Report of the Board to the

shareholders on directors'

remuneration

Remuneration

The Committee consists solely of the four non executive directors:

committee

Richard Madden, Tim Ashley and John Parcell, under the chairmanship of

Keith Young.  None of the committee members has any personal financial

interests (other than as shareholders), conflicts of interests arising from

cross directorships or day to day involvement in running the business.

The Committee consults the Chief Executive about its proposals and has

access to professional advice from inside and outside the company.  The

Committee makes recommendations to the Board.  No director plays a

part in any discussion about his or her own remuneration.

Remuneration policy

Executive remuneration packages are prudently designed to attract,

motivate and retain directors of the high calibre needed to maintain the

company's position as a market leader and to reward them for enhancing

value to shareholders.  The performance measurement of the executive

directors and key members of senior management and the determination

of their annual remuneration package are undertaken by the Committee.

The remuneration of the non executive directors is determined by the

Board within the limits set out in the Articles of Association.

There are four main elements of the remuneration package for executive

directors and senior management:

(a) basic annual salary (including directors' fees) and benefits;

(b) annual bonus payments;

(c) share option incentives; and

(d) pension arrangements.

Executive directors are entitled to accept appointments outside the

company providing the Chairman's permission is sought in advance.

Basic salary

An executive director's basic salary is determined by the Remuneration

Committee at the beginning of each year end and when an individual

changes position or responsibility.  In deciding appropriate levels the

Committee considers the group as a whole and relies on objective

research which gives up to date information on a comparator group of

companies which comprises the top ten companies by capitalisation

within the sector.  Basic salaries were reviewed in June 2001 with

increases taking effect from 1 July 2001.  Executive directors' contracts of

service which include details of remuneration will be available for

inspection at the Annual General Meeting.

Annual bonus

The Committee establishes the objectives that must be met for each

payments

financial year if a cash bonus is to be paid.  In setting appropriate bonus

parameters the Committee refers to the objective research on comparator

groups of companies as noted above.  The Committee believes that any

incentive compensation awarded should be tied to the interests of the

company's shareholders and that the principal measure of those interests

is total shareholder return.  Account is also taken of the relative success

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