Audit Committee
Michael Wareing, Chairman
Members and attendance (eligibility) at meetings held during the year ended 31 July 20111:
Meetings during the year: 4 Current members
M Wareing (Chairman) 4(4)
T Bamford 0(0)
M Clarke 1(1)
A Duff 2(2)
Members who stepped down during the year:
G Davis 2(2)
J Murray 1(1)
N Stein 3(3)
1 The Committee is made up of four Non Executive Directors and the Board considers that the chairman and each member of the Committee is independent within the definition set out in the Code and that each of them has relevant financial experience.
Role and responsibilities
The Audit Committee has wide-ranging oversight of responsibilities assigned to it by the Board. These are to: • assist the Board to fulfil its responsibilities relating to
external financial reporting and associated announcements including:
– the Half Year and Full Year financial statements, including the requirements for financial reporting; and
– the Half Year and Annual Full Year results announcements made to the London Stock Exchange;
• review key accounting and auditing issues;
• review the effectiveness of the Company’s internal control and risk management procedures;
• report regularly to the Board on compliance in relation to the business activities for which it has responsibility within its terms of reference;
• ensure that it has an agenda which is linked to events in the Company’s financial calendar;
• review the Company’s policies and procedures relating to governance, risk and control and, in addition to the regular items, each member of the Committee may request reports on matters of interest;
• develop, implement and monitor the Company’s policy on external audit;
• monitor independence, objectivity and compliance with ethical and regulatory requirements in relation to external audit;
• review the effectiveness of the external auditor;
• recommend the appointment and reappointment of the Company’s external auditors;
• review annually a formal letter provided by the external auditors confirming their independence and objectivity within the context of applicable regulatory requirements and professional standards;
• review the effectiveness of the internal audit function; • review of litigation, contingent liabilities and tax matters,
including compliance with statutory tax obligations; and • monitor fraud reports and the operation of the Company’s
Governance
The Committee’s membership is reviewed by the Nominations Committee and by the chairman of the Audit Committee at regular intervals. Members of the Committee are appointed by the Board following recommendations by the Nominations Committee. All members of the Committee receive appropriate induction, which is in addition to the induction which all new Directors receive and includes an overview of the business, its financial dynamics and risks. Members of the Committee may undertake ongoing training as required. Audit Committee members are expected to have an understanding of the following areas:
• the principles of, contents of and developments in financial reporting, including the applicable accounting standards and statements of recommended practice and, in particular, the appropriateness of the Company’s
accounting policies and integrity of the financial statements; • the Company’s wider corporate policies and its financing;
and
• the Company’s systems of internal control and matters that require the use of judgement in the presentation of accounts and key figures as well as the role of internal and external auditors.
Each member of the Committee brings relevant experience at a senior executive level. In addition to the existing members of the Audit Committee, Mr Wareing, who was International Chief Executive of KPMG until his retirement in September 2009, continues to provide the Board with further assurance that the Audit Committee has the appropriate skills and experience and that it meets the Code
requirements that at least one member of the Committee has significant, recent and relevant financial experience. The expertise and experience of each member of the Committee are summarised on pages 54 and 55.
The Committee invites the Chairman, Group Chief Executive, Chief Financial Officer, Group Financial Controller and the Head of Internal Audit, together with senior representatives of the Company’s external auditors, to attend each meeting and receive its papers, although it reserves part of each meeting for discussions without those invitees present. Other senior executives are also invited to certain meetings to present such reports as are required for the Committee to discharge its duties. The Committee members periodically meet the Head of Internal Audit and the external auditors without the presence of executive management. The chairman of the Committee reports to the subsequent meeting of the Board on the key issues covered by the Committee, and the Board also receives copies of the minutes of each meeting. During the year, the Committee critically reviewed its own performance and considered where improvements could be made. In addition, the Committee’s terms of reference were reviewed during the year.
The chairman of the Committee attends the Annual General Meeting to respond to any shareholder questions that might be raised on the Committee’s activities.
Activities
Details of the activities of the Committee during the financial year ended 31 July 2011 and a full discussion of how the Audit Committee discharges it responsibilities are set out in the Report from the Audit Committee on pages 69 and 70.
Remuneration Committee
Andrew Duff, Chairman
Members and attendance (eligibility) at meetings held during the year ended 31 July 2011:
Meetings during the year: 6 Current members:
A Duff (Chairman) 6(6)
T Bamford 2(2)
M Clarke 1(1)
M Wareing 3(3)
Members who stepped down during the year:
A Le Goff 2(2)
N Stein 3(4)
G Davis 3(3)
The table above sets out the members of the Committee and their attendance during the year. Full details of the Committee’s responsibilities, governance and activities during the year are detailed in the Remuneration report on pages 72 to 82.
Corporate governance report continued
Nominations Committee
Gareth Davis, Chairman
Members and attendance (eligibility) at meetings held during the year ended 31 July 2011:
Meetings during the year: 3 Current members: G Davis (Chairman) 2(2) T Bamford 2(2) M Clarke 2(2) A Duff1 2(3) M Wareing 3(3)
Members who left during the year:
A Le Goff 1(1)
J Murray 1(1)
N Stein 1(1)
J Whybrow 0(0)
1 Owing to scheduling conflicts, Mr Duff was unable to attend one Nominations Committee meeting.
Role and responsibilities
The Nominations Committee responsibilities are to:
• review the structure, size and composition of the Board and its Committees;
• make recommendations with regard to any changes that are considered necessary, both in the identification and nomination of new Directors and the continuation of existing Directors in office;
• evaluate the balance of skills, knowledge and experience on the Board and, in light of that evaluation, prepare the description of the relevant role and capabilities required of prospective candidates;
• make its recommendations to the Board, after a rigorous interview process for shortlisted candidates;
• retain external search consultants for appointments to the Board; and
• advise the Board on succession planning for Board appointments, although the Board itself has overall responsibility for succession generally.
Governance
Mr Davis succeeded Mr Whybrow as chairman of the Nominations Committee on 20 January 2011. Mr Le Goff, Mr Murray and Mr Stein all ceased to be members of the Committee on the dates they stepped down from the Board. Ms Bamford and Mr Clarke were appointed to the Committee on 22 March 2011.
There is a formal procedure in place for selecting and recruiting Directors as detailed in the role and responsibilities section opposite. During the year, the Committee retained an external search agency to assist in the process of identifying potential candidates for nomination to the Board.
The chairman of the Committee attends the Annual General Meeting to respond to any questions shareholders may raise on the Committee’s activities.
Activities
The matters discussed by the Committee during the financial year ended 31 July 2011 included:
• the appointment of a successor Chairman;
• the appointment of a new Senior Independent Director; • the appointment of new Non Executive Directors to the
Board; and
• a review of the Committee’s terms of reference.
During the year, the Committee (in recognising the impact of the Davies Report) ensured that skills, experience, potential and overall balance of the Board – as well as diversity including gender – were fully considered in relation to the appointments mentioned above. When the Committee considered the appointment of a successor Chairman, Mr Whybrow and Mr Davis absented themselves from the meeting.
The proposed activities for the Committee in financial year 2011/12 will be to continue to monitor and assess the Board’s composition and diversity, longer term succession planning and potential further recruitment of Non Executive Directors.
Gareth Davis
Major Announcements Committee
John Martin, Chairman
Members during the year ended 31 July 2011: Current members:
J Martin Chief Financial Officer (Chairman) G Davis Chairman of the Board
M Fearon Group Communications and Investor Relations Director I Meakins Group Chief Executive
R Shoylekov Group Company Secretary and General Counsel
Members who stepped down during the year:
J Whybrow Chairman of the Board
Role and responsibilities
The Committee meets as required to consider the Company’s disclosure obligations in relation to material information in circumstances where the matter (i) is outside the scope of the authority of the Disclosure Committee or (ii) has been referred to it by the Disclosure Committee as being a matter that may involve an announcement relating to a decision of a strategic nature or (iii) is otherwise of such significance or sensitivity that it ought properly be considered by the Committee. The Committee’s terms of reference anticipate that it would meet usually only in exceptional circumstances where information has come to light which is of an unexpected, non-routine, and material nature. The Committee therefore has no meetings scheduled, and it was not required to meet during the year.