Investors

Corporate Governance - The Board of Directors

The Board currently comprises the Chairman, two non-executive Directors, including the senior independent Director, and two executive Directors consisting of the Chief Executive and Finance Director. The roles of the Chairman and the Chief Executive are distinct as agreed by the Board. The Chairman is responsible for the effectiveness of the Board and that it meets its obligations and responsibilities.

The Chief Executive is responsible for providing overall leadership, providing management to the Group and is responsible for the execution of the Group’s strategic and operating plans. The membership of all Board Committees is set out below:

Name	Title	Board	Audit	Remuneration
Nick Prest	Chairman (from 1 April 2006)	Chairman	Member	Member
Richard King	Chairman (to 31 March 2006)	Chairman	Member	Member
David Mann	Independent Non-Executive Director	Member	Member	Chairman
Colin Garrett	Independent Non-Executive Director	Member	Chairman	Member
Richard Longdon	Chief Executive	Member	-	-
Paul Taylor	Finance Director	Member	-	-

It is the view of the Board that all non-executive Directors are independent. Richard King served for more than nine years as Chairman, which the Board has considered and believe that he was independent. The senior independent Director is David Mann and he is available to shareholders if they have concerns, which contact through the normal channels of Chairman, Chief Executive or Finance Director has failed to resolve.The Board is responsible to shareholders for the proper management of the Group.

There is a formal schedule of matters specifically reserved for the Board’s decision that covers key areas of the Group’s affairs, which includes overall responsibility for the business and commercial strategy of the Group, policy on corporate governance issues, review of trading performance and forecasts, the approval of major transactions and the approval of the financial statements and operating and capital expenditure budgets. The Board met nine times during the year. The Board delegates the day to day responsibility for managing the Group to the executive Directors.The attendance of individual Directors at Board meetings and Committee meetings is set out in the table below:

	Board Meetings Attended	Audit Committee Meetings Attended	Remuneration Committee Meetings Attended
Number of meetings held	9	3	2
Richard King	9	3	2
David Mann	9	3	2
Colin Garrett	9	3	2
Richard Longdon	9	-	-
Paul Taylor	9	-	-
Nick Prest*	3	-	1

The full Board is actively involved in the nomination, selection and appointment of non-executive and executive Directors and this is the reason that a Nomination Committee for Board appointments has not been established. On 11 January 2006 Nick Prest CBE was appointed as deputy Chairman and took over as Chairman when Richard King retired from the Board on 1 April 2006. On his appointment as Chairman, the other Board members confirmed the absence of any relationships or circumstances that would lead them to believe that Nick Prest should not be considered to be independent. Mr Prest was appointed as Chairman of Cohort plc, an AIM listed defence technical services company, on 16 February 2006.

Although no formal meetings between the Chairman and the non-executive Directors were held during the year without the executives being present, other than the Remuneration and Audit Committee meetings, there is regular contact between the Chairman and the non-executive Directors to discuss appropriate matters as necessary. Richard King announced to the Board in the summer of 2005 of his intention to retire once a new Chairman had been appointed. The search for a new Chairman was undertaken with the assistance of a third party recruitment firm. The Board decided that it was appropriate to defer the implementation of a formal performance evaluation process for the Board as a whole, its Committees and the non-executive Directors until a new chairman was appointed to allow him to have input into the process.

The appointment of Nick Prest in January 2006 meant that there was insufficient time to have a formal performance evaluation process in place by 31 March 2006, but the Board will ensure that this is a priority in the forthcoming financial year. During the year the Board continued to monitor its performance and that of its Committees and the individual Directors, although as in previous years these discussions were not minuted.

A formal evaluation of the performance of the executive Directors, Richard Longdon and Paul Taylor was carried out by the Remuneration Committee as part of the process for determining their remuneration for the year.

To enable the Board to discharge its duties, all Directors receive appropriate and timely information. Briefing papers are distributed by the Company Secretary to all Directors in advance of Board meetings.

The Chairman ensures that the Directors take independent professional advice as required at the Group’s expense in the appropriate circumstances and all members of the Board have access to the advice of the Company Secretary. The Group maintains Directors and Officers insurance in respect of the risk of claims against Directors. All Directors are subject to re-election at least every three years and Richard Longdon is subject to re-election at the forthcoming Annual General Meeting. In addition, the appointment of Nick Prest as a Director will also be required to be approved at the Annual General Meeting.