Performance bonuses

Performance bonus arrangements for the Executive Directors are designed to encourage individual performance, corporate operating efficiencies and profitable growth. The annual bonus awards are based on a mix of demanding financial targets, derived from the Company's historic performance, annual long-term strategic business plan and annual budget, as well as market expectations and will depend on performance against annual targets of return on capital employed, working capital, Group profit before tax and, where relevant, profit before tax for the appropriate division (which, in aggregate, account for 85% of the bonus, the majority of which relates to the profit before tax targets). The balance of 15% of the bonus depends on specific personal objectives set for each Executive Director.

The following percentages of base salary, which vary between Executive Directors depending on their particular responsibilities and spheres of influence, will be paid in bonus for the year ended 31 July 2006, subject to the achievement of the minimum, on-target and maximum levels of performance (with the percentages increasing on a linear basis for achievement between each level):

Stretching targets are set for each element of the bonus, determined by the Committee each year, which also considers the levels of performance targets to be achieved for bonus payments to be made in the succeeding year. For the year ending 31 July 2007, the Committee has determined that there will be no change from 2006 for the minimum, on-target and maximum targets which will be 80/130/180% for Mr Hornsby, 80/120/160% for Mr Hord, 80/110/140% for Mr Roach and 40/70/100% for Messrs Marchbank and Webster.

Emoluments

The emoluments for 2005 and 2006 of the Directors who served during the financial year are set out below:

Notes:

1. £50,176 (2005: £150,000) of the figure for bonuses relates to the vesting on 31 July 2006 of 34.5% of the award made in 2003 under the 2002 Long Term Incentive Scheme referred to in the Remuneration report.
2. £55,913 (2005: £0) of the figure for benefits was paid by way of a one-off amount to assist with Mr Hornsby's purchase of a house in the UK. Mr Hornsby will receive an annual housing allowance of £75,000 pa from 1 August 2006. £65,283 (2005: £174,194) of the figure for bonuses relates to the vesting on 31 July 2006 of 34.5% of the award made in 2003 under the 2002 Long Term Incentive Scheme referred to in the Remuneration report.
3. £185,080 (2005: £191,018) of the figure for benefits relates to relocation from the USA to the UK. £36,256 (2005: £101,935) of the figure for bonuses relates to the vesting on 31 July 2006 of 34.5% of the award made in 2003 under the 2002 Long Term Incentive Scheme referred to in the Remuneration report.
4. Appointed 16 December 2005. £17,867 of the figure for bonuses relates to the vesting on 31 July 2006 of 34.5% of the award made in 2003 under the 2002 Long Term Incentive Scheme referred to in the Remuneration report.
5. £26,120 (2005: £35,917) of the figure for benefits relates to relocation from Droitwich to Theale. £66,412 (2005: £167,500) of the figure for bonuses relates to the vesting on 31 July 2006 of 34.5% of the award made in 2003 under the 2002 Long Term Incentive Scheme referred to in the Remuneration report.
6. Mr Banks retired from the Company on 31 July 2006 and the emoluments shown in the table relate to the period from 1 August 2005 to 31 July 2006. £70,000 (2005: £70,000) of the figure for benefits relates to relocation from the USA to the UK. £60,919 (2005: £66,633) of the figure for benefits relates to currency protection. £134,882 (2005: £369,908) of the figure for bonuses relates to the vesting on 31 July 2006 of 34.5% of the award made in 2003 under the 2001 Long Term Incentive Scheme referred to in the Remuneration report. In addition, the Company has agreed to pay the removal costs as well as the legal and estate agent fees in connection with the disposal of Mr Banks' home in the UK in advance of his return to the USA.
7. The payments in respect of life assurance relate to arrangements established before Messrs Banks, Hord, Hornsby, Marchbank and Roach became Executive Directors. These payments will cease with effect from 1 August 2006 for Messrs Hornsby, Marchbank and Roach. A final payment of £54,235 was made in the year ended 31 July 2005 in respect of life assurance arrangements for Mr Hord. Payments totalling £1.55 million will be made over the next 16 years in respect of life assurance arrangements for Mr Banks.

Other senior executives and management

There are a number of senior executives whose roles influence the ability of the Group to meet its strategic objectives. They include the members of the Executive Committee and other senior employees. The Committee has regard to the level and structure of this group whose total remuneration including salary, target bonus and value of long-term incentives is summarised below:

Service agreements

All service agreements with Executive Directors are subject to a maximum of 12 months' notice of termination if given by the Company and six months' notice of termination if given by the Executive Director. Such notice periods reflect current market practice and the balance that should be struck between providing contractual protection to the Directors that is fair and the interests of our shareholders. The date of each service agreement and the year in which each Director was last elected or re-elected are noted in the table below. There are no provisions in any service agreement for early termination payments and, in the event of early termination of any service agreement, the Committee will take a robust view of the mitigation, which should be taken into account when computing any compensation payable.