Reserves Policy

Company policy is to maintain a reserve to the value of at least six months’ core costs. This will be calculated as follows:

1. Taking the higher of the following two values:
   1. Half the total of last years’ core expenses, after deduction of any non-recurring items.
   2. The starting balance required for a six-month core expenses forecast to end without a deficit.
2. Adjust this amount for grant income allocated by the grantor to company core costs, provided there is a firm commitment for the grant to be paid to the Company within six months.
3. Add a contingency of 10%.