Investor relations

Constitution, Authority and Membership

1. The Audit Committee is a committee of the Board and, as such, is appointed by and reports to the Board.

2. The Audit Committee is not an executive committee; it makes recommendations to the Board. Specific authority is delegated to the Committee by the Board to agree the external audit fee.
The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. For this purpose it may seek any information it requires from any employee and employees are directed to co-operate with any such request made by the Audit Committee.
The Audit Committee is authorised to obtain external legal or other independent professional advice, subject to notifying the Chairman.

3. The Chairman and members of the Audit Committee shall be appointed from the independent non-executive members of the Board. At least one member of the Audit Committee should have significant, recent and relevant financial experience. The Committee shall consist of not less than three and not more than five members. Members should be free from any business or other relationship which could materially interfere with the exercise of their independent judgement.

4. The Secretary of the Audit Committee shall be the Company Secretary.

Attendance at Meetings

5. A quorum shall be two members; meetings may be held in person or by telephone.

6. In addition to the members of the Committee, it will be normal for the following to be invited to attend the meetings:-

• The Finance Director
• A partner in the accounting firm who are external auditors of Development Securities

7. The Chairman of the Audit Committee may request the attendance of others at meetings including legal advisors, and if so requested, Executive Directors will also make themselves available.

8. At least once a year a partner representing the external auditors will meet with the Audit Committee without any executive member of the Board being present.

9. The external auditors shall have the right of direct access to the Chairman of the Audit Committee.

Frequency of Meetings

10. Meetings of the Audit Committee will be held at least three times a year as follows:

a) A pre-meeting to determine the terms of engagement, proposed programme and fees of the annual audit exercise;
b) Prior to the issue of the preliminary full year results. This meeting to include a report on significant issues arising from the audit exercise;
c)Prior to the issue of half year results, to review the significant issues arising from the auditor’s review exercise;

Additional meetings of the Committee may be called by any member of the Committee as required, or by the external auditors if they consider that one is necessary.

Terms of Reference

11. The duties of the Audit Committee shall be:

• to consider the appointment of the external auditor and any question of resignation or dismissal and make recommendations to the Board. To assess the independence of the external auditor, ensuring that key partners are rotated at appropriate intervals;
• to oversee the process for selecting the external auditor and make appropriate recommendations through the Board to permit shareholder consideration at the AGM;
• to discuss with the external auditors the nature and scope of the audit. To review and monitor the external auditor’s independence and objectivity, the auditors’ quality control procedures and the effectiveness of the audit process, taking into consideration relevant UK professional and regulatory requirements;
• to agree on behalf of the Board the external audit fee proposals. To pre-approve any material fees in respect of non audit services, excluding taxation, provided by the external auditor and to ensure that the provision of non audit services does not impair the external auditors’ independence or objectivity;
• to review and challenge where necessary, the actions and judgements of management, in relation to the interim and annual financial statements before submission to the Development Securities Board, with particular emphasis on:-

• critical accounting policies and practices, and any amendments thereto;
• the extent to which the financial statements are affected by any unusual transactions in the year and how they are disclosed;
• the clarity of disclosures;
• major judgmental areas;
• significant adjustments resulting from the audit;
• the going concern assumption;
• compliance with accounting standards;
• compliance with Stock Exchange and other legal requirements;
• any other issue considered significant by either the Finance Director or the external auditors.

• to consider on an annual basis whether there is a need for an internal audit function and make a recommendation to the Board. Any reason for the absence of such a function should be explained in the Annual Report;
• to ensure there is proper co-ordination with the external auditors to discuss (in the absence of Executive Directors, if appropriate) any problems or reservations which the external auditors may have arising from final audits and any interim reviews or otherwise;
• to establish and review a whistleblowing policy whereby staff, in confidence may raise concerns about possible improprieties in matters of financial reporting or other matters, ensuring arrangements are in place for the proportionate and independent investigation of such matters and for appropriate follow-up action;
• to review any shareholders’ circulars and Listing Particulars or similar public offering documents particularly with regard to any statements regarding profit forecasts or working capital requirements;
• to review the expenses incurred personally by Directors and recharged to the Company;
• to consider such other topics as may be specified by the Board.

Reporting

12. The Chairman of the Committee or, as a minimum, another member of the Committee, shall attend the Main Board Meeting at which the interim and annual financial statements, together with any shareholders’ circulars, Listing Particulars or similar public offering documents, are approved.

13. The Secretary shall distribute the minutes of the meeting of the Audit Committee to all members of the Board.

14. The Committee members shall conduct an annual review of their work and these terms of reference and make recommendations to the Board.

15. The Committee’s duties and activities during the year shall be disclosed in the annual financial statements.

16. The Chairman of the Committee shall attend the AGM and shall answer questions through the Chairman of the Board of the Audit Committee’s activities and responsibilities.

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Constitution, Authority and Membership

1. TThe Remuneration Committee is a committee of the Board and, as such, is appointed by and reports to the Board.

2. Specific authority is delegated to the Committee to decide on all elements of remuneration for the Executive Directors and the Chairman of the Company.

3. The Chairman and members of the Remuneration Committee shall be appointed from the independent Non-executive Directors of the Board. In addition, the Committee should also recommend and monitor the level and structure of remuneration for senior management. Members should have no personal financial interest other than as shareholders in the matters to be decided. The Committee shall consist of not less than three members.

4. The Secretary of the Remuneration Committee shall be the Company Secretary.

5. All Non-executive Directors have a right to attend meetings of the Remuneration Committee.

Meetings

6. The Committee shall meet at the request of its Chairman and a quorum shall be two members; meetings may be held in person or by telephone.

7. In addition to the members of the Committee it will be normal for the following to attend meetings save that they shall not be present when their own remuneration is under discussion:-

• the Chairman of the Company
• the Finance Director of the Company

The Chairman of the Remuneration Committee may also invite others to attend.

Duties

8. The Committee shall:-

a) regarding the Executive Directors, consider and approve the terms of service, salary reviews, eligibility for awards under the Long Term Incentive Plan, annual, special discretionary and any other bonus awards, profit sharing and any other benefits, whether in cash or in kind, together with pension contributions determined on basic salary. The Chairman of the Company should be consulted on the Committee’s remuneration proposals for the Executive Directors. In considering performance related elements, ensure that performance conditions are relevant, stretching and are designed to enhance shareholder value. Performance related elements of remuneration should form a significant proportion of the total remuneration package for Executive Directors.

b) authorise the grant of share options to Executive Directors and other senior executives under the Company’s executive share option schemes in accordance with the Rules of the Schemes and agreed guidelines, ensuring that performance conditions are challenging. Grants under the Company’s executive share option schemes should be phased and not awarded in one large block.

c) ensure compensation commitments for early termination are included in the Chairman’s or an Executive Director’s letter of appointment are carefully considered to avoid rewarding poor performance and also reflects a departing Director’s obligation to mitigate loss.

d) regularly review the Company’s remuneration policies and practices to facilitate the employment and motivation of personnel, with a view to providing the packages needed to attract, retain and motivate Directors of the quality required, but avoiding paying more than is necessary for this purpose.

9. The Committee should be responsible for appointing any Consultants in providing advice at the Company’s expense.

10. The Board itself should determine the remuneration of the Non-executive Directors, reflecting the time commitment and responsibilities of the role.

Reporting

12. The Chairman of the Remuneration Committee shall report to the Board on the deliberations and activities of the Committee at each Board meeting following a Committee meeting.

The Remuneration Committee shall propose to the Board a Remuneration Report in accordance with Schedule 7A to the Companies Act 1985, which is to be approved by shareholders.

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1. The Nomination Committee is a committee of the Board and, as such, is appointed by and reports to the Board.

2. The Committee shall comprise the Chairman of the Company (who shall be the Chairman of the Committee), one of the Joint Managing Directors and at least one Non-executive Director, with the majority of the Committee represented by independent Non-executive Directors. The Joint Managing Director appointed, nor the Chairman as appropriate will be present when the office of their own particular position is under consideration.

3. A quorum shall be two members; meetings may be held in person or by telephone. At least one meeting per annum will be held.

4. The Secretary of the Nomination Committee shall be the Company Secretary.

5. The duty of the Committee is, in the first instance to evaluate the structure, size and composition of the Board as a whole, taking into account the balance of skills knowledge and experience of the individual members and, in the light of this evaluation, prepare a succession plan and a description of the role and capabilities required for a particular appointment, both Executive and Non-executive. In the case of the appointment of a Chairman, the expected time commitment is to be determined and in evaluation of the candidates, the Committee should establish the need for availability in the event of a crisis.

Where a Non-executive Director is being considered for re-appointment at the conclusion of their specified term of office, the Committee will evaluate the individual’s performance and ability to continue to make a constructive contribution and to accordingly make a recommendation to the Board.

6. The Nomination Committee may use outside search consultants and/or open advertisements at the Company’s expense as well as consider nominees put forward by any Board member.

7. The Nomination Committee shall have regard to paragraph A.3.2 of the Combined Code which stipulates that a majority of the Non-executive Directors should be independent.

8. Following interview and evaluation, the selected candidate should be proposed to the Board for approval.

9. The secretary of the Nomination Committee should distribute minutes of the Nomination Committee meetings to the Board.

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