Committees

Audit Committee
This Committee consists of three non-executive directors, Mr J C Kendrick,, Mr E G Owen and is chaired by Mr E E Hughes. The Committee meets at least three times a year with additional meetings as required. The Committee has standard terms of reference in place, which have been formally approved by the Board, and which include the supervision of the external audit process and the effectiveness of the internal financial controls. The terms of reference further task the Committee with identifying and evaluating significant internal and external risks faced by the Company, and then making recommendations to the Board on appropriate strategies for effectively managing these risks.

Such risks include:

• The reliability of internal and external reporting systems.
• The safeguarding of assets from inappropriate use, loss and fraud.
• Identifying and properly managing liabilities.
• Ensuring the business operates within all applicable legislation and uses best practice wherever possible.

The Audit Committee met four times during the year and all committee members attended. The Committee agreed the nature and scope of the audit with the auditors and monitored the findings of the auditors and Group risk. The Committee also initiated a number of Internal Audit assignments to test the operating effectiveness of internal systems and controls.

The Committee regularly meets the auditors without the presence of the Company’s management. The Audit Committee formulates and oversees the Company policy on maintaining auditor objectivity and independence in relation to non-audit services.

The policy is to ensure that the nature of the non-audit services performed or the fee income relative to the audit does not compromise or is seen to compromise the auditors’ independence, objectivity or integrity.

Remuneration Comittee
This Committee of the Board consists of three non-executive directors, Mr E E Hughes, Mr J C Kendrick and is chaired by Lord Carlile of Berriew. The Committee meets at least twice a year and has standard terms of reference in place which have been formally approved by the Board. These terms of reference include the formulation of remuneration policies for executive directors and senior managers, and the supervision of employee benefit structures throughout the Company. The Remuneration Committee met twice during the year and all committee members attended.

Nomination Committee
This Committee of the Board consists of Mr E E Hughes and is chaired by Mr J E Davies. The Committee meets at least once a year and has standard terms of reference in place which have been formally approved by the Board. The

Committee is tasked with reviewing the leadership needs of the Company and to make recommendations to ensure the continuity of such leadership through the identification, evaluation and appointment of both executive and non-executive directors.

Internal Financial Control
The Board has overall responsibility for the Group’s system of internal financial control and has established a control structure to provide reasonable, but not absolute assurance against material misstatement or loss. The key procedures within the control structure are as follows:

• Managers at all levels in the Group have clear lines of reporting responsibility.
• Comprehensive financial reporting procedures exist with budgets covering profits, cash flows and capital expenditure being prepared and adopted by the Board annually. Actual results are reported monthly to the Board and results compared with budgets and last year’s actual. Revised forecasts are prepared as appropriate.
• There is a structural process for appraising and authorising capital projects with clearly defined authorisation levels.
  
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