Terms of reference

Ultra Electronics Holdings PLC

Matters To Be Reserved To The Board

The items set out below are matters which are reserved to the Board in accordance with the principles of the Combined Code. They comprise matters of particular significance for the Company which should have the benefit of input from the whole Board, including non-executive directors. It is not necessary, however, for the Board to undertake all the detailed work entailed in these matters. This can be done at the level of Board Committees, which will investigate, consult and consider as necessary and then make their recommendations to the Board. The Board will take the key decisions.

In addition it is recognised that, in certain circumstances, much greater responsibility will need to be delegated to a Board Committee. For example, in a major acquisition or take-over scenario, the need for urgent action may preclude the convening of full Board meetings, or on a rights issue, whilst the full Board would take the decision to undertake the transaction, matters of detail such as the precise allotments would need to be delegated. The Board may approve such delegation at its own discretion by duly passing a resolution to delegate a specific matter in specific circumstances.

Companies Act requirements

  • Approval of interim and final financial statements.
  • Approval of announcements of results
  • Approval of the interim dividend and recommendation of the final dividend.
  • Approval of any significant change in accounting policies or practices.
  • Appointment or removal of Company Secretary.
  • Remuneration of auditors and recommendations for appointment or removal of auditors.
  • Approve the sealing of documents.

Stock Exchange

  • Any matter (other than routine matters) involving any issue or potential issue of any Ultra Electronics share or other security.
  • Approval of all circulars and listing particulars other than routine documents, e.g. scrip dividend circulars.
  • Approval of press releases concerning major matters decided by the Board.

Management

  • Approval of the Group’s annual operating budget and its longer term strategic plans.
  • Changes relating to the Group’s capital structure or its status as a public limited company.
  • Approval of acquisitions strategy, and of all individual acquisitions or disposals
  • Approval of incorporation of new legal entities
  • Approval of setting up of joint ventures
  • Monitor Group financial performance and endorse updated forecasts
  • Terms and conditions of non-executive directors.
  • Major changes to the Group’s management and control structure.
  • Monthly review of management’s report and accounts.
  • Personnel issues of significance.
  • Financing plans and banking arrangements.
  • The issue of guarantees or letters of comfort in excess of £1m.

Board membership and board committees

  • Board appointments and removals.
  • Terms of reference of the Chairman, the Chief Executive and other executive directors.
  • Terms of reference and membership of Board committees.

Combined Code recommendations

  • Projects, investments or disposals, etc., exceeding Board delegated capital expenditure authorisations of £500,000(or the capital value of rents for leases).
  • Material contracts of the Company or of any subsidiary in the ordinary course of business with contract value of at least £100m or involving initial investment in excess of £5m.
  • Material contracts of the Company or any subsidiary not in the ordinary course of business (no specific limit is set at this stage for this item).
  • Review Audit Committee Reports
  • Review operation and effectiveness of internal control arrangements

Miscellaneous

  • Strategic direction of the Ultra Electronics Group.
  • Management development.
  • Major changes in the rules of the Company pension scheme, or changes of trustees or changes in the Fund management arrangements (all these items are subject to the proviso that these may be Pension Trust matters rather than for the Company).
  • Major changes in Employee Share Schemes and the allocation of executive share options (other than in relation to Executive Directors).
  • Policy in regard to the Group’s long term incentive schemes (other than in relation to Executive Directors).
  • The Group’s executive bonus arrangements (other than in relation to Executive Directors).
  • Approval of Executive Directors’ salaries and benefits
  • Political donations.
  • Prosecution, defence or settlement of major litigation (involving above £100,000 or being otherwise material to the interests of the Company).
  • Appointment of merchant bank and stockbroker.

David Jeffcoat
13/3/06

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