FINANCE AND TREASURY COMMITTEE TERMS OF REFERENCE

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1 1. Purpose FINANCE AND TREASURY COMMITTEE TERMS OF REFERENCE 1.1 The purpose of the Finance and Treasury Committee ( the Committee ) is to exercise delegated authority in relation to certain finance and treasury activities as further set out below from Peabody Trust ("Peabody") and the boards of relevant entities in Peabody's group which have approved these Terms of Reference (each, including Peabody, a "Peabody Group Member" and together Peabody Group ). 1.2 Notwithstanding anything in the subsequent paragraphs of these terms of reference, any matter that could reasonably be considered as a matter that should be approved by the board of the relevant group entity (whether on recommendation of the Finance and Treasury Committee or not) should be reserved as a matter to be approved by the board of the relevant group entity and should not be approved by the Committee. 2. Duties 2.1 In this paragraph 2, any interest rate hedging transaction including, without limitation any rate cap transaction or swap transaction or other hedging or derivative transaction which may be permitted by each relevant Peabody Group Member's constitution shall together be referred to as "treasury management arrangements". 2.2 The Committee shall provide additional scrutiny and support to the boards of each Peabody Group Member (in each case, respectively, a Board ) concerning Peabody Group's treasury management policy (the Treasury Management Policy ) and Peabody Group's treasury strategy (which shall describe proposals for the Peabody Group's treasury structure, funding strategy and hedging and investment strategy in the relevant financial year) (the Treasury Strategy ). 2.3 The Committee shall consider: i) the draft annual Treasury Management Policy (and any proposals for revision of the Treasury Management Policy during each financial year as required) and shall recommend the Treasury Management Policy (and any revision, as appropriate) to each relevant Board for approval. The Treasury Management Policy will include the policies and objectives of the Peabody Group's treasury management activities and the suitable treasury management practices setting out the manner in which Peabody Group and/or each relevant organisation in the Peabody Group will seek to achieve these policies and objectives, and prescribing how the Peabody Group as a whole and/or each Peabody Group Member (as appropriate) will manage and control those activities; ii) the draft annual Treasury Strategy (and any proposals for revision of the 1

2 Treasury Strategy during each financial year as required) and shall recommend the Treasury Strategy (and any revision, as appropriate) to each relevant Board for approval. The Treasury Strategy will include proposals for how the Peabody Group sources external funding, services such funding and its distribution within the Peabody Group. The Treasury Strategy will also include proposals in relation to any treasury management arrangements for the Peabody Group; iii) iv) the draft annual Budget for the Group and shall recommend the Budget to each relevant Board for approval; the monitoring of expenditure against Budget forecasts and capital investment against business plans, and shall report significant variances to the Peabody Board; v) the financial performance, viability and stability of the Group, as determined through regular monitoring by the Committee of: a) The Group s credit rating with Moody s or any other relevant agency; b) The compliance by each of the borrowing entities in the Group with respective bank covenants and c) The compliance by the Group with the HCA s governance and financial viability ratings in accordance with the Group s risk appetite. vi) vii) viii) ix) the annual 30 Year Financial Plan for the Group and shall recommend the Plan to the Peabody Board; how the Group ensures financial strength and viability and reviews stress testing and scenario planning; annually, the budget limit set for the disposals of properties that can be authorised by the Executive Committee on behalf of the subsidiaries; the efficiency of the Group, including effective procurement and value for money; and x) group structure and tax planning arrangements. 2.4 The Committee shall operate at all times in accordance with the approved Treasury Management Policy and Treasury Strategy. 2.5 The Committee shall have delegated authority in its absolute discretion to exercise all the powers of the relevant Peabody Group Member in relation to treasury matters. These include but are not limited to powers to: i) approve the annual Treasury Report on the Peabody Group's treasury activities for the financial year, prior to its submission to each relevant Board for noting; ii) in accordance with the overarching objective set out in paragraph 2.3(vi) above, assess the viability and the terms for the raising of finance by each 2

3 relevant Peabody Group Member (including in respect of any treasury management arrangements) and recommend any such terms or financing arrangements to the relevant Board; iii) iv) consider and take any steps appropriate and necessary to meet the funding requirements of the Peabody Group including without limitation: the appointment of lawyers, financial advisors and any other relevant professionals including any fee arrangements; approve the issuance of any public rating and the appointment of arrangers and/or bookrunners in respect of any financing; and the creation of any funding vehicle. enter into (and terminate, as appropriate) any treasury management arrangements, including the power to renegotiate for the cancellation or re-structure of callable options where deemed economically viable and desirable and to enter into any associated documentation, provided the entry into or termination of any such treasury management arrangement is deemed appropriate and economically viable by the Treasury Committee; v) agree to any amendment or variation of any financing arrangements which any Peabody Group Member has in place; vi) vii) viii) ix) enter into security trust arrangements on behalf of any relevant Peabody Group Member under which any security or collateral for borrowings or treasury management arrangements may be held on trust for any lender or other finance provider; enter into any type of document to create security of any nature or enter into any collateral arrangements, whether relating to borrowings or treasury management arrangements or for any other reason whatsoever; invest the funds of the relevant Peabody Group Member; borrow money or issue bonds, notes loan stock or any other type of debt instrument, subject to Peabody Trust Rules F12 to F14; x) approve the terms of any of the above including without limitation any interest rates and interest bases in relation to any funding or borrowings subject to Peabody Trust Rules F12 to F14; and xi) approve the Group s bankers and the opening or closing of a bank account for dealing with the Group s funds. The exercise of any of the powers described in this paragraph 2.5 must be consistent with the approved Treasury Strategy and Treasury Management Policy. 2.6 In relation to any of the delegated authorities described in this paragraph 2, the Committee shall have the power to: i) approve any documentation which the Committee considers appropriate; 3

4 ii) authorise a signatory or signatories to sign such documentation on behalf of the relevant Peabody Group Member whether under hand or as a deed; iii) authorise the affixation of any seal of the relevant Peabody Group Member and any attestation by a signatory or signatories of such seal in relation to such documentation; iv) authorise any person or persons to do any act, matter, or thing which the Committee considers appropriate in relation to its powers under these terms of reference; and v) approve the sub-delegation of any of its powers. 3. Constitution 3.1 Membership the Committee will comprise up to five members, of whom at least two shall be Board Members. Membership of the Committee shall be determined by the Board and members shall be appointed and removed by the Board in accordance with rules D25 and D27, and subject to rule D7, of the Peabody Trust Rules. The Executive Director, Finance will normally attend meetings. The Committee is authorised to request the attendance of any employee at a meeting of the Committee as and when required. 3.2 Quorum - the quorum necessary for the transaction of business will be two members of the Committee one of whom must be a Board Member. 3.3 Chair the Chair shall be appointed by the Board and must be a Board Member. In the absence of the Chair, the remaining members present shall elect another member present to chair the meeting. 3.4 Secretary - the Group Secretary or a nominee appointed by the Group Secretary will act as Secretary to the Committee and will ensure that the Committee receives information and papers in a timely manner to enable full and proper consideration to be given to issues. 3.5 Meetings meetings of the Committee shall be held as necessary to fulfil its duties, or as required by the Board, but will normally be held at least three times a year. At least two days' notice of meetings shall be given, save that, where the Committee members in their absolute discretion consider that a meeting is required on shorter notice, the Committee shall meet on such shorter notice as members agree. Meetings may be held by telephone, video-conference or via any other facility whereby members can hear and comment on the proceedings. 3.6 Voting - decisions of the Committee shall be made by majority decision with each committee member having one vote. In the event of an equality of votes, the Chair shall have a casting vote. 3.7 Urgent approvals outside of the meeting cycle - a resolution agreed by by at least three quarters of the members shall be as valid and effective as if it had been passed at a properly called and constituted meeting of the Committee. 3.8 Advice and Support where required, and subject to any policy approved by the Board, the Committee is authorised to obtain, at Peabody s expense, external 4

5 legal or other professional advice on any matter within its terms of reference. The Lead Officer shall be the Executive Director, Finance. The Committee shall have access to sufficient resources in order to carry out its duties and be provided with appropriate and timely training, both in the form of an induction programme for new members and on an ongoing basis for all members. 3.9 Reporting - all acts, material decisions and proceedings of the Committee shall be reported to the next scheduled Board meeting and the minutes of the meetings of the Committee shall be available to all Group Board Members. The Committee shall immediately bring to the attention of the Board and subsidiary boards (as necessary) any serious concerns that arise Review the Committee shall arrange for the review of its own performance annually, including constitution and terms of reference to ensure it is operating at maximum effectiveness, and recommend any changes it considers necessary to the Board for approval. Approved by the Board: 25 May