In this report, we provide not only the required regulatory and statutory assurances, but also seek to provide the opportunity for a meaningful assessment of the quality of the Company’s governance arrangements and the workings of our Board.

Adaptive Governance Structure 

Over the years we have been building upon our governance structures to ensure that there is a strong infrastructure in place which not only aids the delivery of the long-term success of the Company but which is also adaptive to meet any unexpected demands on the Company. During the COVID-19 pandemic, we have been able to adapt our governance structures to meet the needs of the business and the Board is pleased that they worked well under the challenging backdrop encountered.

Like the business, the Board quickly adapted the way we worked and, until June 2021, all meetings held during the 2021 financial year were held entirely virtually. The Board and Committee meetings held in June 2021 were held in-person for the first time since March 2020 and in-person Board site visits recommenced, with social distancing maintained.

The AGM held in November 2020 was also held with a minimum quorum of shareholders due to the limits on attendance imposed by restrictions on public gatherings and guidance on social distancing. Given that the AGM is a key event in which the Board is able to engage directly with shareholders, the Board allowed shareholders to dial into the meeting to listen to the proceedings of the AGM remotely and also provided the opportunity for shareholders to submit questions to the Board ahead of the meeting.

Board Composition

Since the last report, John Tutte stepped back to a Non-Executive Chairman role following the 2020 AGM on 6 November 2020 and shall be retiring from the Board following the announcement of the Company's 2021 full year results on 15 September 2021. Richard Akers joined the Board as Chair‐Designate and independent Non-Executive Director on 1 June 2021. Richard has been working closely with John Tutte during a handover period and he will assume the role of Non-Executive Chairman following the retirement of John Tutte on 15 September 2021. Details of the recruitment process can be found on page 119 of the Nomination Committee Report.

Board Effectiveness

This report also discusses how the Board monitors its effectiveness in order to ensure that it has the strength and capability to lead the Company to continued success. In 2019, an externally facilitated evaluation of the Board and each of its Committees was carried out by Independent Audit. This year, a formal internal evaluation of the Board and Committees was undertaken to build upon the progress made in the previous years. Having considered the output of this year’s evaluation, the Board considers that it continues to function effectively and its relationship with its Committees continue to be sound. Details of the evaluation can be found on page 104.

Workforce Engagement and Culture

The Board plays a key role in setting and monitoring the Group’s purpose, strategy and values and ensuring that these are aligned with culture. The Board were mindful of the need to maintain the culture of Redrow during the pandemic and due to the adaptive structures in place across the business and increased engagement with our colleagues, the Redrow culture appears to be stronger than ever.

With effect from 6 November 2020, Nicky Dulieu took over the role of designated Non-Executive Director for workforce engagement from Vanda Murray following her retirement from the Board. During the year, Nicky Dulieu hosted a virtual meeting with representatives from each area of the business to obtain employee views on a wide range of matters relating to life at Redrow. There was a high level of participation and debate throughout the meeting and an action plan was presented to the Board by Nicky Dulieu following the session. Further details of this workforce engagement session, along with other engagement mechanisms, can be found on page 99.

2021 Annual General Meeting

Our 2021 Annual General Meeting will be held on Friday, 12 November 2021 and the Notice of Annual General Meeting together with Explanatory Notes will be sent to you separately.

GRAHAM COPE

Company Secretary

14 September 2021

Introduction

This report sets out the Company’s compliance with the Code issued by the FRC and describes how the governance framework is applied by the Company.

Governance Structure

Governance is a key priority of the Board and the governance structure is set out in the diagram opposite. Each component within the structure is governed by a particular set of rules, whether it is the Redrow employee handbook, the Code of Conduct, the policies and procedures manuals, Articles of Association and/or the Committee terms of reference. Each of these are regularly reviewed and are updated in line with best practice and legislative or regulatory changes.

Compliance with the UK Corporate Governance Code

The Directors have considered the contents and requirements of the Code and confirm that throughout the 52 weeks ended 27 June 2021 the Company has been compliant with the provisions of the Code, as explained further in this report, other than as set out in the table below.

1. Board Leadership and Company Purpose

role of the board

The Board sets the Group’s strategy and oversees and monitors risk management, principal risks, internal controls and the viability of the Company. The Board is responsible for putting in place the strategic plans for the Group and providing the leadership required in order to achieve its vision and goals.

There are matters which the Board delegate to Committees, the Executive Management Team and other relevant management bodies in order to ensure that the Group is operating efficiently and effectively.

In order to ensure that the members of the Board fulfil their statutory duties as Directors, there is a formal schedule of matters reserved specifically for the Board’s decisions. The matters reserved include:

• approval of any significant changes in accounting policies or practices;
• any changes relating to capital structure and approval of treasury policies;
• ensuring the maintenance of a sound system of governance, internal control and risk management;
• authorising conflicts of interest where permitted by the Company’s Articles of Association;
• assessing the prospects and viability of the Group, including measurement of key performance indicators;
• assessing and monitoring culture in alignment with purpose, values and strategy;
• approval of corporate acquisitions or disposals, significant land purchases or contracts;
• changes to the size, structure and composition of the Board;
• approval of significant policies, including the Group’s Health, Safety and Environmental policy;
• reviewing of overall corporate governance arrangements;
• monitoring the whistleblowing programme and reviewing concerns raised through the whistleblowing procedure;
• ensuring a satisfactory dialogue with key stakeholders; and
• appointment and removal of the Company Secretary.
  
  

Long-term performance and shareholder value relies on high quality corporate governance and the Board is responsible for maintaining strong governance practices and regularly reviewing the Group’s governance structure as illustrated on page 94.

BOARD MEETINGS

The Board meets regularly and frequently, not less than six times during the year and maintains a close dialogue between meetings. During the year Board meetings have been predominantly held virtually in compliance with the restrictions put in place during the COVID-19 pandemic. In June 2021, socially distanced in-person Board meetings and site visits, accompanied by the local management team, resumed.

Board packs are distributed sufficiently in advance of the meetings to allow adequate time for review to enable informed debate and challenge at meetings and include key strategic, operational and financial information.

Where a Director is unable to attend a meeting, they are encouraged to discuss any issues arising with the Non-Executive Chairman or Group Chief Executive as appropriate. If a Director has a concern about the running of the business, the minutes should accurately reflect this. Should any Director resign from their position as a result of unresolved concerns in the Company, they are requested to submit a written statement to the Non-Executive Chairman outlining their concerns for circulation to the Board. There were no statements received of this nature during the year.

Attendance by individual Directors at Board meetings is set out below:

Board Meeting Attendance

¹ Vanda Murray stepped down from the Board on 6 November 2020 and attended the meeting held between the beginning of the 2021 financial year to her retirement date.

² Richard Akers was appointed as Non-Executive Director on 1 June 2021 and attended the meeting held between his appointment date to the end of the 2021 financial year.

Professional Development

The Company Secretary and Non-Executive Chairman regularly review the developmental needs of the Board, both as a whole and for individual directors, to ensure that each Director is effective in adding to Board discussion, debate and decision-making and to allow them to continue to fulfil their role effectively on the Committees.

The Board receives regular briefings from those responsible for key Group disciplines. In addition, the Board maintains close working relationships with the Executive Management Team and the divisional management teams.

All new Directors must undertake a formal and comprehensive induction programme which is coordinated by the Company Secretary and the Non-Executive Chairman. The programme for the Non-Executive Directors is specifically designed to encompass the full breadth of the business and includes visits to operating businesses. The programme is tailored accordingly to:

• provide an understanding of their role within the Company and the key priority areas for the Board;
• build an understanding of how the Board operates within the structure of the Group;
• introduce key Group personnel and external advisors;
• enhance their knowledge of the Group’s strategy, culture and business;
• provide an understanding of the financial position of the Company; and
• if applicable, prepare the Director for Committee memberships by additionally providing induction material relevant to the specific committee.
  
  

During the year, formal appraisals of the Group Chief Executive and the Group Finance Director were undertaken by the Non-Executive Chairman. The Non-Executive Chairman and all Non-Executive Directors had an annual appraisal conducted by the Senior Independent Director.

KPI ASSESSMENT AND RISK MANAGEMENT

The Board have the overall responsibility for setting the key performance indicators and selecting the appropriate form of measurement to allow an objective assessment of the Group’s performance. The Board also sets appropriate targets against each indicator and ensures timely and accurate measurements against each identified performance indicator. See page 5 for further details of the key performance indicators of the Group.

The ultimate responsibility for the effective management of the risks faced by the Group in order to achieve its strategic and financial objectives lies with the Board. It is vital to the long-term sustainability of the Group that strong risk management mechanisms are in place. The Board carry out a robust assessment of the principal risks facing the Company, including those that would threaten its business mode, future performance, solvency or liquidity. Details of the Group’s risk management processes, including the Board’s robust assessment of the Group’s emerging and principal risks, key controls and mitigating strategies can be found on pages 66 to 77.

STRATEGY, PURPOSE, VALUES AND CULTURE

Setting and monitoring the Group’s purpose, values and strategy and ensuring that these are aligned with culture is a key role of the Board.

Engagement with stakeholders, and understanding the key matters which are of priority to them, has formed the basis of the Group’s business strategy and purpose and can be seen in the three themes of Developing Thriving Communities, Building Responsibly and Valuing People.

Our purpose, to operate to create a better way for people to live, is supported by our strategy of creating long-term sustainable value for all of our stakeholders by developing thriving communities with high quality homes that provide a better way to live. The messaging regarding the Group’s purpose and strategy is consistent, clear and at the forefront of everything we do.

The Redrow culture is the unconscious landscape through which our people think, behave and act, regardless of whether they are working in the boardroom, Division, Group or on site. Our culture is embedded through our values of: hard work; attention to detail; innovation; passion; and the pursuit of excellence. We expect our people to apply these values in their daily working life.

There are a number of measures adopted by the Board to assist with monitoring, assessing and embedding culture:

1. The Board monitors the opinions of employees via the annual INsight survey to assist with measuring how far Redrow values are incorporated into the culture and evaluates the level of consistency in employees' views of culture.
2. Consistent language is used in communications with our colleagues via our intranet, Engage, which seeks to embed cultural norms by reinforcing the strategy and values and reiterating the behaviours and actions which are to be encouraged.
3. Policies are regularly reviewed and updated to ensure that they are in alignment with the Company’s purpose, values and strategy.
4. Our colleagues have access to the new Brand Portal which reinforces what Redrow stands for and provides a single source of brand related assets to ensure brand consistency.
5. Site and Divisional visits are carried out by the Board, which allows them to engage directly with the workforce and obtain their views on culture within the business.
6. Workforce engagement sessions carried out with Nicky Dulieu, as designated Non-Executive Director for workforce engagement, play an important role in obtaining views of employees and reporting back to the Board on key issues for the workforce.
   
   

The Board is proud to have a business that is customer focused with employees taking pride in creating a better way to live through their contribution to providing a high quality product and service to our customers.

WHISTLEBLOWING

The Group has a widely publicised Whistleblowing Policy which enables employees and other stakeholders to raise concerns in confidence. The Board receives reports on all occasions when such issues are raised under this policy and ensures that appropriate follow-up action is undertaken.

The Whistleblowing Policy allows concerns to be raised anonymously and includes a non-retaliation policy whereby all concerns raised in good faith will be protected, as will those against whom claims are made which turn out to be unfounded. The Company provides a safeguarding assurance for anyone raising concerns in good faith that they will be protected regardless of the outcome of the investigation and any reporting of retaliation shall be treated in the same way as a whistleblowing allegation and disciplinary action taken if necessary.

Employees are reminded of the types of unethical or unlawful behaviours which may prompt a report to be made under the procedure and there are a series of reporting channels within the policy to ensure that people are comfortable raising their concerns at some level within or outside of the Company. The policy contains the contact details of the Company Secretary and Senior Independent Director and additionally includes an independent reporting hotline where independent and confidential advice can be provided on whistleblowing matters.

Investigations are undertaken as quickly as possible without affecting their quality and depth. For any non-anonymised concern, receipt of the concern is acknowledged and the reporting person is provided with an indication of how the Company is proposing to deal with the matter. The person raising the concern shall be provided with feedback relating to the investigation, provided that it would not breach the confidentiality of others within the Company.

The Company Secretary maintains a record of the number of whistleblowing reports received, along with details of the investigations undertaken, and reports to the Board on this. During the year, there were no alleged or suspected wrongdoings reported through the whistleblowing procedure.

The Whistleblowing Policy is formally reviewed and approved each year by the Board. During the year, there were no changes made to the policy.

CONFLICTS OF INTEREST

Transparency in our business dealings is paramount and the Board is ultimately responsible for ensuring that there are procedures in place to ensure that conflicts of interests, or potential conflicts of interests, are managed effectively.

In line with the Group’s Code of Conduct, employees must immediately inform their line manager if there is any possibility of there being an actual or potential conflict of interest. If conflicts can be mitigated, authorisation by way of a Divisional board meeting must be obtained and the Company Secretary must be informed.

Directors must disclose any actual or potential conflicts of interest immediately to the Company Secretary and seek formal approval from the Board.

The Board is satisfied that the procedures in place to deal with conflicts of interest are sufficient and were operated effectively during the year.

SHAREHOLDER ENGAGEMENT

Shareholder engagement is paramount to the Board and the Directors make themselves available to meet with significant shareholders to understand the issues that are of most importance to them. Following any shareholder meeting, the Board is subsequently briefed on any issues discussed therein.

The Board undertakes formal presentations to equity analysts immediately following the announcement of the Company’s  financial results half-yearly. These presentations are available on the Company’s website. During the 2021 financial year, the presentations were held virtually via webcast. Following the full year and half-yearly results’ announcement in September 2020 and February 2021, the Executive Directors held virtual meetings with current and potential significant shareholders and feedback from these meetings was independently collated and disseminated to the Board.

In 2020, due to the unprecedented impact of COVID-19, the Board consulted with significant shareholders regarding putting forward a rolled over remuneration policy at the AGM in November 2020. The policy was largely on the same terms as the previous one, save for additional commitments on compliance with good practice and with the provisions of the Code built in, and was approved with a 95.03% majority by shareholders.

Now with greater clarity on the market environment, and as notified to shareholders last year, a revised remuneration policy is to be put forward for approval at the 2021 AGM. A comprehensive consultation exercise was carried out during the year with significant shareholders of the Company regarding the components of the new policy. Nicky Dulieu, as Chair of the Remuneration Committee, led the consultation exercise which provided shareholders with the following:

• an overview of the growth of the business and the impact of COVID-19 on our stakeholders;
• the objectives of the proposed revised remuneration policy;
• the changes proposed to the remuneration policy; and
• an explanation of how that policy would be implemented.
  
  

Shareholders were invited to provide feedback on the proposals and following the consultation exercise an update was provided to the Remuneration Committee. The proposed remuneration policy was then finalised, taking into consideration the feedback received from shareholders. We recognise the importance of our shareholders as key stakeholders in our discussions, particularly around remuneration, and we welcomed the feedback received through the remuneration consultation exercise.

During the year, the Group Finance Director and Group Communities Director held meetings with significant shareholders to discuss their requirements surrounding Environmental, Social and Governance (“ESG”) matters, the feedback of which shall be used to form the changes being made by the Company as part of the wider ESG improvement project.

The AGM held in November 2020 was held with a minimum quorum of shareholders due to the limits on attendance imposed by restrictions on public gatherings and guidance on social distancing. Given that the AGM is a key event in which the Board is able to engage directly with shareholders, the Board allowed shareholders to dial into the meeting to listen to the proceedings of the AGM remotely and also provided the opportunity for shareholders to submit questions to the Board ahead of the meeting. 

Formal notification of the 2021 Annual General Meeting will be sent to shareholders at least 21 working days in advance.

There is a dedicated investor related section of the Company website, providing easy access to RNS announcements, key financial dates, dividend details, reports and publications. The Company’s website, redrowplc.co.uk, gives access to current financial and corporate information.

WORKFORCE ENGAGEMENT

The Board believes that greater engagement with the workforce is essential to preserving long-term value. Valuing People is a fundamental part of the Group’s strategy and understanding the views of employees and actively encouraging their participation sits highly on the Board’s agenda. The Company engages with employees through the following means:

1. Designated workforce Non-Executive Director – in line with Provision 5 of the Code, Nicky Dulieu was appointed as the designated Non-Executive Director for workforce engagement, having succeeded Vanda Murray in this position following her retirement from the Board on 6 November 2020. In May 2021, Nicky Dulieu hosed a virtual employee engagement session with representatives from each area of the business. The group was wide-ranging with representatives from Build, Sales, Commercial, Technical, Land and other support functions. There was also a good mix of employees of different ages and at different stages of their career to allow for a broad spectrum of voices to be heard.
   
   The session provided the opportunity for Nicky Dulieu to engage directly with the workforce to obtain their views on a wide range of matters relating to life at Redrow. There was a good level of discussion and debate throughout the session and Nicky Dulieu was able to obtain a clear understanding of the most important issues facing employees. The Group HR Director was also available during the session and was able to share with the group which issues were under active consideration by the Board. An action plan was put together following the session and was presented to the Board by Nicky Dulieu. It was agreed that these engagement sessions will be run at least bi-annually with feedback going back to the employee representatives in between each session.
   
   
2. Employee communication via the intranet, Engage – Engage is available for all employees of the Company and is the hub for sharing news and communications across the business. It encourages employees to actively participate and have a voice in decisions being made by the Company. This proved to be a vital communications tool during the COVID-19 pandemic as it allowed information to be shared instantly with all employees so that we were able to keep each person in the loop and up to date with actions being taken by the business.
   
3. Employee engagement meetings – each divisional business and Group has a team of elected representatives who attend regular engagement meetings. These meetings keep employees up to date with Company news and employee health and wellbeing initiatives and enable the representatives to put forward the views and ideas of the department. Each employee has access to their engagement representative and has the opportunity to discuss matters arising from these meetings. All meeting materials and action plans following meetings are made available to all employees via Engage.
   
   
4. INsight survey – this survey is distributed annually to all employees and in the latest survey there was a 81% participation rate. The feedback from employees was anonymised. Following the results, workshops were carried out with each team to discuss the findings and feedback was collated by the Engagement team. Resulting from the feedback, commitments and themes for the year were posted on Engage with regular progress reports posted on these.
   
   
5. Promotion of share ownership through employee share plans – the Company supports employee share ownership at all levels as it directly aligns employee interests with those of shareholders. Share ownership encourages employees to take a wider view of the Group. Thinking like a shareholder, as well as an employee, encourages the workforce to be more inquisitive as to whether they can individually and collectively improve to create even more shareholder value.
   
   
6. Division specific communications – the Divisions are encouraged to make their employees aware of the financial and economic factors affecting their respective Divisions and the Company as a whole. Each Division has a dedicated section on the intranet which is regularly updated to reflect matters directly affecting that part of the business. Following feedback from the workforce engagement session with Nicky Dulieu regarding the value of regular updates from senior management, at least quarterly, Managing Directors and Heads of Departments provide an overview of news within the related Division and beyond.
   
   
7. Company performance communications – the Company’s intranet, Engage, is also used as a tool for communicating factors affecting the performance of the Company to employees to ensure that they understand how the business is performing in the current market. Additionally, the Group Chief Executive circulates the results announcements and trading updates to all employees. Following the release of the interim and final results announcements, the Group Finance Director attends the Head Office and Divisional offices to make a presentation directly to employees to explain the results and strategy for the year.

Stakeholder Engagement

An explanation of the engagement undertaken during the year with the key stakeholders of the Group, including the impact of the engagement on Board decisions, can be found on pages 84 to 89 of the Strategic Report.

Section 172(1) Statement

The Section 172(1) Statement of the Group, explaining how the Directors have carried out their statutory duty within s.172(1) of the Act, can be found on pages 82 and 83 of the Strategic Report.

Directors' and Officers Insurance

The Company has directors’ and officers’ insurance in place which insures Directors against certain liabilities, including legal costs.

2. Division of Responsibilities

THE BOARD

The Board currently comprises a Non-Executive Chairman, two Executive Directors and four independent Non-Executive Directors, one of which acts as the Senior Independent Director. Following the retirement of John Tutte as Non-Executive Chairman on 15 September 2021, the Board will comprise Richard Akers as the Non-Executive Chairman, Matthew Pratt and Barbara Richmond as Executive Directors and Nick Hewson, Sir Michael Lyons and Nicky Dulieu as independent Non-Executive Directors, with Nick Hewson also occupying the position of Senior Independent Director.

Nick Hewson will be stepping down from the Board ahead of the 2022 AGM and the Nomination Committee is leading the process of appointing a new Non-Executive Director to succeed him.

Division of Responsibilities

The Company has separate roles for the Non-Executive Chairman and Group Chief Executive, ensuring that there is a clear division of responsibilities at the head of the Company between the running of the Board and the operational responsibility for the running of the Company’s business, as required by the Code.

The division of responsibility and accountability between the roles is well defined and using such a balanced approach ensures that no one individual has unfettered powers of decision.

Non-Executive Chairman

John Tutte, as Non-Executive Chairman, is primarily responsible for:

• leading the Board to ensure optimum effectiveness;
• encouraging a culture of openness and debate;
• facilitating constructive board relations and effective contributions from all Non-Executive Directors;
• ensuring that all Directors receive accurate, timely and clear information;
• taking a leading role in determining the Board’s composition and structure;
• ensuring that effective communications are maintained with shareholders; and
• meeting with the Non-Executive Directors without the presence of the Executive Management Team.
  
  

John Tutte stepped back from an Executive Chairman role to a Non-Executive Chairman role following the 2020 AGM on 6 November 2020 and shall be retiring from the Board following the full year results presentation on 15 September 2021. As noted above, Richard Akers, currently appointed as Chair-Designate and independent Non-Executive Director, shall replace John as Non-Executive Chairman with effect from the same date.

In 2019 and 2020, the Board engaged with major shareholders in respect of Board composition, particularly regarding the Chairmanship role, and the proposed succession plans were well-received by the shareholders consulted.

Group Chief Executive

Matthew Pratt, as Group Chief Executive, is responsible for: 

• operational management of the Group;
• implementing strategic plans with the assistance of the Executive Management Team;
• ensuring that the visions and values of the Company are properly communicated across the Group; and
• reporting on these to the Board.
  
  

In addition to his role on the Main Board, the Group Chief Executive is also a Member of the Placemaking and Sustainability Committee.

Group Finance Director

Barbara Richmond, as Group Finance Director, is responsible for: 

• the financial management of the Group in its broadest sense;
• maintaining effective communications; and
• reporting on these to the Board.
  
  

Senior Independent Director

In line with Provision 12 of the Code, Nick Hewson was appointed as the Senior Independent Director on 7 November 2018.

Nick Hewson has a wealth of experience as a Non-Executive Director and, having been on the Board since 2012, has a good understanding of the business.

The following additional responsibilities fall within the remit of the Senior Independent Director:

• acting as a sounding board for the Non-Executive Chairman and supporting him in ensuring the Board is effective and that constructive relations are maintained;
• being available to shareholders in order to understand their issues and concerns in order to relay them to the Board; and
• leading the evaluation of the performance of the Non-Executive Chairman and obtaining views from other Directors.
  
  

Non-Executive Directors

The role of the Non-Executive Directors within the Company is essential in order to view the Group objectively and provide constructive challenge to the Executive Directors and scrutinise performance. They have a good understanding of the business and bring a range of skills and experience to the discussions in the boardroom, including offering specialist advice and strategic guidance. The diversity and skills brought into the Company by the Non-Executive Directors are crucial to developing the strategy of the Group.

The Non-Executive Directors play a vital role in occupying seats on the Board’s Committees and they are positioned in such way that the Committees benefit from their expertise and background. The Non-Executive Directors are also key in appointing and removing Executive Directors, and ensuring that there are succession plans in place for senior level roles. The work of the Nomination Committee, comprising all Non-Executive Directors, can be seen on page 118.

Company Secretary

The Company Secretary acts as secretary to the Board and its Committees and his appointment and removal is a matter for the Board as a whole. He is responsible for advising the Board on all governance matters. The Company Secretary is a member of the Executive Management Team and all Directors have access to his advice and services. He is responsible for governance structures and mechanisms, corporate conduct and is the primary source of advice on the conduct of the business.

In certain circumstances, Board Committees and individual Directors may wish to take independent professional advice in connection with their responsibilities and duties, and, in this regard, the Company will meet the reasonable costs and expenses incurred and the Company Secretary will assist in arranging such advice.

BOARD BALANCE AND INDEPENDENCE

The Board considers that it is of a size and has a balance of skills, knowledge and experience that is appropriate for its business. The Executive Management Team provides the Board with an appropriate view of the detail of the business, which, together with the benefit of their significant collective experience of the UK house building industry, enables the Board to discharge its duties and responsibilities effectively. The Non-Executive Directors bring a wealth of experience and understanding from outside the Company which enables them to challenge and help develop proposals on the Company’s strategy.

The details of the Directors’ respective experience are set out in their biographical profiles on pages 92 to 93.

In considering the independence of each Non-Executive Director, the Board has taken into consideration the guidance provided by the Code. The Board considers all Non-Executive Directors holding office during the year, save for John Tutte, to be independent in accordance with Provision 10 of the Code, as they each:

• have not been employed by the Company or Group;
• have no material business relationship with the Company;
• do not participate in the Company’s employee share plans or pension scheme;
• have not received additional remuneration beyond the director’s fee displayed on page 145 of this Annual Report;
• have no close family ties with any of the Company’s Directors, Executive Management Team or advisers;
• have no significant links with other Directors through involvement in other companies;
• do not represent a significant shareholder; and
• have not served on the Board for more than nine years from the date of their first appointment.
  
  

The Board believes that presently the balance of Non-Executive and Executive Directors is effective and contains the appropriate mix of skills and experience for the Board to continue successfully. The composition is compliant with Provision 11 of the Code as the ratio of Independent Non-Executive Directors to Executive Directors, excluding the Chairman, is 4:2 (66.67%). Following the appointment of Richard Akers as Chairman on 15 September 2021, the Board composition will remain compliant with this provision, with the ratio of Independent Non-Executive Directors to Executive Directors, excluding the Chairman, being 3:2 (60%).

Nick Hewson was appointed to the Board in December 2012 and will have served a 9-year term as Director by December 2021. Nick Hewson will therefore be stepping down from the Board ahead of the 2022 AGM and a new independent Non-Executive Director will be appointed in his place. Further details of the recruitment process will be outlined in next year’s Annual Report and as soon as the appointment has been approved, the Company will release an announcement to investors containing details of the appointment.

APPOINTMENTS TO EXTERNAL BOARDS

Prior to Executive Directors and Non-Executive Directors taking on any additional responsibility outside of the Group, and before making new appointments to the Board, an assessment is undertaken to determine whether this will compromise their ability to commit sufficient time to the Company to properly discharge their responsibilities or create any potential conflicts.

In making the assessment, the Board considers the mandates attributable to such positions, in line with the scoring mechanism used by Institutional Shareholder Services, to determine whether a person is overboarded. The Board does not consider that any of its Directors are overboarded and is satisfied that sufficient time and energy is devoted to the Company by each Director.

In line with Provision 15 of the Code, the Executive Directors do not hold more than one significant Non-Executive Directorship position.

Committees

The Board is supported by the Audit, Nomination, Remuneration and Placemaking and Sustainability Committees and their memberships, roles and activities are set out in separate reports, which can be found on the following pages:

• Audit Committee Report - pages 108 to 116;
• Nomination Committee Report - pages 117 to 122;
• Placemaking and Sustainability Committee Report - pages 123 to 127; and
• Remuneration Committee Report - pages 128 to 153.
  
  

Each Committee has Terms of Reference, governing their responsibilities and powers, approved by the Board. The minutes of the Committee meetings are circulated to the Board and the Committee Chairmen provide reports to the Board on the work undertaken by the Committees.

The Audit Committee and the Nomination Committee are chaired by Nick Hewson, the Remuneration Committee is chaired by Nicky Dulieu and the Placemaking and Sustainability Committee is chaired by Sir Michael Lyons.

In addition to the Board, each Committee completed a performance evaluation during the 2021 financial year. The evaluation reports were discussed at a meeting of the Committees and it was concluded that they were contributing and functioning effectively and were complying with their Terms of Reference.

3. Composition, Succession and Evaluation

Nomination Practices

To assist with the assessment of the Company’s application of the Code, the following table sets out where key information relating to the Company’s nomination related practices can be found within the Annual Report:

THE NOMINATION COMMITTEE

The Nomination Committee is responsible for leading the process for appointments to the Board and ensuring that succession plans allow for the development of a diverse pipeline for the Board and Executive Management Team positions.

All members of the Nomination Committee are independent Non-Executive Directors and the Committee is chaired by Nick Hewson, the Senior Independent Director.

Further details of the role of the Nomination Committee and work undertaken throughout the year can be found on pages 117 to 122.

APPOINTMENTS AND RE-ELECTIONS TO THE BOARD

The appointments of the Non-Executive Directors are generally made for three-year terms and all Directors are subject to annual re-election. Following the assessment on the effectiveness of the Directors, the Nomination Committee will make recommendations to the Board on reappointments.

The Nomination Committee has recommended the reappointment of each of the Executive Directors and Non-Executive Directors, save for John Tutte who will be retiring from the Board on 15 September 2021.

The Board is mindful of the principles and provisions of the Code on election and re-election, including that there should be a formal, rigorous and transparent procedure for the appointment of new directors to the Board, and that annual re-election is subject to continued satisfactory performance. The Board has decided that all Directors will be submitting themselves for re-election at the 2021 Annual General Meeting, save for John Tutte who has informed the Board of his intention to retire from the Board on 15 September 2021.

The Board has satisfied itself that all Directors who will be submitting themselves for re-election continue to perform satisfactorily. Details of appropriate Annual General Meeting Resolutions will be found in the Notice of Annual General Meeting which will be sent to shareholders separately.

BOARD PERFORMANCE EVALUATION

In line with the Code, each year a formal performance evaluation of the Board and its Committees is undertaken.

In 2019, an externally facilitated evaluation of the Board and Committees was carried out by Independent Audit. This year, a formal internal evaluation of the Board and Committees was undertaken to build upon the progress made in previous years. In line with Provision 21 of the Code, the Board shall be engaging an external evaluator to facilitate the evaluation of the Board in 2022.

After reviewing the 2020 evaluation report, a questionnaire was created and tailored, taking into consideration comments made in the previous year’s assessment as well as the current market.

The questionnaires were completed by all members of the Board and each member of the Committees. Members of the Executive Management Team and key external advisors were also invited to participate in the relevant questionnaires. The purpose of widening the participant pool was to gain a deeper understanding of the perception of the Board from non-Board members, which was a useful feedback tool.

Following completion of the questionnaires, an anonymised effectiveness report was compiled and presented at the relevant Board and Committee meetings held in June 2021. Having considered the output of this year’s evaluation, the Board considers that it continues to function effectively and its relationship with its Committees continue to be sound. The main observations from the evaluation were that:

• the Board works on a basis of trust and openness whereby each Director is able to speak openly;
• the Board has improved its focus on the consideration of the big trends which impact the industry, particularly in terms of customer research, sustainability and placemaking;
• there was unanimous agreement that the Board was particularly strong in the focus placed on people as a critical part of strategy;
• the organisation has a strong focus on compliance and the Board has good oversight of the Group’s financial heath, organisational controls and cyber risks;
• the Board has a clear picture of the big risks and uncertainties and that there is involvement from the Board at an early stage in the risk management process; and
• discussions of the Board were well set up with structured and clear Board papers.
  
  

The evaluation also identified the following areas for improvement, which will continue to be addressed over the coming year:

• whilst it was acknowledged that the monitoring of culture is high on the Board’s agenda, it was noted that this needs to remain a regular review feature as part of the overall strategy of Valuing People;
• there was agreement that the right people were brought around the table to allow for meaningful discussions however it was noted that there was scope for bringing additional members of the next level senior team, both from a succession planning perspective and a deeper dive into key areas; and
• there was scope for Directors spending more informal time together, although it was acknowledged that this was due to the restrictions regarding in-person meetings resulting from the COVID-19 pandemic.
  
  

As a result, the Board considers that it continues to operate effectively with meetings to facilitate and debate decision making.

2020 Evaluation

DIVERSITY

The principle of boardroom diversity is strongly supported by the Board. It is the Board’s policy that appointments to the Board will always be based on merit, so that the Board has the right individuals in place, and recognises that diversity is an important consideration as part of the selection criteria used to assess candidates to achieve a balanced Board. A more detailed explanation of the approach to diversity can be found on page 121.

In line with Provision 23 of the Code, the gender split of the Company can be found on page 121 within the Nomination Committee Report.

4. Audit, Risk and Internal Control

AUDIT, RISK AND CONTROL PRACTICES

To assist with the assessment of the Company’s application of the Code, the following table sets out where key information relating to the Company’s audit, risk and control practices can be found within the Annual Report:

Audit Committee

The Board has established an Audit Committee comprising three independent Non-Executive Directors. The Non-Executive Chairman is not a member of the Audit Committee.

The Board is satisfied that, with the financial backgrounds of Nick Hewson (being a Fellow of the Institute of Chartered Accountants in England and Wales) and Nicky Dulieu (being a Fellow member of the Association of Chartered Certified Accountants and having held various strategic and financial roles within a FTSE 250 company over a 23 year period), there is sufficient recent and relevant financial experience to ensure that the Committee is able to function effectively with the appropriate degree of challenge.

Further details of the role of the Audit Committee and work undertaken throughout the year can be found on pages 108 to 116.

5. Remuneration

Remuneration practices

To assist with the assessment of the Company’s application of the Code, the following table sets out where key information relating to the Company’s remuneration practices can be found within the Annual Report:

REMUNERATION COMMITTEE

The Board has established a Remuneration Committee comprising all four independent Non-Executive Directors. In line with Provision 32 of the Code, the Non-Executive Chairman is not a member of the Remuneration Committee as he was not independent upon appointment.

Nicky Dulieu is currently the Chair of the Remuneration Committee, having served on the Committee for over 12 months before taking over this role from her predecessor, Vanda Murray. Nicky Dulieu has significant remuneration experience and is currently appointed as the Chair of the Remuneration Committees of Adnams plc and Marshall Motor Holdings plc, therefore the Board is satisfied that she has sufficient remuneration experience to successfully lead the Remuneration Committee.

The Board has delegated the responsibility to the Remuneration Committee for determining the remuneration policy and setting the remuneration for the Non-Executive Chairman, Executive Directors and members of the Executive Management Team, taking into consideration the remuneration of the workforce.

Further details of the role of the Remuneration Committee and work undertaken throughout the year can be found on pages 128 to 153.

DIRECTORS’ EMOLUMENTS WAIVER

With effect from 27 March 2020 until 6 November 2020, John Tutte volunteered to retain a 20% cut in salary whilst occupying the Chairman role in an Executive capacity. On 6 November 2020, John Tutte stepped back to a Non-Executive Chairman role and his revised salary for this role then took effect. See page 144 of the Directors’ Remuneration Report for further details.

GRAHAM COPE

Company Secretary

14 September 2021