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Notice of meeting
Explanatory notesResolution 1The Directors are required to present to the Meeting the audited accounts and the Directors’ and auditors’ report for the financial year ended 31 July 2007.
Resolution 2The Directors’ report on remuneration includes the Company’s policy on Directors’ remuneration for the next financial year and for the years subsequent to that, a table containing details of the Directors’ emoluments and a line graph that shows total shareholder return (‘TSR’) from 1 August 2002, together with the TSR for the FTSE 100 index since that date.
Resolution 3If Resolution 3 is approved by shareholders, the final dividend for the year ended 31 July 2007 will be paid on 30 November 2007 to shareholders whose names appear on the register of members at close of business on 5 October 2007.
Resolutions 4, 5 and 6 Under the Company’s Articles of Association, one-third of the Directors are required to retire by rotation each year and, in addition, no Director may serve for more than three years without being re-elected by shareholders. Messrs Duff, Hornsby and Murray will retire by rotation this year in accordance with the Articles of Association and are proposed for re-election through separate resolutions numbered 4, 5 and 6. Mr Duff is standing for re-election as a Non Executive Director. Mr Duff is the Chairman of the remuneration committee and a member of the nominations committee. Mr Duff does not have a service contract with the Company but his appointment is terminable on six months’ notice. Mr Hornsby is standing for re-election as an Executive Director. Mr Hornsby has a service contract with the Company terminable by not less than six months’ notice given by him or 12 months’ notice if given by the Company. Mr Murray is standing for re-election as a Non Executive Director. He is Chairman of the audit committee. Mr Murray does not have a service contract with the Company but his appointment is terminable on six months’ notice. Biographical details of all the Directors standing for re-election appear Our board of the Annual Report and Accounts.
Resolutions 7 and 8Auditors have to be appointed at every general meeting at which accounts are presented to shareholders. The current appointment of PricewaterhouseCoopers LLP as the Company’s auditors will end at the conclusion of the Annual General Meeting and it has advised its willingness to stand for reappointment. It is normal practice for a company’s directors to be authorised to agree how much the auditors should be paid.
Resolutions 9 and 10The Companies Act 1985 prevents Directors from allotting unissued shares without the authority of shareholders in general meeting. The Company’s Articles of Association permit the Directors to allot unissued shares but this power is subject to renewal by shareholders. Resolution 9 empowers the Directors to allot shares of up to £34,703,160 in nominal amount representing the authorised but unissued ordinary share capital as at 24 September 2007, being a date not more than one month prior to this Notice. The Directors were last given this authority at the Annual General Meeting held in 2006 and it is intended that renewal of this authority will be sought on an annual basis. Resolution 10 empowers the Directors to allot shares for cash or sell/transfer shares out of treasury otherwise than pro rata to existing shareholders but this power is limited to allotments in connection with a rights issue and otherwise up to an aggregate nominal amount of £8,264,842 (approximately 5 per cent of the issued ordinary share capital as at 24 September 2007, being a date not more than one month prior to this Notice). Save for the issue of shares pursuant to the Company’s various employee share schemes and any share dividend alternatives, the Directors do not presently intend to allot any unissued shares. Treasury shares and the regulations which came into force on 1 December 2003 in relation to them, are more fully explained in the note to Resolution 11. The authority conferred by these resolutions will expire no later than 15 months from the date on which the resolution is passed, or at the conclusion of the Annual General Meeting to be held in 2008, whichever is the sooner. Similar resolutions have been approved by shareholders at each Annual General Meeting since 1984.
Resolution 11This resolution empowers the Directors to make limited on-market purchases of the Company’s ordinary shares. The power is limited to a maximum of 66,118,736 shares (10 per cent of the issued share capital as at 24 September 2007) and details the minimum and maximum prices that can be paid, exclusive of expenses. The authority conferred by this resolution will expire at the conclusion of the Company’s next Annual General Meeting. The Companies (Acquisition of Own Shares) (Treasury Shares) Regulations 2003 came into force on 1 December 2003. These regulations allow shares repurchased by the Company to be held as treasury shares. Treasury shares may be cancelled, sold for cash or used for the purpose of employee share schemes. The authority to be sought by this resolution is intended to apply equally to shares to be held by the Company as treasury shares. No dividends will be paid on shares which are held as treasury shares and no voting rights will be attached to them. Shares held as treasury shares will be treated as if cancelled. The Company holds no shares in treasury but the Directors currently intend that any shares which are repurchased will be held in treasury.
Resolution 12This resolution enables the Directors to incur expenditure of up to a total of £125,000 in respect of the heads identified (including any such expenditure by a subsidiary company) without unintentionally breaching the provisions of the Companies Act 2006, which defines political organisations and political donations in a broad manner. The authority sought will, if granted, last until the conclusion of the 2008 Annual General Meeting of the Company when the Directors intend to seek renewal of this authority. The policy of not giving any cash contributions to any political party will continue.
Resolution 13The Articles of Association prescribe that the total amount of fees which may be paid to the Non Executive Directors shall not exceed £750,000 per annum, unless the Company’s shareholders otherwise resolve. In view of the increasing time commitment involved and in line with market trends, the Board believes it is appropriate to recommend an increase in the limit to £1,000,000 per annum in order to provide flexibility for the future.
Amendments to the Articles of Association of the CompanyThe Companies Act 2006 (the ‘2006 Act’) received Royal Assent in November 2006. The 2006 Act represents a major reform of UK companies’ legislation and is being brought into force on a staged basis between January 2007 and October 2008. It is proposed that, at this year’s Annual General Meeting, the Company amends its Articles of Association (the ‘Articles’) to reflect certain changes in the law governing electronic communications and Directors’ conflicts of interest which have or will come into force as a result of the 2006 Act (see notes to Resolutions 13 and Resolutions 14 below).
However, over the coming year, the Company (in conjunction with its legal advisers) intends to conduct a further review of the Articles, incorporating any further changes which are necessary or desirable following the full implementation of the 2006 Act. Any proposed amendments will be put to shareholders at the 2008 Annual General Meeting. Copies of the current and proposed Articles (and comparison documents showing all the proposed changes to the Articles) are available for inspection during normal business hours at the registered office of the Company and at the offices of its solicitors, Freshfields Bruckhaus Deringer (65 Fleet Street, London EC4Y 1HS) until 28 November 2007 or upon request from the Company Secretary. Copies will also be available at the Annual General Meeting from 11.15am until its conclusion. The material differences between the current and the proposed Articles are summarised below. Changes of a minor, conforming or purely technical nature have not been mentioned specifically.
Resolution 14
Provisions relating to electronic communicationsCurrently, shareholders may elect for communications to be sent to them via email rather than receiving documents in hard copy form. The 2006 Act contains new provisions relating to electronic communications between companies and their shareholders which will enable companies to use electronic communications with shareholders as the ‘default’ position by placing documents on a website unless shareholders specifically elect to receive hard copies. Shareholders may also elect to communicate with the Company by electronic means where the Company has given an electronic address in a Notice calling a meeting or in an instrument of proxy. The Company proposes to amend its Articles to take advantage of these provisions.
In any event, before implementing the ‘default’ provisions (as detailed above), the Company would write to all shareholders to give them the opportunity to exercise their choice as to whether they wish to continue to receive documents in hard copy form or via the Company’s website.
Resolution 15
Provisions relating to conflicts of interest The 2006 Act sets out Directors’ general duties, which largely codify the existing law, but with some changes. Under the 2006 Act, from 1 October 2008 a Director must avoid a situation where he has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the Company’s interests. This requirement is very broad and could apply, for example, if a Director becomes a Director of another company or a trustee of another organisation. Currently, Directors discuss such proposed positions with the Company before taking them up and there are actions Directors can take to avoid a breach of their duties if an actual conflict arises. The 2006 Act allows Directors of public companies to authorise conflicts and potential conflicts, where appropriate, where the Articles of Association contain a provision to this effect. The 2006 Act also allows the Articles of Association to contain other provisions for dealing with Directors’ conflicts of interest to avoid a breach of duty. This change to the Articles of Association, to take effect from 1 October 2008, would give the Directors authority to approve such situations and to include other provisions to allow conflicts of interest to be dealt with in a similar way to the current position.
There are safeguards which will apply when the Directors decide whether to authorise a conflict or potential conflict. Firstly, only Directors who have no interest in the matter being considered will be able to take the relevant decision and secondly, in taking the decision the Directors must act in a way they consider, in good faith, will be most likely to promote the Company’s success. The Directors will be able to impose limits or conditions when giving authorisation if they think this is appropriate.
The Directors consider that each of the resolutions is in the best interests of the Company and the shareholders as a whole and, accordingly, recommend all shareholders to vote in favour of all resolutions, as the Directors intend to do in respect of their own shares.