost in the Income Statement over the period of settlement. Cost of construction work in progress comprises direct materials, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Overhead costs include, but are not limited to, roads and other infrastructure costs required for a site and local contributions and physical works contributions required under planning permissions granted for our developments. Due to the scale of the Group’s developments, the Group has to allocate site-wide development costs between homes built in the current year and in future years. It also has to estimate costs to complete on such developments. In making these assessments, there is a degree of inherent uncertainty. The Group has developed internal controls to assess and review carrying values and the appropriateness of estimates made. Further information is included in the margin recognition section of note 3. Work in progress on promotion agreements comprises direct fees and labour costs incurred in investigating, designing, master planning, obtaining planning permission and ultimately securing sales agreements for land on behalf of landowners. The satisfaction of promotion agreements is largely dependent upon the grant of planning consent; therefore, management assesses the likelihood of attaining these consents when assessing their carrying values. Land held for development Construction work in progress Promotion agreements work in progress Part-exchange properties and other inventories The Company has no inventories. Group 2023 £m 3,139.9 1,907.1 97.7 93.3 5,238.0 2022 £m 3,339.9 1,837.8 91.1 22.8 5,291.6 Nature and carrying value of inventories The Group’s principal activities are housebuilding and commercial development. The majority of the development activity is not contracted prior to the development commencing. Accordingly, the Group has in its Balance Sheet at 30 June 2023 current assets that are not covered by a forward sale. The Group’s internal controls are designed to identify any developments where the balance sheet value of land and work in progress is more than the projected lower of cost or net realisable value. During the year, the Group has conducted six-monthly reviews of the net realisable value of specific sites identified as at high risk of impairment, based upon a number of criteria including low site profit margins and sites with no forecast completions. Where the estimated net realisable value of a site was less than its current carrying value, the Group has impaired the land and work in progress value. During the year, due to performance variations, changes in assumptions and changes to viability on individual sites, there were gross impairment charges of £16.7m (2022: £2.0m) and gross impairment reversals of £12.0m (2022: £4.2m), resulting in a net impairment charge of £4.7m (2022: £2.2m reversal) included within profit from operations. The key estimates in these reviews are those used to estimate the realisable value of a site, which is determined by forecast sales rates, expected sales prices and estimated costs to complete. The Directors consider all inventories to be essentially current in nature, although the Group’s operational cycle is such that a proportion of inventories will not be realised within 12 months. It is not possible to determine with accuracy when specific inventory will be realised, as this will be subject to a number of variables such as consumer demand and planning permission delays. Inventories include £11.0m (2022: £nil) in respect of properties currently occupied under the refugee support scheme. Barratt Developments PLC Annual Report and Accounts 2023 207 S G Financial Statements 17. Trade and other receivables Trade and other receivables Trade and other receivables are financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are classified as non-current assets. Amounts recoverable on certain construction contracts where revenue is recognised over time are included in trade receivables and stated at cost plus attributable profit less any foreseeable losses. Payments received on account for these construction contracts are deducted from amounts recoverable on these contracts. Trade and other receivables are initially recognised at their transaction price, being fair value, and subsequently measured at amortised cost, being their nominal value less a loss allowance for expected credit losses, which are assessed on the basis of an average weighting of the risk of default. Any impairment is recognised immediately in the Income Statement. For this purpose, a default is determined to have occurred if the Group becomes aware of evidence that it will not receive all contractual cash flows that are due or if payment has not been received within 60 days of the due date. After this time, it is probable that contractual cash flows will not be fully recovered. The Group does not hold any collateral over these balances. Trade receivables are receivables and contract assets arising from the Group’s contracts with customers. The loss allowance is equal to the lifetime expected credit loss, assessed on an individual basis. The loss allowances for other receivables and amounts due from subsidiary undertakings are equal to 12-month expected credit losses unless there has been a significant increase in credit risk since the date of initial recognition, in which case the loss allowance is equal to the lifetime expected credit loss. A significant increase in credit risk is judged to have occurred if a review of available information indicates an increased probability of default, or if contractual payments are more than 30 days past due. Where amounts due from subsidiary undertakings can be satisfied by the subsidiaries through the recovery of a debt from fellow subsidiaries with strong capacity to meet that debt, the amount is considered to have low credit risk at the reporting date and it is therefore assumed that the credit risk has not significantly increased. Trade and other receivables that are more than two years overdue are deemed to have no reasonable expectation of recovery and are written off in the Financial Statements, but are still subject to enforcement activity. Subsequent recoveries of amounts previously written off are credited to the Income Statement. Non-current assets Amounts due from subsidiary undertakings Contract assets Other receivables Current assets Trade receivables Contract assets Amounts due from subsidiary undertakings Other receivables Prepayments and accrued income Notes 21 21 Group 2023 £m — 0.5 2.4 2.9 70.7 20.8 — 74.0 16.6 182.1 2022 £m — 0.6 5.9 6.5 107.6 12.7 — 97.2 19.5 237.0 Company 2023 £m 76.1 — — 76.1 — — 2.9 4.3 8.7 15.9 2022 £m 76.1 — — 76.1 — — 3.1 1.7 8.6 13.4 Other receivables include £37.1m (2022: £39.3m) receivable from joint ventures. 208 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 17. Trade and other receivables continued The carrying values of trade and other receivables are stated after allowance for expected credit losses. The movements in the loss allowances for the year were as follows: Loss allowance Loss allowance at 1 July 2022 Charge for the year Amounts written off Recoveries of amounts previously written off Loss allowance at 30 June 2023 Trade receivables and contract balances Lifetime expected credit losses (individually assessed) Other receivables 12-month expected credit losses Notes Group £m Company £m Group £m Company £m 22 22 4.9 5.4 (0.3) (1.9) 8.1 — — — — — 0.2 0.2 — (0.1) 0.3 — — — — — Movements in loss allowances are principally a result of the derecognition and origination of financial assets in the year. The loss allowances written off are equal to the gross carrying amounts of the assets written off in the year. The Directors consider that the carrying amount of trade receivables approximates to their fair value. The expected credit losses on the Company amounts due from subsidiary undertakings are not material to the Financial Statements. The subsidiaries are are able to pay their liabilities as they fall due and the probability of default is insignificant. Further disclosures relating to financial assets are set out in note 22. 18. Net cash Net cash is defined as cash and cash equivalents, bank overdrafts, interest-bearing borrowings and prepaid fees. Net cash at 30 June is shown below: Cash and cash equivalents Drawn debt Borrowings: Sterling US private placement notes Bank overdrafts Total borrowings being total drawn debt Prepaid fees Net cash Total borrowings at 30 June are analysed as: Non-current borrowings Current borrowings Total borrowings being total drawn debt Group 2023 £m 2022 £m Company 2023 £m 2022 £m 1,269.1 1,352.7 1,005.0 1,045.4 (200.0) (3.4) (203.4) 3.7 (200.0) (17.3) (217.3) 3.2 1,069.4 1,138.6 (200.0) (200.0) — (200.0) 3.7 808.7 — (200.0) 3.2 848.6 (200.0) (3.4) (203.4) (200.0) (17.3) (217.3) (200.0) (200.0) — — (200.0) (200.0) Barratt Developments PLC Annual Report and Accounts 2023 209 S G Financial Statements 18. Net cash continued Movement in net cash is analysed as follows: Net decrease in cash and cash equivalents (Drawdown)/repayment of borrowings: Loans and borrowings drawdowns Loans and borrowings repayments Other movements in borrowings: Movement in prepaid fees Movement in net cash in the year Opening net cash Closing net cash Changes in liabilities arising from financing activities are shown below: Total borrowings £m Group Lease liabilities £m (205.3) 5.3 — (200.0) — — (40.7) 13.8 (10.2) (37.1) 13.9 (23.0) Liabilities from financing activities at 1 July 2021 Financing cash flows Other movements Liabilities arising from financing activities at 30 June 2022 Financing cash flows Other movements Liabilities arising from financing activities at 30 June 2023 Group Company 2023 £m (83.6) (3.4) 17.3 0.5 (69.2) 1,138.6 1,069.4 Total £m (246.0) 1.8 (10.2) (254.4) 27.8 (23.0) 2022 £m (165.9) (17.3) 5.3 (0.9) (178.8) 1,317.4 1,138.6 2023 £m (40.4) — — 0.5 (39.9) 848.6 808.7 Total borrowings £m Company Lease liabilities £m (200.0) — — (200.0) — — (4.5) 1.1 (0.8) (4.2) 1.3 (1.3) 2022 £m (273.6) — — (0.9) (274.5) 1,123.1 848.6 Total £m (204.5) 1.1 (0.8) (204.2) 1.3 (1.3) (200.0) (46.2) (249.6) (200.0) (4.2) (204.2) Cash and cash equivalents Cash and cash equivalents are held at floating interest rates linked to the UK bank rate and money market rates as applicable. Cash and cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less from inception and are subject to an insignificant risk of changes in value. Cash, cash equivalents and bank overdrafts, as presented in the Cash Flow Statement, are analysed as follows: Cash and cash equivalents Bank overdrafts included in loans and borrowings Cash, cash equivalents and bank overdrafts Further disclosures relating to financial assets are set out in note 22. Group 2023 £m 1,269.1 (3.4) 1,265.7 2022 £m 1,352.7 (17.3) 1,335.4 Company 2023 £m 2022 £m 1,005.0 1,045.4 — — 1,005.0 1,045.4 210 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 18. Net cash continued Borrowings and facilities Loans and borrowings Interest-bearing loans and overdrafts are initially recognised at fair value less directly attributable transaction costs and subsequently measured at amortised cost, being the amount recorded at recognition plus accrued interest applied to the account less any repayments made. All debt facilities at 30 June 2023 are unsecured. The principal features of the Group’s committed debt facilities at 30 June 2023 and 30 June 2022 were as follows: Committed facilities: RCF Fixed rate Sterling USPP notes Facility 30 June 2023 30 June 2022 Maturity Amount drawn £700.0m £200.0m — £200.0m — 18 November 2027 £200.0m 22 August 2027 The Group also uses various bank overdrafts and uncommitted borrowing facilities that are subject to floating interest rates linked to SONIA and money market rates as applicable. Weighted average interest rates are disclosed in note 6. 19. Trade and other payables Trade and other payables Trade and other payables are not interest bearing and are initially recorded at fair value. Subsequent measurement is at amortised cost. Trade and other payables on extended terms, particularly in respect of land, are recorded at their fair value at the date of acquisition of the asset to which they relate by discounting at prevailing market interest rates at the date of recognition. The discount to nominal value, which will be paid in settling the deferred purchase terms liability, is amortised over the period of the credit term and charged to finance costs using the “effective interest rate” method. Non-current liabilities Land payables Other payables Current liabilities Trade payables Land payables Contract liabilities Amounts due to subsidiary undertakings Accruals Other tax and social security Other payables Group 2023 £m Notes 185.2 3.5 188.7 310.3 321.5 89.2 — 381.3 17.0 8.1 21 2022 £m 235.4 5.1 240.5 324.0 498.2 124.3 — 428.8 24.8 14.3 1,127.4 1,414.4 Company 2023 £m — — — 1.1 — — 354.2 28.6 — — 383.9 2022 £m — — — 4.8 — — 323.5 28.2 — 0.5 357.0 The carrying amount of trade payables approximates to their fair value. Accruals include a social security accrual relating to share-based payments (note 27). Other payables classified as non-current liabilities at 30 June 2023 include amounts accrued for payment of the CITB levy and other sundry accruals. The Group has £244.4m (2022: £365.2m) of payables secured by legal charges on land and buildings included within inventories and £nil (2022: £3.1m) supported by promissory notes. Other non-current payables are unsecured and non-interest bearing. Further disclosures relating to financial liabilities are set out in note 22. Barratt Developments PLC Annual Report and Accounts 2023 211 S G Financial Statements 20. Provisions Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that the Group will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet date and are discounted to present value where the effect is material. At 1 July 2022 Additions to provisions in the year Sites reclassified to completed developments Releases Revaluation Imputed interest Utilisation in the year At 30 June 2023 Current Non-current Group Legacy properties — EWS and associated review £m Legacy properties — reinforced concrete frames £m Costs in relation to completed developments £m 145.5 75.4 22.5 (17.3) — — (50.0) 176.1 434.6 213.4 — (41.1) (51.9) 7.5 (26.6) 535.9 44.9 48.6 — (3.8) (7.0) — (6.3) 76.4 Group 2023 £m 310.5 477.9 788.4 Total £m 625.0 337.4 22.5 (62.2) (58.9) 7.5 (82.9) 788.4 2022 £m 265.4 359.6 625.0 The Company had no provisions in either year. Costs in relation to completed developments Following the legal completion and handover to customers of all units on a site, the Group may retain obligations which are not settled for a number of years. These include costs in relation to the adoption of roads or public open space by local authorities, other contractual obligations to third parties and, in certain cases, the costs of remedial works where defects have been identified. Whilst a proportion of this cost will not be realised within 12 months, the Group has an obligation to complete the works immediately should it be requested to do so. The balance in total is therefore considered to be current in nature. All outstanding issues on completed developments are resolved as soon as is practicable. Costs associated with legacy properties External wall systems and associated review On 13 March 2023, the Group signed the Self-Remediation Terms and Contract, codifying the commitments previously made under the Building Safety Pledge to undertake or to fund remediation or mitigation works on external wall systems (EWS) on all buildings of 11 metres or above in England and Wales that it has developed or refurbished in the 30 years preceding the date of the Building Safety Pledge, and to reimburse the Government’s Building Safety fund wherever they have contributed to such activities. The Group has provided for the cost of fulfilling this commitment, as well as assisting with remedial work identified at a limited number of other legacy properties where it has a legal liability to do so, where relevant build issues have been identified, or it is considered probable that such build issues exist. The Group is undertaking a review of all of its current and legacy buildings where it has used EWS or cladding solutions and continues to assess the action required in line with the latest updates to Government guidance, as it applies, to multi-storey and multi-occupied residential buildings. All our buildings, including those incorporating EWS or cladding solutions, were signed off by approved inspectors as compliant with the relevant Building Regulations at the time of completion. 212 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 20. Provisions continued Costs in relation to completed developments continued Costs associated with legacy properties continued External wall systems and associated review Under review: Buildings above 18 metres Buildings between 11 and 18 metres Total buildings Developments June 2022 Identified for review Review confirmed no remediation, or remediation completed June 2023 140 83 223 69 35 30 65 22 (7) (3) (10) (2) 168 110 278 89 This is a complex area requiring significant estimates with respect to the estimates for the number of buildings affected, the individual remediation requirements of each building and the costs associated with that remediation (see also note 29). During the year, following the identification of further buildings requiring remediation and the receipt of more detailed cost estimates on buildings for which a full assessment of the work required has been completed, an additional £213.4m has been provided for the remediation of external wall systems. For buildings on which a detailed cost assessment has yet to be performed, this assumes an updated cost per plot of c. £23,000 (2022: c. £21,000), plus an estimate of future cost price inflation over the expected period until the remediation is completed. The new buildings came into scope during the year because buildings which held valid EWS1 certificates at 30 June 2022 were found to require remediation, or because of new contact from, or information supplied by, building owners. All building owners were contacted again following the signing of the Self- Remediation Terms on 13 March 2023, which led to an increase in contact from building owners during the year. An additional contingency was also allowed to reflect further buildings being identified as within the scope of the Self-Remediation Terms and Contract and for unforeseen remediation costs beyond management’s current knowledge. Provisions of £41.1m (2022: £12.8m) were released in respect of buildings that were found to either require less remediation than expected or for which no remediation is required. It has been assumed that the majority of the work will be completed over the next five years. This depends on a number of factors including timely engagement by building owners and remediation work being completed in line with our estimated timings. Accordingly, the provision has been discounted to its present value at the reporting date, resulting in a credit to cost of sales of £51.9m (2022: £nil) due to an increase in the discount rate in the period from 1.9% to 4.7% driven by higher gilt rates at the year end. The investigation of the works required at many of the buildings is at an early stage and therefore it is possible that these estimates will change over time or if government legislation and regulation further evolves. In relation to the Scottish Safer Buildings Accord, signed on 31 May 2023, the external wall provision is recorded on the basis that the standard of remediation required in Scotland is consistent with England and Wales. This will be confirmed when the final contract with the Scottish government is signed. The estimates are based on key assumptions that will be updated as work and time progresses. The sensitivity of the provision held at the balance sheet date to the following possible movements in key assumptions is shown below, assuming that the contingency is not utilised: Sensitivity 10% increase in estimated cost per plot 10% increase in the number of buildings on which a detailed cost assessment has yet to be performed 100 bps increase in discount rate Increase/(decrease) in provisions at 30 June 2023 £m 26.2 21.8 (13.1) Reinforced concrete frames As announced in July 2020, we took the decision to pay for required remedial action on the reinforced concrete frame at the Citiscape development in Croydon and undertook an associated review of 27 other developments designed by the same engineering firm or its associated companies. This review is substantially complete and remediation work is ongoing. During the period, a net additional £37.2m was recognised in respect of increases in the estimated remediation costs on certain properties under this review, including £18.6m incurred on one development on which remediation plans have now been finalised. The estimates are based on key assumptions that will be updated as work and time progresses. It is now anticipated that remediation on these buildings will extend beyond one year from the balance sheet date. Accordingly, the provision has been discounted to its present value using a rate of 4.7%, consistent with the EWS provision. Barratt Developments PLC Annual Report and Accounts 2023 213 S G Financial Statements 20. Provisions continued Costs associated with legacy properties continued Reinforced concrete frames continued In addition to this review, structural issues have been separately found at two developments where reinforced concrete frames were designed for us by a different engineering firm to that employed at Citiscape. The full extent of the remediation work required is not yet known, however, £7.6m has been provided at the balance sheet date. The buildings affected are still being assessed and therefore this provision may need to be increased in future periods (see note 29) Management have made estimates as to the future costs, extent of the remedial works required and the costs of providing alternative accommodation to any residents affected by the remedial works. The Financial Statements have been prepared based on currently available information, including known costs and quotations where possible. However, the extent, cost and timing of remedial work may change as work progresses. 21. Contract assets and liabilities Contract assets relate to amounts due from customers primarily for construction work completed but not invoiced at the balance sheet date in relation to contracts where revenue is recognised over time. These amounts are included in trade and other receivables. The Group has taken advantage of the practical expedient in paragraph 94 of IFRS 15 to immediately expense the incremental costs of obtaining contracts where the amortisation period of the assets would have been one year or less. Contract liabilities relate to payments received from the customer on the contract, and/or amounts invoiced to the customer in advance of the Group performing its obligations on contracts where revenue is recognised either over time or at a point in time. These amounts are included within trade and other payables. Significant changes in contract assets and liabilities are as follows: At 1 July: Amounts included within trade and other payables Amounts included within trade and other receivables Movements in the year: Performance obligations satisfied in the year Amounts invoiced in the year Cash received for performance obligations not yet satisfied At 30 June Analysed as: Amounts included within trade and other payables Amounts included within trade and other receivables Contracts on which revenue is recognised over time Contracts on which revenue is recognised at a point in time 2023 £m (4.2) 13.3 9.1 192.7 (190.1) — 11.7 (9.6) 21.3 2022 £m (6.6) 0.9 (5.7) 75.0 (60.2) — 9.1 (4.2) 13.3 2023 £m (120.1) — (120.1) 2022 £m (130.9) — (130.9) 5,128.7 5,192.9 (5,008.6) (5,062.0) (79.6) (79.6) (79.6) — (120.1) (120.1) (120.1) — Further revenue of £104.3m (2022: £118.8m) is expected to be recognised in future years in respect of contracts on which revenue is recognised over time, of which 86.8% (2022: 16.9%) is expected to be recognised within 12 months of the balance sheet date. The Company had no contract assets or liabilities in either year. 22. Financial instruments Recognition Financial assets and financial liabilities are recognised on the Balance Sheet in accordance with IFRS 9 when the Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. The Group derecognises a financial liability only when the Group’s obligations are discharged or cancelled or they expire. 214 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 22. Financial instruments continued Classification and measurement All non-derivative financial assets are classified in accordance with IFRS 9 as “subsequently measured at amortised cost”. All non-derivative financial liabilities are classified as “subsequently measured at amortised cost”. Financial assets and liabilities subsequently measured at amortised cost are initially recognised at fair value determined based on discounted cash flow analysis using current market rates for similar instruments. They are subsequently measured at amortised cost using the “effective interest rate” method. Financial assets are also measured after recognition of any impairment, which is included within administrative expenses in the Income Statement. Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Impairment A loss allowance is recognised for expected credit losses on financial assets as described in note 17. Any impairment is recognised immediately in the Income Statement. Financial assets The carrying values and fair values of the Group and Company financial assets are as follows: Group Fair value £m 2023 Carrying value £m Fair value £m Notes 18 1,269.1 1,269.1 1,352.7 Company 2022 Carrying value £m 1,352.7 Fair value £m 2023 Carrying value £m Fair value £m 1,005.0 1,005.0 1,045.4 2022 Carrying value £m 1,045.4 Cash and cash equivalents Measured at amortised cost: Trade and other receivables¹ Intercompany receivables 17 118.7 — 118.7 — 168.1 — 168.1 — 2.7 79.0 2.7 79.0 — 79.2 — 79.2 Total financial assets 1,387.8 1,387.8 1,520.8 1,520.8 1,086.7 1,086.7 1,124.6 1,124.6 1 Excludes amounts recoverable on contracts, prepayments and accrued income, and tax and social security. Financial liabilities The carrying values and fair values of the Group and Company financial liabilities are as follows: Fair value £m Notes 18 18 19 15 3.4 170.7 1,086.6 — 46.2 Group 2023 Carrying value £m 3.4 200.0 1,119.5 — 46.2 Fair value £m 17.3 187.6 1,380.4 — 37.1 2022 Carrying value £m 17.3 200.0 1,387.9 — 37.1 Measured at amortised cost: Bank overdrafts Loans and borrowings Trade and other payables¹ Intercompany payables Lease liabilities Total financial liabilities 1,306.9 1,369.1 1,622.4 1,642.3 Company 2023 Carrying value £m — 200.0 18.1 354.2 4.2 576.5 Fair value £m — 187.6 16.7 323.5 4.2 532.0 2022 Carrying value £m — 200.0 16.7 323.5 4.2 544.4 Fair value £m — 170.7 18.1 354.2 4.2 547.2 1 Excludes deferred income, payments received in excess of amounts recoverable on contracts, tax and social security and other non-financial liabilities. The fair values of liabilities in the above table have been determined using discounted cash flows based on observable market data other than quoted prices in active markets for identical liabilities. Trade and other payables include items secured by legal charges as disclosed in note 19. Barratt Developments PLC Annual Report and Accounts 2023 215 S G Financial Statements 22. Financial instruments continued Financial instruments gains and losses The net (gains)/losses recorded in the Consolidated Income Statement, in respect of financial instruments (excluding interest shown in note 6), were as follows: Financial assets measured at amortised cost Trade receivables — loss allowance charge Recoveries of amounts previously written off 23. Share capital Equity instruments Notes 17 17 2023 £m 5.6 (2.0) 2022 £m 1.8 (2.9) Ordinary share capital is recorded at the proceeds received, net of direct issue costs and is classified as equity. Ordinary share capital Allotted and issued ordinary shares 10p each fully paid: 974,584,613 (2022: 1,022,562,819) ordinary shares Options over the Company’s shares granted during the year LTPP Sharesave DBP ELTIP Cancellation/allotment of shares during the year At 1 July Buyback and cancellation of shares in the year Issued to the EBT to satisfy the vesting of awards Issued to satisfy exercises under Sharesave schemes At 30 June 2023 £m 97.4 2023 Number 4,028,187 6,637,568 920,887 1,792,966 2022 £m 102.2 2022 Number 2,774,294 4,117,231 674,051 1,080,733 13,379,608 8,646,309 2023 Number 2022 Number 1,022,562,819 1,018,331,741 — 2,386,199 (47,985,293) — 7,087 1,844,879 974,584,613 1,022,562,819 24. Merger reserve The merger reserve comprises the non-statutory premium arising on shares issued as consideration for the acquisition of subsidiaries where merger relief under Section 612 of the Companies Act 2006 applies. 25. Capital redemption reserve During the year the Company purchased 47,985,293 (2022: none) of its own shares in the market which have been cancelled. The nominal value of these shares has been transferred to the capital redemption reserve. As at 1 July Amounts transferred in respect of own shares purchased and cancelled during the year At 30 June 2023 £m — 4.8 4.8 2022 £m — — — 216 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 26. Own shares reserve The own shares reserve represents the cost of shares in Barratt Developments PLC purchased in the market or issued by the Company and held by the EBT on behalf of the Company in order to satisfy options and awards that have been granted by the Company. The EBT has agreed to waive all, or any future right to dividend payments on shares held within the EBT and these shares do not count in the calculation of the weighted average number of shares used to calculate EPS until such time as they are vested to the relevant employee. Ordinary shares in the Company held in the EBT (number) Cost of shares held in the EBT (£m) Market value of shares held in the EBT at 413.5p (2022: 457.4p) per share (£m) 2023 2022 4,998,602 23.2 20.7 5,320,168 27.0 24.3 During the year, the EBT purchased 2,951,352 shares (2022: 4,989,573) in the market and no shares (2022: 2,386,199) were issued to the EBT. The EBT disposed of 3,254,817 (2022: 3,355,729) shares which were used to satisfy the vesting of ELTIP, LTPP and DBP awards. A further 18,101 shares were used in the year in settlement of exercises under Sharesave schemes (2022: none). 27. Share-based payments The Group issues equity-settled share-based payments to certain employees. Share-based payments Equity-settled share-based payments are measured at the fair value of the equity instrument at the date of grant. Fair value is measured either using Black Scholes or Monte Carlo models depending on the characteristics of the scheme. Valuations have also been adjusted for any post-vesting holding period with the adjustment calculated using a Finnerty and Chaffe model. The fair value is expensed in the Income Statement on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest where non-market vesting conditions apply. Non-vesting conditions are taken into account in the estimate of the fair value of the equity instruments. Analysis of the Consolidated Income Statement charge: Equity-settled share-based payments: LTPP Sharesave DBP ELTIP 2023 £m (2.2) 3.6 2.7 6.1 10.2 2022 £m 13.0 2.4 2.6 6.2 24.2 As at 30 June 2023, an accrual of £2.7m (2022: £4.0m) was recognised in respect of social security liabilities on share-based payments. Share-based payments reserve The share-based payments reserve represents the obligation of the Group in relation to equity-settled share-based payment transactions. Details of movements in the share-based payments reserve are shown on the Statement of Changes in Shareholders’ Equity. Barratt Developments PLC Annual Report and Accounts 2023 217 S G Financial Statements 27. Share-based payments continued Outstanding equity-settled share-based payments At 30 June 2023, the following options were outstanding: Date of grant Sharesave 20 April 2018 — 5-year plan 9 April 2019 — 3-year plan 9 April 2019 — 5-year plan 7 April 2020 — 3-year plan 7 April 2020 — 5-year plan 7 April 2021 — 3-year plan 7 April 2021 — 5-year plan 6 April 2022 — 3-year plan 6 April 2022 — 5-year plan 12 April 2023 — 3-year plan 12 April 2023 — 5-year plan Total Sharesave options LTPP 30 November 2020 — Executive 18 February 2021 and 21 April 2021 — Executive 14 October 2021 — Executive 14 February 2022 — Executive 14 February 2022 — Executive 12 October 2022 — Executive 30 November 2020 — Senior management 14 October 2021 — Senior management 12 October 2022 — Senior management Total LTPP awards DBP 24 September 2021 12 October 2022 Total DBP awards ELTIP 15 July 2021 15 July 2022 Total ELTIP awards Total 218 Option price pence 2023 number Not exercisable after 449 519 519 456 456 604 604 436 436 347 347 — — — — — — — — — — — — — — 116,675 1,386 87,380 1,460,790 206,649 598,953 68,971 1,927,638 293,108 5,075,614 1,485,104 11,322,268 1,337,942 45,392 1,049,279 117,716 67,681 1,811,729 1,317,068 1,135,755 2,065,031 8,947,593 637,949 890,457 1,528,406 812,666 1,561,277 2,373,943 — 24,172,210 31 December 2023 1 October 2023 31 December 2024 31 December 2023 31 December 2025 31 December 2024 31 December 2026 31 December 2025 31 December 2027 31 December 2026 31 December 2028 — — — — — — — — — — — — — — — Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 27. Share-based payments continued Further information relating to the share-based payment schemes Sharesave Under the Sharesave, participants are required to make monthly contributions to an HMRC approved savings contract with a bank or building society for a period of three or five years. On entering into the savings contract, participants are granted an option to acquire ordinary shares in the Company at an exercise price determined under the rules of the Sharesave. The Sharesave is open to all eligible employees as determined by the Board and is not subject to the satisfaction of any performance conditions. LTPP The grant of awards under the LTPP is at the discretion of the Remuneration Committee taking into account individual performance and overall performance of the Group. Vesting under this scheme is dependent upon performance conditions including TSR, EPS and ROCE. Further details can be found in the Remuneration Report on pages 157 and 158. DBP Deferred shares are held in accordance with the DBP as approved by the shareholders at the 2015 AGM. The DBP is currently utilised to hold shares awarded in respect of any bonus earned in excess of 100% of base salary. Further details can be found on page 161. ELTIP The Board approved the 2022 Award in July 2022 and the 2021 Award in July 2021 under the ELTIP. The Awards were made to all eligible employees employed as at 15 July 2022 and 15 July 2021 respectively. Participants will be entitled to receive shares in the Company when the 2021 Award vests on 1 July 2023, and participants of the 2022 Award will be entitled to receive shares in the Company when the Award vests on 1 July 2024. Senior management is not eligible to participate in the ELTIP. The Awards are not subject to the satisfaction of any performance condition other than that participants remain employed by the Group and have not resigned before the end of the vesting period. Number and weighted average exercise price of outstanding share-based payments The number and weighted average exercise prices of options and awards made under the Group’s share option schemes were as follows: LTPP Outstanding at 1 July Forfeited during the year Reinstated Exercised during the year Granted during the year Outstanding at 30 June Exercisable at 30 June Sharesave Outstanding at 1 July Forfeited during the year Exercised during the year Granted during the year Outstanding at 30 June Exercisable at 30 June 2023 2022 Weighted average exercise price in pence — — — — — — — Number of award units 7,823,199 (1,161,682) 8,989 (1,751,100) 4,028,187 8,947,593 — Weighted average exercise price in pence — — — — — — — 2023 2022 Weighted average exercise price in pence 474 532 461 347 398 — Number of award units 8,945,381 (4,235,493) (25,188) 6,637,568 11,322,268 — Weighted average exercise price in pence 499 533 451 436 474 — Number of award units 8,087,663 (1,277,018) — (1,761,740) 2,774,294 7,823,199 — Number of award units 8,217,072 (1,544,043) (1,844,879) 4,117,231 8,945,381 — Barratt Developments PLC Annual Report and Accounts 2023 219 S G Financial Statements 27. Share-based payments continued Number and weighted average exercise price of outstanding share-based payments continued DBP Outstanding at 1 July Forfeited during the year Exercised during the year Granted during the year Outstanding at 30 June Exercisable at 30 June ELTIP Outstanding at 1 July Forfeited during the year Exercised during the year Granted during the year Outstanding at 30 June Exercisable at 30 June 2023 2022 Weighted average exercise price in pence — — — — — — Number of award units 1,225,640 (25,123) (592,998) 920,887 1,528,406 — Weighted average exercise price in pence — — — — — — 2023 2022 Weighted average exercise price in pence — — — — — — Number of award units 1,879,686 (387,990) (910,719) 1,792,966 2,373,943 — Weighted average exercise price in pence — — — — — — Number of award units 1,168,788 (12,186) (605,013) 674,051 1,225,640 — Number of award units 2,149,584 (361,655) (988,976) 1,080,733 1,879,686 182 The weighted average share price, at the date of exercise, of share options exercised during the year was 368.8p (2022: 674.4p). The weighted average life for all schemes outstanding at the end of the year was 2.1 years (2022: 1.9 years). Fair value of options and awards granted in the year Weighted average fair value of options granted Sharesave LTPP DBP ELTIP Weighted average fair value of options granted Valuation model Black Scholes model Black Scholes and Monte Carlo models1 Black Scholes model Black Scholes model 2023 pence 132.9 260.7 324.1 399.7 2022 pence 94.7 683.0 681.0 634.0 1 The TSR portion of the award is valued using a Monte Carlo model. Other elements of the award are valued using a Black Scholes model. The valuations have also been adjusted for any post-vesting holding period with the adjustment calculated using a Finnerty and Chaffe model. Inputs used to determine fair value of options The weighted average inputs to the valuation models were as follows: Average share price Average exercise price Expected volatility Expected life Risk-free interest rate Expected dividends Grants 2023 Grants 2022 ELTIP Sharesave LTPP DBP ELTIP Sharesave LTPP DBP 471p — 37.3% 2.0 years 4.14% 467p 347p 37.6% 3.5 years 3.28% 325p — 44.8% 3.0 years 4.17% 325p — 38.2% 3.0 years 4.35% 690p — 37.7% 2.0 years 0.50% 520p 436p 36.6% 3.3 years 1.40% 683p — 36.2% 3.0 years 0.58% 682p — 37.7% 3.0 years 0.65% 8.2% 5.9% — — 4.2% 8.4% — — Expected volatility was determined by reference to the historical volatility of the Group’s share price over a period consistent with the expected life of the options. The expected life used in the models has been adjusted, based on the Directors’ best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. 220 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 28. Non-controlling interests Movement in non-controlling interest share of net assets recognised in the Consolidated Balance Sheet At 1 July Distribution of profits to non-controlling partner Share of profit for the year recognised in the Consolidated Income Statement At 30 June Group 2023 £m 0.8 (0.3) — 0.5 2022 £m 1.1 (0.4) 0.1 0.8 There are no significant restrictions on the ability of the Group to access or use assets and settle liabilities. Detailed arrangements for each subsidiary are laid out in the relevant shareholder and partnership agreements. 29. Contingent liabilities Contingent liabilities related to subsidiaries The Company has guaranteed certain bank borrowings of its subsidiary undertakings. Certain subsidiary undertakings have commitments for the purchase of trading stock entered into in the normal course of business. In the normal course of business, the Group has given counter-indemnities in respect of performance bonds and financial guarantees. Management estimates that the bonds and guarantees amount to £412.7m (2022: £420.7m) and confirms that, at the date of these Financial Statements, the possibility of cash outflow is considered minimal and no provision is required. External wall systems and associated review As disclosed in note 20, on 13 March 2023, the Group signed the Self-Remediation Terms and Contract, codifying the commitments previously made under the Building Safety Pledge. The Group is currently undertaking a review of all of its current and legacy buildings where it has used EWS or cladding solutions. Approved inspectors signed off all of our buildings, including the EWS or cladding used, as compliant with the relevant building regulations at the time of completion. At 30 June 2023, the Group held provisions of £535.9m (2022: £434.6m) in relation to EWS and associated reviews, based on management’s best estimate of the cost and timing of remediation of in-scope buildings. It is possible that as remediation work proceeds, additional remedial works are required which do not relate to EWS or cladding solutions. Such works may not have been identified from the reviews and physical inspections undertaken to date and may only be identified when detailed remediation work is in progress. Therefore, the nature, timing and extent of any such costs was unknown at the balance sheet date. It is also possible that the number of buildings requiring remediation may increase. This could occur because buildings which hold valid EWS1 certificates are found to require remediation or because investigatory works identify remediation not previously identified. In addition, we recognise that the retrospective review of building materials and fire-safety matters continues to evolve. The Financial Statements have been prepared based on currently available information and regulatory guidance. However, these estimates may be updated if government legislation and regulation further evolves. On 31 May 2023 the Group signed the Scottish Safer Buildings Accord, committing to resolve life critical fire safety defects in multi-occupancy residential domestic or part-domestic buildings, over 11 metres, built by us as a developer in the period of 30 years to 1 June 2022. This Accord is not legally binding, but we are committed to working in good faith with the Scottish Government to agree a legal form contract. The Group is already undertaking remedial work at all multi-occupancy buildings over 11 metres in Scotland at which fire safety defects have been identified and the Group’s EWS provision at 30 June 2023 includes the estimated cost of this work. These estimates are based on the assumption that the standard of remediation required in Scotland is consistent with that in England and Wales and therefore depend on the final form of the contract agreed with the Scottish Government. Reinforced concrete frames As disclosed in note 20, following the issues identified at Citiscape, the Group is conducting a review of developments designed by the same engineering firm or its associated companies. The Financial Statements have been prepared based on currently available information; however, the detailed review is ongoing and the extent and cost of any remedial work may change as this work progresses. Separately, during the year structural issues have been found at two developments where reinforced concrete frames were designed for us by a particular engineering firm. Investigatory work is proceeding to identify the remediation works required and associated cost. It is possible that further costs or additional buildings are identified as part of this review, the nature, timing and extent of which were unknown at the balance sheet date. Barratt Developments PLC Annual Report and Accounts 2023 221 S G Financial Statements 29. Contingent liabilities continued Contingent liabilities related to JVs The Group has given counter-indemnities in respect of performance bonds and financial guarantees to its JVs totalling £9.5m at 30 June 2023 (2022: £2.2m). The Group has also given a number of performance guarantees in respect of the obligations of its JVs, requiring the Group to complete development agreement contractual obligations in the event that the JVs do not perform as required under the terms of the related contracts. At 30 June 2023, the probability of any loss to the Group resulting from these guarantees is considered to be remote. Contingent liabilities related to legal claims Provision is made for the Directors’ best estimates of all known material legal claims and all legal actions in progress. The Group takes legal advice as to the likelihood of success of claims and actions and no provision is made (other than for legal costs) where the Directors consider, based on such advice, that claims or actions are unlikely to succeed, or a sufficiently reliable estimate of the potential obligations cannot be made. 30. Related party transactions Directors of Barratt Developments PLC and remuneration of key personnel The Board and certain members of senior management are related parties within the definition of IAS 24 (Revised): ‘Related Party Disclosures’ and the Board members are related parties within the definition of Chapter 11 of the UK Listing Rules. There is no difference between transactions with key personnel of the Company and transactions with key personnel of the Group. Disclosures related to the remuneration of key personnel as defined in IAS 24 are given in note 5. There have been no related party transactions as defined in Listing Rule 11.1.5R for the year ended 30 June 2023. Transactions between the Company and its subsidiaries and a former JV The Company has entered into transactions with its subsidiary undertakings in respect of funding and Group services which include management accounting and audit, sales and marketing, IT, company secretarial, architects and purchasing. Recharges are made to the subsidiaries based on their utilisation of these services. Transactions between the Company and its subsidiaries and former JV during the year: Charges in respect of management and other services provided to subsidiaries Net interest paid by the Company on net loans from subsidiaries Dividends received from subsidiary undertakings Distribution received from a former JV of the Company1 Balances at 30 June: Amounts due by the Company to subsidiary undertakings Amounts due to the Company from subsidiary undertakings Company 2023 £m 142.7 18.4 500.0 0.1 354.2 79.0 1 The Company’s only JV, Rose Shared Equity LLP, was wound up during the year. Prior to this, it made a final distribution to its members. The Company and its subsidiaries have entered into counter-indemnities in the normal course of business in respect of performance bonds. Transactions between the Group and its JVs The Group has entered into transactions with its JVs as follows: Transactions between the Group and its JVs during the year: Charges in respect of development management and other services provided to JVs Interest charges in respect of funding provided to JVs Dividends received from JVs Balances at 30 June: Funding loans and interest due from JVs net of impairment Other amounts due from JVs Loans and other amounts due to JVs Group 2023 £m 8.4 1.6 34.8 66.5 37.1 (0.5) 2022 £m 146.5 24.5 517.4 — 323.5 79.2 2022 £m 9.2 0.5 16.5 94.0 39.3 (1.3) In addition, one of the Group’s subsidiaries, BDW Trading Limited, contracts with a number of the Group’s JVs to provide construction services. The Group’s contingent liabilities relating to its JVs are disclosed in note 29. 222 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 31. Financial risk management The Group’s approach to risk management and the principal operational risks of the business are detailed on pages 71 to 77. The Group’s financial assets and financial liabilities are detailed in note 22. The Group’s operations and financing arrangements expose it to a variety of financial risks, of which the most material are: liquidity risk, the availability of funding at reasonable margins, credit risk and interest rates. There is a regular, detailed system for the reporting and forecasting of cash flows from operations to senior management including Executive Directors to ensure that liquidity risks are promptly identified and appropriate mitigating actions are taken by the Treasury department. These forecasts are further stress-tested at a Group level on a regular basis to ensure that adequate headroom within facilities and banking covenants is maintained. In addition, the Group has a risk management programme that seeks to limit the adverse effects of the other risks on its financial performance. The Board approves treasury policies and certain day-to-day treasury activities have been delegated to a centralised Treasury Operating Committee, which in turn regularly reports to the Board. The Treasury department implements guidelines that are established by the Board and the Treasury Operating Committee. Liquidity risk Liquidity risk is the risk that the Group will be unable to meet its liabilities as they fall due. The Group actively maintains a mixture of long-term and medium-term committed facilities that are designed to ensure that the Group has sufficient available funds for operations. The Group’s borrowings are typically cyclical throughout the financial year and peak in April to May, and October to November of each year, due to seasonal trends in income. Accordingly, the Group maintains sufficient facility headroom to cover these requirements. On a normal operating basis, the Group has a policy of maintaining a minimum headroom of £150.0m. The Group identifies and takes appropriate actions based on its regular, detailed system for the reporting and forecasting of cash flows from its operations. The Group’s drawn debt, excluding fees, represented 22.6% (2022: 24.1%) of available committed facilities at 30 June 2023. In addition, the Group had £1,269.1m (2022: £1,352.7m) of cash and cash equivalents. The Group was in compliance with its financial covenants at 30 June 2023. The Group’s resilience to its principal risks has been modelled, together with possible mitigating actions, over a three-year period. At the date of approval of the Financial Statements, the Group’s internal forecasts indicate that it will be able to operate within its current facilities and remain in compliance with these covenants for the foreseeable future, being at least 12 months from the date of signing these Financial Statements. One of the Group’s objectives is to minimise refinancing risk. The Group has a policy that the average maturity of its committed bank facilities and private placement notes is a minimum of two years with a target of two to three years. At 30 June 2023, the average maturity of the Group’s committed facilities was 4.4 years (2022: 3.8 years). The Group maintains certain committed floating rate facilities with banks to ensure sufficient liquidity for its operations. The undrawn committed facilities available to the Group, in respect of which all conditions precedent had been met, were as follows: Expiry date In more than two years but not more than five years Group Company 2023 £m 700.0 2022 £m 700.0 2023 £m 700.0 2022 £m 700.0 In addition, the Group had undrawn, uncommitted overdraft facilities available at 30 June 2023 of £37.0m (2022: £37.0m). The expected undiscounted cash flows of the Group and Company financial liabilities, by remaining contractual maturity at the balance sheet date were as follows: Group 2023 Loans and borrowings (including bank overdrafts)¹ Trade and other payables2 Lease liabilities 2022 Loans and borrowings (including bank overdrafts)¹ Trade and other payables2 Lease liabilities Carrying amount £m Contractual cash flow £m Less than 1 year £m Notes 1—2 years £m 2—5 years £m Over 5 years £m 22 22 22 22 22 22 203.4 224.9 1,119.5 1,140.1 46.2 50.3 1,369.1 1,415.3 217.3 1,387.9 37.1 230.4 1,411.6 39.5 5.5 937.8 13.3 956.6 5.5 1,157.6 11.2 1,642.3 1,681.5 1,174.3 5.5 133.0 11.4 149.9 5.5 146.7 8.7 160.9 213.9 67.4 18.8 300.1 16.6 98.1 15.8 130.5 — 1.9 6.8 8.7 202.8 9.2 3.8 215.8 1 The Group is party to banking agreements that include a legal right of offset, which enables the overdraft balances of £3.4m (2022: £17.3m) to be settled net with cash balances. These balances have been excluded from contractual cash flows. 2 Excludes deferred income, payments received in excess of amounts recoverable on contracts, tax and social security and other non-financial liabilities. The Group had no derivative financial instruments at 30 June 2023 or 30 June 2022. Barratt Developments PLC Annual Report and Accounts 2023 223 S G Financial Statements 31. Financial risk management continued Liquidity risk continued Company 2023 Loans and borrowings (including bank overdrafts) Trade and other payables1 Intercompany payables Lease liabilities 2022 Loans and borrowings (including bank overdrafts) Trade and other payables¹ Intercompany payables Lease liabilities Carrying amount £m Contractual cash flow £m Less than 1 year £m Notes 1–2 years £m 2–5 years £m Over 5 years £m 22 22 22 22 22 22 22 22 200.0 18.1 354.2 4.2 576.5 200.0 16.7 323.5 4.2 544.4 224.9 18.1 354.2 4.3 601.5 230.4 16.7 323.5 4.3 574.9 5.5 18.1 354.2 1.3 379.1 5.5 16.7 323.5 1.1 346.8 5.5 — — 1.2 6.7 5.5 — — 1.0 6.5 213.9 — — 1.8 215.7 16.6 — — 2.2 18.8 — — — — — 202.8 — — — 202.8 1 Excludes tax and social security and other non-financial liabilities. The Company had no derivative financial instruments at 30 June 2023 or 30 June 2022. Market risk (price risk) Interest rate risk The Group has both interest-bearing assets and interest-bearing liabilities. Floating rate borrowings expose the Group to cash flow interest rate risk, and fixed rate borrowings expose the Group to fair value interest rate risk. The Group has a conservative treasury risk management strategy and the Group’s interest rates are set using fixed rate debt instruments. Due to the level of the Group’s interest cover ratio, and in accordance with the Group’s policy to hedge a proportion of the forecast RCF drawings based on the Group’s three-year plan, no interest rate hedges are currently required. The exposure of the Group’s financial liabilities to interest rate risk is as follows: Group 2023 Financial liability exposure to interest rate risk 2022 Financial liability exposure to interest rate risk Floating rate financial liabilities £m Fixed rate financial liabilities £m Non-interest -bearing financial liabilities £m Total £m — — 200.0 1,169.1 1,369.1 200.0 1,442.3 1,642.3 The Group retained a strong cash position throughout the year and, therefore, the Group did not draw on its RCF during the year and the use of other facilities was minimal. No interest was paid by the Group on floating rate borrowings in 2023 or 2022. Sterling USPP notes of £200.0m were issued on 22 August 2017 with a fixed coupon of 2.77% and a ten-year maturity. These fixed rate notes expose the Group and Company to fair value interest rate risk. The exposure of the Company’s financial liabilities to interest rate risk is as follows: Company 2023 Floating rate financial liabilities 1 £m Fixed rate financial liabilities £m Non-interest -bearing financial liabilities 1 £m Financial liability exposure to interest rate risk 340.7 200.0 2022 Financial liability exposure to interest rate risk1 310.0 200.0 35.8 34.4 Total £m 576.5 544.4 1 In the prior year, interest-bearing loans from Group undertakings of £310.0m were disclosed as non-interest-bearing financial liabilities. These have been reclassified to floating rate financial liabilities. 224 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 31. Financial risk management continued Market risk (price risk) continued Interest rate risk continued The Company’s floating rate financial liabilities comprise interest-bearing loans from other Group undertakings, on which interest was charged at a rate of 4.0% throughout the year (2022: 4.0%). Sensitivity analysis In the year ended 30 June 2023, if UK interest rates had been 1.0% higher (considered to be a reasonably possible change based on forecast peak Bank of England interest rates) and all other variables were held constant, the Group’s pre-tax profit would increase by £9.6m, the Group’s post-tax profit would increase by £7.2m and, as such, the Group’s equity would increase by £7.2m. Credit risk In the majority of cases, the Group receives cash on legal completion for private sales and receives advance stage payments from registered providers for affordable housing. The Group has £1,269.1m (2022: £1,352.7m) on deposit or in current accounts with 14 (2022: 14) financial institutions. Other than this, neither the Group nor the Company has a significant concentration of credit risk, as their exposure is spread over a large number of counterparties and customers. The Group manages credit risk through its credit policy. This limits its exposure to financial institutions with high credit ratings, as set by international credit rating agencies, and determines the maximum permissible exposure to any single counterparty. The maximum exposure to any counterparty at 30 June 2023 was £181.3m (2022: £190.0m) of cash on deposit with a financial institution. The carrying amount of financial assets recorded in the Financial Statements, net of any allowance for losses, represents the Group’s maximum exposure to credit risk. As at 30 June 2023, the Company was exposed to £79.0m (2022: £79.2m) of credit risk in relation to intercompany loans, which are considered to be of low credit risk and fully recoverable, as well as financial guarantees, performance bonds and the bank borrowings of subsidiary undertakings. Further details are provided in notes 29 and 30. Capital risk management (cash flow risk) The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and meet its liabilities as they fall due while maintaining an appropriate capital structure. The Group manages its share capital as equity, as set out in the Statement of Changes in Shareholders’ Equity, and its bank borrowings (being overdrafts and bank loans) and its private placement notes as other financial liabilities, as set out in note 22. The Group is subject to the prevailing conditions of the UK economy and the quantum of the Group’s earnings is dependent upon the level of UK house prices. UK house prices are determined by the UK economy and economic conditions, employment levels, interest rates, consumer confidence, mortgage availability and competitor pricing. The Group’s approach to the management of the principal operational risks of the business is detailed on pages 71 and 72. Other methods by which the Group can manage its short-term and long-term capital structure include: adjusting the level of dividend payments to shareholders (assuming the Company is paying a dividend); issuing new share capital; arranging debt to meet liability payments; and selling assets to reduce debt. 32. Business combinations and Group subsidiary undertakings Consolidation The Financial Statements of subsidiary undertakings are consolidated from the date when control passes to the Group, as defined in IFRS 3, using the acquisition method of accounting up to the date control ceases. All of the subsidiaries’ identifiable assets and liabilities, including contingent liabilities, existing at the date of acquisition are recorded at their fair values. All changes to those assets and liabilities, and the resulting gains and losses that arise after the Group has gained control of the subsidiary are included in the Income Statement. All intra-Group transactions and intercompany profits or losses are eliminated on consolidation. During the prior year, the Group acquired all of the share capital of Gladman Developments Limited. No revision of the acquisition accounting for Gladman Developments Limited was necessary in the current year, and no new acquisitions have been made. The entities listed below, and on the following pages, are subsidiaries of the Company or Group. All are registered in England and Wales or Scotland, with the exception of SQ Holdings Limited, which is registered in Guernsey. Unless otherwise stated, the results of these entities are consolidated within these Financial Statements. Barratt Developments PLC Annual Report and Accounts 2023 225 S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Audit exemption The following UK subsidiaries will take advantage of the audit exemption set out within Section 479A of the Companies Act 2006 for the year ended 30 June 2023. The undertakings listed below are 100% owned, either directly or indirectly, by Barratt Developments PLC. Subsidiary Acre Developments Limited Base East Central Rochdale LLP Base Hattersley LLP Base Regeneration LLP Basildon Regeneration (Barratt Wilson Bowden) Limited BDW (F.R.) Limited BDW (F.R. Commercial) Limited BDW North Scotland Limited Milton Park Homes Limited Wilson Bowden Limited Yeovil Developments Limited Company number SC091934 OC318544 OC318541 OC318540 05876010 05876012 05876013 SC027535 03787306 02059194 05285388 In accordance with Section 479C of the Companies Act 2006, the Company will guarantee the debts and liabilities of the above UK subsidiary undertakings. As at 30 June 2023, the total sum of these debts and liabilities is £32.7m. At 30 June 2023 the Group owned 100% of the ordinary share capital of the following subsidiaries: Subsidiary Acre Developments Limited Advance Housing Limited Ambrose Builders Limited Barratt Bristol Limited Barratt Central Limited Barratt Chester Limited Barratt Commercial Limited Barratt Construction (Southern) Limited Barratt Corporate Secretarial Services Limited Barratt Developments (International) Limited Barratt Dormant (Atlantic Quay) Limited Barratt Dormant (Blackpool) Limited Barratt Dormant (Capella) Limited Barratt Dormant (Cheadle Hulme) Limited Barratt Dormant (Harlow) Limited Barratt Dormant (Riverside Exchange Sheffield C2) Limited Barratt Dormant (Riverside Exchange Sheffield L/M) Limited Barratt Dormant (Riverside Quarter) Limited Barratt Dormant (Riverside Sheffield Building C1) Limited Barratt Dormant (Rugby) Limited Barratt Dormant (Southampton) Limited Barratt Dormant (Thetford) Limited Barratt Dormant (Tyers Bros. Oakham) Limited Barratt Dormant (Walton) Limited Barratt Dormant (WB Construction) Limited Barratt Dormant (WB Developments) Limited Barratt Dormant (WB Properties Developments) Limited Barratt Dormant (WB Properties Northern) Limited Barratt East Anglia Limited Barratt East Midlands Limited Barratt East Scotland Limited Barratt Eastern Counties Limited Barratt Edinburgh Limited Barratt Evolution Limited Barratt Falkirk Limited Barratt Leeds Limited Barratt London Limited Barratt Manchester Limited Barratt Newcastle Limited Barratt North London Limited 226 Registered office Notes 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 58 1 2 1 2 1 1 1 1 1 A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A Subsidiary Barratt Northampton Limited Barratt Northern Limited Barratt Norwich Limited Barratt Pension Trustee Limited Barratt Poppleton Limited Barratt Preston Limited Barratt Properties Limited Barratt Scottish Holdings Limited Barratt South London Limited Barratt South Wales Limited Barratt South West Limited Barratt Southern Counties Limited Barratt Southern Limited Barratt Southern Properties Limited Barratt Special Projects Limited Barratt St Mary’s Limited Barratt St Paul’s Limited Barratt Sutton Coldfield Limited Barratt Trade And Property Company Limited Barratt Urban Construction (East London) Limited Barratt Urban Construction (Northern) Limited Barratt Urban Construction (Scotland) Limited Barratt West Midlands Limited Barratt West Scotland Limited Barratt Woking Limited Barratt York Limited Bart 225 Limited Basildon Regeneration (Barratt Wilson Bowden) Limited BDW (F.R.) Limited BDW (F.R. Commercial) Limited BDW North Scotland Limited BDW Trading Limited Bradgate Development Services Limited Broad Oak Homes Limited C V (Ward) Limited Cameoplot Limited CHOQS 429 Limited Crossbourne Construction Limited David Wilson Estates Limited David Wilson Homes (Anglia) Limited Registered office Notes 1 1 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 2 1 1 2 1 2 1 1 1 1 1 1 51 1 1 1 1 1 1 1 1 1 A A A A A A A A A A A A A A A A A A A A A A A A A A A A Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Audit exemption continued Registered Registered Subsidiary David Wilson Homes (East Midlands) Limited David Wilson Homes (Home Counties) Limited David Wilson Homes (North Midlands) Limited David Wilson Homes (Northern) Limited David Wilson Homes (South Midlands) Limited David Wilson Homes (Southern) Limited David Wilson Homes (Western) Limited David Wilson Homes Land (No 10) Limited David Wilson Homes Land (No 11) Limited David Wilson Homes Land (No 13) Limited David Wilson Homes Land (No 14) Limited David Wilson Homes Land (No 15) Limited David Wilson Homes Limited David Wilson Homes Services Limited David Wilson Homes Yorkshire Limited Decorfresh Projects Limited Dicconson Holdings Limited E. Barker Limited E. Geary & Son Limited English Oak Homes Limited Francis (Springmeadows) Limited Frenchay Developments Limited G.D. Thorner (Construction) Limited G.D. Thorner (Holdings) Limited Gladman Developments Limited Glasgow Trust Limited Hartswood House Limited Hawkstone (South West) Limited Heartland Development Company Limited Idle Works Limited J.G.Parker Limited James Harrison (Contracts) Limited Janellis (No.2) Limited Kealoha 11 Limited Kealoha Limited Kingsoak Homes Limited Knightsdale Homes Limited Lindmere Construction Limited Marple Development Company Limited Meridian Press Limited Milton Park Homes Limited Mountdale Homes Limited Norfolk Garden Estates Limited North West Land Developments Limited Oregon Contract Management Limited Oregon Timber Frame Limited Oregon Timber Frame (England) Limited Redbourne Builders Limited Roland Bardsley Homes Limited Scothomes Limited Scottish Homes Investment Company, Limited office Notes A A A A A A A A A A A A A A A A A A A 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 51 51 1 1 1 2 2 Subsidiary Skydream Property Co. Limited Squires Bridge Homes Limited Squires Bridge Limited Swift Properties Limited The French House Limited Tomnik Limited Trencherwood Commercial Limited Trencherwood Construction Limited Trencherwood Developments Limited Trencherwood Estates Limited Trencherwood Group Services Limited Trencherwood Homes (Holdings) Limited Trencherwood Homes (Midlands) Limited Trencherwood Homes (South Western) Limited Trencherwood Homes (Southern) Limited Trencherwood Homes Limited Trencherwood Housing Developments Limited Trencherwood Investments Limited Trencherwood Land Holdings Limited Trencherwood Land Limited Trencherwood Retirement Homes Limited Vizion (Milton Keynes) Limited VSM (Bentley Priory 1) Limited VSM (Bentley Priory 2) Limited VSM (Bentley Priory 3) Limited VSM (Bentley Priory 4) Limited VSM (Bentley Priory 5) Limited VSM (Bentley Priory 6) Limited Ward Holdings Limited Ward Homes (London) Limited Ward Homes (North Thames) Limited Ward Homes (South Eastern) Limited Ward Homes Group Limited Ward Homes Limited Ward Insurance Services Limited Wards Construction (Industrial) Limited Wards Construction (Investments) Limited Wards Country Houses Limited Waterton Tennis Centre Limited WBD (Wokingham) Limited Westcountry Land (Union Corner) Limited William Corah & Son Limited William Corah Joinery Limited Wilson Bowden (Atlantic Quay Number 2) Limited Wilson Bowden (Ravenscraig) Limited Wilson Bowden City Homes Limited Wilson Bowden Developments Limited Wilson Bowden Group Services Limited Wilson Bowden Limited Yeovil Developments Limited office Notes A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A A 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 29 1 1 1 1 1 1 1 1 1 1 1 A A A A Barratt Developments PLC Annual Report and Accounts 2023 227 A A A A A A A A A A A A A A A A A A A A A A A A A A A S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Audit exemption continued Subsidiaries of the Group which are management companies limited by guarantee: Subsidiary 28-33 Imperial Park Management Company Limited Abbey Gate Residents Management Company Limited Abbey View Residents Management Company Limited Abbotts Green (Woolpit) Management Company Limited Abbotts Meadow (Steventon) Management Company Limited Adderbury Fields Management Company Limited Aldhelm Court Management Company Limited Amberswood Rise Management Company Limited Ambler’s Meadow (East Ardsley) Management Company Limited Applegarth Manor (Oulton) Management Company Limited Applegate (Sittingbourne) Management Company Limited Ashridge Grange (Wokingham) Management Company Limited Aylesham (Central) Residents Management Company Limited Aylesham Village (Barratt) Residents Management Company Limited B5 Central Residents Management Company Limited Baggeridge Village Management Company Limited Barley Fields Management Company Limited Barum Knoll, Barnstaple Management Company Limited Beaufort Park (Wotton Bassett) Management Limited Beavans House Management Company Limited Beck Lane, Sutton-in-Ashfield (The Hawthorns) Management Company Limited Beeston Quarter Apartments (Beeston) Management Company Limited Belle Vue (Doncaster) Management Company Limited Bentley Fields Residents Management Company Limited Bermondsey Heights Residents Energy Management Company Limited Bermondsey Heights Residents Management Company Limited Berry Acres (Paignton) Management Company Limited Bilberry Chase Residents Management Company Limited Birds Marsh View Chippenham Apartment Resident Management Company Limited Bishop Fields (Hereford) Management Company Limited Bishop Park (Henfield) Management Company Limited Bishops Green (Wells) Management Company Limited Bishop’s Hill Residents Management Company Limited Blackberry Park Residents Management Company Limited Blackdown Heights (Crimchard) Management Company Limited Blackhorse View Energy Centre Management Company Blackhorse View Residents Management Company Blackwater Reach (Southminster) Management Company Limited Blossomfields Residents Management Company Limited Bluebell Woods (Wyke) Management Company Limited Blythe House Management Company Limited Bodington Manor (Adel) Management Company Limited Bowds House Management Company Limited Braid Park (Tiverton) Management Company Limited Brindsley (Old Mill Farm)Management Company Limited Brooklands (Milton Keynes) Management Company Limited Brue Place Residents Management Company Limited Bruneval Gardens (Wellesley) Management Company Limited Brun Lea Heights Resident Management Company Limited Buckley Gardens (Melksham) Management Company Limited Bure Meadows (Aylsham) Management Company Limited 228 Registered office Notes A, B A, B A, B A, B A, B 26 5 57 14 12 5 30 57 10 10 11 10 A, B A, B A, B A, B A, B A, B A, B 11 A, B 49 23 5 10 31 50 1 26 8 6 23 4 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 4 A, B 40 5 13 20 53 30 23 13 31 1 1 52 5 10 39 9 1 40 60 54 32 10 36 59 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 10 A, B Subsidiary Burlington Road Residents’ Management Company Limited Canal Quarter Resident Management Company Limited Cane Hill Park (Coulsdon) Management Company Limited Cane Hill Park (Gateway) Management Company Limited Canes Meadow (Brixton) Management Company Limited Canford Paddock (Poole) Management Company Limited Carlton Green (Carlton) Management Company Limited Castle Hill (DWH1) Residents Management Company Limited Castlegate & Mowbray Park Management Company Limited Cedar Ridge Management Company Limited Central Area Heat Company Limited Centurion Meadows (Burley) Management Company Limited Centurion Village Management Company Limited Ceres Rise Residents Management Company Limited Chalkers Rise (Peacehaven) Management Company Limited Chapel Gate (Launceston) Management Company Limited Charfield Gardens Management Company Limited Cherry Blossom Meadow (Newbury) Management Company Limited City Heights Apartments (Leicester) Management Company Limited Clements Gate (Poringland 2) Management Company Limited Clipstone Park (Leighton Buzzard) Management Company Limited Coat Grove (Martock) Management Company Limited Colliers Court (Speedwell) Management Company Limited Compass Point (Swanage Grammar School) Management Company Limited Compass Point (Swanage) Management Company Limited Constable Gardens (Residents) Management Company Limited Corinthian Place Management Company Limited Cottam Gardens Resident Management Company Limited Cringleford Heights Management Company Limited Croft Gardens (Phase 2) Management Company Limited Daracombe Gardens Management Company Limited Darwin Green Management Company Limited De Cheney Gardens Management Company Limited De Havilland Place (Hatfield) Limited De Lacy Fields KM8 Management Company Limited De Lacy Fields KM12 Management Company Limited Deddington Grange Management Company Limited Delamere Park (Nunney) Management Company Limited Dickens Gate (Staplehurst) Management Company Limited Dida Gardens (Didcot) Management Company Limited Donnington Heights (Newbury) Management Company Limited Doseley Park Residents Management Company Limited Drayton Meadows Management Company Limited Drovers Court (Micklefield) Management Company Limited Dunmore Road (Abingdon) Management Company Limited Dunstall Park (Tamworth) Residents Management Company Limited Earls Park Management Company Limited East Ham Market Energy Centre Management Company East Ham Market Residents Management Company Eastman Village Energy Centre Management Company Limited Registered office Notes A, B 1 16 54 53 40 46 9 8 A, B A, B A, B A, B A, B A, B A, B 6 A, B 10 42 54 36 21 10 40 10 12 A, B A, B A, B A, B A, B A, B A, B A, B A, B 8 A, B 54 A, B 54 A, B 40 13 A, B A, B 46 A, B 46 14 47 36 A, B A, B A, B A, B A, B 61 A, B 12 33 A, B A, B 54 A, B 30 A, B 22 A, B 5 A, B 5 A, B 5 A, B 50 A, B 8 A, B 42 A, B 12 5 23 9 12 20 30 1 1 1 A, B A, B A, B A, B A, B A, B A, B A, B A, B Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Audit exemption continued Subsidiary Eastman Village Residents Management Company Limited Ecclesden Park (Angmering) Management Company Limited Edwalton (Sharp Hill) Management Company Limited Eldebury Place (Chertsey) Management Company Limited Elderwood (Bannerdale) Management Company Limited Elm Tree Park (Rainworth) Management Company Limited Elworthy Place (Wiveliscombe) Management Company Limited Elysian Fields (Adel) Management Company Limited Embden Grange (Tavistock) Management Company Limited Emmet’s Reach (Birkenshaw) Management Company Limited Ersham Park (Hailsham) Management Company Limited Fairfield Croft Management Company Limited Fairfield (Stony Stratford) Management Company Limited Fairway Gardens (Rusington) Management Company Limited Farrier Place – Canford Paddock Phase 2 (Poole) Management Company Limited Ferris House Management Company Limited Filwood Park Management Company Limited Finchwood Park Management Company Limited Folliott’s Manor Residents Management Company Limited Forest Walk, Whiteley Management Company Limited Fradley Manor Management Company Limited Franklin Gardens (Darwin Green) Management Company Limited Freemen’s Meadow Residents Management Company Limited Garnett Wharf (Otley) Management Company Limited Gerway Management Limited Gilden Park (Old Harlow) Residents Management Company Limited Gillies Meadow (Basingstoke) Management Company Limited Glenvale Park Management Company Limited Grange Park (Hampsthwaite) Management Company Limited Great Dunmow Grange Management Company Limited H2363 Limited Hallam Park Residents Management Company Limited Hampton Water Management Company Limited Hanwood Park Community Partnership Limited Harbour Place (Bedhampton) Management Company Limited Harbourside (East Quay Apartments 13–21 & 31–39) Management Company Limited Harclay Park Management Company Limited Harlow Gateway Limited Hartley Brook (Netherton) Management Company Limited Haskins House Management Company Limited Hawley Gardens Management Company Limited Hayes Village Energy Centre Management Company Limited Hayes Village Resident Management Company Limited Heather Croft (Pickering) Management Company Limited Heathwood Park (Lindfield) Management Company Limited Helme Ridge (Meltham) Management Company Limited Henbrook Gardens Management Company Limited Hendon Waterside Energy Centre Management Company Limited Hendon Waterside Residents Management Company Limited Hengist Field Management Company Limited Heron House (Wichelstowe) Management Company Limited Hesslewood Park Management Company Limited Registered office Notes A, B 1 A, B 18 48 53 9 9 31 10 40 54 10 6 54 28 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 46 A, B 54 13 7 20 48 20 14 A, B A, B A, B A, B A, B A, B A, B 26 A, B 9 40 8 A, B A, B A, B 12 A, B 43 10 18 50 23 15 17 35 A, B A, B A, B A, B A, B A, B A, B A, B 29 A, B 57 A, B 25 A, B A, B A, B 36 A, B A, B 9 1 1 1 9 28 54 20 1 A, B A, B A, B A, B A, B A, B 1 A, B 55 1 A, B A, B 10 A, B Subsidiary Hewenden Ridge (Cullingworth) Management Company Limited Hidcote House Management Company Limited High Elms Park (Hullbridge) Management Company Limited High Street Quarter Energy Centre Management Company Limited High Street Quarter Residents Management Company Limited Highgrove Gardens (Romsey) Management Company Limited Hillside Gardens (Orchard RW) Residents Management Company Limited Hollygate Park (Cotgrave) Management Company Limited Infinity Park Derby Management Limited Honeymans Helm (Highworth) Management Company Limited Inglewhite Meadows Residents Management Company Limited Inkersall Road (Chesterfield) Management Company Limited Jenkins House Management Company Limited Keeper’s Meadow Residents Management Company Limited Kennett Heath Management Limited Kilners Grange (Tongham) Management Company Limited Kingfisher Meadow (Horsford) Management Company Limited Kingfisher Meadows Residents Management Company Limited Kingley Gate (Littlehampton) Management Company Limited Kingsbourne (Nantwich) Community Management Company Limited Kingsbrook Estate Management Company Limited Kings Chase Residents Management Company Limited Kingsdown Gate (Swindon) Management Company Limited Kingsley Meadows (Harrogate) Management Company Limited Kings Lodge (Hatfield) Management Company Limited Kipling Road (Ledbury) Residents Management Company Limited Knights Park (Watton) Management Company Limited Knights Rise (Temple Cloud) Management Company Limited Knights View (Landgold) Management Company Limited KP (Macclesfield) Residents Management Company Limited KW (Site B) Management Company Limited Ladden Garden Village Apartment Blocks BCD Management Company Limited Ladden Garden Village Management Company Limited Lakeside Walk (Hamworthy) Management Company Limited Lancaster Gardens Management Company Limited Lancaster Gardens (Phase 2) Management Company Limited Landmark Square Wokingham Management Limited Langham Mews Management Company Limited Languard View (Dovercourt) Residents Management Company Limited Lavender Grange (Stondon) Resident Management Company Limited Lavendon Fields (Olney) Residents Management Company Limited Lay Wood (Devizes) Management Company Limited Letcombe Gardens (Grove) Management Company Limited Linmere (Houghton Regis) Residents Management Company Limited Registered office Notes A, B 9 39 47 1 1 A, B A, B A, B A, B 46 A, B 40 A, B 16 1 59 8 9 1 23 8 53 14 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 23 A, B 53 A, B 8 A, B 16 25 13 6 25 20 54 30 54 26 12 30 30 35 6 6 12 44 14 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 54 A, B 57 A, B 13 41 15 A, B A, B A, B Barratt Developments PLC Annual Report and Accounts 2023 229 S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Audit exemption continued Subsidiary Lock Keeper’s Gate (Low Barugh) Management Company Limited Locksbridge Park (Andover) Management Company Limited Lockwood Fields (Chidswell) Management Company Limited Lordswood Gardens Residents Management Company Limited Lubbesthorpe R5 Management Company Limited Lucerne Fields (Ivybridge) Management Company Limited Luneside Mills Management Company Limited Lyde View Residents Management Company Limited Macclesfield Road Management Company Limited Madgwick Park Management Company Limited Marham Park Management Company Limited Market Warsop (Stonebridge Lane) Management Company Limited Marlborough Grove Estate Management Company Limited Marston Park (Marston Moretaine) Management Company Limited Martello Lakes (Barratt) Resident Management Company Limited Martello Lakes (Hythe) Resident Management Company Limited Martingale Chase (Newbury) Management Company Limited Meadowburne Place (Willingdon) Management Company Limited Meadowfields (Boroughbridge) Management Company Limited Meadow View Watchfield Management Company Limited Melton Mowbray (Kirby Lane) Management Company Limited Merlin Gate (Newent) Management Company Limited Mill Brook (Westbury) Management Company Limited Millbrook Park (Phase 9) Energy Centre Management Company Limited Millbrook Park (Phase 9) Residents’ Management Company Limited Mill Springs (Whitchurch) Management Company Limited Minerva (Apartments) Management Company Limited Monarchs Keep (Bursledon) Management Company Limited Montague Park No2 (Buckhurst Farm) Management Company Limited Monument House Management Company Limited Moorland Gate (Bishops Lydeard) Management Company Limited Mortimer Park (Driffield) Management Company Limited Mortimer Place (Hatfield Peverel) Residents Management Company Limited Morton Meadows (Thornbury) Management Company Limited Nant Y Castell (Caldicot) Management Company Limited Needham’s Grange Residents Management Company Limited Needingworth Park Residents Management Company Limited Nerrols Grange (Taunton) Management Company Limited Netherwood (Darfield) Management Company Limited Newbery Corner Management Company Ltd New Heritage (Bordon) Management Company Limited New Mill Quarter (BL) Residents Management Company Limited New Mill Quarter Estate Resident Management Company Limited 230 Registered office Notes A, B 10 12 10 A, B A, B 5 A, B 60 40 8 10 36 46 18 16 16 54 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 8 A, B 11 A, B 8 54 A, B A, B 9 A, B 13 60 50 59 1 1 34 40 46 12 54 50 9 14 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 50 A, B 33 20 A, B A, B 56 A, B 13 54 13 46 8 A, B A, B A, B A, B A, B 8 A, B Subsidiary Niveus Walk Management Company Limited North Abington Management Company Limited Northfield Park (Patchway) Management Company Limited Northstowe Residents Management Company Limited Northwalls Grange (Taunton) Management Company Limited Norton Farm Management Company Limited Notton Wood View (Royston) Management Company Limited Oak Hill Mews Management Company Limited Oakfield Village Estate Management Company Limited Oakfields Residential Management Company Limited Oakhill Gardens (Swanmore) Management Company Limited Oaklands (Pontefract) Management Company Limited Oatley Park Management Company Limited Okement Park (Okehampton) Management Company Limited Olive Park Residents Management Company Limited Orchard Gate (Kingston Bagpuize) Management Company Limited Orchard Green Estate Management Company Limited Orchard Meadows (Appleton) Management Company Limited Oughtibridge Valley (Oughtibridge) Management Company Limited Overstone Gate Residents Management Company Limited Parc Fferm Wen (St Athen) Management Company Limited Parish Brook Residents Management Company Limited Park Farm (Thornbury) Community Interest Company Patch Meadows (Somerton) Management Company Limited Pates House Management Company Limited Pavilion Square (Phase 2) Management Company Limited Pavilion Square (Pocklington) Management Company Limited Peasedown Meadows Management Company Limited Pebble Walk (Hayling Island) Management Company Limited Pembridge Park (Phase 2) Management Company Limited Pembroke Park (Cirencester) Management Company Limited Pen Bethan (Falmouth) Management Company Limited Penndrumm (Looe) Management Company Limited Penning Ridge (Penistone) Management Company Limited Pentref Llewelyn (Penllergaer) Management Company Limited Perry Court (Faversham) Management Company Limited Phase 3 Clark Drive LGV Management Company Limited Phase 3 Clark Drive 2 LGV Management Company Limited Phase 6 Apartments LGV Management Company Limited Phoenix And Scorseby Park Management Company Limited Phoenix Quarter — Apt — Management Company Limited Phoenix Quarter Estate Management Company Limited Pinewood Park (Formby) Management Company Limited Pinn Brook Park (Monkerton) Management Company Limited PL2 Plymouth (2016) Limited Poppy Fields (Cottingham) Management Company Limited Portman Square West Village Reading Management Company Limited Preston Grange Residents Management Company Limited Registered office Notes A, B 7 A, B 41 A, B 32 54 30 20 54 20 16 5 18 9 62 31 17 12 16 45 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 9 A, B 56 33 32 30 30 39 6 6 30 54 26 30 31 40 9 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 10 A, B 54 32 32 A, B A, B A, B 32 A, B 6 A, B 49 49 57 40 40 6 12 A, B A, B A, B A, B A, B A, B A, B 3 A, B Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Audit exemption continued Subsidiary Priestley House Management Company Limited Priory Fields (Pontefract) Management Company Limited Prospect Rise (Whitby) Management Company Limited Quarter Jack Park (Wimborne) Management Company Limited Raleigh Holt (Barnstaple) Management Company Limited Ramsey Park Residents Management Company Limited Ravenhill Park Management Company Limited Redhayes Management Company Limited Redlodge (Suffolk) Management Company Limited Redwood Heights (Plymouth) Management Company Limited Residents Management Company (Beaconside) Limited Richmond Park (Whitfield) Residents Management Company Limited Ridgeway Views Energy Centre Management Company Ridgeway Views Residents Management Company River Meadow (Stanford in the Vale) Management Company Limited River Whitewater Management Company (Hook) Limited Riverdown Park (Salisbury) Management Company Limited Riverside Grange (Farmbridge) Management Company Limited Romans Edge Godmanchester Management Company Limited Romans’ Quarter (Bingham) Residential Management Company Limited Rose and Lillies Residents Management Company Limited Rosewood Park Bexhill Residents Management Company Limited RV North Petherton Residents Management Company Limited Ryebank Gate (Yapton) Management Company Limited Salters Brook (Cudworth) Management Company Limited Sandridge Place (Melksham) Management Company Limited Saunderson Gardens Management Co Limited Sawbridge Park (Sawbridgeworth) Management Company Limited Saxon Corner (Emsworth) Management Company Limited Saxon Dean (Silsden) Management Company Limited Saxon Fields (Cullompton) Management Company Limited Saxon Fields (Thanington) Management Company Limited Saxon Gate (Leonard Stanley) Management Company Limited Saxon Gate (Stamford Bridge) Management Company Limited Saxon Mills (Hassocks) Management Company Limited Scotgate Ridge (Honley) Management Company Limited Shaftmoor Land Residents Management Company Limited Silkwood Gate (Wakefield) Management Company Limited Spinney Fields Residents Management Company Limited Spitfire Green, (Manston) Residents Management Company Limited Spring Valley View (Clayton) Management Company Limited Springfield Place Resident Management Company Limited St Andrews View (Morley) Management Co. Limited Registered office Notes A, B A, B 54 10 6 46 A, B A, B 40 A, B 56 20 40 14 40 57 8 1 1 12 10 54 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 9 A, B 54 A, B 16 A, B 23 8 A, B A, B 32 A, B 28 54 A, B A, B 10 A, B 10 16 A, B A, B 46 A, B 10 40 A, B A, B 11 A, B 10 A, B 6 A, B 53 54 20 9 5 A, B A, B A, B A, B A, B 49 A, B 10 4 54 A, B A, B A, B Subsidiary St James Gardens (Wick) Management Company Limited St James Management Company Limited St Johns View Residents Management Company Limited St Rumbolds Fields Management Company Limited St. Andrews Place (Morley) Management Co. Limited St. John’s Walk (Hoylandswaine) Management Company Limited St. Mary’s Park (Hartley Wintney) Management Company Limited St. Oswald’s View (Methley) Management Company Limited Stallard House Management Company Limited Stansted Road (Kingswood Place Elsenham) Management Company Limited Stotfold Park Management Company Limited Summersfield (Papworth) Management Company Limited Swallows Field (Hemel Hempstead) Management Company Ltd Swan Mill (Newbury) Management Company Limited Swinbrook Park (Carterton) Management Company Limited Sydney Place (Crewe) Management Company Limited Talbot and Clockmakers Management Company Limited Tarka Ridge (Yelland) Management Company Limited Templar’s Chase (Wetherby) Management Company Limited The Acorns and Hunters Wood Management Company Limited The Belt Open Space Management Co Limited The Bridleways (Eccleshill) Management Company Limited The Causeway Park (Petersfield) Management Company Limited The Chase (Newbury) Management Company Lmited The Chocolate Works Management Company Limited The Courtyard (Darwin Green) Management Company Limited The Furlongs (Westergate) Management Company Limited The Glassworks (Catcliffe) Management Company Limited The Grange (Lightcliffe) Management Company Limited The Meads (Frampton Cotterell) Management Company Limited The Mounts Residents Management Company Limited The Old Meadow Management Company Limited The Orchards (Hildersley) Management Company Limited The Paddocks (Skelmanthorpe) Management Company Limited The Paddocks (Southmoor) Management Company Limited The Pastures (Knaresborough) Management Company Limited The Pavilions Management Company (Southampton) Limited The Pavilions Resident Management Company Limited The Poppies (Maidstone) Residents Management Company Limited The Spires (Chesterfield) Management Company Limited The Vineyards Management Company Limited The Woodlands (Sturry) Management Company Limited Thornbury Gardens Dinnington Management Company Limited Townsend Landing (Henstridge) Management Company Limited Tranby Fields Management Company Limited Treledan (Saltash) Management Company Limited Trumpington Meadows Residents Management Company Limited Trumpington (Phase 8—11) Management Company Limited Trumpington Vista Management Company Limited Union Park (Falmouth) Management Company Limited Upton Gardens Energy Centre Management Company Upton Gardens Residents Management Company Registered office Notes A, B A, B A, B A, B A, B A, B 29 9 57 16 54 54 25 A, B 9 39 18 10 54 22 12 12 57 23 40 9 54 6 54 34 12 37 16 46 10 10 13 5 41 10 10 12 6 46 23 11 26 30 11 10 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 31 A, B 10 31 10 10 16 40 1 1 A, B A, B A, B A, B A, B A, B A, B A, B Barratt Developments PLC Annual Report and Accounts 2023 231 S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Audit exemption continued Subsidiary Victoria Heights (Alphington) Management Company Limited Wadsworth Gardens (Cleckheaton) Management Company Limited Waite House Management Company Limited Waldmers Wood Management Company Limited Walton Gate (Felixstowe) Management Company Limited Warboys Management Company Limited Warren Grove (Storrington) Management Company Limited Waterside (The Quays Barry) Management Company Number 1 Limited Waterside (The Quays Barry) Management Company Number 2 Limited Waterside (The Quays Barry) Management Company Number 3 Limited Waterside Trentham Residents Management Company Limited Watkin Road Energy Centre Management Company Watkin Road Residents Management Company Wayland Fields Residents Management Company Limited WBD (Kingsway Management) Limited Weavers Chase (Golcar) Management Company Limited Webheath (Redditch) Management Company Limited Wedgwood Residents Management Company Limited Wendel View Residents Management Company Limited Westbridge Park (Auckley) Management Company Limited Westminster View (Clayton) Management Company Limited Weston Meadows, Calne Management Company Limited Whalley Road (Barrow) Management Company Limited White Lias House Management Company Limited Whittlesey Lakeside (Cambridge) Management Company Limited Wichelstowe Estate Management CIC Wigmore Park Management Company Limited Willow Grove (Stopsley) Management Company Limited Willow Grove (Wixams) Management Company Limited Willow Lane (Beverley) Management Company Limited Willow Lane (Beverley) Phase 2 Management Company Limited Willowmead (Wiveliscombe) Management Company Limited Winnington View Management Company Limited Winnington Village Community Management Company Limited Winnycroft Residents Management Company Limited Withies Bridge Management Company Ltd Whittingham Residents Management Company Limited Woodhall Grange Management Company Limited Woodland Heath Residential Management Company Limited Wychwood Park (Haywards Heath) Management Company Limited Registered office Notes A, B A, B 40 54 1 57 14 38 49 29 A, B A, B A, B A, B A, B A, B 29 A, B 29 A, B 36 A, B 1 1 14 1 9 54 5 56 26 10 50 8 23 21 1 10 8 54 6 19 50 26 26 32 30 36 6 14 53 A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B A, B 232 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Other subsidiary entities: Subsidiary Base East Central Rochdale LLP Base Hattersley LLP Base Regeneration LLP Base Werneth Oldham LLP BLLQ LLP BLLQ2 LLP SQ Holdings Limited Vizion (MK) Properties LLP Ash Tree Court Management Co. Ltd Aspects Management Company Limited Buckshaw Village Management Company Limited Famous Five Glenfield Limited Foxcote Mead Management Company Limited GWQ Management Limited Hazelmere Management Company Limited Interlink Park Management Company Limited Meridian Business Park Extension Management Company Limited Newbury Racecourse Management Limited Nottingham Business Park Management Company Limited Nottingham Business Park (Orchard Place) Management Company Limited Optimus Point Management Company Limited Pye Green Management Company Limited Riverside Exchange Management Company Limited Romulus Management Company Limited Runshaw Management Company Limited Springfield Village Estate Limited Stoneyfield Management Limited WBD Blenheim Management Company Limited WBD (Riverside Exchange Sheffield B) Limited WBD Riverside Sheffield Building K Limited West Village Reading Management Limited Registered office 1 1 1 1 1 1 53 1 1 27 8 1 1 24 1 1 1 12 1 1 1 20 1 1 8 16 1 1 1 1 12 Notes A A A A A A A A A, D A A A, C A A, C A, D A, D A, C A, D A, C A, C A, C A, C A, C A, D A A, C A A, C A, C A, C A, D Class of share held N/A N/A N/A N/A N/A N/A Ordinary N/A Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary/Preference Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary % of shares owned N/A N/A N/A N/A N/A N/A 90% N/A 0% 50% 50% 50% 100% 0% 0% 0% 2% 0% 2% 2% 0% 17% 22% 4% 100% 16% 100% 2% 100% 100% 0% Barratt Developments PLC Annual Report and Accounts 2023 233 S G Financial Statements 32. Business combinations and Group subsidiary undertakings continued Registered Office 1. Barratt House, Cartwright Way, Forest Business Park, Bardon 37. Watson, Glendevon House, 4 Hawthorn Park, Coal Road, Hill, Coalville, Leicestershire LE67 1UF Leeds, West Yorkshire LS14 1PQ 2. Buchanan Gate, Cumbernauld Road, Stepps, Glasgow G33 6FB 3. 111 West Street, Faversham, Kent ME13 7JB 4. Barratt East London, 3rd Floor Press Centre, Here East, 13 East Bay Lane, Stratford, London E15 2GW 5. One Eleven, Edmund Street, Birmingham, West Midlands B3 2HJ 6. Unit 11, Omega Business Park, Omega Business Village, Thurston Road, Northallerton, North Yorkshire DL6 2NJ 7. Discovery House, Crossley Road, Stockport, Greater Manchester, England, SK4 5BH 8. RMG House, Essex Road, Hoddesdon, Hertfordshire EN11 0DR 9. Gateway House, 10 Coopers Way, Southend-on-Sea, Essex SS2 5TE 10. Vantage Point, 23 Mark Road, Hemel Hempstead, Hertfordshire HP2 7DN 11. Weald House, 88 Main Road, Sundridge, Kent, United Kingdom, 38. Cumberland Court, 80 Mount Street, Nottingham, Nottinghamshire, United Kingdom, NG1 6HH 39. Ashford House, Grenadier Road, Exeter, Devon, EX1 3LH 40. Woodwater House, Pynes Hill, Exeter, Devon EX2 5WR 41. Unit 7, Astra Centre, Edinburgh Way, Harlow, Essex, England, CM20 2BN 42. Norgate House Tealgate, Charnham Park, Hungerford, Berkshire RG17 0YT 43. Barratt House, Sandy Way, Grange Park, Northampton NN4 5EJ 44. Unit 7, Hockliffe Business Park, Watling Street, Hockliffe, Leighton Buzzard, Bedfordshire LU7 9NB 45. 377–379 Hoylake Road, Moreton, Wirral, Merseyside CH46 0RW 46. 128 Pyle Street, Granary Court, Newport, Isle of Wight PO30 1JW 47. Woodland Place, Wickford Business Park, Hurricane Way, TN14 6ER Wickford SS11 8YB 12. Cygnet House, Cygnet Way, Hungerford, Berkshire RG17 0YL 13. Units 1, 2 & 3 Beech Court, Wokingham Road, Hurst, Reading 48. 154–155 Great Charles Street, Queensway, Birmingham B3 3LP 49. Thamesbourne Lodge, Station Road, Bourne End, RG10 0RU Buckinghamshire SL8 5QH 14. Barratt House, 7 Springfield Lyons Approach, Chelmsford, 50. 1 West Point Court, Great Park Road, Bradley Stoke, Bristol Essex CM2 5EY BS32 4PY 15. The Maltings, Hyde Hall Farm, Sandon, Hertfordshire SG9 0RU 16. 2 Hills Road, Cambridge, Cambridgeshire CB2 1JP 17. Unit A5 Optimum Business Park, Optimum Road, Swadlincote, Derbyshire, England, DE11 0WT 18. Fisher House, 84 Fisherton Street, Salisbury SP2 7QY 19. 6 Alpha Court, Monks Cross Drive, York, Yorkshire, YO32 9WN 20. 60 Whitehall Road, Halesowen B63 3JS 21. Unit 1 Forder Way Cygnet Park, Hampton, Peterborough, United Kingdom, PE7 8GX 22. Wellstones House, Wellstones, Watford, Hertfordshire WD17 2AF 23. Remus 2, 2 Cranbook Way, Solihull Business Park, Solihull, West Midlands B90 4GT 24. Wallis House, Great West Road, Brentford, Middlesex TW8 9BS 25. Firstport Property Services Limited, Marlborough House, Wigmore Place, Wigmore Lane, Luton LU2 9EX 26. Chiltern House, 72–74 King Edward Street, Macclesfield, Cheshire SK10 1AT 27. 100 Avebury Boulevard, Milton Keynes England, MK9 1FH 28. 41a Beach Road, Littlehampton, West Sussex, England, DN17 5JA 29. Oak House, Village Way, Cardiff CF15 7NE 30. Unit 2 Beech Court, Wokingham Road, Hurst, Twyford, Berkshire RG10 0RQ 31. Vanguard House, Yeoford Way, Marsh Barton, Exeter EX2 8HL 32. Barratt House, 710 Waterside Drive, Aztec West, Almondsbury, Bristol, BS32 4UD 33. Whittington Hall, Whittington Road, Worcester, WR5 2ZX 34. Building 4, Dares Farm Business Park, Farnham Road, 51. Blairton House, Old Aberdeen Road, Balmedie, Aberdeen, Scotland, AB23 8SH 52. C/O East Block Group, The Colchester Centre, Hawkins Road, Colchester, Essex CO 2 8JX 53. Compton House, The Guildway, Old Portsmouth Road, Guildford, GU3 1LR 54. Queensway House, 11 Queensway, New Milton, Hampshire BH25 5NR 55. 100 High Street, Whitstable, Kent, CT5 1AT 56. 1a Fortune Close, Riverside Business Park, Northampton NN3 9HT 57. Unit 7, Portal Business Park, Eaton Lane, Tarporley, Cheshire CW6 9DL 58. Telford House, 3 Mid New Cultins, Edinburgh, Midlothian EH11 4DH 59. Wellington House, Great Park Road, Bradley Stoke, Bristol, BS32 4PY 60. 72–74 King Edward Street, Macclesfield, Cheshire, SK10 1AT 61. Second Floor Lakeside 300, Broadland Business Park, Norwich, Norfolk, England, NR7 0WG 62. Unit 1, Great Park Road, Bradley Stoke, Bristol, United Kingdom, BS32 4PY Notes A Owned through another Group company. B Entity is limited by guarantee and is a temporary member of the Group. Assets are not held for the benefit of the Group and the entity has no profit or loss in the year. C The Group is a minority shareholder but has voting control. D The Group does not own any shares but has control via directors who are Ewshot, Farnham, Surrey GU10 5BB employees of the Group. 35. Ground Floor, Cromwell House, 15 Andover Road, Winchester, Hampshire SO23 7BT 36. 4 Brindley Road, City Park, Manchester M16 9HQ 234 Barratt Developments PLC Annual Report and Accounts 2023Notes to the Financial Statements continuedYear ended 30 June 2023 S G Financial Statements Definitions of alternative performance measures and reconciliation to IFRS (unaudited) The Group uses a number of APMs that are not defined within IFRS. The Directors use these APMs, along with IFRS measures, to assess the operational performance of the Group as detailed in the key performance indicators section of the Strategic Report on pages 16 to 19. These APMs may not be directly comparable with similarly titled measures reported by other companies and they are not intended to be a substitute for, or superior to, IFRS measures. Definitions and reconciliations of the financial APMs used to IFRS measures, are included below: Gross margin is defined as gross profit divided by revenue: Revenue per Consolidated Income Statement (£m) Gross profit per Consolidated Income Statement (£m) Gross margin Adjusted gross margin is defined as adjusted gross profit divided by revenue: Revenue per Consolidated Income Statement (£m) Adjusted gross profit per Consolidated Income Statement (£m) Adjusted gross margin Operating margin is defined as profit from operations divided by revenue: Revenue per Consolidated Income Statement (£m) Profit from operations per Consolidated Income Statement (£m) Operating margin Adjusted operating margin is defined as adjusted profit from operations divided by revenue: Revenue per Consolidated Income Statement (£m) Adjusted profit from operations per Consolidated Income Statement (£m) Adjusted operating margin 2023 5,321.4 974.9 18.3% 2023 5,321.4 1,130.4 21.2% 2023 5,321.4 707.4 13.3% 2023 5,321.4 862.9 16.2% 2022 5,267.9 899.9 17.1% 2022 5,267.9 1,308.1 24.8% 2022 5,267.9 646.6 12.3% 2022 5,267.9 1,054.8 20.0% Adjusted earnings for adjusted basic earnings per share and adjusted diluted earnings per share are calculated by excluding adjusted items and any associated net tax amounts from profit attributable to ordinary shareholders of the Company: Profit attributable to ordinary shareholders of the Company Net cost associated with legacy properties per note 4 Cost associated with JV legacy properties per note 4 Tax impact of adjusted items Adjusted earnings 2023 £m 530.3 155.5 23.7 (39.3) 670.2 2022 £m 515.1 408.2 4.3 (82.5) 845.1 Barratt Developments PLC Annual Report and Accounts 2023 235 S G Financial Statements Definitions of alternative performance measures and reconciliation to IFRS (unaudited) continued Net cash is defined in note 18. ROCE is calculated as earnings before amortisation, interest, tax and operating adjusting items for the year, divided by average net assets adjusted for goodwill and intangibles, tax, net cash, derivative financial instruments and provisions in relation to legacy properties. Profit from operations Amortisation of intangible assets Cost associated with legacy properties Share of post-tax profit from JVs and associates Adjusted cost related to JV legacy properties Earnings before amortisation, interest, tax and adjusted items Group net assets per Consolidated Balance Sheet Less: Other intangible assets per Consolidated Balance Sheet Goodwill per Consolidated Balance Sheet Current tax (assets)/liabilities Deferred tax liabilities Cash and cash equivalents Loans and borrowings Provisions in relation to legacy properties Prepaid fees Capital employed Three point average capital employed 2023 £m 707.4 10.5 155.5 8.8 23.7 905.9 30 June 2023 £m 5,596.4 31 December 2022 £m 5,656.6 30 June 2022 £m 5,631.3 31 December 2021 £m 5,589.7 (194.9) (852.9) (31.1) 53.5 (1,269.1) 203.4 612.3 (3.7) 4,113.9 4,075.6 (200.1) (852.9) (0.1) 44.0 (1,166.5) 202.0 485.3 (4.6) 4,163.7 (205.4) (852.9) (9.9) 45.1 (1,352.7) 217.3 479.5 (3.2) 3,949.1 3,625.8 (100.0) (805.9) (13.7) 9.9 (1,336.3) 208.7 73.6 (4.1) 2022 £m 646.6 4.3 408.2 23.3 4.3 1,086.7 30 June 2021 £m 5,452.1 (100.0) (805.9) 1.0 8.9 (1,518.6) 205.3 67.6 (4.1) 3,621.9 3,306.3 2023 905.9 4,075.6 22.2% 2022 1,086.7 3,625.8 30.0% Earnings before interest, tax, adjusted items and defined benefit scheme charges (from table above) (£m) Three point average capital employed (from table above) (£m) ROCE 236 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Underlying ROCE is calculated as ROCE (above) with net assets also adjusted for land payables: Capital employed (from ROCE table above) Adjust for land payables Capital employed adjusted for land payables Three point average capital employed adjusted for land payables 31 December 2022 £m 4,163.7 622.3 4,786.0 30 June 2023 £m 4,113.9 506.7 4,620.6 4,696.4 31 December 2021 £m 3,621.9 682.3 4,304.2 30 June 2022 £m 3,949.1 733.6 4,682.7 4,317.2 Earnings before interest, tax and adjusted items (from table above) (£m) Three point average capital employed adjusted for land payables (from table above) (£m) Underlying ROCE 2023 905.9 4,696.4 19.3% 30 June 2021 £m 3,306.3 658.3 3,964.6 2022 1,086.7 4,317.2 25.2% For the purpose of determining the Executive Directors’ annual bonus (page 140), capital employed is adjusted for land, land payables, trade payables and, for 2023, inventories currently occupied under the refugee support scheme: Capital employed (from ROCE table above) Adjust for land Adjust for land payables Adjust for trade payables Adjust for inventories currently occupied under the refugee support scheme Capital employed adjusted for land, land payables, trade payables and inventories currently occupied under the refugee support scheme Three point average capital employed adjusted for land, land payables, trade payables and inventories currently occupied under the refugee support scheme 30 June 2023 £m 4,113.9 (3,139.9) 506.7 310.3 31 December 2022 £m 4,163.7 (3,253.7) 622.3 220.4 (11.0) - 30 June 2022 £m 3,949.1 (3,339.9) 31 December 2021 £m 3,621.9 (3,046.1) 733.6 324.0 - 682.3 238.9 - 30 June 2021 £m 3,306.3 (2,946.3) 658.3 289.6 - 1,780.0 1,752.7 1,666.8 1,497.0 1,307.9 1,733.2 1,490.6 Total indebtedness is defined as net (cash)/debt and land payables: Net cash (£m) Land payables (£m) Total indebtedness 2023 2022 (1,069.4) (1,138.6) 506.7 (562.7) 733.6 (405.0) TSR is a measure of the performance of the Group’s share price over a period of three financial years. It combines share price appreciation and dividends paid to show the total return to the shareholders expressed as a percentage. Barratt Developments PLC Annual Report and Accounts 2023 237 S G Financial Statements Five year record (unaudited) Financial five year record Private wholly owned home completions Affordable wholly owned home completions Wholly owned completions (homes) Joint venture completions (homes) Total home completions including JVs Wholly owned completions average selling price (£000) Note Revenue (£m) Gross profit (£m) Gross profit margin (%) Adjusted gross profit (£m) Adjusted gross profit margin (%) Profit from operations (£m) Operating profit margin (%) Adjusted profit from operations (£m) Adjusted operating margin (%) Net finance costs (£m) Share of post-tax income from joint ventures Profit before tax Adjusted profit before tax Basic earnings per share (pence) Adjusted earnings per share (pence) Dividend (interim paid and final proposed) (pence) Special cash payment proposed per share (pence) Total shareholder return (TSR) over three financial years (%) Tangible shareholders’ funds (£m) Tangible net assets per share at year end (pence) Total shareholders’ funds (£m) Total net assets per share at year end (pence) Year-end net (debt)/cash (£m) Year-end total land payables (£m) Year-end total net (indebtedness)/surplus (£m) Average net cash across the financial year (£m) 2019 13,533 3,578 17,111 745 17,856 274.4 4,763.1 1,084.2 22.8% 1,087.4 22.8% 901.1 18.9% 904.3 19.0% (28.8) 39.2 909.8 920.0 73.2 74.1 29.1 17.3 36.8% 3,953.9 388.8 4,869.0 478.8 765.7 960.7 (195.0) 298.3 2020 9,568 2,466 12,034 570 12,604 280.3 3,419.2 614.3 18.0% 631.4 18.5% 493.4 14.4% 507.3 14.8% (29.9) 28.3 491.8 505.7 39.4 40.5 — — 6.1% 3,931.9 386.1 4,840.3 475.3 308.2 791.9 (483.7) 348.3 2021 13,134 3,383 16,517 726 17,243 288.8 4,811.7 1,010.0 21.0% 1,114.7 23.2% 811.1 16.9% 919.0 19.1% (26.6) 27.7 812.2 919.7 64.9 73.5 29.4 — 59.8% 4,545.1 446.3 5,452.1 535.4 1,317.4 658.3 659.1 821.0 2022 2023 13,327 12,456 3,835 17,162 746 17,908 300.2 5,267.9 899.9 17.1% 1,308.1 24.8% 646.6 12.3% 1,054.8 20.0% (27.6) 23.3 642.3 1,054.8 50.6 83.0 36.9 — (4.9%) 4573.0 447.2 5,631.3 550.7 1,138.6 733.6 405.0 957.4 3,922 16,378 828 17,206 319.6 5,321.4 974.9 18.3% 1,130.4 21.2% 707.4 13.3% 862.9 16.2% (11.1) 8.8 705.1 884.3 53.2 67.3 33.7 — 10.6% 4,548.6 466.7 5,596.4 574.2 1,069.4 506.7 562.7 759.1 Three point average capital employed (£m) Return on capital employed (ROCE) (%) 3,180.2 29.9% 3,457.6 15.5% 3,414.5 27.8% 3,625.8 30.0% 4,075.6 22.2% Total land investment (£m) Proportion of total land investment funded by land creditors (%) 16 3,071.6 31.3% 3,112.3 25.4% 2,946.3 22.3% 3,339.9 22.0% 3,139.9 16.1% Weighted average shares in issue during the year (m) Weighted average shares in issue during the year less EBT (m) Number of ordinary shares in issue at year end (m) 23 1,014.2 1,010.4 1,017.0 1,018.2 1,013.9 1,018.3 1,018.3 1,016.4 1,018.3 1,021.9 1,018.7 1,022.6 1,000.1 996.3 974.6 238 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Non-financial five year record SHE audit compliance Injury Incidence Rate Average training days per employee (days/employee) Employee turnover (%) Employee engagement index (%) Number of employees at 30 June Proportion female (%) Graduates, apprentices and trainees on programmes Number of senior managers Proportion female (%) Number of PLC Directors Proportion female (%) Legally completed build area (100m2) Carbon intensity (tonnes per 100m2 legally completed build area) Waste intensity (tonnes per 100m2 legally completed build area) Waste intensity (tonnes per 100m2 house build equivalent area) Diversion of construction waste from landfill (%) Electricity on renewable tariffs (%) Average active sales outlets (inc. JVs) Customer service (HBF Customer Satisfaction Survey) NHBC Pride in the Job Awards (number awarded) 2019 96% 297 4.7 16% 84.5% 6,504 31% 470 290 15% 8 38% 17,196 1.78 6.53 6.25 97% 46.0% 379 5 star 84 2020 96% 256 4.1 10% 84.2% 6,655 31% 492 286 14% 8 38% 12,197 1.80 7.70 6.93 96% 68.0% 366 5 star 92 2021 97% 416 3.9 12% N/A 6,329 31% 426 283 16% 9 44% 16,439 1.78 5.89 6.29 95% 72.0% 343 5 star 93 Owned and unconditional land bank (plots) 66,423 68,393 66,601 Conditional land bank (plots) Owned and controlled land bank (plots) JV owned and controlled land bank (plots) Total owned and controlled land bank including JVs (plots) Land bank years owned (years) Land bank years controlled (years) Land bank total years (owned and controlled) (years) Average selling price of homes in land bank at year end (£000) Land approvals (plots) Land approvals (£m) Planning consents secured in the year (plots) Strategic land plots converted to owned and controlled land bank (plots) Strategic land bank (acres) Expenditure on physical improvement works benefitting local communities (£m) School places provided (number) Home completions from strategically sourced land (homes) Proportion of home completions from strategically sourced land (%) Home completions using MMC (homes) Proportion of home completions using MMC (%) Proportion of home completions using 2016 and later house type range (%) Proportion of home completions EPC rated “B” or above (%) Average DER for completed properties (kgCO2/m2/yr) Average SAP rating of home completions 13,599 11,931 80,022 80,324 5,207 85,229 3.9 0.8 4.7 275 18,448 859.8 18,280 7,915 11,995 506 3,894 4,374 25.6% 3,609 20.0% 36.4% 99% 16.66 84 5,400 85,724 5.7 1.0 6.7 276 9,441 368.1 14,768 3,137 13,271 477 2,211 2,929 24.3% 2,652 21.0% 60.2% 99% 16.59 84 11,041 77,642 4,661 82,303 4.0 0.7 4.7 289 18,067 876.8 14,280 3,507 13,754 572 3,591 4,172 25.3% 4,393 25.0% 65.3% 99% 16.21 85 Note: additional granularity and more detailed sustainability metrics are available on our website at: https://www.barrattdevelopments.co.uk/sustainability/performance-data/data 2022 97% 262 3.3 17% 79.4% 6,837 32% 391 328 17% 9 33% 16,402 1.53 4.97 4.83 96% 76.0% 352 5 star 98 67,687 13,239 80,926 4,548 85,474 3.9 0.8 4.7 322 19,089 1,396.1 14,988 1,663 15,537 699 5,346 4,530 26.4% 4,846 27.0% 77.0% 99% 15.89 85 2023 96%* 289* 4.1 15% 84.4% 6,728 31% 483 331 18% 8 38% 15,609 1.60* 4.31* 4.34* 96%* 87.0% 367 5 star 96 59,248 11,142 70,390 4,356 74,746 3.6 0.7 4.3 331 (812) (14.9) 12,969 777 16,431 726 3,327 3,938 24.0% 5,578 32.0% 71.0% 99% 16.02* 85 Deloitte have provided independent third-party limited assurance in accordance with the International Standard for Assurance Engagements 3000 (ISAE 3000) and Assurance Engagements on Greenhouse Gas Statements (ISAE 3410) issued by the International Auditing and Assurance Standards Board (IAASB) over selected metrics in the above table identified with an *. For Deloitte’s full unqualified assurance opinion, which includes details of the selected metrics assured, our full Carbon Reporting Methodology Statement and a full breakdown of scope 3 GHG emissions, see our website www.barrattdevelopments.co.uk/building-sustainably/our-publications-and-policies/publications. Barratt Developments PLC Annual Report and Accounts 2023 239 S G Financial Statements Glossary Glossary Act The Companies Act 2006 Active outlet A site with at least one plot for sale AGM APM Annual General Meeting Alternative performance measure APPG All-Party Parliamentary Groups Articles The Company’s Articles of Association ASP Average selling price Barratt Barratt Developments PLC and its subsidiary undertakings BEIS BNG BRICk BREEAM Building for Life 12 Department for Business, Energy and Industrial Strategy Biodiversity Net Gain Barratt Risk and Internal Control Framework Building Research Establishment Environmental Assessment Methodology This is the industry standard, endorsed by the government, for well-designed homes and neighbourhoods that local communities, local authorities and developers are invited to use to stimulate conversations about creating good places to live Building regulations The requirements relating to the erection and extension of buildings under UK Law Capital employed Average net assets adjusted for goodwill and intangibles, tax, cash, loans and borrowings, prepaid fees, provisions in respect of legacy properties and derivative financial instruments Confederation of British Industry Charity that runs the global system for disclosure of environmental impacts for investors, companies, cities, states and regions Chief Executive Officer Chief Financial Officer Chartered Institute of Personnel and Development Code COINS Connected Persons UK Corporate Governance Code issued in July 2018 (copy available from www.frc.org.uk) Construction Industry Solutions (software used by the Group) As defined in the EU Market Abuse Regulation COO Chief Operating Officer Contribution margin Housebuild revenue less land and directly attributable build and site costs, divided by housebuild revenue COVID-19 Coronavirus Disease 2019 CRM DBP DTRs EBT ELTIP EMC EPC EPS EQA ESG EU EWS FCA FHS Customer Relationship Management Deferred Bonus Plan Disclosure Guidance and Transparency Rules Barratt Developments Employee Benefit Trust Employee Long-Term Incentive Plan Ethnic Minority Communities Energy Performance Certificate Earnings per share External Quality Assessment Environmental, Social and Governance European Union External Wall System Financial Conduct Authority Future Homes Standard Foundation The Barratt Developments PLC Charitable Foundation FRC FSC Financial Reporting Council Forest Stewardship Council FTSE4Good Equity index series of companies demonstrating strong ESG practices Construction Industry Training Board Competition and Markets Authority FY GDP Financial year ended 30 June Gross Domestic Product CBI CDP CEO CFO CIPD CITB CMA 240 Barratt Developments PLC Annual Report and Accounts 2023 HR HVO IA IAS IASB IEA IFRS IIA IIR IIRC IPA IPCCISA ISAE ISO JVs KPI LED LGBTQ+ lpppd LTPP LTV MHCLG S G Financial Statements Group GHG HBF Barratt Developments PLC and its subsidiary undertakings Greenhouse Gas Home Builders Federation HMRC HM Revenue & Customs Human Resources Hydrotreated Vegetable Oil Investment Association International Accounting Standards International Accounting Standards Board International Energy Agency International Financial Reporting Standards Institute of Internal Auditors Injury incidence rate MMC MP MWh NED Modern methods of construction Member of Parliament Megawatt Hours Non-Executive Director Net cash Cash and cash equivalents, bank overdrafts, interest-bearing borrowings and prepaid fees Net tangible assets Group net assets less other intangible assets and goodwill NGFS NHBC NI NPPF Ofcom Network for Greening the Financial System National House Building Council National Insurance The National Planning Policy Framework The regulator and competition authority for the UK communications industries OHSAS Occupational Health and Safety Assessment Series International Integrated Reporting Council Independent Project/Programme Assurance Intergovernmental Panel on Climate Change Operating margin Oregon Profit from operations divided by revenue Oregon Timber Frame Limited and Oregon Timber Frame (England) Limited Integrated Report International Standards on Auditing International Standard on Assurance Engagements International Organisation for Standardisation Joint ventures Key performance indicator Light-emitting diode Lesbian, gay, bisexual, transgender, queer and other gender expressions Litres per person per day Long-Term Performance Plan Loan to Value Ministry of Housing, Communities and Local Government Paris Agreement International treaty on climate change adopted on 12 December 2015 and entered into force on 4 November 2016 PBT PEFC PwC RCF REGO RIs ROCE RPDT RSPB Profit before tax The Programme for the Endorsement of Forest Certification PricewaterhouseCoopers LLP Revolving Credit Facility Renewable Energy Guarantees of Origin Reportable Items Return on capital employed calculated as described on pages 236 and 237 Residential Property Developer Tax Royal Society for the Protection of Birds Barratt Developments PLC Annual Report and Accounts 2023 241 S G Financial Statements Glossary continued SAP SASB SBTi SDLT SECR Standard Assessment Procedure -quantifies a dwelling’s energy use per unit floor area Sustainability Accounting Standards Board Science Based Targets Initiative Stamp Duty Land Tax Streamlined Energy and Carbon Reporting Sharesave Savings-Related Share Option Scheme SHE SHU SIC Site ROCE Safety, Health and Environment Sheffield Hallam University Standing Interpretations Committee Site operating profit (site trading profit less allocated administrative overheads) divided by average investment in site land and work in progress SONIA Sterling Overnight Interest Average SUDS TCFD tCO2e Sustainable Urban Drainage Systems Task Force for Climate-related Financial Disclosures Tonnes of carbon dioxide equivalent Total completions Unless otherwise stated, total completions quoted include JVs Total indebtedness Net debt/(cash) and land payables TSR Total shareholder return Underlying ROCE ROCE as defined on pages 236 and 237, with net assets also adjusted for land payables UN SDGs United Nations Sustainable Development Goals USPP US Private Placement VAT WIP Value Added Tax Work in progress 242 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements Integrated reporting approach Reporting approach Our integrated report is primarily prepared for our shareholders; however, through our activities we create value for a range of other stakeholders. Reporting frameworks Our integrated reporting is guided by various codes and standards outlined in the table here. Report scope and boundary Our Integrated Report covers the performance of Barratt Developments PLC for the financial year ended June 2023. The report extends beyond financial reporting and includes non-financial performance, opportunities and risks that may have a significant influence on our ability to create value. Integrated reporting framework The primary purpose of an integrated report is to explain to providers of financial capital how an organisation creates value over time. An integrated report benefits all interested stakeholders including employees, customers, suppliers, business partners, local communities, legislators, regulators and policy-makers. The IIRC’s vision is to align capital allocation and corporate behaviour to wider goals of financial stability and sustainable development through the cycle of integrated reporting and thinking. Sustainability frameworks Legal requirements Framework The International Integrated Reporting Council’s Integrated Reporting Framework International Financial Reporting Standards (IFRS) Purpose Framework that is focused on articulating the value creation of an entity over time. Purpose Global framework for how companies prepare and disclose their financial statements. Framework Companies Act 2006 Purpose Company law in the UK. Framework UK Corporate Governance Code Purpose The standards of good practice for listed companies on board composition and development, remuneration, shareholder relations, accountability and audit. Framework Streamline Energy and Carbon Reporting (SECR) Purpose Disclosures required by the UK Government on a company’s energy consumption and greenhouse gas emissions. Framework United Nations Sustainable Development Goals Purpose Outward-looking framework that covers the areas of the UN’s 2030 Agenda focused on people, planet and prosperity. The 17 UN SDGs define global sustainable development priorities and aspirations for 2030 and seek to mobilise global efforts around a common set of goals and targets. The UN SDGs call for worldwide action among governments, business and civil society to end poverty and create a life of dignity and opportunity for all, within the boundaries of the planet. The UN SDGs were launched in 2015 by the UN. Framework Task Force on Climate-related Financial Disclosures (TCFD) recommendations Purpose Recommendations for disclosing clear, comparable and consistent information about the risks and opportunities presented by climate change. Our primary disclosures aligning with TCFD recommendations as we continue on our journey towards full alignment, are made through the CDP Climate survey, which we submit on an annual basis. In 2018 the CDP Climate Survey format was aligned to TCFD recommendations. Other TCFD related disclosures can be found within the content of this integrated report, and on the sustainability section of our corporate website. Barratt Developments PLC Annual Report and Accounts 2023 243 S G Financial Statements Group advisers and Company information Registrars Equiniti Group Aspect House Spencer Road Lancing, West Sussex BN99 6DA Tel: 0371 384 2657 Statutory auditor Deloitte LLP London Solicitors Slaughter and May Linklaters LLP Brokers and investment bankers UBS AG and Barclays Bank plc Financial calendar Announcement 2023 Annual General Meeting and Trading update 2024 Interim Results Announcement 2024 Annual Results Announcement Registered office Barratt Developments PLC Barratt House Cartwright Way Forest Business Park Bardon Hill Coalville Leicestershire LE67 1UF Tel: 01530 278278 www.barrattdevelopments.co.uk Company information Registered in England and Wales. Company number 00604574 18 October 2023 7 February 2024 4 September 2024 244 Barratt Developments PLC Annual Report and Accounts 2023 S G Financial Statements CBP020635 Barratt Developments PLC’s commitment to environmental issues is reflected in this Annual Report, which has been printed on Magno Satin, an FSC® certified material. This document was printed by Park Communications using its environmental print technology, which minimises the impact of printing on the environment. Vegetable-based inks have been used and 99% of dry waste is diverted from landfill. The printer is a CarbonNeutral® company. Both the printer and the paper mill are registered to ISO 14001 Barratt Developments PLC Annual Report and Accounts 2023 245 Barratt Developments PLC Barratt House Cartwright Way Forest Business Park Bardon Hill Coalville Leicestershire LE67 1UF Tel: 01530 278278 www.barrattdevelopments.co.uk