Corporate Governance Report

Board effectiveness

Induction: On joining the Board, Directors are given background information describing the Company and its activities. For new Directors, site visits to the major business units are arranged. Lord Patten, who was appointed as a Director on 1 July 2005, received an induction pack of information on our business following his appointment. This included brokers' reports and guidance notes on the Group, our structure, operations and corporate governance. Meetings were arranged with all the members of the Chief Executive's Committee and other senior executives below Board level from each Group function, and with some of our advisers. Visits are also being arranged to one of our factories and to a Science & Technology centre. For those Non-Executive Directors who are members of Board Committees, meetings are also arranged with the Group departments who provide support to the relevant Board Committee.

Continuing professional development: During 2005, the majority of the Non-Executive Directors attended training on the adoption of IFRS, the proposed introduction of the Operating and Financial Review and the introduction of the new FSA Disclosure and Listing Rules and Model Code.

Performance evaluation: A formal and rigorous external evaluation of the Board, its members and its committees was conducted during 2005 by the Zygos Partnership. The evaluation, undertaken by meetings with Directors and senior management, included reviewing, amongst other things, the composition of the Board; succession planning; the role of the Nomination Committee, the Board agenda and those areas on which the Board should focus at its meetings, and the role of the Group Secretary. The results were considered by the Board in September 2005 and certain action points were proposed. All of these proposals were agreed and will now be acted upon. The Chairman was also appraised by the Non-Executive Directors, led by Roger Carr.

Board evaluation will continue on an annual basis and will be undertaken by a combination of internal processes and advice from external consultants.