Taken from the Annual Report 2006

The Listing Rules require a company to include in its annual report and accounts a statement of how it has applied the main and supporting principles set out in the 2003 Combined Code (the 'Code'). The Listing Rules also require a company to include a statement as to whether or not it has complied throughout the accounting period with the Code provisions. A company that has not complied with the Code provisions, or complied with only some of the Code provisions or (in the case of provisions whose requirements are of a continuing nature) complied for only part of an accounting period, must specify the Code provisions with which it has not complied, and (where relevant) for what part of the period such noncompliance continued, and give reasons for such noncompliance.

Statement of compliance

The Board considers that it has complied with the Code throughout the year ended 31 December 2006. The Company regularly reviews and revises its procedures, as necessary, to take account of the requirements of the Code.

The Board

The Board met six times during the year and there is a formal schedule of matters and levels of authority which are delegated to the executive directors, all other matters and powers being reserved to the Board or to its Committees.

Throughout the year the Board comprised two executive directors and a minimum of five non-executive directors. The number of non-executive directors increased to six for a short time as a result of the appointment of Mr Beresford-Wylie on 1 March 2006 but reduced to five following the retirement of John Potter immediately after the Annual General Meeting. Gareth Rhys Williams was a director and the Chief Executive throughout the year. Alastair Hewgill was the Finance Director throughout the year. During 2006 all the directors attended all the Board meetings except for Sir David Bell and Mr Beresford-Wylie. Sir David Bell was unable to attend the August and November Board meetings due to unavoidable absences, one of which was to attend a funeral. Mr Beresford- Wylie was unable to attend the December meeting due to urgent business commitments.

Maria Richter was appointed a director on 28 February 2007. She was also appointed to the Audit Committee, Nominations Committee and Remuneration Committee.

Sir David Bell, who completes ten years as a non-executive director in March 2007, has indicated that he will stand down as a director immediately following the Annual General Meeting in May 2007.

The directors bring independent character and judgement to bear on strategic matters, the performance of the Group, the adequacy of resources and standards of conduct. The roles of the Chairman (who is non-executive) and of the Chief Executive are separate and they each have a clear written division of responsibilities approved by the Board.

Directors, having notified the Chairman, are able to take independent professional advice at the Company's expense in furtherance of their duties. All new directors are given an extensive introduction to the Group, including meeting with senior executives and visiting the Group's principal operations both in the UK and overseas. All directors have access to the advice and services of the Group Company Secretary.

Ongoing training for new directors and existing directors is available at the request of the director. Each director receives details of relevant training and development courses from both the Secretary and from external bodies such as KPMG and Watson Wyatt. The requirement for training is regularly discussed at meetings of the Board and of its Committees.

The papers supplied for consideration by the Board are provided on the basis that it gives all Board members adequate time to read and, where appropriate, ask questions prior to the meeting about the information supplied. The information includes budgets, strategy papers, reviews of the Group's financial position and operating performance and annual and interim reports and accounts. Further information is supplied from time to time as and when requested by the Board.

The Board has an Audit Committee, a Nominations Committee and a Remuneration Committee. Each Committee has formal terms of reference which may be viewed on the Company's website and are available by request from the Company Secretary. The terms of reference and the effectiveness of the Board and of each Committee are regularly reviewed and changes made where necessary. Any issues arising from the reviews of effectiveness are summarised and tabled at subsequent Board meetings at which they are discussed and action plans agreed.

Performance evaluations of each of the directors took place during the year. In the case of the executive directors this evaluation takes place by the non-executive directors regularly throughout the year against achievement of specific objectives. Evaluation of the Chairman was carried out by the Senior Independent Director. Evaluation of each of the other non-executive directors was carried out by the Chairman. Each evaluation was carried out by using written questionnaires and the results were discussed individually with each of the relevant non-executive directors. Evaluations of the effectiveness of each of the Committees was also carried out by the relevant Committee members. Issues arising from the evaluations were discussed and, where relevant, action was taken. Similar evaluations are planned to take place each year in the future.