Terms of Reference for the Group Board - November 2005

Policy & Guidelines

1. Introduction
The Group Board’s role is to:

• Provide entrepreneurial leadership of the company within a framework of prudent and effective controls which enable risk to be assessed and managed.
• Set the company’s strategic aims and ensure that the necessary financial and human resources are in place for the company to meet its objectives.
  
• Monitor progress towards achieving the objectives and policies.
  
• Review management performance.
  
• Set the company’s values and standards.
  
• Ensure that its obligations to shareholders and others are understood and met.

The Board of Directors of James Cropper PLC is referred to as the ‘Group Board’. The Articles of Association state that the number of directors shall not be less than two nor more than twelve.

2. Sub-committees
Although the Group Board controls the business, it delegates the day today responsibility to the executive management, ie the Executive Committee.

The Group Board also delegates specific tasks to the following sub-committees:

• Nominations Committee
• Audit Committee
• Remuneration Committee

The Group Board receives recommendations from the sub-committees and the final decision is taken by the Group Board.

3. Meetings
The Group Board should meet regularly, normally four 2-day meetings peryear, with prepared agendas of items for discussion. A quorum of at least two directors is required for a board meeting. The Company Secretary will act as secretary to the meetings and minutes of meetings are to be recorded.

4. Urgent Issues
When, exceptionally, decisions on matters specifically reserved for the full Board are required to be taken urgently between Board meetings, such decisions shall be taken by a quorum of at least two directors, including (if possible) both the Chairman and the Chief Executive, but at least one of them, and a report of the proceedings shall be
circulated to the Board before, or at, its next meeting. Telephone conference calls are a permissible medium for Board meetings to be conducted.

5. Matters Reserved for the Board
There are a number of matters which are required to be or, in the interests of the Company, should only be taken by the Group Board, viz:

(i) Structure and capital

• Changes relating to the Group’s capital structure, including share issues.
  
• Approval of all circulars and listing particulars to the financial markets.
  
• Major changes to the Group’s corporate structure.
  
• Any changes to the company’s listing or its status as a plc.
  
• Acquisitions, disposals and investments.
  
• Approval of treasury policies and bank borrowing facilities.

(ii) Strategy

• Responsible for determining the long term objectives and commercial strategy of the Group.
  
• Responsible for the overall management of the Group and ensuring the Company’s organisational structure is appropriate for the chosen strategies.
  
• Setting the values and standards for the Group.
  
• Approval of policies relating to health and safety, environment, treasury, and corporate social responsibility.

(iii) Management

• Ensure maintenance of sound systems of internal control and risk management.
  
• Major changes in the rules of the company pension schemes.
  
• Political donations.
  
• Receiving reports from Board sub-committees and discussing their recommendations.
  

(iv) Financial reporting and controls

• Approval of preliminary announcements of interim and final results.
  
• Approval of press releases concerning matters decided by the Group Board.
  
• Approval of Annual Report and Accounts.
  
• Approval of the dividend policy.
  
• Declaration of the interim dividend and recommendation of the final dividend.
  
• Approval of significant changes in accounting policies or practices.
  
• Approval of annual operating and capital expenditure budgets.
  
• Approval of capital projects in excess of £500,000 for budgeted items and £250,000 for unbudgeted items.
  
• Approval of Financial Control Reports on major capital project overspends/non compliance of targets.
  
• Remuneration, appointment or removal of auditors.
  

(v) Board membership and Board Committees

• Board appointments and removals.
  
• Succession planning for the board.
  
• Remuneration of directors, subject to shareholder approval as appropriate.
• Terms of reference and membership of board committees.
  
• Terms of reference of Chairman, executive directors and non-executive directors.
  
• Appointment or removal of Company Secretary.
  
• Appointments to boards of subsidiaries.

(vi) Corporate Governance

• Undertake annual reviews of Board and sub-committee performance, and the performance of individual directors.
  
• Approval of the Group’s corporate governance policies and procedures.