easyGroup Business Rules

27th April 2004

General Rules

Rule Comments/ Examples1 New ventures only to start in the UK (US is the only

exception). No staff to be employed anywhere else (except for 2 employees in Athens).

2 Only contract under UK law, except in the US.

3 Borrow modestly against hard assets with resale value in capital intensive industries

4 Use franchising for international expansion in labour intensive industries. Learn and in-source the skills of a franchisor

5 Challenge expected competitive advantages. Don’t believe our own BS!

6 Vendor finance to be used with care

7 Protect the brand within the operating budgets of a company (normally a percent of turnover)

8 Litigate on anti-competitive issues in a low cost way - an easy brand value!

Rule Comments/ Examples9 Identify contingent liabilities and insure

against them

10 Outsource industry standard ops at first (reduce execution risk)

e.g. easyBus operations outsourced to MK Metro

11 Adhere to business ethics. Zero tolerance of accepting gifts from suppliers (at most a meal)

e.g. NO overnight or overseas trips (weekday or weekend) at suppliers expense

12 Analyse best of class operators in each industry - find out how they make money

13 Do not buy anything without 3 bids (threshold is 1,000 gbp)

All bids to be scrutinised by Head of Procurement (Jamie McLeod) to ensure compliance

14 Do not sign contracts that restrict choice of suppliers later

Ensure contracts allow the customers, look & feel of web site etc to be transferred without additional payment

General Rules (cont)

General Rules

Rule Comments/ Examples15 Expenses for Travel etc • Line manager must authorise all expenses (no

self authorisation)• Trips must NOT be extended to enable weekend

stays away, even at personal expense• No claiming for spouses/partners• Travel by most economical method

– Economy class travel only (air & rail)

• Modest hotels and meals only• Personal expenditure (calls etc) etc will not be

paid• No loyalty rewards to be collected on company

business trips (e.g. Airmiles)

Checks and Balances

Rule Comments/ Examples1 Segregation of duties. Means strong procurement

and CFO, independent of the CEO

2 Internal auditor to be appointed at an early stage Ensure visible compliance with Processes, procedures and business rules

3 Maintain good asset tracking systems with accountability (no generic log ins).

4 Good management information vital

Matters reserved for the board and signed by the chairman

Rule Comments/ Examples1 Incurring Debt (threshold 5,000gbp per item).

2 Employee remuneration

3 Employee headcount (firing and hiring).

4 Contracts over 1 year.

5 Contracts of value more than 5% of revenue

6 Incorporation and dissolution of companies

7 Annual report and accounts.

8 Appointment of auditors.

Inter-company Recharges for easyGroup companies

Rule Comments/ Examples

1 The objective is obtain visibility of the true overhead cost of the easyGroup incubator business in London and NYC which will be re-charged to the parent company easyGroup Ltd of Jersey

2 Companies with minority shareholders of less than 10% will not be re-charged any of the expenses of the incubator. For the avoidance of any doubt such companies will be expected to pay for true third party costs incurred on their behalf.

3 Companies with minority shareholders of more than 10% will be recharged a fixed annual fee as a lump sum negotiated between easyGroup and the outside shareholders for residing in the Rotunda

4 easyGroup employees seconded to another company, provided they spend 100% of their time with that company for an expected period of at least 6 months, will be paid out of the payroll of such company (however their contracts will remain with easyGroup). For the avoidance of any doubt all other easyGroup employees doing part time work for other companies will either be covered by the fixed annual lump sum, or they are in essence an expense of the shareholder to safeguard the investment in that company