Committees

Audit Committee

The role of the Audit Committee

The Committee oversees the process for selecting the external auditor, assesses the continuing independence of the external auditor and recommends approval of the audit fee to the Board. It is responsible for ensuring that provision of non-audit services does not impair the external auditor's independence or objectivity. It discusses with the external auditor the nature and scope of the audit and any issues or concerns arising from the audit process. The Committee reviews the internal audit programme, considers major findings of the internal audit investigations and reviews management's financial reporting and risk management. The Committee reviews the half-year and annual financial statements and the effectiveness of the Company's internal control and risk management systems.

The Committee met four times in 2011. The agenda reflects the duties delegated to it by its terms of reference. There are a number of standing items considered during the year such as consideration of the internal and external audit reports, review of the Annual Report and Accounts, review of the preliminary and half-year announcements, and review of the Corporate Governance Report.

At the invitation of the Committee, and as appropriate to the matters under discussion, meetings may be attended by the Executive Directors and internal and external auditors. Full minutes are kept by the Secretary of the matters considered and decisions taken by the Committee. Outside of the meeting process the Committee Chairman has regular contact with the Executive Directors, other Committee members and the auditors on a variety of topics.

Main activities during the year

In addition to the responsibilities noted above, tha following mainitems of business were considered and discussed during 2011:

• oversight of the tender and selection process for the role of external auditor;
• review of compiance with teh UK Corporate Governance Code;
• approval of the Group's Anti-Bribery Policy; and
• consideration of the results of internal audit compliance testing of fitness controls (Annual Fitness Checks) within the subsidiaries.

Review of external auditors

The Audit Committee assesses and reviews on a regular basis the independence of the external auditors. As part of their determination the Audit Committee considers a report by the external auditors on the firm's independence which is required in order to carry out their professional duties and responsibilities as auditors.

Policy on auditors providing non-audit work
The Committee has an approved policy on the provision of non-audit services by its auditor. The policy sets the approvals policy for the following types of service:

• services that are considered to have 'general pre-approval' by the Audit Committee, by virtue of the approval of the policy;
• services that require 'specific pre-approval', on a case-by-case basis, before any work can commence; and
• services that cannot be supplied by the external auditors ("prohibited services").

The services that have general pre-approval are tax, transaction investigation and advisory and corporate finance services. The fees for these services are pre-approved up to £50,000 for each non-audit assignment undertaken and subject to an overall limit of 75% of the total fees paid to the external auditor. For services exceeding this limit specific pre-approval is required.

In deciding whether or not to grant approval for the provision of specific services by the external auditors, the Audit Committee includes in its consideration the following factors:

(i)whether the external auditing firm is best placed to provide an effective and efficient service, given its familiarity with the Company's processes, systems and people; and

(ii)the level of non-audit fees paid to the external auditors in the year as a proportion of the annual external audit fee.

The majority of non-audit work undertaken by the external auditors during the year relates to advice in respect of tax advisory and other regulatory services. These items the Committee believes would be impractical and costly to provide through another party.

Nomination Committee

The role of the Nomination Committee

The Committee is responsible for identifying and nominating, for the approval of the Board, candidates to fill Board vacancies as and when they arise. It will give full consideration to succession planning, and keep under review the leadership needs of the organisation, both Executive and Non-Executive. The Committee reviews the time required from a Non-Executive Director and uses performance evaluation to assess whether the Non-Executive Director is spending enough time on fulfilling their duties.

The Nomination Committee leads the process for Board appointments and makes recommendations to the Board. The Committee will prepare a description of the role and requirements for any particular appointment based on its evaluation of the Board as a whole.

The terms and conditions of appointment of the Non-Executive Directors are available for inspection at the Company's registered office during normal business hours, at the Annual General Meeting of the Company and can be accessed here. The Non-Executive Directors disclose to the Board their other significant commitments. The procedures adopted by the Company in relation to Directors' conflicts of interest are detailed here.

External advisors are normally appointed when recruiting Board members; they use as a basis for their search a description of the role and capabilities required for a particular appointment proposed by the Nomination Committee.

During the year the Committee:

• evaluated the balance of skills, experience, independence, diversity and knowledge of the Board and then prepared a description of the role and capabilities required for the role of Non-Executive Director
• appointed search consultants to identify a shortlist of candidates for the role of Non-Executive Director and interviewed candidates, following which three candidates were recommneded for appointment: Joaquin Ayuso, Chris Muntwyler and Lee Sander
• considered Lord Davies' report on Diversity, published in February 2011 and recommended the Board adopt the aspirational target that by 2015 30% of the Board should be women
• the Chairman, as Chairman of the Nomination Committee appointed search consultants to draw up a shortlist of candidates for the role of Group Company Secretary and interviewed candidates, following which Michael Hampson was appointed on 30 January 2012
• reviewed succession planning across the Group

Safety and Environment Committee

The role of the Safety and Environment Committee

The Committee is responsible for reviewing and challenging constructively the structure, content and operation of the safety management arrangements put in place by members of the executive management of the Group's operating companies. It reports periodically to the Board its observations on the safety management arrangements in place and reviews and makes recommendations to the Board on any specific safety management issues relating to the Group or any subsidiary company.

Main activities during the year
During the year the Committee:

• approved the launch of the Group's Global Safety Standards;
• reviewed progress on implementation of the Group's Driving out Harm initiative;
• commissioned an independent review of safety in Morocco and monitored its recommendations;
• visited Group locations to review safety practices and procedures
• reviewed the Group's Environmental Strategy Plan; and
• considered the Group's safety KPI's.

Remuneration Committee

Role of the Remuneration Committee

The key responsibilities of the Committee are to:

• determine the fees of the Chairman;
• determine the remuneration and conditions of employment (including any termination arrangements) of the Executive Directors;
• approve the remuneration and conditions of employment of the Divisional Chief Executives and Company Secretary;
• review the remuneration and conditions of employment of the senior management team; and
• select and appoint any remuneration consultants who advise the Committee.

The full terms of reference of the Committee are available here. The members of the Committee who served during the year were all independent Directors.