Board Committees

There are a number of standing Committees of the Board to which various matters are delegated. The Committees all have formal Terms of Reference that have been approved by the Board and that are available for inspection at the Company’s registered office. Other than for the Audit Committee, the Terms of Reference are not currently available on the Group’s website and as a result, the Company is not in compliance with provisions A.4.1 and B.2.1 of the revised code. The Company feels that making the Nomination and Remuneration Committee Terms of Reference available at its registered office is sufficient for those Shareholders that require to see the Terms of Reference. No such requests were made in the year ended 31 March 2009.

The Nomination Committee comprises N England and G McFaull, under the chairmanship of D A Edmonds. The Combined Code provision A.4.1 requires that a majority of members of the Nomination Committee should be independent non-executive Directors. The Company does not comply with this provision of the Combined Code. However, the Board feels that the small size of the Committee is best placed to act quickly and efficiently on its behalf. The Committee meets as necessary and is responsible for considering and recommending to the Board persons who are appropriate for appointment as Executive and non-executive Directors. There is a formal, rigorous and transparent procedure for the appointment of new Directors to the Board. This process involves the Nomination Committee interviewing suitable candidates who are proposed by either existing Board members or by an external search company. Careful consideration is given to ensure that appointees have enough time available to devote to the role and that the balance of skills, knowledge and experience on the Board is maintained. When dealing with the appointment of a successor to the Chairman, the senior independent non-executive Director will chair the Committee instead of the Chairman. When the Committee has found a suitable candidate, the Chairman of the Committee will make a proposal to the whole Board and the appointment is the responsibility of the whole Board following recommendation from the Committee. In addition, the Committee has been empowered to review annually and approve any potential situational conflict of interest.

Nomination Committee Terms of Reference

The Remuneration Committee comprises J Cox, D A Edmonds, Dr W Hasselkus and P Venables under the chairmanship of N England. The Remuneration Committee is responsible, within a framework established by the Board overall, for setting the remuneration of senior executives, including the Executive Directors and senior management. It is also responsible for granting executive options, long-term incentive plan awards, pension rights and any compensation packages, and for determining the terms of any compensation package in the event of early termination of the contract of any Director or senior executive.

It meets at least three times a year. The Chairman of the Committee reports the outcome of meetings to the Board. Full details of its activities and of Directors’ remuneration are set out in the Directors’ remuneration report on pages 32 to 40. Those pages detail compliance with the legal requirements with regard to remuneration matters.

Remuneration Committee Terms of Reference

The Audit Committee comprises N England, Dr W Hasselkus and P Venables, under the chairmanship of J Cox. The Committee meets at least three times and year. The Combined Code provision C.3.1 requires that all members of the Audit Committee should be independent non-executive Directors. During the year, the Chairman of the Board resigned as a member of the Audit Committee although he is still able to attend meetings at the invitation of the Committee. The Committee is responsible for, and during the year carried out, the following:

• reviewing the annual and interim financial statements before they are presented to the Board;
• monitoring and reviewing the effectiveness of the Group’s systems of internal control;
• agreeing internal and external audit plans;
• receiving reports from external auditors’ and from the Head of Internal Audit and dealing with any significant control issues arising;
• monitoring and reviewing the external auditors’ independence and objectivity and the effectiveness of the external audit process;
• making recommendations for the appointment, re-appointment and removal of the external auditors and approving their remuneration and terms of engagement; and
• developing and implementing policy on the engagement of the external auditors to supply non-audit services, taking into account relevant ethical guidance regarding the provision of such services by the external audit firm; and to report to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.

The Audit Committee also reviews the arrangements by which staff of the Group may, in confidence, raise concerns about possible improprieties in matters of financial reporting or otherwise. It is an objective of the Committee to ensure that arrangements are in place for the proportionate and independent investigation of any such matters and for overseeing the appropriate follow-up action, where required.

It is a specific responsibility of the Audit Committee to ensure that an appropriate relationship is maintained between the Company and its external auditors. The Company has a policy of controlling the provision of non-audit services by the external auditors in order to maintain their independence and ensure that their objectivity and independence are safeguarded. This control is exercised by ensuring non-audit projects, where fees are expected to exceed £150,000, are subject to the prior approval of the Chairman of the Audit Committee and the Group Finance Director. If non-audit project fees are expected to exceed £250,000 the prior approval of the Board is required. The Chairman of the Committee reports the outcome of meetings to the Board and the Board receives the minutes of all Audit Committee meetings.

Audit Committee Terms of Reference