Corporate Governance

The Combined Code

The ordinary shares of the Company were admitted to the Official List and to the London Stock Exchange to be traded on its main market for listed securities, on 17 May 2005. The Company is committed to practising good corporate governance of its affairs as part of its management of relationships with its shareholders and other stakeholders.

Compliance statement

The directors are committed to ensuring that the Company will work towards compliance with the provisions set out in Section 1 of the Combined Code.

The Company has been in compliance with the Code provisions set out in Section 1 of the Combined Code on corporate governance, except for the following:

• A.2.1. – division of roles – Upon the resignation of Anthony Hill on 23 February 2006, the Chairman, Kevin Loosemore assumed the roles of both non-executive Chairman and interim Chief Executive Officer until a replacement Chief Executive Officer was recruited. Following the appointment of Stephen Kelly as Chief Executive Officer on 1 May 2006, Kevin Loosemore reverted back to the role solely of non-executive Chairman on 21 May 2006, after a handover period.

• A.3.2. – board of directors – The Combined Code requires that at least half the board, excluding the Chairman, should comprise non-executive directors determined by the board to be independent. With two non-executive directors not regarded as independent, the Company was not able to comply with this rule during the year ended 30 April 2007. With the appointment of Paul Pester on 27 June 2007, the Company is closer to compliance.

• B.2.1. – remuneration committee – The Company is aware that the Chairman is not regarded as independent for the purposes of the Combined Code. The Code states that the remuneration committee must comprise at least three independent non-executive directors. With the appointment of Tom Skelton and Paul Pester as independent non-executive directors, it is planned that Kevin Loosemore will hand over the chairmanship of the committee before the end of the year and be in compliance.

• C.3.1. – audit committee – Similarly, the audit committee should comprise at least three independent non-executive directors. As the Chairman was not regarded as independent throughout the year this requirement was not met. With Paul Pester's appointment as a non-executive director and appointment to the audit committee, Kevin Loosemore resigned from the audit committee and the Company is now in compliance.

The principles set out in the Combined Code cover four areas: the board, directors' remuneration, accountability and audit and shareholder relations. With the exception of directors' remuneration (which is dealt with separately in the remuneration report on pages 26 to 31 of the Annual Report 2007) the following section sets out how the board has applied these principles.

Corporate Governance Report 2007 (PDF)