Continued

Performance evaluation of the Board, its Committees and individual directors
The Board intends to conduct a rigorous evaluation of its own performance and that of its Committees and its individual directors on an annual basis. The process will be initiated in 2004.

The process which will be used to undertake such evaluation will initially include assistance from an external specialist who will carry out in-depth discussions with each director to assess their contribution to the Company, including the level of expertise and skills which each individual is bringing to the Board. A Board capability and skills mix analysis will then be produced to review the available skills with likely challenges the Company may face. A performance criteria will then be established and a performance framework created against which directors will be reviewed and developed if necessary. The performance of the Board and its members will then be evaluated against the targets for improvement and development which are set. A similar procedure will also be applied to evaluate the performance of the Committees.

Re-election of directors
The Articles of the Company require the directors to retire from office and submit themselves for re-election on a date which is no more than three years from the date of their appointment or last re-appointment. The directors retiring at the next Annual General Meeting and submitting themselves for re-election are Michael Hartnall, who has been a director of the Company or a related Company for more than eleven years, and Edward Wilson. Biographical details and reasons why the Board is proposing the re-elections will be included in the Notice convening the AGM to enable shareholders to make an informed decision.

The level and make-up of directors' remuneration
The level and make-up of remuneration is set out in the Directors' remuneration report. As that report shows, a proportion of executive directors' remuneration is linked to corporate performance through the Performance Share Plan, the Executive Share Option Scheme and the annual bonus scheme.

Procedure on Board remuneration
The remuneration of the executive directors is the responsibility of the Remuneration Committee which is more fully described in the Directors' remuneration report. The responsibilities of the Committee include the determination of (i) the Company's policy on remuneration of executive directors and (ii) the specific remuneration in all its forms and all other terms of service of executive directors. The Remuneration Committee comprises all the non-executive directors and is chaired by the Chairman of the Company. None of the executive directors are members of the Remuneration Committee and no director is involved in deciding his own remuneration.

The remuneration of the non-executive directors is the responsibility of the Board as a whole but no director may vote on his own remuneration.

Financial reporting
The directors have acknowledged, in the Director's responsibilities statement, their responsibility for preparing the financial statements of the Company and the Group. The auditors have included, in the independent auditors' report, a statement about their reporting responsibilities.

The directors are also responsible for the publication of an un-audited interim report of the Group which provides balanced and understandable assessments of the Group's financial position for the first six months of each account period. The same standards are applied to other price sensitive public reports and reports to regulators, as well as to information provided to satisfy statutory requirements.

After making appropriate enquiries, the directors have a reasonable expectation that the Company and Group have adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements.

Board report on corporate governance continues on the next page >
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