Internal Control

The Directors have overall responsibility for the Group's systems of internal control and for reviewing their effectiveness. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives. They provide reasonable rather than absolute assurance against material misstatement or loss.

The Directors confirm the Group's ongoing process of identifying, evaluating, and managing its significant risks in accordance with the Turnbull guidance (Internal Control: Revised Guidance for Directors on the Combined Code, published in October 2005). This process has been in place throughout the year and up to the date of approval of the Annual Report and financial statements. As part of this process, the Board gives due consideration to current and emerging legislation. This process is reviewed by the Board on a regular basis.

Group management has responsibility for major financial and strategic development decisions. Responsibility for operational issues is devolved, subject to limits of authority, to divisional and regional company management.

Management at all levels are responsible for internal controls relating to their respective business risks and for ensuring that significant internal control issues are reported promptly to the appropriate levels of management.

The major components of the systems of internal control are as follows:

• Clearly defined organisational structure with appropriate levels of authority applicable to all transactions;

• Regular formal meetings and sign-off of various reports by the appropriate levels of management;
• Internal audit function monitors adherence with various internal controls as well as ascertaining their adequacy;

• Integration and linking of systems of reporting between construction, finance and sales;
• Consistent and accurate financial and management reporting;
• Constant monitoring of progress against financial and operational metrics on a site by site basis;
• Certain key functions of the Group are dealt with centrally, including human resource management, information systems, risk management, corporate finance and treasury;
• Comparisons of Group performance with the performance of competitors and against industry norms.
  
  

The Board receives, on a regular basis, reports on the key risks of the business and steps being taken to manage such risks. It considers whether the significant risks faced by the Group are being identified, evaluated and appropriately managed, having regard to the balance of risk, cost and opportunity. In addition, the Audit Committee meets regularly with both the Internal Auditor and External Auditors as referred to above. The Chairman of the Audit Committee reports to the Board on all significant issues considered by the Committee.

The Directors confirm that they conducted an annual review of the effectiveness of the systems of internal control. This review had regard to the process used to identify the principal business risks facing the Group, the methods of managing those risks, the controls to contain those risks and the relevant monitoring procedures. No significant failings or weaknesses were identified from the internal controls review. The systems of internal control remain in effect up to and including the date of approval of the financial statements.