REMUNERATION COMMITTEE (Terms of Reference) TERMS OF REFERENCE 1 Membership and Attendance 1.1 The Committee shall comprise of at least 3 members, each of whom shall be appointed by the Board. 1.2 All members of the Committee shall be non-executive directors who are independent of management and free from any business or other relationship which could interfere with the exercise of their independent judgement, except that the Chairman of the Board may be an ordinary member of the Committee so as to facilitate and expedite its deliberations. 1.3 The Board should appoint the Committee Chairman and determine the period for which he/she shall hold office. The Chairman of the company shall not be eligible to be appointed as Chairman of the Committee. 1.4 Care should be taken to minimise the risk of any conflict of interest that might be seen to give rise to an unacceptable influence, and no member or invitee should participate in discussions in which a conflict of interest may arise. 2 Secretary 2.1 The Company Secretary shall act as Secretary of the Committee, upon request. 3 Quorum 3.1 The quorum necessary for the transaction of business shall be in accordance with the Articles of the company (presently 2). A duly convened meeting of the Committee at which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee. 4 Meetings 4.1 The Committee shall meet not less than once a year, and at such other times as the Chairman of the Committee shall require. 5 Invitees 5.1 The Chief Executive shall have the right to address any meeting of the Committee and shall be invited to attend all meetings of the Committee as a matter of course; others may be called upon or shall be able to speak by prior arrangement with the Chairman of the Committee. 6 Minutes of Meetings 6.1 The proceedings and resolutions of all Committee meetings, including the names of those present and in attendance shall be recorded in the minutes. 6.2 Minutes of Committee meetings shall be circulated to all members of the Committee as soon as practicable after the meeting. 7 Annual General Meeting 7.1 The Chairman of the Committee shall attend the Annual General Meeting and be prepared to respond to any shareholder questions on the Committee’s activities. 8 Duties The Committee shall: 8.1 Determine and agree with the Board the framework or broad policy for the remuneration of the Chief Executive, the Chairman of the company, and the executive directors. The remuneration of non-executive directors shall be a matter of the executive members of the Board. No director or managers shall be involved in any decisions as to his or her own remuneration. 8.2 In determining such policy, the Committee shall take into account all factors which it deems necessary. The objective of such policy shall be to ensure that members of the executive management of the company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and responsible manner, rewarded for their individual contributions to the success of the company. 8.3 Determine targets for any performance related incentive schemes operated by the company and asking the Board, when appropriate, to seek shareholder approval for any long term incentive arrangements. 8.4 Within the terms of the agreed policy, determine the total individual remuneration package of each executive director including, where appropriate, bonuses, incentive payments and share options. 8.5 Determine the scope and nature of service agreements for the executive director, termination payments and compensation payments, taking into account the prevailing pension arrangements. In particular the Committee shall endeavour to ensure that the contractual terms on termination and any payments made are fair to the individual and the company, that failure is not rewarded and that the duty to mitigate loss is fully recognised. 8.6 In determining such packages and arrangements, give due regard to the comments and recommendations of the Combined Code as well as the UK Listing Authority’s Listing Rules and associated guidance. 8.7 Ensure that provisions regarding disclosure of remuneration including pensions, as listed in the Directors Remuneration Report Regulations 2002, are fulfilled. 8.8 Produce an annual report of the Committee’s remuneration policy including details of the frequency of and attendance by members at Committee meetings. 9 Authority 9.1 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, bearing in mind the need to maintain line management authority. 9.2 The Committee may select, set the terms of reference, and appoint remuneration consultants at the company’s reasonable expense. NOMINATION COMMITTEE (Terms of Reference) TERMS OF REFERENCE On 29th January 2004, the Main Board decided that the Remuneration Committee should also take on the responsibilities that otherwise be undertaken by a Nomination Committee - should such exist. These Terms of Reference simply define those additional duties as follows:- Duties The Committee is responsible for :- 1 Identifying and nominating for the approval of the Main Board, candidates to fill Board vacancies as and when they arise. 2 Evaluating the balance of skills, knowledge and experience on the Board and, in the light of this evaluation, defining the role and capabilities required for the particular appointment. 3 Considering candidates from a wide range of backgrounds in order to bring broad commercial expertise and insight to the workings of the Board. 4 Fully considering succession planning in the course of its work, having regard for the future course of the Company and what skills and expertise may therefore be required on the Board in the future. 5 Undertaking a regular review of the structure, size and composition of the Board (including its skills, knowledge and experience) and making recommendations to the Board with regard to any changes. 6 Considering the leadership needs of the business, both executive and non-executive, with a view to ensuring its continued competitiveness in the marketplace. 7 Making a statement in the Annual Report about its activities; the process used for appointments and explaining if external advice or open advertising has not been used; the membership of the Committee, number of Committee meetings, and attendance over the course of the year. 8 Making available its Terms of Reference to shareholders. 9 Making recommendations to the Board as follows:- (a) Regarding plans for succession for both Executive and Non-Executive Directors. (b) Regarding the reappointment of any Non-Executive Director at the conclusion of their specified term of office. (c) Regarding the re-election by shareholders of any Director under the retirement by rotation provisions in the Company’s Articles of Association. (d) Concerning any matters relating to the continuation in office of any Director at any time. AUDIT COMMITTEE (Terms of Reference) TERMS OF REFERENCE 1. Membership and Attendance 1.1 The Committee shall be appointed by the Board and shall comprise of a Chairman and at least one other member. 1.2 All members of the Committee shall be independent non-executive directors. The Chairman of the Board shall not be a member of the Committee. At least one member of the Committee shall have recent relevant financial knowledge. 1.3 Care should be taken to minimise the risk of any conflict of interest that might be seen to give rise to an unacceptable influence. 1.4 The Board shall appoint the Committee Chairman who shall be an independent non-executive director. 1.5 The Committee shall invite the Group Finance Director to attend all meetings together with any relevant senior management. 1.6 The Committee shall ask a representative of the external auditors to attend all meetings. The Committee may request that part of a meeting be held with the external auditor without management being present. 2. Secretary 2.1 At the request of the Committee the Company Secretary may act as Secretary of the Committee. 3. Quorum 3.1 The quorum necessary for the transaction of business shall be as prescribed by the Articles of Association (presently 2). A duly convened meeting of the Committee of which a quorum is present shall be competent to exercise all or any of the authorities, powers and discretions vested in or exercisable by the Committee. 4. Frequency of Meetings 4.1 The Committee shall meet not less than twice a year and at such times as the Chairman of the Committee shall require. 4.2 Meetings will be arranged to tie in with the publication of the company’s financial statements, allowing at least 2 working days prior to a Board Meeting where accounts or financial statements are to be approved. 4.3 Meetings can be requested by the external auditors if they consider one is necessary. 5. Notice of Meetings 5.1 Meetings of the Committee shall be summoned by the Chairman of the Committee at the request of any member thereof. 5.2 Unless otherwise agreed, notice of each meeting confirming the venue, time and date together with an agenda of items to be discussed shall be forwarded to each member of the Committee, and any other person required to attend no fewer than 5 working days prior to the date of the meeting. 6. Minutes of Meetings 6.1 The proceedings and resolutions of all meetings of the Committee shall be minuted, including recording the names of those present and in attendance. 6.2 At the beginning of each meeting the existence of any conflicts of interest should be ascertained and minuted. 6.3 Minutes of Committee meetings shall be circulated promptly to all members of the Committee and to the Chairman and all members of the Board. 7. Annual General Meeting 7.1 The Chairman of the Committee shall attend the Annual General Meeting prepared to respond to any shareholder questions on the Committee’s activities. 8. Duties 8.1 Internal Control and Risk Assessment 8.1.1 The Committee shall keep under review the effectiveness of the company’s financial reporting and internal financial control policies and procedures for the identification, assessment and reporting of financial risk. 8.2 External Audit 8.2.1 The Committee shall consider and make recommendations to the Board for it to put to the shareholders for the approval in General Meeting, as regards the appointment and re-appointment of the company’s external auditors and their remuneration and terms of engagement, and shall ensure that key partners within the appointed firm are rotated from time to time. 8.2.2 The Committee shall meet with the external auditors at least twice each year, once at the planning stage, where the scope of the audit will be considered, and once post audit at the reporting stage, and shall ensure that any auditor’s management letters and management’s responses are reviewed. 8.2.3 The Committee shall keep under review the relationship with external auditors including (but not limited to): 8.2.3.1 the independence and objectivity of the external auditors and the effectiveness of the audit process, taking into consideration relevant UK and US professional and regulatory requirements; 8.2.3.2 the consideration of audit fees which should be paid as well as any other fees which are payable to auditors in respect of non-audit activities; and 8.2.3.3 discussions with the external auditors concerning such issues as compliance with accounting standards and any proposals which the external auditors have made vis-à-vis the company’s internal controls; 8.2.3.4 implementation of the Board’s policy on the engagement of the external auditors to supply non-audit services, and the Committee shall advise and shall report to the Board thereon. 8.3 Financial Statements 8.3.1 The Committee shall keep under review the consistency of accounting policies both on a year to year basis and across the Group. 8.3.2 The Committee shall review and challenge where necessary the integrity of the company’s financial statements and any formal announcements containing detailed commentary upon the company’s financial performance taking into account: 8.3.2.1 decisions requiring a major element of judgement; 8.3.2.2 the extent to which the financial statements are affected by any unusual transactions; 8.3.2.3 the clarity of disclosures; 8.3.2.4 significant adjustments resulting from the audit; 8.3.2.5 the going concern assumption; 8.3.2.6 compliance with accounting standards. 8.4 Reporting Responsibilities 8.4.1 The Committee’s Chairman shall meet formally with the Board of Directors at least once a year to discuss such matters as the annual report and the relationship with the external auditors. 8.4.2 In the light of its other duties the Committee shall make whatever recommendations to the Board it deems appropriate and shall compile a report to shareholders to be included in the company’s annual report and accounts. The report should, in relation to such non-audit services as have been provided by the auditor (if any), explain how auditor objectivity and independence has been safeguarded. 8.5 Other Matters 8.5.1 The Committee shall give due consideration to the requirements of the UK Listing Authority’s Listing Rules. 8.5.2 The Committee shall be responsible for co-ordination of the external auditors. 8.5.3 The Committee will review the company’s procedures for handling allegations from whistleblowers, and ensure that arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow up action. 8.5.4 The Committee shall oversee any investigation of activities, which are within its terms of reference. 8.5.5 The Committee should on a regular basis review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness. 8.5.6 The Committee should annually consider whether there is a need for an internal audit function and make a recommendation to the Board. 9. Authority The Committee is authorised: 9.1 to seek any information it requires from any employee of the company in order to perform its duties, whilst bearing in mind the need to preserve the authority of line management; including an invitation to any member of staff to be questioned at a meeting of the Committee as and when required; 9.2 to obtain, at the reasonable expense of the company, external professional advice on matters within its terms of reference.