Corporate Governance

The Directors recognise the value and importance of high standards of corporate governance and have adopted the QCA Corporate Governance Code (the “QCA Code”). At the present time, the Board believes the Group is fully compliant with the QCA Code.

James Wakefield, as non-executive director and Chairman, has assumed responsibility for ensuring that the Group has appropriate corporate governance standards in place and that these requirements are followed and applied within the Group as a whole.

There have been no changes to governance related matters that have occurred during the year.

The sections below set out the ways in which the Group applies the ten principles of the QCA Code in support of the Group’s medium to long-term success.

Last updated 01.12.2022

DELIVER GROWTH

1. Establish a strategy and business model which promotes long-term value for shareholders

The Board is responsible to Shareholders for setting the Group’s strategy by:
maintaining the policy and decision making process around which the strategy is implemented; ensuring that necessary financial and human resources are in place to meet strategic aims; monitoring performance against key financial and non-financial indicators;
providing leadership whilst maintaining the controls for managing risk; overseeing the system of risk management; and setting values and standards in corporate governance matters.

The Board has established a strategy and business model which seek to promote long-term value for Shareholders and the business is focused on three strategic pillars of growth:

• Organic Growth
• Innovative R&D
• Acquisition

2. Seek to understand and meet shareholder needs and expectations

The Company has a strong commitment to market communication, with the Directors seeking to be accountable against the stated strategic objectives of the Group. The Company maintains regular contact with Shareholders through publications such as the Annual Report and Accounts, operational updates, regular press announcements made via a regulatory information service and the Company’s website.

The Company is responsive to Shareholder telephone and email enquiries throughout the year and the Board regards the AGM as a particularly important opportunity for Shareholders and members of the Board to meet and exchange views.

The Company receives occasional feedback direct from investors, which is carefully considered by the Board, with appropriate action being taken where the Board believes it in the interests of Shareholders to do so. None of the feedback received from investors has involved non-compliance with the QCA Code.

3. Take into account wider stakeholder and social responsibilities and their implications for long-term success

In addition to its Shareholders, the Company believes its main stakeholder groups are its employees, clients, suppliers and relevant statutory authorities in its areas of operation.

The Group is committed to maintaining the highest standards of corporate social responsibility in its business activities by: aiming to comply with all applicable laws and regulations, wherever the Group operates; achieve and comply with relevant quality and people management standards; consult with and respond to the concerns of its stakeholders; work towards realising the Group’s mission and vision statements; and behave with honesty and integrity in all the Group’s activities and relationships with others and reject bribery and corruption in all its forms.

The Board recognises the benefits of a diverse workforce, which enables the Group to make better decisions about how to optimise resources and work by eliminating structural and cultural barriers and bias. It allows us to: protect and enhance our reputation by recognising and respecting the needs and interests of diverse stakeholders: deliver strong performance and growth by attracting, engaging and retaining diverse talent; and innovate by drawing on the diversity of perspectives, skills, styles and experience of our employees and stakeholders.

The Group is committed to ensuring that it treats its employees fairly and with dignity. This includes being free from any direct or indirect discrimination, harassment, bullying or other form of victimisation. The Group has policies in place to encourage employees to speak up about any inappropriate practices or behaviour.

It was important for us to look after our employees during 2020 as they are keyworkers and the majority had to come into work during lockdown. We continued to pay employees who had to shield, self-isolate or take time off for childcare. We also introduced a bonus to recognise that our employees were working particularly hard during these challenging times. At the end of 2020, we introduced a COVID-19 screening programme, using our tests, to prevent the spread of Coronavirus amongst the workforce.
During this time, we reminded our employees of the Employee Assistance Programme, which provides 24/7 support for any issues they were facing during this time, particularly with mental health challenges, relationship issues, etc.

The Group believes that having empowered and responsible employees who display sound judgement and awareness of the consequences of their decisions or actions, and who act in an ethical and responsible way, is key to the success of the business.

The operation of a profitable business is a priority and that means investing for growth as well as providing returns to its Shareholders. To achieve this, the Group recognises that it needs to operate in a sustainable manner and therefore has adopted core principles to its business operations, which provide a framework for both managing risk and maintaining its position as a good ‘corporate citizen’, and also to facilitate the setting of goals to achieve continuous improvement.

The Group encourages feedback from its clients through engagement with individual customers. As a consequence of such feedback, the Group has collaborated with multiple existing and prospective clients to develop and validate new products, work flows and know-how to improve accuracy, reduce testing turnaround times, cost per test, and ultimately deliver improved clinical outcomes for millions of individual patients globally.

The Board is aware of the need to maintain good working relationships with the Group’s key suppliers and receives regular updates from the Executive team on key supply agreements.

Health and safety
The Group is committed to complying with all relevant health and safety regulations to its operations. As such, the Group has adopted a Health & Safety Policy, which forms part of the Employee Handbook issued to all employees upon commencement of employment within the Group. The policy sets out arrangements and responsibilities across the Group and includes aspects such as: emergency procedures; security recommendations; accidents/incidences and first aid; manual handling/lifting and moving; work related upper limbs disorders (including strains to hands and arms); display screen equipment/visual display equipment; alcohol and drugs policy; smoking policy; and COVID-19 in the workplace.

The Group is not aware of any orders made in respect of a breach of health and safety regulation during the period.

Environment
The Directors consider that the nature of the Group’s activities is not detrimental to the environment. The Group continues to maintain the necessary levels of quality control and quality assurance through the application of its various quality management systems. Manufacturing facilities operate to the current revisions of ISO 13485:2016 and ISO 9001:2015 as applicable.

4. Embed effective risk management, considering both opportunities and threats, throughout the organisation

The Board has overall responsibility for the Group’s system of internal control and for reviewing the effectiveness of internal control to safeguard Shareholders’ investment and the Group’s assets. There is an ongoing process for identifying, evaluating and managing the significant risks the Group faces.

The Board delegates to the Executive team the responsibility for designing, operating and monitoring both the risk management and internal control systems, and the maintenance of effective internal controls within the Group. The Company also has a whistleblowing policy.

The systems and controls in place include policies and procedures, which relate to the maintenance of records that fairly and accurately reflect transactions, correctly evidence and control the Group’s assets, provide reasonable assurance that transactions are recorded as necessary to enable the preparation of financial statements in accordance with International Financial Reporting Standards (“IFRS”), and review and reconcile reported results.

The Group’s key internal controls are:
• an independent review of internal controls was completed in 2020;
• a regular review of the Group’s insurance policies with its insurance broker to ensure that the policies are appropriate for the Group’s activities and exposures;
• a comprehensive system for consolidating financial results from Group companies and reporting these financial results to the Board;
• reviewing cash flow, annual revenue and capital forecasts regularly during the year, along with regular monitoring of management accounts and capital expenditure reported to the Board and comparisons with forecasts;
• financial controls and procedures, including in respect of bank payments, bank reconciliation’s and petty cash;
• monthly review of outstanding debtors;
• regular meetings of the Executive team; and
• an Audit Committee that approves audit plans and published financial information and reviews reports from the external Auditor arising from the audit and deals with significant control matters raised.

The Board monitors the activities of the Group through regular Board meetings and it retains responsibility for approving any significant financial expenditure or commitment of resources. Risk management is focused around the operational areas of the Group. The Group has a dedicated Regulatory Affairs and Quality Assurance Director who has extensive operational experience at senior management and board levels, and particularly strong experience in quality system development and regulatory compliance. He is responsible for a Regulatory team operating across the Group, working at identifying and prioritising operational risks and working with the operational teams to mitigate the identified risks. This work is supported by the risk assessment procedure in place across the Group, with the objective to ensure that risk assessment of the Group’s equipment, procedures and processes is approached consistently across the Group.

With the assistance of the Audit Committee, the Board’s review process is principally based on reviewing regular reports from the Executive team to consider whether significant risks are identified, evaluated, managed and controlled effectively, and whether any significant weaknesses are promptly remedied. The system is designed to manage rather than eliminate the risk of failure to achieve the Company’s objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

In assessing what constitutes reasonable assurance, the Board considers the materiality of financial and non-financial risks and the relationship between the cost of, and benefit from, internal control systems.

The Board confirms that it has, during the reporting period, reviewed on an ongoing basis the effectiveness of the Company’s system of internal controls including financial, operational and compliance controls and risk management systems and has reviewed insurance provisions. No significant failing or weaknesses have been identified.

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

5. Maintain the Board as a well-functioning, balanced team led by the Chair

The Chairman, James Wakefield, is responsible for leadership of the Board, ensuring its effectiveness in all aspects of its role. The Company is satisfied that the current Board is sufficiently resourced to discharge its governance obligations on behalf of all stakeholders.

To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed to all Directors in advance of Board and Committee meetings. All Directors have access to the advice and services of the Chief Financial

Officer and the Company Secretary, who are responsible for ensuring that the Board procedures are followed, and that applicable rules and regulations are complied with. In addition, procedures are in place to enable the Directors to obtain independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense.

In between Board meetings, the Executive Directors maintain regular informal contact with the Non-Executive Directors. Whilst the Board retains overall responsibility for, and control of, the Group, day-today management of the business is conducted by the Executive Directors, who meet with the senior management team on a weekly basis.

Board of Directors

The Board comprises six members, of which five are Non-executive Directors, being James Wakefield, Dr Andrew Heath, Dr Ed Snape, Jean-Pierre Crinelli and Juliet Thompson. The Non-executive Directors are appointed to act in the best interests of the Company, and when relevant, appropriately record their concerns about the running of the Company.

Independence of Directors

The Directors acknowledge the importance of the principles of the QCA Code which recommend that a company should have at least two independent non-executive directors.  The Board has, therefore, considered and determined that, since the date of their respective appointments, James Wakefield, Dr Andrew Heath, Dr Ed Snape, and Juliet Thompson were, and continue to be, independent of the executive management and free from any relationship which could materially affect the exercise of their independent judgement.

At the time of the AIM listing, Jean-Pierre Crinelli’s role had just changed to that of a Non-Executive Director. At that time, the Board did not consider him independent as he was previously an Executive Director of the Company and one of the founders of the NOVAprep® business. The Board now considers Jean-Pierre Crinelli to be an Independent Non-Executive Director. It has reached this view following the sale of NOVAprep® by the Company in 2019, and because he has now been a Non-Executive Director for over five years, and has demonstrated his independence over that period through his questioning at Board meetings. All other Non-Executive Directors are considered independent for the purpose of the QCA Code, as none have beneficial or non-beneficial shareholdings in the Company exceeding 3%, nor have an existing tenure of more than 12 years. Dr Ed Snape was co-owner of Nexus Medical, LLC, the general partner of Nexus Medical Partners II, L.P., which has a current shareholding in the Company of less than 3% Accordingly, Dr Ed Snape is considered by the Directors to be independent for the purposes of the QCA Code.

All the Non-Executive Directors constructively challenge and help develop proposals on strategy and bring strong, independent judgement, knowledge and experience to the Board’s deliberations. The Non-Executive Directors are of sufficient experience and competence that their views carry significant weight in the Board’s decision making and when relevant, would record their concerns about the running of the Company.  At each meeting the Board considers Directors’ conflicts of interest.

The Non-Executive Directors have regular opportunities to meet without Executive Directors being present (including time after Board and Committee meetings).

Time commitments

Non-Executive Directors receive a formal appointment letter on joining the Board which identifies the terms and conditions of their appointment.

A potential director candidate (whether an executive director or non-executive director) is required to disclose all significant outside commitments prior to their appointment.

The Board is satisfied that both the Chairman and the Non-Executive Directors are able to devote sufficient time to the Company’s business.

If considered appropriate, the Board may authorise Executive Directors to take non-executive positions in other companies and organisations, provided the time commitment does not conflict with the Director’s duties to the Company, since such appointments should broaden their experience. The acceptance of appointment to such positions is subject to the approval of the Chairman.

Attendance at Board and Committee meetings

The Directors meet at least ten times per year for formal Board meetings to discuss and decide the Group’s business, financial performance and strategic decisions. In addition, and as required, the Board meets more frequently by conference call to discuss and decide on matters considered more urgent, such as those relating to acquisitive growth.

During the reporting period, the Board met in person or via conference calls 16 times.

In advance of each meeting of the Directors, the Board is provided with relevant information to ensure that it can properly carry out its role. For each meeting, the Directors generally consider the minutes of the previous meeting and any action points, recent forecast and operations, cash flows and progress on any particular projects.

The attendance of each Director at Board and Committee meetings during 2020 is set out in the table below.  Attendance is expressed as the number of meetings attended/number eligible to attend. Directors’ attendance by invitation at meetings of Committees of which they are not a member is not reflected in the following table.

6. Ensure that between them, the directors have the necessary up-to-date experience, skills and capabilities

The Board currently comprises of one Executive and five Non-Executive Directors with an appropriate balance of sector, financial and public market skills and experience to deliver the Group’s strategy for the benefit of shareholders over the medium to long term.  The Board considers that the Non-Executive Directors bring a wide experience at a senior level of business operations and strategy and have an expanse of knowledge and expertise gained from other areas of business.

The experience and knowledge of each of the Directors gives them the ability to constructively challenge the strategy and to scrutinise performance. The Board also has access to external advisors where necessary. Neither the Board nor its Committees sought external advice on any significant matter during the reporting period.

New Directors are presented with appropriate levels of background information on the Company, meet the management, visit sites and spend time with the Chairman and other Directors as required. The induction is tailored to meet each new Director’s specific needs.

Throughout their period in office the Directors are continually updated on the Group’s business, the industry and competitive environment in which it operates, corporate social responsibility matters and other changes affecting the Group by written briefings and meetings with senior executives.

Each Director takes responsibility for maintaining his/her skill set, which includes roles and experience with other boards and organisations as well as attending formal training and seminars.   The Executive Directors receive regular and ongoing updates from their professional advisors covering financial, legal, tax and the Euronext Growth Paris and AIM Rules.

The Company Secretary provides information and advice on corporate governance and individual support to Directors on any aspect of their role, particularly supporting the Chairman and those who chair Board Committees.  The Company Secretary is also responsible for ensuring that Board procedures are followed, that the Company complies with company law and with the Euronext Growth Paris and AIM Rules.

The Company is a strong supporter of diversity in the boardroom and, during the reporting period, the Board comprised of one female and six male Directors.  The Company remains of the opinion that appointments to the Board should be made relative to a number of different criteria, including diversity of gender, background and personal attributes, alongside the appropriate skill set, experience and expertise.

7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement

Board evaluation

The Board is mindful that it needs to continually monitor and identify ways in which it might improve its performance and recognises that board evaluation is a useful tool for enhancing a board’s effectiveness.  Alongside the formal annual evaluation, the Chairman routinely assesses the performance of the Board and its members and discusses any issues, problems or shortcomings with the relevant Directors. Likewise, the Senior Independent Director reviews the performance of the Chairman.

It is not an AIM requirement for an external Board appraisal to be undertaken; however, in view of the significant growth experienced by the Company during 2020 and its growth plans for the future, the Board intends to appoint an external third party to undertake an independent review of the Board and its operations. The report will seek input from all Board members both
in the form of a questionnaire and one-to-one interviews covering:

• the themes from the questionnaire;
• the assessment of the Director’s
  individual performance; and
• feedback on Board colleague’s
  individual performance.

In addition, the independent review will have access to certain historic nonconfidential/ price sensitive Board packs and other information.

Final feedback will be in the form of a full report for internal use. It is intended that this includes an Executive summary and key findings, together with a detailed analysis of the responses to the questionnaire and anonymised comments made in response to the questionnaire and during the interviews. The report will also include recommendations for consideration together with benchmarking against best practice.

The aim of the review is to ensure that the Board contains the necessary skills to enable it to be satisfied that:

• the Board continues to meet its regulatory requirements and ensures that appropriate processes are in place for setting the strategic direction of the Group;
• each Committee continues to be effective and that all members were considered to have made valuable contributions, and individual Directors continue to perform effectively; and
• feedback will be provided through the Chairman to individual Board members.

8. Promote a corporate culture that is based on ethical values and behaviours

The Company recognises the importance of investing in its employees to provide foundations and leadership to drive performance further, regardless of age, race, religion, gender or sexual orientation or disability. Our core company values are the building blocks for developing our dynamic and challenging culture within the Group.

These values represent our philosophy which through our people and organisation will help the business deliver our company goals. The values represent how each of us can contribute to the success of the Company both now and in the future as an individual and also as part of the wider team.

• To treat each other with trust, dignity and respect.
• Enabling, empowering and energizing others to make things happen.
• Work as a team with colleagues and across functions.
• Innovation, inspiration and motivation, creating an open culture where people are valued for their contribution.
• Novacyt endeavours to deliver the best quality service to all of our internal and external customers.

The Group recognises the importance of investing in its employees and, as such, the Group provides opportunities for training and personal development and encourages the involvement of employees in the planning and direction of their work. These values are applied regardless of age, race, religion, gender, sexual orientation or disability.

The Group believes that it has robust policies and procedures for combating bribery and corruption.

The Group recognises that commercial success depends on the full commitment of all its employees and commits to respecting their human rights, to provide them with favourable working conditions that are free from unnecessary risk and to maintain fair and competitive terms and conditions of service at all times.  The performance and reward system endorses the desired ethical behaviours across all levels of the Group.

9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

The Chairman, James Wakefield, is responsible for leading the Board, facilitating the effective contribution of all members and ensuring that it operates effectively in the interests of the shareholders. James McCarthy, the Acting Chief Executive Officer, is responsible for the leadership of the business and implementation of the strategy. By dividing responsibilities in this way, no one individual has unfettered powers of decision-making.

The Board reserves for itself a range of key decisions to ensure that it retains proper direction and control of the Group, and a formal schedule of matters reserved for decision by the Board has been adopted by the Board since Admission to AIM. Such matters include business strategy and management, financial reporting (including the approval of the annual budget), Group policies, corporate governance matters, major capital expenditure projects, material acquisitions and divestment’s and the establishment and monitoring of internal controls. This schedule may be updated by the Board and approved by the Board only. The day-to-day management of the business has been delegated to the Chief Executive Officer and the wider Executive Team.

The appropriateness of the Board’s composition and corporate governance structures are reviewed through the ongoing Board evaluation process and on an ad hoc basis by the Chairman together with the other Directors, and these will evolve in parallel with the Group’s objectives, strategy and business model as the Group develops.

Board Committees

The Board has established an Audit Committee, a Remuneration Committee and a Nomination Committee, the terms of these Committees reflect market practice on AIM. These Committees of the Board have formally delegated responsibilities.

Audit Committee

The Audit Committee is chaired by Juliet Thomson, and has primary responsibility for monitoring the quality of internal controls, ensuring that the financial performance of the Group is properly measured and reported on, and for reviewing reports from the Group’s auditor relating to the Group’s accounting and internal controls, in all cases having due regard to the interests of shareholders. The Audit Committee meets at least twice a year.  Dr Andrew Heath and Jean-Pierre Crinelli are the other members of the Audit Committee.

Remuneration Committee

The Remuneration Committee is chaired by Dr Andrew Heath, and reviews the performance of the Executive Directors, and determines their terms and conditions of service, including their remuneration and the grant of options, having due regard to the interests of shareholders. The Remuneration Committee meets at least twice a year.  Dr Ed Snape and Juliet Thompson are the other members of the Remuneration Committee.

Nomination Committee

The Nomination Committee is chaired by James Wakefield, and identifies and nominates, for the approval of the Board, candidates to fill Board vacancies as and when they arise. The Nomination Committee meets at least once a year. Dr Andrew Heath and Juliet Thompson are the other members of the Nomination Committee.

BUILD TRUST

10. Communicate how the Group is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

As explained earlier in this Corporate Governance Statement, the Board has established a Nomination Committee, an Audit Committee and a Remuneration Committee.

The Board places its responsibility to the Company’s shareholders and setting the Group’s strategy for achieving long-term success as a high priority. The Group’s website is regularly updated with all press releases, future financial calendar dates, AGM and EGM results and investor presentations.

The results of the proxy votes received in relation to the 2021 AGM are available on the Company’s website.  All resolutions were passed at the 2021 AGM and no resolution had a significant proportion (>20%) of votes cast against them at that meeting.

The Board maintains a healthy dialogue with all of its stakeholders. Throughout the course of the year the Board communicates with shareholders directly on any views, concerns and expectations they may wish to express.

Terms of reference – Audit Committee, Remuneration Committee and Nomination Committee

Terms of Reference of the Audit Committee 

Membership

• Members of the Audit Committee shall be appointed by the Board on the recommendation of the Nomination Committee, if a Nomination Committee is appointed.
• The Audit Committee must comprise of a minimum of 2 members, including at least one non-executive director who is considered independent (such independent non- executive director may also be the chairperson of the Audit Committee).
• One of the members of the Audit Committee shall be a non-executive Director with recent and relevant financial experience.
• All members should have sufficient competence to understand, analyse and, when necessary, challenge the management accounts and draft public financial statements.
• Only members of the Audit Committee shall have the right to attend Audit Committee meetings. However, other individuals, such as the Chief  Executive Officer, the Finance Director and other representatives from the finance, risk and compliance functions of the Company may be invited to attend all or part of any meeting.
• The external auditors will be invited to attend meetings of the Audit Committee on a regular basis.
• Membership of the Audit Committee can be varied at any time by a majority resolution of the existing members of the Audit Committee provided that the provisions of paragraph 2 are observed.
• Appointments to the Audit Committee shall be for a period of up to three years, which may be extended for two further three-year periods.

Chairman

• The Chairman if the Company may be appointed as a member of the Audit Committee but may not be chairman of the Audit Committee.
• The Board shall appoint the chairman of the Audit Committee who shall be an independent non-executive Director. The chairman has the responsibility of liaising with the Board.
• The chairman shall chair the meetings of the Audit Committee.
• In the absence of the chairman of the Audit Committee, the remaining members present shall elect one of themselves to chair the meetings of the Audit Committee.

Secretary

• The Company Secretary (or his/her delegate) or such other person as the Board may determine from time to time shall be the secretary of the Audit Committee.
• The secretary of the Audit Committee or his/her delegate shall attend meetings of the Audit Committee to take minutes and will ensure that the members of the Audit Committee receive information and papers in a timely manner to enable full and proper consideration to be given to issues.
• In the absence of the secretary of the Audit Committee, the members present at a meeting of the Audit Committee shall elect another person to act as the secretary for the purposes of that meeting.

Quorum

• The quorum necessary for the transaction of business of the Audit Committee shall be 2 members, both of whom shall be independent non-executive Directors.
• The secretary shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly. The relevant member of the Audit Committee shall not be counted towards the quorum and he/she must abstain from voting on any resolution of the Audit Committee in which he/she and/or his/her associates have a material interest.
• A duly convened meeting of the Audit 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 Audit Committee.

Frequency of meetings

• The Audit Committee shall meet at least three times a year at appropriate times in the reporting and audit cycle, and at such other times as the chairman of the Audit Committee shall require.
• Any member of the Audit Committee, the internal auditors or the external auditors may request a meeting if they consider that one is necessary.
• Meetings of the Audit Committee will be arranged to the extent reasonably possible to tie in with the publication of the Company’s financial statements.
• Outside of the formal meeting programme, the chairman of the Audit Committee, and to a lesser extent the other members of the Audit Committee will maintain a dialogue with key individuals involved in the Company’s governance, including the Chairman of the Company (to the extent that he/she is not already a member of the Audit Committee), the Chief Executive Officer, the Finance Director and the external audit partner.

Attendance at meetings

• Members of the Audit Committee may attend meetings of the Audit Committee either in person or through telephonic and/or electronic means of communication.
• Should any member of the Audit Committee wish to attend a meeting through telephonic and/or electronic communications, prior arrangements shall be made with the secretary of the Audit Committee.
• Other than members of the Audit Committee, the Finance Director, the head of internal audit (if any) and a representative of the external auditors shall normally attend meetings along with the members of the Audit Committee.
• At least once a year the Audit Committee shall consider meeting with the external auditors without any executive member of the Board (or other members of the management team) being present.

Notice of meetings

• Meetings of the Audit Committee shall be convened by the secretary of the Audit Committee at the request of any of its members or at the request of the chairman of the Audit Committee.
• Unless otherwise agreed by the Audit Committee, 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 Audit Committee, and to any other person required to attend within a reasonable time prior to the date of the meeting. Supporting papers shall be sent to Audit Committee members and to other attendees as appropriate, within a reasonable time prior to the date of the meeting.
• Any member of the Audit Committee shall be entitled, by notice to the secretary of the Audit Committee, to include other matters relevant to the functions of the Audit Committee in the agenda of an Audit Committee meeting.

Voting

• Each member of the Audit Committee shall have one vote which may be cast on matters considered at a meeting of the Audit Committee. Votes can only be cast by members attending a meeting of the Audit Committee.
• Save where he has a personal interest, the chairman of the Audit Committee will have a casting vote.

Minutes of meetings

• The secretary of the Audit Committee (or his/her delegate) in attendance at the meetings of the Audit Committee shall minute in sufficient detail all proceedings and resolutions of all such meetings, including the names of those present and in attendance. The minutes should also include any concerns raised by any member of the Audit Committee and/or dissenting views expressed and any conflicts of interest.
• Draft and final versions of minutes of the Audit meetings shall be sent to all Audit Committee members for their comments and records respectively, in both cases within a reasonable time after the meeting. Once they are agreed, the secretary of the Audit Committee shall circulate the minutes, and reports of the Audit Committee, to all members of the Audit Committee and to all members of the Board.
• Minutes of the Audit Committee meetings shall be kept by the secretary of the Audit Committee and shall be available for inspection by any member of the Audit Committee or Director at any reasonable time on reasonable notice.

Annual General Meeting

• The chairman of the Audit Committee shall attend the annual general meeting of the Company and be prepared to respond to any Shareholder questions on the Audit Committee’s activities.
• The Audit Committee shall produce an annual report to be included in a separate section of the Directors’ report to the annual report describing the Audit Committee’s role and detailing its activities and how independent oversight over both management and external auditors has been exercised.

Duties

The Audit Committee shall be responsible for:

• monitoring in discussion with the auditors the integrity of the financial statements of the Company including its annual and interim accounts and reports, preliminary results announcements, and any other formal announcements relating to the Group’s financial performance, reviewing significant financial reporting issues and judgements contained in them having regard to the matters communicated to it by the auditor;
• reviewing summary financial statements, significant financial returns to regulators and any financial information contained in certain other documents such as announcements of price sensitive information;
• reviewing and challenging where necessary:
• the consistency of, any changes to, and the application of significant accounting policies on a year on year basis;
• the methods used to account for significant or unusual transactions where different approaches are possible;
• whether the Company has followed appropriate accounting standards and made appropriate estimates and judgements, taking into account the views of the external auditor;
• the clarity and completeness of disclosure in the company’s financial reports and the context in which statements are made; and
• all material information presented with the financial statements, such as business review/operating and financial review, the strategic report and any corporate governance statement (insofar as it relates to the audit and risk management).
• reviewing the effectiveness of the Company’s internal financial controls and, unless expressly addressed by a separate board risk committee composed of independent Directors, or by the Board itself, to review the Company’s internal control and risk management systems and review and approve the statements to be included in the Annual Report concerning internal controls and risk management;
• monitoring and reviewing the effectiveness of the Company’s internal audit function in the context of the overall risk management system including assessing the operation, effectiveness and integrity of the internal audit plan and ensuring that it is adequately resourced and has appropriate standing within the Company, reviewing all reports from the internal auditors (and management’s response) and meeting with the head of internal audit without management being present at least once a year to discuss their remit and any issues and, where there is no internal audit function, considering annually whether there is a need for an internal audit function and making a recommendation to the Board;
• discussing whether the Audit Committee should recommend that the financial statements and accompanying reports should be approved by the Board in the Board meeting following the Audit Committee meeting and, if so, whether that approval should be granted subject to any matters discussed by the Audit Committee;
• (where relevant) reviewing the annual financial statements of the pension funds where not reviewed by the Board as a whole;
• reviewing the adequacy and security of the Company’s arrangements for its employees and contractors to raise concerns, in confidence, about possible wrongdoing in financial reporting or other matters. The Audit Committee shall ensure that these arrangements allow proportionate and independent investigation of such matters and appropriate follow up action. The Audit Committee shall review the Company’s procedures for detecting fraud and the Company’s systems and controls for the prevention of bribery and receive reports on non-compliance;
• making recommendations to the Board, for it to put to the shareholders for their approval in general meeting, in relation to the appointment, re- appointment and removal of the external auditor and approving the remuneration and terms of engagement of the external auditor and any matters relating to their resignation or dismissal;
• reviewing and monitoring the external auditor’s independence and objectivity as well as their qualifications, expertise and resources and the effectiveness of the audit process, taking into consideration relevant UK and other relevant professional and regulatory requirements;
• developing and implementing policy on the engagement of the external auditor to supply non-audit services, taking into account relevant ethical guidance regarding the provision of non-audit services by the external audit firm; and reporting 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;
• reviewing and approving the annual audit plan with the external auditor and ensuring that it is consistent with the scope of the audit engagement and the effectiveness of the audit;
• reviewing the findings of the audit with the external auditor which shall include but not be limited to discussing major issues which arose on the audit, any accounting and audit judgements, levels of errors identified during the audit and the effectiveness of the audit;
• reviewing any representation letters and/or responses from the management before being given to the external auditor;
• meeting with the auditors at least twice a year, once at the planning stage, where the nature and 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;
• discussing with the external auditor such issues as compliance with accounting standards and any proposals which the external auditor has made regarding the Company’s internal auditing standards;
• to meet with the Chief Executive Officer (or his representative) to hear a report on compliance with ethics and bribery act requirements and the Company’s systems and controls for the prevention of bribery and to review the ongoing compliance policies; and
• reviewing the management of financial matters and focus upon the freedom allowed to internal auditors.

Reporting responsibilities

• The chairman of the Audit Committee shall report formally to the Board on proceedings after each meeting on all matters within its duties and responsibilities and how it has discharged its responsibilities.
• The Audit Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed. However, the minutes detailing recommendations of the Audit Committee must be approved by the Board before they can be implemented.
• The Audit Committee shall compile a report to Shareholders on its role and activities to be included in the Company’s Corporate Governance Report.

Other

• The Audit Committee shall have access to sufficient resources in order to carry out its functions and discharge its duties. In the event that the Audit Committee determines that it has insufficient resources, it may make a request for additional resources to the Chief Executive Officer. If the request for additional resources is denied, the Audit Committee may, if it chooses, make a request to the Board. The Board shall convene a Board meeting as soon as reasonably practicable to consider the request.
• All members of the Audit Committee shall have access to the advice and services of the secretary of the Audit Committee with a view to ensuring that procedures of the Audit Committee and all applicable rules and regulations are followed.
• In the event that the Audit Committee or any member of the Audit Committee requires access to independent professional advice in connection with its/his/her duties, a request may be made to the Company. All such requests shall be processed in accordance with any pre-defined procedures for seeking independent professional advice at the Company’s expense.
• Every member of the Audit Committee shall give sufficient time and attention to his/her duties as a member of the Audit Committee. He/she shall give the Company the benefit of his skills and expertise through regular attendance and active participation.
• The Audit Committee shall be provided with appropriate and timely training, both in the form of an induction process for new members and on an on-going basis for all members.
• The Audit Committee shall, at least once a year, review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.
• The Audit Committee shall give due consideration to laws and regulations relevant to the Group and in particular the provisions of the UK Corporate Governance Code, the QCA Code and associated guidance, and the AIM Rules.

The Audit Committee shall:

• keep under review the Company’s procedures for handling allegations from whistleblowers;
• address any other matters relating to its duties referred to the Audit Committee by the Board;
• ensure that its terms of reference are available on the Company’s website and include an explanation of its role and the authority delegated to it by the Board; and
• while carrying out its duties, have regard to their duties as Directors of the Company, including under all applicable laws and regulations, the UK Corporate Governance Code and the provisions of the QCA Code and associated guidance.

Authority

The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it reasonably requires from any employee of the Company in order to perform its duties pursuant to these terms of reference and all employees are directed to co-operate with any reasonable request made by the Audit Committee. The Audit Committee has the right to publish in the Company’s annual report details of any issues that cannot be resolved between the Audit Committee and the board.

Terms of Reference of the Remuneration Committee

Membership

• Members of the Remuneration Committee shall be appointed by the Board on the recommendation of the Nomination Committee, if a Nomination Committee is appointed, and in consultation with the chairman of the Remuneration Committee.
• The Remuneration Committee must comprise of a minimum of two members from amongst the non-executive Directors of the Company each of whom is identified by the Board as independent.
• The Board may appoint as a member of the Remuneration Committee, the Chairman of the Company, but he may not chair the Remuneration Committee.
• Only members of the Remuneration Committee have the right to attend meetings of the Remuneration Committee. However, other individuals may be invited to attend for all or part of any meeting as and when appropriate in accordance with Paragraph 6.3 of these Terms of Reference.
• Membership of the Remuneration Committee can be varied at any time by a majority resolution of the existing members of the Remuneration Committee provided that the provisions of paragraph 1.2 are observed.
• Appointments to the Remuneration Committee shall be for a period of up to three years, which may be extended for two further three-year periods, so long as members continue to be independent.

Chairman

• The Board shall appoint the chairman of the Remuneration Committee who shall be an independent non-executive Director. The chairman has the responsibility of liaising with the Board.
• The chairman of the Remuneration Committee shall chair the meetings of the Remuneration Committee.
• In the absence of the chairman of the Remuneration Committee, the remaining members present at any meeting of the Remuneration Committee shall elect one of themselves to chair the meetings of the Remuneration Committee.

Secretary

• Such person as the board may determine from time to time shall be the secretary of the Remuneration Committee.
• The secretary of the Remuneration Committee or his/her delegate shall attend meetings of the Remuneration Committee to take minutes and will ensure that the members of the Remuneration Committee receive information and papers in a timely manner to enable full and proper consideration to be given to the issues.
• In the absence of the secretary of the Remuneration Committee, the members present at a meeting of the Remuneration Committee shall elect another person to act as the secretary for the purposes of that meeting.

Quorum

• The quorum necessary for the transaction of business of the Remuneration Committee shall be two members of the Committee, both of whom shall be an independent non-executive Director.
• The secretary shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly. The relevant member of the Remuneration Committee shall not be counted towards the quorum and he/she must abstain from participating in any discussions or voting on any resolution of the Remuneration Committee in which he/she and/or his/her associates have a material interest.
• A duly convened meeting of the Remuneration 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 Remuneration Committee.

Frequency of meetings

• The Remuneration Committee shall meet at least twice a year and at such other times as the chairman of the Remuneration Committee shall require.
• Any member of the Remuneration Committee may request a meeting if he/she considers that one is necessary.

Attendance at meetings

• Members of the Remuneration Committee may attend meetings of the Remuneration Committee either in person or through telephonic and/or electronic means of communication.
• Should any member of the Remuneration Committee wish to attend a meeting through telephonic and/or electronic communications, prior arrangements shall be made with the secretary of the Remuneration Committee.
• Apart from the members of the Remuneration Committee, the Chairman, the Chief Executive Officer, the Head of Human Resources (if any) and external advisers may be invited to attend for all or part of any meeting as and when However, these persons shall not be involved in any decision or present at any discussions of the Remuneration Committee as to his or her own remuneration.

Notice of meetings

• Meetings of the Remuneration Committee shall be convened by the secretary of the Remuneration Committee at the request of any of its members or at the request of the chairman of the Remuneration Committee.
• 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 Remuneration Committee, and to any other person required to attend within a reasonable time prior to the date of the meeting. Supporting papers shall be sent to Remuneration Committee members and to other attendees as appropriate within a reasonable time prior to the date of the meeting.
• Any member of the Remuneration Committee shall be entitled, by notice to the secretary of the Remuneration Committee, to include other matters relevant to the functions of the Remuneration Committee in the agenda of a Remuneration Committee meeting.

Voting

• Each member of the Remuneration Committee shall have one vote which may be cast on matters considered at a meeting of the Remuneration Committee. Votes can only be cast by members attending a meeting of the Remuneration Committee.
• Save where he has a personal interest, the chairman of the Remuneration Committee will have a casting vote.

Minutes of meetings

• The secretary of the Remuneration Committee (or his/her delegate) in attendance at the meetings of the Remuneration Committee shall minute in sufficient detail all proceedings and resolutions of all such meetings, including the names of those present and in attendance. The minutes should also include any concerns raised by any member of the Remuneration Committee and/or dissenting views expressed.
• Draft and final versions of minutes of the Remuneration Committee meetings shall be sent to all Remuneration Committee members for their comments and records respectively, in both cases within a reasonable time after the meeting. Once they are agreed, the secretary of the Remuneration Committee shall circulate the minutes, and reports of the Remuneration Committee, to all members of the Remuneration Committee and to all members of the Board:
• Minutes of the Remuneration Committee meetings shall be kept by the secretary of the Remuneration Committee and shall be available for inspection by any member of the Remuneration Committee or a non-executive Director at any reasonable time on reasonable notice.

Annual general meeting

• The chairman of the Remuneration Committee shall attend the annual general meeting of the Company and be prepared to respond to any Shareholder questions on the Remuneration Committee’s activities.
• The Remuneration Committee shall produce a report of the Company’s remuneration policy and practices (including an explanation as to why they have chosen the remuneration structure adopted) to be included in the Company’s annual general meeting.

Duties

For the purposes of these terms of reference « Executive Management » means all executive directors and the Chairman;

The Remuneration Committee shall be responsible for:

• determining and agreeing with the Board the framework or broad policy for the remuneration of Executive Management;
• in determining such policy, taking into account all factors which it deems necessary including the relevant legal and regulatory requirements, the provisions and recommendations of the UK Corporate Governance Code and associated guidance and the Quoted Companies Alliance guidance for smaller quoted companies and associated guidance. The objective of such policy shall be to attract, retain and motivate Executive Management of the quality required to run the Company successfully without paying more than is necessary, having regard to views of shareholder and other stakeholders. The remuneration policy should have regard to the risk appetite of the Company and alignment to the Company’s long term strategic goals. A significant proportion of 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;
• reviewing and having regard to pay and employment conditions across the Company or Group when setting remuneration policy for Executive Management and especially when determining salary increases;
• reviewing the on-going appropriateness and relevance of the remuneration policy;
• recommending and monitoring the level and structure of remuneration for Senior Management;
• approving the design of and determining targets for any performance- related pay schemes operated by the Company including:
  • the setting and monitoring of any performance conditions subject to which any options may be granted under any executive share option schemes adopted by the Company; and
  • approving the total annual payments made under such schemes;
• reviewing the design of and determining targets for all share incentive plans for approval by the Board and (only where relevant) Shareholders. For any such plans, determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to Executive Management and the performance targets to be used;
• determining the policy for and scope of pension arrangements for Executive Management;
• the policy for and scope of any termination payments and the severance terms for Executive Management ensuring that 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;
• within the terms of the agreed policy, recommending the total individual remuneration package of Executive Management including, where appropriate, bonuses, incentive payments and share options or other share awards;
• reviewing annually the remuneration trends across the Company or Group;
• co-ordinating closely with the Nomination Committee in relation to the remuneration to be offered to any new member of Executive Management;
• being aware of and advising on any major changes in employee benefit structures throughout the Group;
• agreeing the policy for authorising reimbursement of claims for expenses from the Executive Management;
• ensuring that provisions regarding disclosure of remuneration, including pensions, as set out in the Directors’ Remuneration Report, are fulfilled;
• establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Remuneration Committee;
• considering any other matters relating to the above referred to the Remuneration Committee by the Board; and
• obtaining reliable, up-to-date information about remuneration in other companies of comparable scale and complexity. To help it fulfil its obligations the Remuneration Committee will have full authority to appoint remuneration consultants and to commission or purchase any reports, surveys or information which it deems necessary, within any budgetary restraints imposed by the Board.

Reporting responsibilities

• The chairman of the Remuneration Committee shall report formally to the Board on proceedings after each meeting on all matters within its duties and responsibilities.
• The Remuneration Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed. However, the minutes detailing recommendations of the Remuneration Committee must be approved by the Board before they can be implemented.
• The Remuneration Committee, through the Chairman of the Board, shall ensure the Company maintains contact as required with its principal shareholders about remuneration.

Other

• The Remuneration Committee shall have access to sufficient resources in order to discharge its duties. In the event that the Remuneration Committee determines that it has insufficient resources, it may make a request for additional resources to the Chief Executive Officer. If the request for additional resources is denied, the Remuneration Committee may, if it chooses, make a request to the Board. The Board shall convene a Board meeting as soon as reasonably practicable to consider the request.
• All members of the Remuneration Committee shall have access to the advice and services of the secretary of the Remuneration Committee with a view to ensuring that procedures of the Remuneration Committee and all applicable rules and regulations are followed.
• In the event that the Remuneration Committee or any member of the Remuneration Committee requires access to independent professional advice in connection with its/his/her duties, a request may be made to Chief Executive Officer. All such requests shall be processed in accordance with any pre-defined procedures for seeking independent professional advice at the Company’s expense.
• Every member of the Remuneration Committee shall give sufficient time and attention to his/her duties as a member of the Remuneration Committee. He/she shall give the Company the benefit of his skills and expertise through regular attendance and active participation.
• The Remuneration Committee shall be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members.
• The Remuneration Committee shall, at least once a year, review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.
• The Remuneration Committee shall ensure that its terms of reference are available on the Company’s website and include an explanation of its role and the authority delegated to it by the Board.
• The Remuneration Committee shall, while carrying out the duties specified in Paragraph 10, have regard to their duties as Directors of the Company, including under all applicable laws and regulations, the UK Corporate Governance Code and the provisions of the QCA Code and associated guidance.

Authority

The Remuneration Committee is authorised by the Board to investigate any activity within its terms of reference. It is authorised to seek any information it reasonably requires from any employee of the Company in order to perform its duties pursuant to these terms of reference and all employees are directed to co-operate with any reasonable request made by the Remuneration Committee.

Terms of reference of the Nomination Committee

General Principles and Membership

• The purpose of the procedure is to ensure that the Board consists of members with the range of skills and qualities to meet its principal responsibilities in a way which ensures that the interests of stakeholders are protected and promoted and the requirements of the AIM Rules for Companies are complied with.
• Members of the Nomination Committee shall be appointed by the Board.
• The Nomination Committee must comprise of a minimum of 2 members from amongst the non-executive Directors of the Company a majority of who are identified by the Board as independent.
• The Board, through the Nomination Committee, considers the selection and re- appointment of Directors.
• This procedure is not exhaustive and may be varied depending on the circumstances of the Company at the particular time.
• Membership of the Nomination Committee can be varied at any time by a majority resolution of the existing members of the Nomination Committee subject to paragraph 1.3.
• Appointments to the Nomination Committee shall be for a period of up to three years, which may be extended for further three-year periods provided that the member still meets the criteria for membership of the Nomination Committee.

Chairman

• The Chairman shall be the chairman of the Nomination Committee.
• The Chairman shall chair the meetings of the Nomination Committee, except when the Nomination Committee is dealing with the matter of succession to the Chairmanship.
• In the absence of the chairman of the Nomination Committee, the remaining members present shall elect one of themselves to chair the meetings of the Nomination Committee.

Secretary

• Such person as the Board may determine from time to time shall be the secretary of the Nomination Committee.
• The secretary of the Nomination Committee or his/her delegate shall attend meetings of the Nomination Committee to take minutes and will ensure that the members of the Nomination Committee receive information and papers in a timely manner to enable full and proper consideration to be given to the issues.
• In the absence of the secretary of the Nomination Committee, the members present at a meeting of the Nomination Committee shall elect another person to act as the secretary for the purposes of that meeting.

Quorum

• The quorum necessary for the transaction of business of the Nomination Committee shall be two members both of whom must be independent.
• The secretary shall ascertain, at the beginning of each meeting, the existence of any conflicts of interest and minute them accordingly. The relevant member of the Nomination Committee shall not be counted towards the quorum and he/she must abstain from voting on any resolution of the Nomination Committee in which he/she and/or his/her associates have a material interest.
• A duly convened meeting of the Nomination 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 Nomination Committee.

Frequency of meetings

The Nomination Committee shall meet at least once a year and at such other times as the Chairman or any other member of the Nomination Committee shall require.

Attendance at meetings

• Members of the Nomination Committee may attend meetings of the Nomination Committee either in person or through other telephonic and/or electronic means of communication.
• Should any member of the Nomination Committee wish to attend a meeting through telephonic and/or electronic communications, prior arrangements shall be made with the secretary of the Nomination Committee.
• Other than members of the Nomination Committee, other Directors and external advisers may be invited to attend all or part of any meeting as and when appropriate. However no Director shall be involved in any decision or present at any discussions as to his or her own appointment.

Notice of meetings

• Meetings of the Nomination Committee shall be convened by the secretary of the Nomination Committee at the request of any of its members.
• 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 Nomination Committee, and to any other person required to attend within a reasonable time prior to the date of the meeting. Supporting papers shall be sent to Nomination Committee members and to other attendees as appropriate, within a reasonable time prior to the date of the meeting.
• Any member of the Nomination Committee shall be entitled, by notice to the secretary of the Nomination Committee, to include other matters relevant to the functions of the Nomination Committee in the agenda of a Nomination Committee meeting.

Voting

• Each member of the Nomination Committee shall have one vote which may be cast on matters considered at a meeting of the Nomination Committee. Votes can only be cast by members attending a meeting of the Nomination Committee.
• Save where he has a personal interest, the chairman of the Nomination Committee will have a casting vote.

Minutes of meetings

• The secretary of the Nomination Committee (or his/her delegate) in attendance at the meetings of the Nomination Committee shall minute in sufficient detail the proceedings and resolutions of all such meetings, including the names of those present and in attendance. The minutes should also include any concerns raised by any member of the Nomination Committee and/or dissenting views expressed.
• Draft and final versions of minutes of the Nomination meetings shall be sent to all Nomination Committee members for their comments and records respectively, in both cases within a reasonable time after the meeting. Once they are agreed, the secretary of the Nomination Committee shall circulate the minutes, and reports of the Nomination Committee, to all members of the Nomination Committee and to all members of the Board.
• Minutes of the Nomination Committee meetings shall be kept by the secretary of the Nomination Committee and shall be available for inspection by any member of the Nomination Committee or Director at any reasonable time on reasonable notice.

Annual general meeting

• The chairman of the Nomination Committee shall attend the AGM of the Company and be prepared to respond to any Shareholder questions on the Nomination Committee’s activities.
• The Nomination Committee shall make a statement in the annual report detailing its activities including the process used for Board appointments, including an explanation of how the Company’s remuneration practices align the interests of senior management with those of shareholders, a description of board performance evaluation procedures applied, the evolution of such procedures from the previous year, the result of the evaluation and action taken or planned as a result.

Duties

• In the capacity of the Nomination Committee, the Board shall be responsible for:
• identifying and nominating for the approval of the Board, candidates to fill board vacancies as and when they arise;
• before making an appointment, evaluating the balance of skills, knowledge, experience and diversity on the Board and, in the light of this evaluation, preparing a description of the role and capabilities required for a particular appointment;
• reviewing annually the time required from a non-executive Director and assessing whether the non-executive Director is spending enough time to fulfil his/her duties;
• considering candidates from a wide range of backgrounds;
• considering candidates on merit and objective criteria and with due regard for the benefits of diversity on the Board, including gender, taking care that appointees have enough time available to devote to the position;
• using open advertising or the services of external advertisers to facilitate the search for candidates;
• giving full consideration to succession planning in the course of its work, taking into account the challenges and opportunities facing the Company and the skills and expertise therefore needed on the Board, reporting to the Board regularly;
• keeping up to date and fully informed about strategic issues and commercial changes affecting the Company and the market in which it operates;
• preparing a job specification for the appointment of the chairman, including the time commitment expected. A proposed chairman’s other significant commitments should be disclosed to the Board before appointment and any changes reported as they arise;
• regularly reviewing the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board and making recommendations to the Board with regard to any changes;
• keeping under review the leadership needs of the Company, both executive and non-executive, with a view to ensuring the continued ability of the Company to compete effectively in the marketplace;
• supporting the chairman in taking necessary steps to remove underperforming executive Directors or non-executive Directors including the chairman;
• making a statement in the annual report about its activities: the process used for appointments and explain if external advice or open advertising has not been used;
• ensuring 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;
• considering the re-appointment of any non-executive Director at the conclusion of their specified term of office or retiring in accordance with the Company’s Articles of Association;
• considering any matter relating to the continuation in office of any Director at any time;
• before appointing a Director, requiring the proposed appointee to disclose any other business interest that may result in a conflict of interest and requiring him or her to report any future business interests that could result in a conflict of interest;
• reviewing the results of the board performance evaluation process that relate to the composition of the Board;
• ensuring that the Board has formally written to any appointees, detailing the role and time commitments; and
• making recommendations from time to time to the Board regarding:
• formulating plans for succession for both executive and non- executive directors and in particular for the key roles of Chairman and Chief Executive of the Company;
• the re-election by shareholders of any Director under the annual re-election provisions in the Company’s articles of association or as required by law, having given due regard to their performance and ability to continue to contribute to the Board in light of the knowledge, skills and experience required and the need for progressive refreshing of the Board;
• the appointment of any Director to executive or other office including to the positions of Chairman or Chief Executive Officer;
• suitable candidates for the role of senior independent director;
• the re-appointment of any non-executive director at the conclusion of their specified term of office;
• any matter relating to the continuation in office of any director at any time including the suspension or termination of service of an executive director as an employee of the Company subject to the provisions of the law and their service contract; and
• the membership of the audit and remuneration and any other Board committees as appropriate, in consultation with the chairmen of those committees.

Reporting responsibilities

• The chairman of the Nominations Committee shall report formally to the Board on proceedings after each meeting on all matters within its duties and responsibilities.
• The Nominations Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed. However, the minutes detailing recommendations of the Nomination Committee must be approved by the Board before they can be implemented.

Other

• The Nominations Committee shall, at least once a year, review its own performance, constitution and terms of reference to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.
• The Nomination Committee shall have access to sufficient resources in order to carry out its duties and functions. In the event that the Nomination Committee determines that it has insufficient resources, it may make a request for additional resources to the Chief Executive Officer. If the request for additional resources is denied, the Nomination Committee may, if it chooses, make a request to the Board. The Board shall convene a Board meeting as soon as reasonably practicable to consider the request.
• The Nomination Committee shall be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members.
• The Nomination Committee shall, while carrying out the duties specified in Paragraph 10, have regard to their duties as Directors of the Company, including under all applicable laws and regulations, the UK Corporate Governance Code and the provisions of the QCA Code and associated guidance.

In the event that the Nomination Committee or any member of the Nomination Committee requires access to independent professional advice in connection with its/his/her duties, a request may be made to Chief Executive Officer. All such requests shall be processed in accordance with any pre-defined procedures for seeking independent professional advice at the Company’s expense.