Audit Committee

(Approved by the Board on 17 January 2017) 

1. Membership

1.1 The members of the Audit Committee (“the Committee”) shall be appointed by the Board from amongst the independent Non-Executive Directors.

1.2 The Committee shall comprise at least three Directors. The Board shall appoint the Chairman of the Committee.

1.3 The quorum necessary for the transaction of business shall be two members. A duly convened meeting of the Committee at which a quorum is present shall be authorised to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

1.4 At least one member of the Committee should have significant recent and relevant financial experience and the members as a whole must have competence relevant to the sector in which the Company operates.

2. Duties of the Secretary

2.1 The Secretary of the Company shall act as Secretary to the Committee.

2.2 The Secretary shall be required to keep a proper and timely record of meetings of the Committee and circulate such minutes to all members of the Committee. Such records should also be made available for inspection by the Board and the Company’s external auditors on request.

2.3 The Secretary shall ensure that these Terms of Reference are made available on the Company’s web-site.

3. Attendance at Meetings

3.1 Only members of the Committee have the right to attend Committee meetings.

3.2 The Chairman of the Company, the Chief Executive, the Chief Financial Officer, the Group Financial Controller and representatives of the external and internal auditors may be invited, by the Chairman of the Committee, to attend for all or part of any meeting along with any other person the Committee determines would assist with the performance of its duties.

3.3 There should be at least one meeting, or part of a meeting, each year, where each of the external auditors and the internal auditors attend without management present.

4. Frequency of Meetings

4.1 The Committee shall meet not less than three times a year and two of these meetings should coincide with key dates in the Company’s financial reporting cycle.

4.2 The external auditors or the internal auditors may request a meeting if they consider that one is necessary.

5. Powers

5.1 The Committee is authorised by the Board to:

(a) investigate any activity within its Terms of Reference;

(b) seek any information it requires from any employee of the Company in order to perform its duties;

(c) obtain, at the Company’s expense, external legal or independent professional advice on any matters within its Terms of Reference; and

(d) the Committee shall have access to sufficient resources in order to carry out its duties including access to the Company Secretary for assistance as required.

6. Responsibilities

6.1 The responsibilities of the Committee shall be to:

(a) act in a way which the Committee considers, in good faith, to be most likely to promote the success of the Company for the benefit of its members as a  whole;

(b) monitor the integrity of the financial statements of the Company, review, and challenge where necessary, the Company’s Annual and Half-Yearly financial statements taking into account:

i. critical accounting policies and practices, and any changes in them;
ii. decisions requiring a major element of judgement;
iii. the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed;
iv. the clarity and adequacy of disclosures;
v. significant adjustments resulting from the audit and all identified but unadjusted items;
vi. the going concern assumption;
vii. compliance with accounting standards;
viii. the requirement to monitor the integrity of the financial reporting process;
ix. compliance with the Stock Exchange, the UK Corporate Governance Code, as it relates to the work of the Committee, and other legal requirements;
x. the Company’s proposed statements on internal control systems and on its policies and process for identifying and assessing business risks and the management of those risks by the Company;
xi. the requirement to review the process the Company has followed to ensure that, taken as a whole, the Annual Report is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s performance, business model and strategy;
xii. the requirement to ensure that the process followed by the Company to support the making of the viability statement is robust and correctly followed; and
xiii. any findings and conclusions made by the Financial Reporting Council from inspections of previous audits;

(c) have primary responsibility for the tender process for selecting the external auditor, in accordance with regulations and guidance on auditor rotation, and make appropriate recommendations through the Board to the shareholders to consider at the Annual General Meeting;

(d) determine the remuneration of the auditor and establish a policy for the use of the external auditor for non-audit services so as to ensure that the provision of non-audit services is performed within the remit permitted by law and does not impair the external auditor’s independence or objectivity;

(e) regularly review the fees paid to the audit firm in respect of non-audit services;

(f) discuss with the external auditor, before the audit commences, their terms of engagement, the nature and scope of the audit plan and to review the auditors’ quality control procedures and steps taken by the auditor to respond to changes in regulatory and other requirements;

(g) when considering the appointment of the external auditor assess the independence and objectivity of the external auditor, ensuring that key partners are rotated at appropriate intervals;

(h) review the effectiveness of the external auditor and the external audit process;

(i) review the external auditor’s management letter and representation letter;

(j) review, with the external auditors, the findings of its work, including any major issues that have arisen during the course of the audit, including key accounting and audit judgements;

(k) approve the appointment of auditors to subsidiaries of the Company;

(l) monitor and review the effectiveness of the internal audit function;

(m) oversee the process for selecting the internal auditor and make appropriate recommendations through the Board;

(n) approve the internal audit programme and review the effectiveness of the internal audit arrangements and ensure that there are adequate resources and access to information to enable it to perform its functions effectively;

(o) consider management’s response to any major external audit or internal review recommendations;

(p) review, from time to time, the Company’s arrangements for its employees to raise concerns, in confidence, about possible wrong doing in financial reporting or other matters;

(q) review the Company’s procedures for detecting fraud and the Company’s systems and controls for the prevention of bribery. To receive reports on non-compliance;

(r) review the adequacy and effectiveness of the Company’s internal financial controls, internal control and risk management systems, including reviewing managements’ and the internal auditors’ reports on the effectiveness of systems for internal financial control, financial reporting and risk management and reporting; and

(s) consider such other topics, as determined by the Board;

(t) arrange for annual review of its own performance; and

(u) work and liaise as necessary with all other Board Committees.

7. Reporting Procedures

7.1 The Chairman of the Committee shall report to the Board on its proceedings after each meeting.

7.2 The Chairman of the Committee shall inform the Board of the outcome of the audit, and shall explain how the Committee contributed to the integrity of financial reporting and the Committee’s role in that process.

7.3 The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.

7.4 The Committee shall ensure that a report on its activities shall be included in the Corporate Governance Statement of the Company’s annual report.

7.5 The Chairman of the Committee shall attend the Annual General Meeting and shall be available to answer questions from shareholders.

Remuneration Committee

(Approved by the Board on 17 January 2017)

1. Membership

1.2 The Committee shall comprise at least three Directors. The Board shall appoint the Chairman of the Committee who shall not be the Chairman of the Company.

1.3 The quorum necessary for the transaction of business shall be two members. A duly convened meeting of the Committee at which a quorum is present shall be authorised to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

2. Duties of the Secretary

2.1 The Secretary of the Company shall act as Secretary to the Committee.

2.2 The Secretary shall be required to keep a proper and timely record of meetings of the Committee and circulate such minutes to all members of the Committee. Such records should also be made available for inspection by the Board and the Company’s external auditors on request.

2.3 The Secretary shall ensure that these Terms of Reference are made available on the Company’s web site.

3. Attendance at meetings

3.1 Only members of the Committee have the right to attend Committee meetings.

3.2 The Chairman of the Company, if he is not a member of the Committee, the Chief Executive, the Group Human Resources Director and external advisers may be invited, by the Chairman of the Committee, to attend for all or part of any meeting, except when their own remuneration is being discussed.

4. Frequency of Meetings

4.1 The Committee shall meet at least three times a year and at such other times as the Chairman of the Committee shall require.

5. Appointment of Advisers

5.1 The Committee may, at its discretion select, appoint and instruct suitably experienced and qualified persons to act as remuneration advisers to the Committee and to attend such meetings as the Committee may decide. The Company shall meet the expense of such advice.

5.2 The Committee is authorised by the Board to seek any information it requires from any employee of the Company in order to perform its duties and may request that the Company Secretary or the Group Human Resources Director obtain this information on its behalf.

6. Powers

6.1 The Committee has no authority in relation to the remuneration of the Non-Executive Directors other than the Chairman. The remuneration of the Non-Executive Directors shall be a matter for the Chairman and the Executive Directors.

6.2 The Committee UK Corporate Governance Code shall give consideration to such guidance on remuneration principles and practice that are set out in the the Listing Rules of the UK Listing Authority and the Companies Act 2006 relating to remuneration committees or the remuneration of directors and shall also have regard to any authoritative best practice guidelines for remuneration committees published from time to time.

6.3 The Committee shall have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required. .

7. Responsibilities

7.1 The responsibilities of the Committee shall be:

(a) to act in a way which the Committee considers, in good faith, to be most likely to promote the success of the Company for the benefit of its members as a whole;

(b) to propose to the Board the remuneration policy for the Chairman and the Executive Directors (‘the Directors’) and the framework for such other designated Senior Executives as it may determine from time to time (‘the Relevant Executives’). No Director or Relevant Executive should be involved in any decisions as to their own remuneration;

(c) to review the on-going appropriateness and relevance of the remuneration policy;

(d) to determine, for the Directors, the entire recruitment terms, remuneration benefits, employment conditions, pension rights, compensation payments and severance terms, individual bonus plans, including share based awards, and targets and the subsequent achievement of performance against targets;

(e) to monitor, for the Relevant Executives, the general recruitment terms, remuneration benefits, employment conditions and severance terms, general incentive and annual bonus plans and targets;

(f) to review the ongoing appropriateness and relevance of the remuneration policy;

(g) to approve the remuneration of the Chairman;

(h) to approve the design of and determine targets for any performance related pay schemes and to approve total annual payments under such schemes;

(i) to propose, for the approval of the Board and for the recommendation by the Board to shareholders, all new long term incentive schemes;

(j) to approve the rules and associated guidelines for the granting of awards under any long term incentive plan, including the performance targets to be used;

(k) to approve all employee share-based remuneration schemes;

(l) to approve award of Special LTIPs to employees below Executive Director level, without performance conditions;

(m) to determine the level of remuneration, construction of remuneration arrangements and severance terms for any new employees who will be a Director;

(n) to determine the policy for and scope of pension arrangements for the Directors and Relevant Executives;

(o) to be aware of and advise on any major changes in employee benefit structure throughout the Group;

(p) to arrange for annual review of its own performance; and

(q) to have regard to the latest legislation, corporate governance best practices and the FSA Listing Rules

(q) to work and liaise as necessary with all other Board Committees.

7.2 In determining the remuneration policy and incentive packages for the Directors and Relevant Executives, the Committee should:

(a) provide the packages needed to attract, retain and motivate Directors and Relevant Executives of the quality required to run the Company successfully but should avoid paying more than is necessary for the purpose having regard to the views of shareholders and other stakeholders. A significant proportion of the remuneration should be structured so as to link rewards to corporate and individual performance and designed to promote the long term success of the Company. The remuneration policy should have regard to the risk appetite of the Company and alignment of the Company’s long term strategic goals;

(b) judge where to position the Company relative to other companies. The Committee should use comparisons with caution, in view of the risk that they can result in an upward ratchet of remuneration levels with no corresponding improvement in performance. The Committee may commission or purchase such reports, surveys or information as it deems necessary, to help it fulfil this obligation; and

(c) be sensitive to pay and employment conditions elsewhere in Group especially when determining annual salary increases.

7.3 In determining the basis on which the employment of a Director or Relevant Executive is terminated where the service contract does not explicitly provide for compensation commitments or liquidated damages for termination without cause, the Committee should, within legal constraints, tailor its approach in individual early termination cases to the particular circumstance surrounding the termination. The broad aim should be to avoiding rewarding poor performance while dealing fairly with cases where departure is not due to poor performance and to take a robust line on reducing compensation to reflect any obligation to mitigate loss on the part of the departing executive.

8. Reporting responsibilities

8.1 The Chairman of the Committee shall report to the Board on its proceedings after each meeting.

8.2 The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed.

8.3 The Committee shall produce, for approval by the Board, a remuneration policy and remuneration report which will form part of the Company’s Annual Report. It shall ensure that these reports are put to shareholders for approval at the Annual General Meeting.

8.4 The Chairman of the Committee shall attend the Annual General Meeting and shall be available to answer questions from shareholders.

Nomination Committee

(Approved by the Board on 17 January 2017)

1. Membership

1.1 The members of the Nomination Committee (’the Committee’) should be appointed by the Board, the majority of whom will be independent Non-Executive Directors. The Chairman and the Chief Executive will be members of the Committee.

1.2 The Committee shall comprise at least three Directors.

1.3 The Chairman of the Committee shall be Chairman of the Company. In his absence or for meetings about the appointment of a successor to the Chairman, the Senior Independent Non-Executive Director, or another independent Non-Executive Director, shall act as Chairman.

1.4 A quorum necessary for the transaction of business shall be at least two members, one of whom shall be an independent Non-Executive Director. A duly convened meeting of the Committee at which a quorum is present shall be authorised to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee.

2. Duties of Secretary

2.1 The Company Secretary shall act as Secretary to the Committee.

2.2 The Secretary shall be required to keep a proper and timely record of meetings of the Committee and circulate such minutes to all members of the Committee. Such records should also be made available for inspection by the Board and the Company’s external auditors on request.

2.3 The Secretary shall ensure that these Terms of Reference are made available on the Company’s web site.

3. Attendance at meetings

3.1 Only members of the Committee have the right to attend Committee meetings.

3.2 Other Directors, the Group Human Resources Director and external advisers, may be invited, by the Chairman of the Committee, to attend for all or part of any meeting.

4. Frequency of Meetings

4.1 Meetings shall be held not less than once per year and at such other times when there is business to be transacted.

5. Appointment of advisers

5.1 The Committee may, at its discretion select, appoint and instruct suitably experienced and qualified persons to act as advisers to the Committee and to attend such meetings as the Committee may decide. The Company shall meet the expense of such advice.

6. Powers

6.1 The Committee is authorised by the Board to seek any information it requires from any employee of the Company in order to perform its duties and may request that the Company Secretary or the Group Human Resources Director obtain this information on its behalf.

6.2 The Committee shall have access to sufficient resources in order to carry out its duties, including access to the Company Secretary for assistance as required.

6.3 The Committee shall give consideration to laws and regulations, the provisions of the UK Corporate Governance Code relating to nomination committees and shall also have regard to any authoritative best practice guidelines for nomination committees published from time to time.

7. Responsibilities

7.1 The responsibilities of the Committee shall be:

(a) to act in a way which the Committee considers, in good faith, to be most likely to promote the success of the Company for the benefit of the members as a whole;

(b) to regularly review the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and make recommendations to the Board with regard to any changes;

(c) to give full consideration to succession planning for the Directors both Non-Executive and Executive, and other Senior Executives, taking into account the challenges and opportunities facing the Company, and what skills and expertise are needed on the Board in the future including the balance between Executive and Non-Executive Directors;

(d) review the results of the Board evaluation process, in particular taking account of matters which relate to the skills and composition of the Board;

(e) be responsible for identifying and nominating for approval of the Board, candidates to fill Board vacancies as and when they arise;

(f) before any appointment is made by the Board, evaluate the balance of skills, knowledge, experience and diversity on the Board, and, in the light of this evaluation prepare a description of the role and capabilities required for a particular appointment. In identifying suitable candidates the Committee shall:

(i) use open advertising or the services of an external adviser to facilitate the search;

(ii) consider candidates from a wide range of backgrounds;

(iii) consider candidates on merit and against objective criteria and with due regard for the benefits of diversity on the Board, including gender, ensuring that appointees have enough time available to devote to the position;

(g) to ensure that on appointment to the Board, Non-Executive Directors receive a formal letter of appointment setting out clearly what is expected of them in terms of time commitment, Committee service and involvement outside Board meetings;

(h) to review the re-appointment of those Non-Executive Directors coming up for re-election which takes into account their contribution as a Non-Executive at Board and Committee meetings;

(i) for the appointment of a chairman, the Committee should prepare a job specification, including the time commitment expected. A proposed chairman’s other significant commitments should be disclosed to the Board before appointment and any changes to the Chairman’s commitments should be reported to the Board as they arise;

(j) arrange for annual review of its own performance; and

(k) work and liaise as necessary with all other Board Committees.

7.2 The Committee is expected to make the following recommendations to the Board concerning:

(a) formulating plans for succession for both Executive and Non-Executive Directors;

(b) suitable candidates for the role of Senior Independent Director and Chairman of Audit and Remuneration Committees;

(c) the membership of the Audit and Remuneration Committees in conjunction with the Chairmen of those Committees;

(d) the re-appointment of any Non-Executive Director at the conclusion of their specified term of office;

(e) the re-election by shareholders of any Director under the annual re-election provision of the UK Corporate Governance Code or the retirement by rotation provisions in the Company’s Articles of Association having regard to their performance and ability to continue to contribute to the Board in the light of the knowledge, skill and experience required and the need for progressive refreshing of the Board.

8. Reporting Responsibilities

8.1 The Chairman of the Committee shall report to the Board on its proceedings after each meeting.

8.2 The Committee shall ensure that a statement is made in the Annual Report about its activities, the process used for appointments and explain if external advice or open advertising has not been used.