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Board Committees

The Board has established three standing Committees: the Audit Committee, the Remuneration Committee and the Nominations Committee. It also has an Executive Committee which is responsible for the day-to-day management of the business. Terms of Reference for the Audit, Remuneration and Nominations are available on our website.

The Audit Committee
All members of the Audit Committee are independent Non-Executive Directors in accordance with Code provision C.3.1. The Board is satisfied that Mr M E Rolfe, who is a member of the Institute of Chartered Accountants in England and Wales and was formerly the Finance Director of Gallaher Group Plc, has recent and relevant financial experience.

The Audit Committee met on five occasions during the financial year ended 30 June 2009.

The Audit Committee invites the Group Chief Executive, the Group Finance Director, other members of senior management and senior representatives of the external auditors to attend meetings as required.

Principal responsibilities
Under its Terms of Reference the Audit Committee’s principal responsibilities are:

• monitoring the integrity of the Group’s financial statements and any formal announcements relating to the Group’s performance;
• reviewing and challenging where necessary the consistency of, and changes to, its accounting policies;
• monitoring the effectiveness, independence and objectivity of the external auditors and the effectiveness of the external audit process and making recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditors;
• monitoring the Group’s financial management and reporting systems and assessing the integrity and effectiveness of its accounting procedures, system of internal control and the process for identifying and monitoring the risks facing the Group;
• reviewing and monitoring the effectiveness of the internal audit function, the annual internal audit plan and all reports produced by the internal auditor and management’s responsiveness to the findings and recommendations of the internal auditor;
• reviewing whistleblowing procedures and ensuring arrangements are in place for proportionate and independent investigation and follow-up action; and
• reviewing and making recommendations to the Board on the authorisation of Directors’ conflicts of interest.

As well as carrying out the work associated with the annual financial reporting cycle, the Audit Committee discharged a number of principal responsibilities during the year ended 30 June 2009 including, inter alia, the review of: the effectiveness of internal control systems; the Audit Committee’s Terms of Reference; auditor independence and non-audit fees policy; the whistleblowing policy; the internal audit plan; key accounting policies; judgements and issues; the external audit plan and associated reports and re-appointment of the external auditors.

Re-appointment of Auditors
The Audit Committee considered the re-appointment of Deloitte LLP (‘Deloitte’) as the Auditors to the Company in September 2009. On the basis that Deloitte had been appointed as the Company’s auditors, replacing PricewaterhouseCoopers LLP, following a competitive tender in 2007 the Audit Committee made a recommendation to the Board to propose a resolution re-appointing Deloitte as the Auditors to the Company at the AGM to be held on 17 November 2009.

Auditor objectivity and independence
Deloitte did provide non-audit related services during the year ended 30 June 2009 primarily relating to corporate finance services, financial modelling and advice on accounting and internal control matters.

The Company has also developed and implemented a policy on Auditor Independence and Non-Audit Fees (the ‘Policy’). The Policy sets out the duties of the Audit Committee relating to the maintenance of audit independence and non-audit fees and the services which the Auditors can and cannot provide to the Group.

Under the Policy the following services should not be provided by the Auditors:

• bookkeeping or other services related to the accounting records or financial statements;
• financial information systems design and implementation relating to the financial statements or accounting records;
• appraisal or valuation services, fairness opinions;
• actuarial services;
• internal audit outsourcing services; and
• management functions, legal services or Executive recruiting.

The Company is also required, under the Policy, to obtain written confirmation from the Auditors that they remain independent on an annual basis. The Audit Committee is therefore satisfied that there are no independence issues in respect of the Auditors.

Remuneration Committee
All members of the Remuneration Committee are considered by the Company to be independent in accordance with Code provision B.2.1.

Miss T E Bamford joined the Remuneration Committee on 1 July 2009 and is considered to be independent by the Company.

The Remuneration Committee met on three occasions during the financial year ended 30 June 2009.

Principal responsibilities
The Remuneration Committee’s principal responsibilities include:

• determining and reviewing the overall remuneration policy of the Company with regard to attracting, retaining and motivating directors and senior managers of the experience and calibre required;
• determining and reviewing executive remuneration policy, including the terms and conditions of employment for Executive Directors and their individual remuneration packages;
• making recommendations to the Board in relation to the remuneration of the Chairman;
• agreeing targets and benefits in respect of performance related pay schemes for all employees;
• approving the rules of and the basis of participation in Group share options, long-term performance plans and cash based bonus incentive schemes and the specific awards, grants and payments made under any such schemes;
• determining the policy for and scope of pension arrangements for Executive Directors and senior management;
• agreeing severance arrangements or other compensation for loss of office or early retirement for all employees;
• the evaluation of Executive Director performance with regard to the award of share incentives, annual bonus and other performance based remuneration; and
• obtaining independent professional advice in relation to Executive Director remuneration.

Nominations Committee
Miss T E Bamford joined the Nominations Committee on 1 July 2009.

The Nominations Committee’s principal responsibilities include:

• regularly reviewing the structure, size and composition required of the Board and succession planning for Directors and senior executives;
• identifying and nominating candidates to fill Board vacancies and evaluating the role and capabilities required for a particular appointment;
• reviewing the leadership needs of the Group to ensure continued ability of the Group to compete effectively in the market;
• annually reviewing the time required from Non-Executive Directors to fulfil their duties;
• obtaining details of and reviewing any interests of candidates which conflict or may conflict with the interests of the Company and recommending to the Board the terms and conditions on which such conflicts should be authorised; and
• annually reviewing the performance of the Board.

During the year ended 30 June 2009 the Nominations Committee undertook a recruitment selection process involving external consultants, JCA Group Limited, which resulted in the appointment of a new Group Finance Director, Mr D F Thomas and The Zygos Partnership, which resulted in the appointment of an additional Non-Executive Director, Miss T E Bamford.

The service contracts of the Executive Directors and the letters of appointment of the Non-Executive Directors are available for inspection by any person at the Company’s registered office during normal office hours and at the AGM for 15 minutes prior to and throughout the meeting.

Executive Committee
The Board delegates the day-to-day management of the business to an Executive Committee, which is led by the Group Chief Executive. The members of the Executive Committee are currently the Group Chief Executive, Mr M S Clare, the Group Finance Director, Mr D F Thomas, Executive Directors Mr S J Boyes and Mr C Fenton, the Group General Counsel and Company Secretary, Mr L Dent, the Managing Director of Wilson Bowden Developments Limited, Mr N Richardson, Group Director of Corporate Affairs, Mr P Law and Group Human Resources Director, Mrs J Mee.

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