Table of Attendance

*Liz Peace was unable to attend the meeting which was held whilst she was a Member of the Committee.

**Vanda Murray attended both meetings which were held following her appointment as a Member of the Committee.

The Committee met three times during the year ended 30 June 2018. For all meetings, papers were circulated sufficiently in advance to allow proper consideration of all matters for discussion. The Group Company Secretary acts as Secretary to the Committee.

Responsibilities and Terms of Reference

The key responsibilities of the Committee are:

• reviewing the structure, size and composition of the Board (including skills, knowledge and experience) and making recommendations for further recruitment to the Board or proposing changes to the existing Board;
• reviewing the leadership needs of the Company, both executive and non-executive, ensuring appropriate succession planning for Directors and other senior executives within the business;
• leading the process for Board appointments ensuring they are conducted on merit and against objective criteria;
• making recommendations to the Board, including on appointment of Executive Directors and Non-Executive Directors to the Board, the re-appointment of Directors, the re-election of Directors at the Annual General Meeting and the membership of the Audit, Nomination, Remuneration and Placemaking and Sustainability Committees;
• ensuring that a formal, structured and tailored induction programme is undertaken by any newly appointed member of the Board;
• reviewing annually the time required from the Non-Executive Directors;
• satisfying itself with regard to succession planning for the Board and senior management, taking into account the challenges and opportunities facing the Company and future skills and expertise needed on the Board including development and training; and
• ensuring suitable candidates for the Board are identified through an appropriate recruitment process, giving due regard to the benefits of diversity, including gender and ethnicity, and recommended for appointment.
  
  

The Committee’s Terms of Reference are published on the Group’s website.

Main Activities During the Year

During the year to 30 June 2018 the Committee undertook the following activities:

• a review of the structure, size and composition of the Board;
• a review of executive succession. The Committee concluded that the present Board balance and composition remains appropriate but that it will be kept under review;
• an assessment of the Board composition and effectiveness with specific regard given to the retirement of Debbie Hewitt at the conclusion of the 2018 Annual General Meeting;
• recommended that the Directors, save for Debbie Hewitt following completion of 9 years’ service, stand for re-election at the conclusion of the 2018 Annual General Meeting in accordance with UK Corporate Governance Code; and
• reviewed the Committee’s Terms of Reference.
  
  

The Directors were not present and did not vote when their individual proposals were discussed.

Succession

The Board considers that succession planning of the Board and its Committees is extremely important and believes that it currently has a good balance and diversity among its Non-Executive Directors, with each of them having relevant skills derived from serving in a range of executive and non-executive positions over many years.

On 19 August 2018, Debbie Hewitt completed 9 years’ service on the Board and, in line with best practice, she will not be standing for re-election at the 2018 Annual General Meeting.

In preparation for the retirement of Debbie Hewitt, the Committee put in place a succession plan recognising best practice which advises the Chairman of the Remuneration Committee shall sit on the Committee for a year prior to taking up the Chairman role and that the Senior Independent Director have a good understanding of the Company to enable them to carry out the duties of the role effectively.

With effect from the close of the  2018 Annual General Meeting, Debbie Hewitt will be succeeded by Nick Hewson as the Senior Independent Director and Chairman of the Nomination Committee and by Vanda Murray as Chairman of the Remuneration Committee.

Nick Hewson has substantial experience as a Non-Executive Director and, having been on the Board since December 2012, has a good understanding of the business of the Group. He has also been a member of the Nomination Committee since joining the Board in 2012.

Vanda Murray has extensive Remuneration Committee experience, having held Chairman positions of the Remuneration Committees in Bunzl plc and Fenner plc. She joined the Remuneration Committee of the Company on 1 August 2017 and has spent a significant amount of time shadowing Debbie Hewitt in preparation for her taking on the role of Chairman of the Remuneration Committee.

Following an assessment by the Committee, the Board is not currently seeking to appoint an additional Non-Executive Director to replace Debbie Hewitt, as the recruitment of Vanda Murray in 2017 has provided for the Non-Executive succession needs. As a result of careful succession planning, the Committee believes that the resultant balance of the Non-Executive Directors and Executive Directors remains effective, along with each of the Board’s Committees.

Diversity

The principle of boardroom diversity is strongly supported and recognised by the Board. It is the Board’s policy that appointments to the Board will always be based on merit, so that the Board has the right individuals in place, and recognises that diversity is seen as an important consideration as part of the selective criteria used to assess candidates to achieve a balanced Board. Current female representation on the Board is 43%.

Once Debbie Hewitt steps down from the Board at the close of the 2018 Annual General Meeting, female representation on the Board will be 33%, remaining in line with the Hampton-Alexander Review, which recommends that FTSE 350 companies should aim to build the representation of women on their boards to 33% by 2020.

The Board believes in the benefits of cognitive diversity, from a wide range of complementary skills. The Committee will continue to aspire to maintain a diverse Board with recruitment and selection of talented individuals and with a broad range of appropriate skills, irrespective of gender.

The Committee continues to monitor and review reports and recommendations relating to the composition of boards and diversity, including the Parker Review on ethnic diversity.

The Group Human Resources Director attends the monthly Executive Management Team meetings and provides a monthly people report which provides key statistics on Group employees as well as providing updates on employee engagement and recruitment. She reports to the Nomination Committee at least twice a year to update on progress.

Performance Evaluation

The Committee members completed a performance evaluation during the financial year and a report was presented by the Secretary to the Committee and discussed. The Committee was found to be effective and it was concluded that the Committee had fulfilled its remit and had in place appropriate Terms of Reference. Actions were agreed to maintain this progress.

Throughout the year, good progress had been made on the longer-term succession planning of the Executive Management Team and this will remain a priority for the coming year.

DEBBIE HEWITT

Chairman of the Nomination Committee

3 September 2018