Governance

Board composition

As at 31 July 2008, the Board of Directors was made up of nine members consisting of the Chairman, four Executive Directors and four Non Executive Directors. The Chairman and the Non Executive Directors are each considered by the Board to be independent of management and free of any relationship which could materially interfere with the exercise of their independent judgement. The Board considers that each of the Non Executive Directors brings his own senior level of experience and expertise. Biographical details of the Directors currently in office are available. The Company's policy relating to the terms of appointment and the remuneration of both the Executive and Non Executive Directors is detailed in the Remuneration report. The distinct roles of Chairman and Group Chief Executive are acknowledged and set out in writing. The Chairman has confirmed that he would not chair any other major company's board of directors. Gareth Davis is the Company's Senior Independent Director and is available to shareholders where communication through the Chairman or the Executive Directors would not be appropriate. Robert Walker stepped down from the Board as a Non Executive Director on 31 October 2007. The Nominations Committee, and the Board as a whole, considers succession planning and the appropriate composition of the Board.

The Company's Articles of Association provide that one third of the Directors retire by rotation each year and that each Director will seek re-election by the shareholders at the Annual General Meeting at least once every three years. Additionally, new Directors are subject to election by shareholders at the first opportunity after their appointment. It is Board policy that Non Executive Directors are normally appointed for an initial term of three years, which is then reviewed and extended for up to a further two three-year periods. It is also Board policy that Non Executive Directors should not generally serve on the Board for more than nine years and that, in cases where it is proposed to exceed this period, the Director concerned will retire annually and offer himself for re-election. Details of the Directors seeking re-election at the 2008 Annual General Meeting are given in the Notice of Meeting.

Board procedures and responsibilities

A 12-month rolling programme of items for discussion by the Board is prepared to ensure that all matters reserved and other key issues are considered at appropriate times. The Board met 10 times during the year and Director attendance for each meeting is shown in the Meetings attendance table. Together with the Group Chief Executive and the Company Secretary, the Chairman ensures that the Board is kept properly informed and is consulted on all matters reserved to it. Board papers and other information are delivered at times to allow Directors to be properly briefed in advance of meetings.

The Board has established a procedure for Directors, if deemed necessary, to take independent professional advice at the Company's expense in the furtherance of their duties. This is in addition to the direct access that every Director has to the Company Secretary, who is charged with ensuring that Board procedures are followed and that good corporate governance and compliance is implemented throughout the Group.

Following their appointment, formal comprehensive and tailored induction is offered to all Directors. This is supplemented by meetings, as required, with major shareholders, visits to key locations within the Group and meetings with members of the Executive Committee and other key senior executives. Meetings between the Non Executive Directors, both with and without the presence of the Chairman and the Group Chief Executive, are scheduled in the Board's annual timetable. The Board has also arranged to hold at least two Board meetings each year at divisional locations to help all Board members gain a deeper understanding of the business, whilst also providing senior managers from across the Group the opportunity to present to the Board as well as to meet the Directors on more informal occasions.

During the year the Non Executive Directors reviewed the performance of both the Chairman and the Group Chief Executive and, together with the Chairman and the Group Chief Executive, reviewed the performance of each of the Executive Directors. A full evaluation of the Board's performance will be carried out during 2008. The Chairman has confirmed that should any Director have any concerns or observations which they wished to raise, these should be notified to him directly or to the Company Secretary, to be addressed appropriately. The Chairman has further confirmed there were no items which had been brought to his attention during the year.

As part of their ongoing development, the Executive Directors are encouraged to take up an external non-executive position on the board of a non-competitor company, for which they may retain payments received in respect of such appointment. In order to avoid any conflict of interest, all appointments are subject to the Board's approval and, generally, outside appointments for Executive Directors are limited to one company board. The Board monitors the extent of Directors' other interests to ensure that the effectiveness of the Board is not compromised. Details of external directorships and the fees retained are shown on the External directorships page.

Indemnities

In accordance with the Company's Articles of Association, the Company has always indemnified its Directors to the maximum extent permitted by law in respect of liabilities incurred as a result of their office. Qualifying third-party indemnity provisions (as defined in section 234 of the Companies Act 2006) have been granted to the Directors and the Company Secretary and these remain in force as at the date of this report. The Company has also arranged appropriate insurance coverage in respect of legal action against its Directors and Officers. Neither the Company's indemnity nor insurance would provide any coverage to the extent that a Director is proved to have acted fraudulently or dishonestly.