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Financial Year 2022 – Key Facts 3

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Alternative performance measure (APM). The rationale for the use of these metrics, definitions of the Group’s KPIs and reconciliations to the related

International Financial Reporting Standards (IFRS)* metrics where appropriate, can be found in the Measuring Performance and the Glossary of Terms on pages

125 to 128.

.

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embarked on a plan to bring human values back into the

fabric of what we do, using a combination of deep expertise

from multiple industries, empathetic customer service and

cutting-edge technology. Our scale, expertise and

entrepreneurial culture make us well placed to lead this

evolution, enhancing value for our customers and our

business.

2022 has been a challenging year for the industry with

significant claims inflation, a weak pricing environment,

increased weather related home claims and motor claims

However, we remain focused on the delivery of our

strategic plans and believe that they remain more relevant

than ever. We set out to transform esure on the back of an

industry-first, flexible and data-driven technology platform.

We have made significant investments in the business –

and substantial progress on our path towards being an

agile ‘game changer’ that provides products and services

that truly meet our customers’ needs and expectations. I am

grateful for the continued support of our investor, Bain

Capital, who shares our excitement about the potential of

underwriting and established our enterprise data science

capability (see case study on page 14)

blend deep-rooted insurance expertise with fresh thinking

from a diverse range of digitally-advanced, customer-

centric sectors, at all levels of the business. This diversity,

coupled with our agile and collaborative ways of working,

continue to make a positive impact on the productivity and

responsiveness of the Company.

We have also continued to strengthen the Board during the

year. We were delighted to welcome Elisabeth Ling as an

Independent Non-Executive Director in May. Elisabeth has

over 20 years’ experience across a wide range of

businesses – most recently at Elsevier. Her experience in

product management, data and developing world-leading

2023 ready to showcase more of the work we have been

doing behind the scenes which will start to visibly benefit

our customers. We are looking ahead with cautious

optimism.

Andy Haste

Chair of the Board of Directors

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Exceptional Culture

sustainable, low carbon economy.

As a motor insurer, we are naturally passionate about

creating safer roads for our customers and their families.

Focus

Aligned to our Climate strategy (see ESG section on page

30 for full details), we are focused on reducing our impact

on the environment by driving carbon emissions in line with

science-based targets aimed at limiting warming to 1.5°C.

We are focused on doing so across our own operations, our

supply chain and emissions related to our investment

portfolio. We also seek to inspire change amongst our

2022 progress

Within 2022, we have made great strides across multiple

initiatives aimed at reducing our impact on the environment.

We have:

• Defined and published our climate strategy

• Disclosed all climate targets, activities, progress and

future plans via our new Corporate website

• Ensured 100% of our branded body shops achieved net

neutral status as of December 2022

• Offset 100% of our Scope 1 & 2 emissions, whilst we

schoolchildren took part in this year’s event,

campaigning for safer roads and cleaner traffic.

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The Group is well positioned to drive value and is looking to do so by focusing on our three

key priorities:

Growth

competitive underwriting footprint.

Our Game Changer strategy is bringing together digital transformation with our customer-centric approach to build a

significant competitive advantage in this highly fragmented, profitable market.

We recognise that there will be periods when market conditions are not conducive to near term growth and, in those

circumstances, we will take a long term view and demonstrate pricing discipline at the expense of short term growth.

Quality

In addition to maintaining our core insurance disciplines our Blueprint programme is building an advanced digital platform.

The speed and flexibility of the platform will enable a low cost personalised customer experience that will use advanced data

The combination of the Group’s trading and underwriting performance with its efficient balance sheet structure is expected to

deliver strong profitability over the medium term. Our disciplined financial and risk management approach and cautious

reserving philosophy give the Group its strong balance sheet.

We expect our Game Changer strategy to support already strong underwriting, pricing and claims management discipline

through further automation and data science capabilities.

Key Performance Indicators (‘KPIs’)

Growth

2022

2021: 908m

2021: 42%

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2021: 0.03%

Returns

2022

2021: 84.8m

2021: 15%

(Loss)/Profit After Tax* (£m)

Underlying RoTE (%)

2021: 7.7m

2021: 24%

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inflation and severe weather. The Group prioritised pricing and underwriting discipline and the

execution of its Blueprint programme above short term policy growth.

Financial highlights

Against a backdrop of unsustainable market profitability and continued weak market pricing, the Group took a decision at the

start of the year to pursue a disciplined rate plan to price for both the return of more normal claims frequency following two

years affected by Covid and the heightened levels of inflation impacting UK motor insurance. As a consequence, the Group’s

total in-force policies decreased 8.7% from 2.54m to 2.32m. The reduction was primarily driven by Motor which decreased

10.9% from 1.93m to 1.72m whilst Home remained broadly stable at 0.61m.

Group Turnover also decreased 7.9% from £908m to £836m due to lower motor volumes, partially offset by higher average

premiums and instalment income as a result of price increases.

Group solvency coverage is within our target operating range at 149% (2021: 188%) with the decrease largely driven by

continued investment in the Group’s technology platform.

Financial Summary

Year ended 31st December 2022 £m

2021 Restated

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norms to build market share. Market pricing, therefore, remained soft throughout the year, albeit claims inflation remained less

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Currently, the Group has in place non-proportional excess of loss reinsurance programmes for its motor and home

The Group’s reinsurance programmes are reviewed on an annual basis and capital modelling is used to identify the most

appropriate structure and risk retention profile, taking into account the Group’s business objective of minimising volatility and

the prevailing cost and the availability of reinsurance in the market. Our capital management approach considers the proactive

use of reinsurance to protect against downside risks and manage our business effectively.

Solvency

The Group seeks to maintain an appropriate level of capitalisation and solvency to ensure that regulatory requirements are

met with a prudent buffer and to ensure that there is sufficient capital available to fund profitable growth opportunities.

The Group’s solvency coverage remains within our desired operating range at 149% with Eligible Own Funds of £389.6m at

31 December 2022 (2021: 188% and £497.1m). The decrease in the year was largely driven by the continued investment in

the Blueprint programme. The Solvency Capital Requirement decreased to £260.7m (2021: £264.3m), reflecting the

Dividend policy

The Board considers issuing dividends to its Shareholder if the Group has excess capital and distributable reserves. The Board

considers a number of factors when determining the level of dividend, which include but are not limited to the level of

available distributable reserves, opportunities for growth, potential strategic opportunities, and the outlook for solvency

capital, including capital generation and headroom required to absorb adverse capital events.

esure Group plc, the parent Company of the Group, is a non-trading holding company that derives its profits from dividends

paid by its subsidiary companies. The Board reviews the level of distributable reserves and aims to maintain distributable

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2. Claims inflation: Dependent on political and economic backdrop, but likely to remain a significant feature into 2023

Despite this uncertainty, the Group is well-placed to deliver against its long term strategic objectives. The disciplined approach

expects to benefit increasingly from the operational improvements delivered from the Blueprint programme with the new

operational platform expected to support the majority of the Group’s customer base by the end of 2023. The Group will

monitor and control actual and prospective

risks and to inform key business decisions.

Our Enterprise Risk Management (ERM) framework defines

a set of guidelines to identify, assess, treat, monitor and

report risk across the business. It supports the consistent

and robust identification and management of opportunities

and risks within desired levels, promoting openness,

challenge, innovation and excellence in the achievement of

objectives. Within this framework:

• Our risk culture defines acceptable behaviours, attitudes

is linked to our annual strategic planning process and

includes our annual ORSA report which documents our

capital requirements and risks associated with the

current period and forward looking periods. The key

processes that underpin the ORSA include:

reverse stress testing;

position;

Risk governance

defence model which provides a simple and effective way

to delegate and co-ordinate risk management roles and

responsibilities across the organisation. Further information

on the work of the Risk Committee of the Board can be

found in the Governance section pages 55 to 56.

1st Line - Business functions that own and manage risks

• Primary ownership, responsibility and accountability for

identifying, assessing and managing risks and controls

2nd Line – Risk and Compliance functions that oversee

• Monitor and help implement effective risk management

related information

independent assurance

• Improves esure’s operations through independent

objective assurance and consulting activities.

The accountability for the Internal Audit function resides

with the Chief Audit Officer (CAO), who reports to the Chief

Executive Officer. The independence of the CAO is assured

through a direct reporting line into the Chair of the

Audit Committee.

Accountabilities across the executive and senior

management are clearly articulated and managed through

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Carbon emissions quantification methodology: The emissions footprint is calculated in accordance with the Greenhouse Gas (GHG) Protocol and Environmental

Reporting Guidelines: Including streamlined energy and carbon reporting guidance. Activity data has been converted into carbon emissions using published

emissions factors. The data used has been provided by the Group.

Emissions sources: The emissions footprint includes the Scope 1 combustion of fuel, fugitive and process emissions and Scope 2 electricity emissions associated

with the activities for which the Group are responsible.

Emissions data quality: The quality of the data used for the emissions footprint calculations has been rated as ‘good’, ‘average’, ‘poor’ or based on benchmarks.

Around 99.7% of emissions in the footprint were based on ‘good’ quality data; this is a weighted percentage according to contribution by the emissions source.

kWh Energy Consumed

Transport and other

2022

1,740,151

107,333

5,406,144

2021

1,817,994

5,373,555

• Using recycled parts: We continue to work with our suppliers to increase the use of recycled car parts for repairs in non-

safety-critical applications, e.g. vehicle doors, tailgates, lights and bumpers. We have established a UK-wide programme by

working with suppliers to enhance the availability of parts, building a distribution network and establishing appropriate

standards. As of Oct 2022, we fitted 3,918 recycled parts which we estimate has resulted in savings of c.117,000kg CO2e.

Responsible Investment Strategy

Our commitments

We have committed to investing responsibly and considering the long-term impacts of our investment decisions. This includes

committing to integrating ESG factors when evaluating investment risks and opportunities, to support sustainable growth and

the transition towards a low-carbon economy.

We have defined the following objectives and tolerance levels to focus our attention on the long-term reduction of the carbon

• Engage in open dialogue with our asset managers about their approaches to responsible investment and ensure they

incorporate ESG factors and KPIs into their investment analysis and decision-making processes;

• Encourage our asset managers to seek disclosure on ESG issues by the entities in which we invest, and use it to encourage

positive ESG behaviour; and

• Track meaningful metrics and analysis on holdings, including ESG scores, carbon intensities and temperature

pathways/trajectories.

Key progress

We have set our milestones and trajectory to deliver against our 2030 and 2050 targets.

We have moved an element of our surplus funds into less carbon-intensive assets as part of our regular review of investment

risk vs reward analysis, which has had the effect of reducing the overall carbon emissions from our investment portfolio.

Future plans to deliver our Sustainability Ambition

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emissions on an ongoing basis.

• We will set milestone targets for emissions reductions specific to Operations and Supply Chain, alongside those already

agreed for Investments, to enhance the rigour within our transition plan.

As of 31 December 2022, the Group employed 1,538 (2021: 1,672) people across three offices in Glasgow, Manchester, and

Reigate.

Engaging our people

Our people are our strength, supporting us to transform our business and fix insurance for good. Strong insurance heritage

and expertise are enhanced by a diverse range of colleagues committed to delivering fantastic products, service, and

experiences for our customers. Our Transformation team has been hand-picked to provide the skills needed to develop

innovative insurance products and an outstanding customer experience. You will find people with deep-rooted insurance

knowledge working alongside data scientists and machine learning experts, drafted in from more digitally advanced sectors.

We are passionate about developing and maximising the potential of all our colleagues and continue to invest in a range of

development programmes.

We want to be a truly inclusive and diverse organisation. We want to create an environment where people from all

backgrounds and beliefs feel respected, are treated equally, and can thrive. It is important for us that our colleagues’

perspectives and beliefs reflect the breadth and diversity of the customers we serve. A diverse and inclusive workplace is also

critical to enable us to attract and retain the best talent, reduce risk, and improve decision making.

Our Board Equity, Inclusion and Diversity Policy (I&D Policy) reinforces our commitment to promote equity, inclusion, diversity,

and fairness. It includes commitments to:

day as colleagues;

• Work to a target of 33% female members in our senior team by the end of 2024 and to achieve our longer-term ambition of

having each level in the organisation as broadly 50/50 male/female; and

• Create an environment that nurtures individual differences and ensure that the contributions of all colleagues are

colleagues but across the insurance sector. We were a sponsor of Link Insurance Pride 2022; 50 over Fifty, an initiative

working to make Insurance a more age and gender inclusive industry; and a partner of Women in Data, a movement and a

force for change in the realm of data science and analytics; and

• We have produced our first Ethnicity pay gap report.

55% of our colleagues are male (2021: 52.5%), 45% female (2021:47.5%). Within our senior team, 31% are female (2021:

32%).

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We have implemented a hybrid working model for all colleagues that combines remote working with using our offices in a

We have also signed the ABIs ‘Making Flexible Work charter’ to increase flexible working and support more women into

senior roles.

Recognition and Reward

• We have enhanced the support we offer colleagues becoming a parent. Our package of support includes the removal of any

service eligibility, 26-weeks paid maternity/adoption leave, five-weeks paid paternity leave and two weeks paid time off in

the event of miscarriage, pregnancy loss or neo-natal illness.

Community

We always strive to be a powerful force for good by supporting charities in the communities in which we operate, alongside

those whose work directly impacts the broader insurance industry. We offer all colleagues two days’ paid leave per year

for volunteering.

• In partnership with Brake, the road safety charity, we sponsored Brake’s Kids Walk for the second year running. The event

saw over 90,000 schoolchildren from over 600 schools march for safer and cleaner journeys.

• We sponsor Run Reigate as part of our commitment to the local area in which our headquarters are based. We sponsored

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Stakeholder groups

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Corporate partners

S172 sections (a), (c), (d) and (e)

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Statement of the Directors in respect of the Strategic Report

The Board reviewed and approved the Strategic Report on pages 08 to 40 on 30 March 2023.

By order of the Board

David McMillan

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The role of the Board

Our role as the Board is to promote the long-term success of the Group. We do this by implementing and overseeing

frameworks for governance, risk and performance management and receiving regular updates on governance, stakeholder

engagement activities, risk, strategy, performance and culture.

The Board has delegated a number of its responsibilities to Board Committees. This assists the Board in carrying out its

functions and ensures there is independent oversight of internal control, risk management and remuneration policy. These

Committees are comprised of Non-Executive Directors and utilise the expertise and experience of their members to examine

subjects in detail and make recommendations to the Board where required.

Whilst day to day responsibility for the business lies with the Executive management team, we maintain a Schedule of Matters

Reserved for the Board to ensure that key decisions that affect the Group and are of the utmost importance to our Shareholder

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• Approval of the Group’s strategic plan and objectives and setting the Group’s values and standards

Actuary and Company Secretary

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• Leads the Board and sets the agenda

• Promotes a culture of openness and debate

• Ensures the Board is effective

• Facilitates the contribution of Independent Non-Executive Directors and oversees the relationship between them and the

Non-Executive Directors and Executive Directors

Chief Executive Officer, Executive Director – David McMillan

• Responsible for the performance and management of the Group’s business

• Leads the senior Executive team in the day-to-day running of the Group’s business

• Charged with recommending and then implementing the Board’s strategy and decisions

Independent Non-Executive Directors – Peter Shaw, Andrew Birrell, Elke Reichart, Elisabeth Ling

• Bring a very broad level of experience across the financial, commercial, actuarial, technology, data science and

product sectors

• Constructively challenge management and scrutinise performance

• Contribute to the development of the Group’s strategy

• Monitor the Group’s performance

• Satisfy themselves on the effectiveness of financial controls, risk management, consumer duty and appropriate conduct

• Participate in the selection and recruitment of new Directors and succession planning

Non-Executive Directors – Robin Marshall, Phil Loughlin, Luca Bassi, James Stevens

• Bring representation of the Shareholder view to the Board

• Acts as Secretary to the Board and its Committees

• Ensures compliance with Board procedures and advises on governance issues

• Ensures good information flow within the Board and between the Non-Executive Directors and senior management

Directors’ external activities and conflicts of interest

Directors have a statutory duty to avoid situations in which they have a direct or indirect conflict of interest or possible conflict

of interest with the Company. Under the Company’s Articles of Association, the Board has the ability to authorise any actual or

Board Risk Committee in March 2022. There is a procedure in place to deal with any actual or potential conflicts of interest

and Directors are required to review and confirm their interests annually. Prior to taking on additional responsibilities or

external appointments, Directors are required to declare any interests that may give rise to a conflict of interest on

appointment and to obtain authorisation from the Chair subsequently as they arise. It is a Director’s responsibility to ensure

that they will be able to meet the time commitment expected of them in their role in the Group. Any potential conflicts

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leadership roles and all its employees.

the Board agreed an action plan based on development opportunities identified. Significant progress has been made against

this plan: increased focus on customer voice and customer needs, on employee talent and succession development, and a

greater degree of initiative in discussing social and environmental topics; and achieving a greater balance of diversity in terms

of identity, areas of expertise and share of voice.

Progress against these actions were tracked throughout the year and were formally discussed by the Board in

November 2022.

Website

The Group’s website www.esuregroup.com has been comprehensively updated during 2022, it provides a source of

information for stakeholders about the Group and contains financial presentations and publications, including the online

Annual Report, mid-year report in line with the Walker PERG Guidelines, the Group’s ClimateWise report and recent

press releases.

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their Terms of Reference remain appropriate to cover both

appointment / removal of the external auditor, their

performance.

(SFCR) and the Group Regular Supervisory Report

(RSR).

internal controls.

Large Private Companies and the Walker PERG Guidelines.

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inherent uncertainties associated with reserving for claims,

is satisfied that outstanding claims reserves included in

these Financial Statements are appropriate. In reaching this

conclusion, the Committee specifically considered risks

related to the impact of the Covid pandemic, inflation and

the Civil Liability Act.

recognition risk.

• Reviewed key and emerging risks including the impact of

inflation and rising interest rates.

• Reviewed and approved the Internal Audit Charter.

• Reviewed and challenged the effectiveness of the

Group’s whistleblowing procedures and approved the

Group Whistleblowing Policy.

• Considered the Group’s approach to the Legacy IT estate

as part of the transformation.

Internal Audit

Internal Audit has established a three-year audit cycle with

annual delivery plans to focus on the most significant risks

Committee on the effectiveness of the Group’s systems of

internal controls and the adequacy of these systems to

manage business risk and to safeguard the Group’s assets

actions or mitigating controls are in place in response to

any findings.

External Audit update

As a result of the mandatory requirement to rotate external

The Committee oversaw the Group’s relationship with the

external auditor, Deloitte LLP, and will conduct an annual,

formal review of the relationship, policies and procedures

to ensure independence.

The Group’s policy on non-audit work is updated annually

and was last updated on 16 November 2022. This policy

effectiveness of the incoming external auditor, including

consideration of the quality of the external auditor’s report

to the Committee and the interaction of the audit partner

with the Committee in 2023.

The Committee concluded that no Conflicts of interest were

of an external audit and the non-audit services provided by

Details of fees paid to Deloitte LLP in 2022 are included in

Note 11 in the Financial Statements.

The Committee carried out a review of its Terms of

Reference during 2022. As a result of its work during the

year, the Committee has concluded that it has acted in

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The Risk Committee remained central to the Group’s governance process in 2022, working

The Committee is comprised of Independent Non-Executive

The Chief Executive Officer, the Chief Financial Officer, the

Chief Risk Officer, the Chief Audit Officer, Non-Executive

external and internal auditors, are invited to attend

meetings of the Committee. Other members of senior

management are invited to present reports as necessary.

Cross-membership of the Committee and the Audit

Committee has permitted both Committees to ensure that

their Terms of Reference remain appropriate to cover both

the internal control and risk management framework of the

Group.

pages 25 to 26.

During the year, the Committee continued to have an open

and transparent relationship with our regulators and

considered feedback in respect of the ongoing suite of

regulatory reviews and activity, both specific to the Group

and industry wide.

Responsibilities

The Committee responsibilities in respect of the risk

management framework are to:

• Provide advice to the Board on risk strategy and

appetite;

• Evaluate potential emerging trends, including but not

limited to environmental, social and governance trends,

that may result in future adverse developments against

the Group’s risk appetite and approve any material

changes to those policies;

• Oversee and challenge the design and execution of

stress and scenario testing, this includes reverse stress

testing, day-to-day risk management and management’s

responsiveness to the findings and recommendations

from the Chief Risk Officer and the Risk Management

function;

• Review the capital adequacy of the Group, taking into

account the forward-looking assessment of risks from

the outcomes of the ORSA process and recommend to

the Board for approval prior to submission to the

Group’s regulatory supervisor;

• Approve the annual objectives of the Risk Management

function, ensuring it has adequate resources,

independence and has appropriate access to information

to enable it to perform its function effectively;

• Review the approach by which each principal risk is

Group’s risk appetite, risk exposure, management of risk

and regulatory compliance.

Key areas of focus

Key matters discussed by the Committee during the year

are set out below:

• Regular oversight and review of governance and risk

assessing the management of change risks and the

impact of the transformation on the overall business risk

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programme, and future transformation risk strategy for

the Group.

• Oversight of the ORSA process and reporting including

assessment of the overarching risks within the Group.

• Oversight of responses and dialogue with the regulators

in relation to pricing practices, reserving and risk

exposure management.

• Reporting on and debating material risk areas including

Operational Resilience, Pricing, Reserving, Solvency,

Conduct and Customer risk, Investment risk, Data risk

Material Third Party Arrangements, Financial Crime,

ESG, Supplier Code of Conduct.

• Review of the 2022 and 2023 reinsurance programme

for recommendation to the Board.

• Review of the upcoming Consumer Duty regulation and

implementation of Board training.

In addition, pages 27 to 29 provide a summary of the

the risk management section on pages 25 to 29.

The Committee has a duty to advise the Remuneration

aforementioned plans.

The Committee reviewed the remit and performance of the

Group’s risk management function to confirm that these

functions have the requisite skills, experience and

resources, along with unrestricted access to information, to

the relevant professional standards, and ensuring also that

the functions have adequate independence.

Risk Committee Terms of Reference

The Committee carried out a review of its Terms of

Reference in November 2022. As a result of its work during

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This report presents an overview of the approach to the remuneration of our Chair, Executive

The Committee is appointed by the Board and is comprised

of Independent Non-Executive Directors and a

representative Non-Executive Director of the Shareholder.

Elke Reichart is Chair of the Committee and other member

are Andrew Birrell, Peter Shaw and Luca Bassi.

The Chair of the Board, the Chief Executive Officer, the

Chief People Officer, Chief Risk Officer, Non-Executive

Directors and the Company Secretary, along with the

external Committee advisors, are invited to attend

meetings of the Committee, as appropriate for the agreed

Roles and responsibilities

Chief Financial Officer. The Remuneration Committee may

Executive and Material Risk Takers Remuneration Policy

the remuneration on offer to the wider employee

Key elements and principles of the Policy

underpinning the policy and the regulatory framework

within which the policy sits, in addition to the roles and