Corporate Governance

The Board is the principal decision making forum for the Group providing leadership either directly or through its committees of directors and delegated authority. It is responsible to shareholders for setting and achieving its strategic objectives and for its financial and operational performance. The Board has adopted a formal schedule of matters specifically reserved to it including corporate strategy, approval of budgets and financial results, policies in relation to risk management, health and safety and environmental matters, new Board appointments, proposals for dividend payments and the approval of major transactions. This schedule is reviewed on an annual basis and was last reviewed on 30 January 2008.

The Board met on eight occasions in 2007. In addition the Board held a strategy day and visited its operations in Germany. Agendas and papers are circulated to the Board in a timely manner in preparation for Board and Committee meetings. These papers are supplemented by information specifically requested by the directors from time to time. All directors are, therefore, able to bring independent judgement to bear on issues such as strategy, performance, and resources. Additional meetings are called when required and there is frequent contact between meetings, where necessary, to progress the Company's business.

The Board currently comprises ten directors, the Chairman (who was independent on appointment), three executive directors, five independent non-executive directors and one non-executive director who is employed by a significant shareholder and is not, therefore, considered independent. The Board has accepted the Nomination Committee’s assessment of the independence of the five non-executive directors and is not aware of any relationships or circumstances which are likely to affect, or could appear to affect, the judgement of any of them.

Independent non-executive directors are currently appointed for fixed periods of three years, subject to election by shareholders. The initial three-year period may be extended for one further three-year period and the Board may invite the non-executive director to serve for a further three-year period, subject to re-election by shareholders. Their letters of appointment may be inspected at the Company's registered office or can be obtained on request from the Company Secretary.

The Board has approved a statement of the division of responsibilities between the Chairman and the Chief Executive. The Chairman is primarily responsible for the workings of the Board and is not involved in the day-to-day aspects of the business. Save for matters reserved for decision by the Board, the Chief Executive, with the support of the other executive directors, is responsible for the running of the business, carrying out the agreed strategy adopted by the Board and implementing specific Board decisions relating to the operation of the Group. The statement of division of responsibilities and matters reserved for decision by the Board were reviewed in January 2008.

Relations with shareholders

The Investor Relations team has day-to-day primary responsibility for managing communications with institutional shareholders through a combination of briefings to analysts and institutional shareholders, both at the half-year and full year results. Site visits and individual discussions with the executive directors are also arranged throughout the year with individual shareholders. Regular dialogue with shareholders helps to ensure that the Company's strategy is understood and that any issues are addressed in a constructive way.

In fulfilment of the Chairman's obligations under the new Combined Code, the Chairman would give feedback to the Board on issues raised with him by major shareholders, although to date there have been no such issues. This is supplemented by monthly feedback to the Board on meetings between management and investors. External analyst reports are circulated to all the directors.

The Chairmen of the Audit, Remuneration and Nomination Committees attend the Company's Annual General Meeting along with other directors, and are available to answer shareholders' questions on the activities of the committees they chair.

Board Committees

The principal committees of the Board - Audit, Remuneration and Nomination - all comply fully with the requirements of the Combined Code. They are all chaired by an independent director and exclusively comprise, or, in the case of the Nomination Committee (where the Chairman of the Board is a member), have a majority of, independent directors. The committees are constituted with appropriate written terms of reference that are reviewed annually and minutes of the committee meetings are circulated to the Board.

Audit Committee

The Audit Committee is chaired by Martin Jackson, the other members being Keith James and Margaret Johnson. The Audit Committee formally meets at least three times a year and external auditors attend at least one meeting annually. The external auditors have unrestricted access to the Audit Committee and its Chairman. The Audit Committee considers all matters relating to financial control and reporting, internal and external audits, the scope and results of the audits, regulatory compliance and risk management. The Audit Committee also monitors the independence of the external auditors and their remuneration.

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Remuneration Committee

The Remuneration Committee is chaired by John Sussens the other members being Martin Jackson and Margaret Johnson. The Remuneration Committee will meet at least once a year and will consider all material elements of remuneration policy, the remuneration and incentivisation of executive directors and senior management and make recommendations to the Board on the framework for executive remuneration and its costs. No Director will be involved in setting his own remuneration package.

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Nomination Committee

The Nomination Committee is chaired by Keith James, its other members being Lucy Kellaway, and Alastair Lyons. The Nomination Committee will meet at least once a year but also as required and make recommendations to the Board on new appointments to the Board and top executive positions within the Group.

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National Association of Pension Funds (NAPF)

The NAPF produced guidance on corporate governance in February 2004. One of the requirements of the guidance over and above those of the Combined Code is that the corporate website should include the Company's memorandum and articles of association.

Memorandum
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Articles of Association
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