For the year ended 31 December 2009

Combined code

The London Stock Exchange first issued the Combined Code on Corporate Governance ("the Code") in 1998 and it was revised most recently in June 2008. Section 1 of the Code is applicable to companies. A statement explaining how the Company has applied the principles and the extent to which it has complied with the provisions of the Code appears below. The Code contains fourteen main principles of governance, which are divided into the following four areas:

1. Directors

   The Company is controlled through a board of directors, which presently comprises the Chairman, three executive and five non-executive directors. Tim Stevenson is Chairman and Geoff Cooper is Chief Executive. Chris Bunker is the Senior Independent Director. John Coleman, Philip Jansen (who was appointed on 9 April 2009), Andrew Simon and Robert Walker (who was appointed on 30 September 2009) are also independent non-executive directors. It is intended that Tim Stevenson will retire from the board after the AGM on 17 May, and that Robert Walker will succeed him as Chairman. Appointments of new directors are made by the Board on the recommendation of the Nominations Committee. All directors will submit themselves for re-election at least every three years.

   The Board has a formal schedule of matters reserved to it and meets at least ten times a year. It is responsible for overall group strategy, policy on corporate governance matters, acquisition policy, approval of major capital expenditure and consideration of significant financial and operational matters. It monitors the exposure to key business risks and reviews the strategy of the trading subsidiaries, their annual budgets and progress towards the achievement of those budgets and their capital expenditure programmes. It also considers legislative, environmental, health and safety and employment issues. The Board has approved a written statement of the division of key responsibilities between the Chairman and the Chief Executive.

   The Chairman leads the Board, ensuring that each director is able to make an effective contribution. He also monitors the information provided to the Board to ensure it is sufficient, timely and clear, and from time to time, the Board reviews the adequacy of this information.

   The Board held eleven meetings during 2009, one of which was by conference telephone call. One meeting dealt with consideration of the Company's long-term strategy and 5 meetings either included visits to parts of the Company's operations or included presentations by senior executives on their areas of responsibility. Individual visits to operational sites by non-executive directors also occurred. In addition to the regular board meetings, key financial information is circulated to directors outside of meetings. The Chairman has regular direct contact with the executive directors and keeps the non-executive directors informed of material developments between board meetings. The Chairman held two meetings during the year with all the non-executive directors, without the executive directors being present.

   All directors have direct access to the Company Secretary and may take independent professional advice in the furtherance of their duties if necessary. The Company maintains directors & officers' insurance in respect of the risk of claims against directors.

   The Board has an induction process for new directors, which is facilitated by the Company Secretary. The Chairman ensures that all directors receive appropriate training on appointment and then subsequently as required, taking into account the need to update their skills and their knowledge of the Company's business. They are also regularly provided with information on forthcoming legal and regulatory changes and corporate governance developments, and briefings on the key risks facing the Company, including those identified in the Corporate Responsibility statement on page 46.

   The Board has established five committees: the Audit Committee, the Remuneration Committee, the Nominations Committee, the Health and Safety Committee and the Executive Committee, which operate within defined terms of reference, which are available on the Company's website or may be obtained from the Company Secretary. The minutes of committee meetings are available to all the directors. The reports of the Audit Committee, Health & Safety Committee, Remuneration Committee and Nominations Committee are on pages 49 and 50, 51 and 52, 53 to 63 and 64 respectively.

   The Executive Committee members are listed on page 44. Other executives are invited to attend from time to time in relation to specific matters. The principal purpose of the Committee is to assist the executive directors in the performance of their duties in relation in particular to:

   • Strategy, operational plans, policies, procedures and budgets;
   • The monitoring of operational and financial performance;
   • The assessment and control of risk;
   • The prioritisation and allocation of resources.

   The number of board and committee meetings attended by each director (in whole or in part) during the year was as follows:

   	PLC Board No.	Audit No.	Remuneration No.	Nomination No.	Health & Safety No.	Executive No.
   Number of meetings	11	5	9	-	2	11
   Attendances:
   C. J. Bunker	10	5	8	-	-	-
   J. P. Carter	10	2	-	-	2	11
   J. Coleman	11	5	9	-	-	-
   G. I. Cooper	11	-	6	-	-	11
   P. N. Hampden Smith	11	4	1	-	-	11
   P. Jansen¹	6	1	-	-	-	-
   A. H. Simon²	11	-	8	-	2	-
   T. E. P. Stevenson	11	5	9	-	2	-
   R. Walker³	2	-	2	-	-	-

   1 Appointed to the Board April 2009 and to the Audit Committee June 2009.
   2 Stood down from Audit Committee in June 2009. 3 Appointed to the Board September 2009.

   If a director was unable to attend a meeting of the Board or a committee of which he is a member, the Chairman discussed the meeting papers with him to obtain his views prior to the meeting.

   During the year, the Board undertook an evaluation of its performance and the performance of its committees and the individual directors. This consisted of interviews by the Chairman with each other director and the Company Secretary separately, focussing on the operation of the Board and, its committees and in particular on those matters identified in 2008 where measures were taken to enhance performance. These interviews formed the basis of a report by the Chairman that was the subject of a discussion by the Board, which was satisfied that the process showed that the Board and its committees worked effectively. However, it agreed a number of measures, in particular relating to the presentation of board business, the format of its meetings, and the process for its consideration of risks faced by the Group, aimed at further enhancing its performance. A board evaluation process will be carried out in 2010.

2. Directors' remuneration

   The Remuneration Committee consists of the Chairman and three independent non-executive directors, and meets at least four times a year. Its responsibilities include remuneration policy, a review of the performance of executive directors prior to determining their remuneration and the approval of incentive arrangements, including performance criteria. The remuneration of the non-executive directors is determined by the Board as a whole, except that the Remuneration Committee makes a recommendation in respect of the Chairman's salary. No director plays a part in the discussion about his own remuneration.

   The Remuneration Report is set out on pages 53 to 63.

3. Accountability and audit

   A review of the performance of the Group's trading subsidiaries and the financial position of the Group is included in the Chief Executive's review of the year, in the Chief Operating Officer's review of the year and in the Finance Director's review of the year set out on pages 10 to 43. The Board uses them, together with the Chairman's statement on pages 8 and 9 to present a full assessment of the Company's position and prospects. The Directors' responsibilities for the financial statements are described on page 70.

   Internal control

   The Board is responsible for the Group's system of internal control and for reviewing its effectiveness. In designing the system of internal control, consideration is given to the significant risks to the business, the probability of these risks manifesting themselves and the most cost effective means of controlling them. The system is designed to manage rather than eliminate risk and therefore can only provide reasonable, and not absolute, assurance against material misstatement or loss.

   The day-to-day operation of the system of internal control has been delegated to executive directors and senior management, but the effectiveness of the system is regularly reviewed by the Board in a process that accords with the Turnbull Guidance. The Board and the Executive Committee receive regular reports on specific areas of risk. If appropriate, these reports include recommendations for improvement in controls or for the management of those risks. Measures to integrate risk management processes into the Group's operations, to extend awareness of the importance of risk management and to ensure that recommended improvements are implemented, are regularly reviewed and refreshed. Senior executives are asked, twice a year, to confirm the adequacy of internal controls in their areas of responsibility, identify any control weaknesses, and to confirm the accuracy and completeness of information given to the directors and to the external auditors.

   In conjunction with the Audit Committee, the Board has carried out an annual review of the overall effectiveness of the system of internal control and risk management procedures, during the year and up until the date of approval of this annual report.

   Audit committee and auditors

   The report of the Audit Committee is set out on pages 49 and 50.

4. Relations with shareholders

   The Company encourages two-way communication with both its institutional and private investors and responds promptly to all enquiries received. During the year the Chairman, the Senior Independent Director and the executive directors, either separately or together, attended a number of meetings with analysts, and with shareholders representing circa 60% of the issued share capital. The Chairman and executive directors report to the Board on any meetings with shareholders or analysts. In addition, written reports about the Company by analysts or brokers are circulated to all directors.

   As well as sending the annual report to shareholders, during the year, the Company published its interim results on its website, issued two interim management statements and sent a circular to shareholders in May 2009 concerning its rights issue. All shareholders receive at least twenty working days notice of the Annual General Meeting at which all directors are available for questions and a short business presentation takes place. Each substantive issue is the subject of a separate resolution. The numbers of proxy votes for and against each resolution are announced at the meeting, after the voting has taken place, and are subsequently published on the Company's website.

Going concern

This matter is dealt with on page 38 of the Finance Director's review of the year.

Corporate governance compliance statement

The Company is pleased to report that it has complied throughout the year ended 31 December 2009 with the provisions set out in Section 1 of the Code.