CORPORATE GOVERNANCE

— a review of non-audit services provided to the Company and related fees;

— discussion with the auditors of a written report detailing all relationships with the Company and any other parties that could affect independence or the perception of independence;

— a review of the auditors' own procedures for ensuring the independence of the audit firm and partners and staff involved in the audit, including the regular rotation of the audit partner;

— obtaining written confirmation from the auditors that, in their professional judgement, they are independent.

An analysis of the fees payable to the external audit firm in respect of both audit and non-audit services during the year is set out in note 11 on page 41 of the financial statements.

The quorum necessary for the transaction of business by the Committee is two. In the event that a meeting of the Audit Committee is required but a quorum might not be secured, an existing member of the Audit Committee shall be empowered to appoint an additional Non-Executive Director(s) to attend such meeting.

Meetings shall be held at least two times a year, and also at such other times as the Chairman of the Committee requires. Only members of the Committee have the right to attend. Other non-members may be invited. Members may participate in a meeting by means of a conference telephone, video conferencing facility or other suitable communicating equipment. The Secretary shall minute the proceedings and resolutions of all meetings as well as keep appropriate records. Minutes of the meetings shall be circulated promptly to all members of the Audit Committee.

The duties of the audit committee as follows:

To ensure:

• that due consideration is given to laws and regulations, the provisions of the Code (as amended from time to time) and the requirements of the UK Listing Authority's Listing Rules as appropriate, including the requirement for explanation in the event of any permitted non-compliance with the provisions of the Code;
• that the external auditors' comply with relevant ethical and professional guidance on the rotation of audit partners, the level of fees paid by the Company compared to the overall fee income of the firm, office and partner and other related requirements;
• that there are no relationships (such as family, employment, investment, financial or business) between the external auditors and the Company (other than in the ordinary course of business);
• that a tendering process in respect of the external auditor contract is conducted at least every 5 years;
• the maintenance of a sound system of internal control and risk management

• that the Committee reports annually to the Board on how it has discharged its' responsibilities;

• that the Committee's terms of reference are made publicly available.

To review:

• and monitor the integrity of the financial statements of the Company, including its annual and interim reports, preliminary results announcements and any other formal announcement relating to its financial performance, and discuss with the auditors as appropriate, including the consideration of representation letters requested by the external auditors prior to signing by management;
  
• annually, the external auditors qualifications, expertise and resources, their independence and objectivity and the effectiveness of the audit process; and
• annually, the Company's internal controls (including financial, operational and compliance controls) and risk management systems as well as the policies and procedures for preventing and detecting fraud.

To approve a statement for inclusion in the annual report on its duties and activities.

To recommend to the Board:

• the approval of the financial statements of the Company, including its annual and interim reports, and any other formal announcement relating to its financial performance

• for approval at the AGM, the appointment, re-appointment and removal of the Company's external auditors. The Audit Committee shall oversee the selection process for new auditors, and if auditors resign the Audit Committee shall investigate the issues and circumstances leading to this and decide whether any action is required;
• the external auditor to this and decide whether any action is required; and the the start of each audit (ensuring that it has been updated to reflect changes in the circumstances arising since the previous year) and the scope of the audit.

1. Membership

1.1 The Committee is appointed by the Board from amongst the independent Non-Executive Directors.. A quorum shall be two members present in person, by telephone, audio or video link or similar real time communication facility, while recognising that wherever possible there should be a minimum of three members attending in line with current best practice. The Board shall appoint any member of the Committee (other than the Chair of the Board), which save in exceptional circumstances shall be a member who has served on the Committee for at least 12 months, to act as Chair.

1.2 The term of appointment to the Committee shall be three years. Members may be reappointed after their initial term for up to two further periods of three years provided that they continue to be independent. The Chair of the Committee will not normally remain in post beyond nine years from their first appointment to the Board.

1.3 Membership shall be reviewed annually as part of the annual performance evaluation of the Committee.

2. Attendance at Meetings

2.1 Only members of the Committee have the right to attend Committee meetings.

2.2 The Chair of the Board, if he or she is not a member of the Committee, and the Chief Executive shall have the right to address any meeting of the Committee, and other individuals may attend for all or part of any meeting by invitation of the Chair of the

Committee.

2.3 No individual may participate in deliberations in which their remuneration is being directly discussed or in decisions which directly affect their personal remuneration.

2.4 The Secretary of the Company shall act as Secretary to the Committee.

3. Frequency of Meetings

3.1 The Committee shall meet at least twice a year and at such other times as the Chair of the Committee shall require.

3.2 Meetings of the Committee shall be called by the Secretary to the Committee at the request of the Committee Chair.

3.3 The Secretary shall be responsible for circulating information and papers in a timely manner to enable the Committee to give proper consideration to issues.

4. Minutes of Meetings

4.1 The Secretary shall keep appropriate minutes of the Committee's proceedings, including the names of those present and in attendance.

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4.2 Draft minutes shall be circulated promptly to all members of the Committee and once approved will be circulated to all members of the Board unless it would be inappropriate to do so.

4.3 A resolution in writing signed by all Committee members will be as effective as a resolution passed at a Committee meeting.

5. Authority

5.1 The Committee has delegated authority from the Board in respect of the functions and powers set out in these terms of reference. In performing its duties, the Committee may:-

5.1.1 take such internal and external advice as it considers appropriate to determine any aspect of remuneration, terms of service and incentives.

5.2 The Committee may appoint remuneration consultants and/or commission and/or purchase such reports, surveys or information as may be necessary to allow it to perform its duties. In doing so, it shall determine the terms of reference and engagement of external advisers including remuneration consultants, and shall ensure appropriate disclosures relating to such advisers and consultants are included in the Company's annual remuneration report, including whether they have any other connection with the Company or individual directors.

6. Responsibilities

6.1 The role of the Committee is to assist the Board to fulfil its responsibility to shareholders to ensure that the remuneration policy and practices of the Company reward fairly and responsibly, with a clear link to corporate and individual performance, having regard to statutory and regulatory requirements.

6.2 In particular, the Committee shall:-

6.2.1 determine the Company's remuneration policy for the remuneration of the Chair of the Board, the Executive Directors and senior management;

6.2.2 in determining the policy, consider and comply with all relevant legal and regulatory requirements from time to time, and with the provisions and

recommendations of the UK Corporate Governance Code and the FCA's Listing Rules and associated guidance.

6.2.3 in determining the policy, and when determining annual remuneration, ensure that, without paying more than is necessary, it:-

(i) is designed to achieve an appropriate balance between fixed and performance-related remuneration, and immediate and deferred remuneration;

(ii) is designed to incentivise attract, retain and motivate individuals of the quality required to promote the long term success of the Company;

(iii) rewards individuals in a fair and responsible manner for their contributions to the success of the Company, linking rewards to corporate and individual

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performance and driving behaviour that is consistent with the Company's purpose, values and desired culture;

(iv) gives the Committee discretion to override formulaic outcomes that might otherwise reward poor performance and recover or withhold sums in circumstances where it has specified it would be appropriate to do so;

(v) is linked to the business strategy of the Company and its long term strategic goals;

(vi) takes into account wider workforce remuneration and related policies; and (vii) is aligned with the Company's risk appetite, risk management strategy, risk policies and systems.

6.3 The Committee shall be responsible for ensuring:-

6.3.1 that the remuneration policy is submitted to shareholders in general meeting, and for periodically reviewing its ongoing appropriateness and relevance. In doing so, it shall have regard to the views of shareholders and other stakeholders and (through the Chair) maintain contact as required and engage with its principal shareholders and institutional investors about remuneration; and

6.3.2 that the annual report contains a clear description of its work, how it has addressed the requirement to engage with shareholders and the wider workforce in relation to remuneration matters, and includes relevant pay ratios in accordance with current regulation.

6. 4 The Committee shall ensure that all payments or proposed payments to directors are consistent with the latest remuneration policy approved by shareholders from time to time;

6.5 The Committee will be responsible for setting remuneration policy and monitoring the level and structure of remuneration for the Executive and senior management below Board level.

6.6 The Committee will:

6.6.1 approve the design of, and determine targets for, any performance related pay schemes operated by the Company and approve the total annual payments made under such schemes, ensuring that such performance-related elements are transparent, stretching and rigorously applied;

6.6.2 review the design of all long term incentive plans for approval by the Board and shareholders; determine each year whether awards will be made, and if so, the overall amount of such awards, the individual awards to each Executive Director and participant from senior management, and the performance targets to be used, and monitor the amount of such awards to be made to these participants, and the performance targets to be used;

6.6.3 design agreed safeguards, for example, clawback, to protect against rewarding failure, and adopt appropriate risk management of incentive arrangements to ensure performance-related payments reflect actual achievement;

6.6.4 determine the policy for, and scope of, pension arrangements for each Executive Director and senior manager and the level of contributions by the Company, and monitor the pension arrangements for the Executive and senior management. In doing so, it shall have regard to pension contribution rates available to the workforce;

6.6.5 ensure that contractual terms on termination, and any compensation payments made, are fair to the individual, and the Company, that failure is not rewarded and that the duty to mitigate loss is recognised;

6.6.6 within the terms of the agreed remuneration policy and in consultation with the Chair and/or Chief Executive as appropriate, determine the total individual remuneration package of each Executive Director including base salary, bonuses, incentive payments and share options or other share or share-based awards;

6.6.7 review and note annually the remuneration trends across the Group and have regard to these when setting remuneration, especially when determining annual salary increases;

6.6.8 oversee any major changes in employee benefits structures throughout the Group;

6.6.9 agree the policy for authorising claims for expenses from directors; and

6.6.10 ensure proper disclosure of remuneration as set out in the Large and Medium sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013 and the Companies Act 2006 and any other relevant regulations which may come into force from time to time.

6.7 in carrying out their responsibilities, each member of the Committee shall act in a way which he or she considers, in good faith, to be most likely to promote the success of the Company for the benefit of its members as a whole.

6.8 The remuneration of the Non-Executive Directors (other than the Chairman) is a matter for the Board.

7. Reporting and Evaluation Procedures

7.1 The Committee Chair shall report formally to the Board on its proceedings after each meeting.

7.2 The Committee shall review its own performance, constitution and terms of reference, at least once a year, to ensure it is operating at maximum effectiveness and recommend any changes it considers necessary to the Board for approval.

7.3 The Committee Chair shall liaise with the Chief Executive on Remuneration Committee matters, and may also seek information from the Secretary and other members of senior management. Where it seeks advice and assistance from any such person, the Committee will take steps to address any potential conflict of interest and to ensure that this role is distinct from that person's role within the business.

7.4 The Committee shall make whatever recommendations to the Board it deems appropriate on any area within its remit where action or improvement is needed, and shall work and liaise with other Board Committees as necessary

7.5 The Committee shall report annually on the Company's remuneration policy and practices which will form part of the Company's Annual Report for submission as appropriate to shareholders at the Company's AGM

7.6 The Chair of the Committee shall attend the Company's AGM and shall be available to answer questions from shareholders.

7.7 The Terms of Reference shall be made available to shareholders by being placed on the Company's website.

8. Other matters

8.1 The Committee shall have access to sufficient resources in order to fulfil its duties, including access to the Company Secretariat as required;

8.2. The Committee shall be provided with appropriate and timely training, both in the form of an induction programme for new members and on an on-going basis for all members.

The Policy is intended to apply for three years from the approval of the Policy. The Policy described in this document was approved by shareholders at the Company's AGM on 29 June 2018.

The Committee has established the Policy on the remuneration of the Executive Directors and the Chairman. The Board has established the Policy on the remuneration of the other Non-Executive Directors.

Executive Director Remuneration Policy

Remuneration strategy

The Company's remuneration strategy is to provide a remuneration framework based on the following principles:

• Attract, motivate and retain Executive and senior management in order to deliver the Company's strategic goals and business plans.
  
  
• Encourage and support a culture that delivers good customer outcomes and which adheres to FCA best practice.
  
  
• Reward delivery of the Company's business plan and key strategic goals.
  
  
• Adhere to the principles of good corporate governance and appropriate risk management.
  
  
• Align employees' interests with the interests of shareholders and other external stakeholders.
  
  

The current remuneration structure will continue to support and motivate our Executive Directors in furthering the Company's long-term strategic objectives including the creation of sustainable shareholder returns.

Remuneration Policy

Base salary

• To provide competitive fixed remuneration that will attract and retain key employees and reflect their experience and position in the Group.
  
  
• Salaries are reviewed annually. When determining the salary of the Executives the Committee takes into consideration: the levels of base salary for similar positions with comparable status, responsibility and skills, in organisations of broadly similar size and complexity; the performance of the individual Executive Director; the individual Executive Director's experience and responsibilities;
  
  
• A broad assessment of individual and business performance is used as part of the salary review. No recovery provisions apply
  
  

Benefits

• To provide competitive benefits and to attract and retain high calibre employees. Currently given the size and development no material benefits are offered. The policy is reviewed on a regular basis.
  
  

Pension

• To provide a competitive Company contribution that enables effective retirement planning. Currently given the size and development no material benefits are offered in this regard. The policy is reviewed on a regular basis.
  
  

Annual bonus

• Incentivises achievement of annual objectives which support the Group's short-term performance goals and protects longer term interests of the Group. Currently given the size and development no material incentives are offered in this regard. The policy is reviewed on a regular basis.
  
  

Long-Term Incentive and performance measures and targets

• Incentivises achievement of long term objectives which support the Group's longer-term performance goals. Currently given the size and development no material incentives and performance targets are offered in this regard. The policy is reviewed on a regular basis.
  
  

Executive Director service contracts and payment for loss of office

When setting notice periods, the Committee has regard to market practice and corporate governance best practice. Executive Directors' service agreements can be terminated by not less than 12 months' prior written notice given by the Executive or by the employer.

Payments for loss of office

When determining any loss of office payment for a departing Director the Committee will always seek to minimise cost to the Company while complying with the contractual terms and seeking to reflect the circumstances in place at the time. The Committee reserves the right to make additional payments where such payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or by way of settlement or compromise of any claim arising in connection with the termination of an Executive Director's office or employment.

Consideration of shareholder views

The Remuneration Committee takes the views of shareholders seriously and these views are taken into account in setting remuneration policy and practice. Shareholder views are considered when evaluating and setting remuneration strategy and the Committee commits to consulting with key shareholders prior to any significant changes to its Remuneration Policy

Non-Executive Director Remuneration Policy and letters of appointment

The Board as a whole is responsible for setting the remuneration of the Non-Executive Directors

Fees

• Core element of remuneration, set at a level sufficient to attract and retain individuals with appropriate knowledge and experience in organisations of broadly similar size and complexity.
  
  
• Fee levels are sufficient to attract individuals with appropriate knowledge and experience. Non-Executive Directors are paid a base fee.. In exceptional circumstances, fees may also be paid for additional time spent on the Company's business outside of the normal duties. Fees are reviewed annually, any increases in fees will be determined based on time commitment and take into consideration level of responsibility and fees paid in other companies of comparable size and complexity. Non-Executive Directors do not receive any variable remuneration element or receive any other benefits
  
  

Expenses

• To provide Non-Executive Directors with travel and subsistence expenses.
  
  
• Non-Executive Directors are reimbursed for all reasonable travelling and subsistence expenses (including any relevant tax) incurred in carrying out their duties
  
  

Letters of appointment

The Non-Executive Directors do not have service contracts but are appointed under letters of appointment. Appointments are reviewed every three years and continued on a rolling basis new appointments are made following recommendation by board.