The Board is responsible and accountable for the Group's operations. The Board has a formal schedule of matters reserved to itself, including the Group's strategic plans, acquisitions or disposals, capital expenditure, all financial matters, annual operating plan and budget and our operating and financial performance.

The Board also delegates specific responsibilities to committees each of which has clear written terms of reference, as described below. The Board did not believe that it was necessary to use external resources to review its performance during 2006 but chose to evaluate its own performance, that of its committees and of its directors through an extensive questionnaire sent to each director. This was a process that it had adopted in 2004 and 2005, having used the services of external consultants in 2003.

In 2005 the form of the questionnaire and the detail of the process itself was reviewed an amended following advice from the independent consultant Dr Tracy Long, of Boardroom Review. The questionnaires were reviewed by the Chairman and Secretary and Group Legal Director, and a report of findings distributed to each director and discussed at a meeting of the Board. The Board was broadly satisfied with its performance and an action plan was created for those areas for which it believed improved processes could be introduced.

Following a Corporate Governance review in 2003 it was agreed that all non-executive directors should serve as members of the Nomination, Audit and Remuneration Committees. The Board believes that an increasing amount of work is undertaken by these Committees and that a non-executive director can only fulfil his or her responsibilities if they are present during committee meetings and are able to follow the detail of discussion and debate held at those meetings. Similarly the Chairman, in addition to chairing the Nomination Committee, is a full member of the Remuneration Committee and attends meetings of the Audit Committee at the invitation of the Chairman.

As a result of this policy it has been said that the Company does not comply with certain parts of the Combined Code in that the Chairman serves on the Remuneration Committee. The Board notes that the Financial Reporting Council has recognised the issue and that the amended Combined Code made allowances for Chairmen to serve on Remuneration Committees.

During 2007 the Board proposes to review whether its policy remains appropriate.

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