Renumeration Report (page 3)

The following information has been audited.



Directors’ emoluments and compensation

Michael Harper, who became Chairman on 1 November 2004, when Alison Carnwath stepped down, is paid a fee at the rate of £85,000 per annum. On 1 July 2004, the fee payable to the other non-executive directors was increased from £25,000 per annum to £27,500 per annum. The previous increase, from £20,000 per annum to £25,000 per annum, was on 1 April 2002. The next fee review for non-executive directors will be as at June 2006. The chairmen of the Remuneration Committee and of the Audit Committee, Will Wyatt and Nigel Moore respectively, each receive an additional fee for their services as chairmen of those Committees. Will Wyatt receives an additional £2,500 per annum and Nigel Moore receives £5,000 per annum. No additional fee is currently paid to the Senior Independent Director. The non-executive directors do not receive any other benefits from the Company.

Gareth Rhys Williams, Chief Executive, currently receives an annual salary of £300,000, increased from £285,000 with effect from 1 January 2006. Mr Rhys Williams is a member of the Vitec Group Pension Scheme, Executive section, and contributes 9% of his salary on the amount of the pensions earnings cap. The accrual rate is one fortieth of the pensions earnings cap for each year of pensionable service. In accordance with his service contract, the Company makes contributions of 24% of his annual salary in excess of the pensions earnings cap to his funded unapproved retirement benefits scheme. In addition, a guaranteed pension-related bonus of 16% of his annual salary in excess of the pensions earnings cap is paid to him. This arrangement is being reviewed in the light of the new pension provisions coming into force on 6 April 2006.

Gareth Rhys Williams is eligible for a performance-related bonus, based on Company performance and, if or when determined by the Remuneration Committee, individual performance, of up to 100% of base salary each year. In respect of 2005, his bonus was calculated upon the Group’s financial performance and the achievement of personal objectives. Mr Rhys Williams was paid a bonus of £158,496 in respect of 2005 and of £120,510 for 2004.

Alastair Hewgill, Finance Director, currently receives an annual salary of £200,000, increased from £190,000 with effect from 1 January 2006. Mr Hewgill is a member of the Vitec Group Pension Scheme, Executive section, and until April 2005 contributed 9% of his pensionable salary. That pension scheme is a defined benefit scheme, the accrual rate of which is one fortieth of his pensionable salary for each year of pensionable service. During the year, Mr Hewgill’s pension arrangements were reviewed by the Remuneration Committee, taking advice from Watson Wyatt in respect of comparable pension arrangements for finance directors of companies of similar size and international spread. Mr Hewgill’s pension arrangements were revised and backdated to 6 April 2005. Under the new arrangements he continues to contribute to the Vitec Group Pension Scheme, Executive section, but at 9% of the pensions earnings cap to match the accrual rate of one fortieth of the pensions earnings cap for each year of pensionable service. From 6 April 2005, Mr Hewgill was paid 25% of the difference between the amount of his base salary and the pensions earnings cap. Mr Hewgill is eligible for a performance-related bonus, based on Company performance and, if or when determined by the Remuneration Committee, individual performance, of up to 100% of base salary each year.

Mr Hewgill was paid a bonus of £108,039 in respect of 2005 and £81,000 for his 2004 bonus.

During the year the highest paid director was Gareth Rhys Williams who received £494,846 (2004: £435,648).

Details of the directors’ emoluments and compensation for 2005 with comparatives for 2004, are set out in the table below:

Salaries and
fees		 Benefits1 Performance
related annual
bonus		 Pension2
related
remuneration		 Total
Director’s name 2005
£		 2004
£		 2005
£		 2004
£		 2005
£		 2004
£		 2005
£		 2004
£		 2005
£		 2004
£
Chairman                    
Michael Harper 85,000 25,644 - - - - - - 85,000 25,644
Executive Directors                    
Gareth Rhys Williams 285,000 267,800 22,496 20,685 158,496 120,510 28,854 26,653 494,846 435,648
Alastair Hewgill 190,000 180,000 12,434 11,412 108,039 81,000 15,825 - 326,298 272,412
Non-executive Directors                    
David Bell 28,542 28,750 - - - - - - 28,542 28,750
Nigel Moore 32,500 23,750 - - - - - - 32,500 23,750
John Potter 27,500 27,500 - - - - - - 27,500 27,500
Will Wyatt 29,063 28,250 - - - - - - 29,063 28,250
  677,605 581,694 34,930 32,097 266,535 201,510 44,679 26,653 1,023,749 841,954

Notes

1. The principal benefits are a company car, fuel, medical insurance and life assurance. In respect of Gareth Rhys Williams only, a cash payment of £16,053 in lieu of a company car and a contribution of £400 per month to a permanent health arrangement are included in the figures shown for 2005 benefits.

2. Gareth Rhys Williams receives a pension-related bonus calculated at 16% of his annual salary in excess of the pensions earnings cap.

Directors’ share options Date of
grant		 At 1
January
2005
(shares)		 Options
exercised
or lapsed
during
year
(shares)		 Options
granted
during
year
(shares)		 At 31
December
2005
(shares)		 Exercise
price
(pence)		 Market
price at
exercise
date
(pence)		 Date from
which
exercisable		 Expiry date
Gareth Rhys Williams                  
Executive share options                  
1996 Unapproved Sep 2002 142,857 - - 142,857 350 - Sep 2005 Sep 2012
2002 Unapproved Jun 2005 - - 95,000 95,000 300 - Jun 2008 Jun 2015
SAYE options Nov 2002 2,451 - - 2,451 268 - Jan 2008 Jun 2008
  May 2003 4,266 - - 4,266 231 - Jul 2008 Dec 2008
Alastair Hewgill                  
Executive share options                  
2002 Unapproved Jun 2005 - - 63,333 63,333 300 - Jun 2008 Jun 2015
SAYE options May 2003 7,110 - - 7,110 231 - Jul 2008 Dec 2008
    156,684 158,333 315,017        

Notes

1. In November 2001, a share price related cash bonus scheme was adopted under which an award equivalent to an option over 142,857 shares, representing 0.3% (2004: 0.3%) of the called up share capital of the Company, at a price of £3.50 per share, was made to Gareth Rhys Williams. This was replaced on 19 September 2002 by an equivalent option over 142,857 shares at the same exercise price of £3.50 per share under the Rules of the (1996) Unapproved Executive Share Option Scheme, the scheme used as the comparable for the cash bonus scheme. The total number of shares comprising the award were purchased in the market in September 2002. These shares are being held in trust by Mourant & Co Trustees Limited. Under the transitional arrangement, the cash bonus scheme ran in tandem with the share option and to the extent that the cash bonus was not triggered by Mr Rhys Williams prior to the first occasion upon which he became entitled to exercise the share option granted on 19 September 2002, the cash bonus scheme would lapse and would be replaced by the share option. The cash bonus was not triggered and therefore the share option granted on 19 September 2002 has now replaced the share price related cash bonus award.

2. Non-executive directors are not eligible to participate in the Company’s share option or share incentive schemes and consequently they do not hold any share options or other share incentives.

3. The total gain on the exercise of options by the directors during 2005 was nil (2004: Nil) as no options were exercised.

4. The share price at the end of the year and the highest and lowest prices during the year are shown on the Shareholder Information and Financial Calendar.

Directors’ long term incentives

Awards under the Long Term Incentive Plan Date of
award		 Market price
of a share
at the date
of award
(pence)		 Awards at
1 January
2005
(shares)		 Awards
exercised
or lapsed
during
the year
(shares)		 Awards
made
during
the year
(shares)		 At
31 December
2005
(shares)
Gareth Rhys Williams Mar 2002 442.5 28,248 - - 28,248
  Mar 2003 257.5 50,485 - - 50,485
  Mar 2004 357.5 - - 37,455 37,455
  Jun 2005 300.0 - - 95,000 95,000
             
Alastair Hewgill Sep 2002 342.5 21,898 - - 21,898
  Mar 2003 257.5 30,097 - - 30,097
  Mar 2004 357.5 - - 25,175 25,175
  Jun 2005 300.0 - - 63,333 63,333
  193,358 50,146 158,333 301,545
Awards under the Deferred Bonus Plan Date of
award		 Market price
of a share
at the date
of award
(pence)		 Awards at
1 January
2005
(shares)		 Awards
exercised
or lapsed
during
the year
(shares)		 Awards
made
during
the year
(shares)		 At
31 December
2005
(shares)
Gareth Rhys Williams Jun 2003 345 7,705 - - 7,705
Basic
  Jun 2003 345 13,755 - - 13,755
Matching
Jun 2005 336 - - 10,497 10,497
Basic
  Jun 2005 336 - - 17,886 17,886
Matching
             
Alastair Hewgill Jun 2003 345 1,651 - - 1,651
Basic
  Jun 2003 345 2,947 - - 2,947
Matching
Jun 2005 336 - - 7,056 7,056
Basic
  Jun 2005 336 - - 12,022 12,022
Matching
  26,058 - 47,461 73,519

Pensions related remuneration

  Gareth Rhys Williams Alastair Hewgill
Accrued pension at 31 December
2005 (£)
 10,780 11,953
2004 (£) 7,863 8,783
Increase in accrued pension (in excess of price inflation) during
2005 (£)
 2,673 2,898
2004 (£) 2,563 3,412
Member contributions towards pension
2005 (£)
 9,423 10,953
2004 (£) 7,088 12,163
Transfer value of the increase in accrued pension net of member contributions
2005 (£)
 14,690 29,124
2004 (£) 13,655 28,508
Transfer value of accrued pension at 31 December
2005 (£)
 90,904 153,681
2004 (£) 61,248 102,215
Increase in transfer value over year to 31 December net of member contributions
2005 (£)
 20,053 40,513

Beyond the earnings cap, the cost of pensions comprised defined contribution payments to a funded unapproved retirement benefit scheme (FURBS) in respect of Gareth Rhys Williams of £43,272 (2004: £39,972).

Approved by the Board of Directors on 6 March 2006 and signed on its behalf by:

Roland Peate

Secretary

Information correct at 02/05/2006