Report on Corporate

Governance

The directors recognise the value of, and are committed to, high standards of

Corporate Governance.

In June 1998 the Combined Code was issued by the UK Listing Authority.

This Code is based on the report of the Hampel Committee and sets out

Principles of Good Corporate Governance and Code provisions which

consolidate the earlier Cadbury and Greenbury Committees.  Section One of

the Code is applicable to listed companies.  A narrative statement on how the

Company has applied the principles and a statement explaining the extent to

which the provisions of the Code have been complied with appear below.

Narrative statement

Section One of the Combined Code establishes fourteen Principles of Good

Governance which the directors have sought to apply in the following

manner:

Board of Directors

The Board, currently comprises the non executive chairman, the chief

executive, two other executive directors and three non executive directors.

The directors' biographies set out on page 8 demonstrate the broad range of

experience and knowledge they bring to the Company enabling them to offer

sound judgement on the proper management of the Group.  

The Board meets monthly and has a schedule of matters specifically reserved

to it for decision.  It is responsible for approving the overall Group strategy,

acquisitions, major capital expenditure projects, reviewing the trading

performance, ensuring adequate funding and reporting to shareholders.  To

enable the Board to discharge its duties management provide appropriate

and timely information in advance of each meeting.  All directors have access

to advice from the Company Secretary and are able to take independent

professional advice as required.

The three longest serving directors at the date of the Annual General Meeting

offer themselves for re election.

The Board of Directors considers that John Parcell and Richard Madden are

independent of management and, in making this decision, have had regard

to guidance issued by several of the company's largest institutional investors.

John Parcell is the senior independent director.

The following committees deal with the specific aspects of the Group's affairs.

Remuneration

The Remuneration Committee is chaired by Keith Young.  Its other members

committee

are Tim Ashley, Richard Madden and John Parcell.  The committee meets at

least once a year.  The Board's report to shareholders on directors'

remuneration is set out on pages 12 and 13.

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