In July 2006, the Financial Reporting Council published an amended version of the Combined Code. Although the amended version only applies to accounting periods starting on or after 1 November 2006, the Directors believe that from 1 July 2007 the Group will comply with all of the recommendations contained in the amended Combined Code.
However, for a period during the year the Company did not fully comply with the recommendations of the Combined Code. Russell Walls stepped down as a Non-Executive Director on 25 August 2006 and Garry Watts will be appointed as a Non-Executive Director on 1 July 2007. In the period from 25 August 2006 to the date of this report:
- The Audit Committee did not have a Chairman and comprised only two Directors, neither of whom have recent and relevant financial experience. However, Iain Duffin acted as Chairman at meetings and at least one of the Company's other independent Non-Executive Directors who have recent and relevant financial experience was also in attendance at all meetings of the Committee. This ensured that at least two independent Non-Executive Directors attended each meeting.
- The Remuneration Committee comprised only two Directors. However, at least one of the Company's other independent Non-Executive Directors attended meetings of the Committee thus ensuring at least three independent Non-Executive Directors attended each meeting.
- If the criteria for determining independence suggested by the Combined Code were applied, less than half of each of the Board and Nomination Committee (in each case excluding the Chairman) was independent. However, the Board's own view was that at least half of the Board and Nomination Committee (excluding the Chairman) was independent, because it regards Ewan Brown as independent.
Notwithstanding the above, the Board believes that it and its Committees remained effective during this period. The appointment of Garry Watts with effect from 1 July 2007 will remedy the above areas of non-compliance with the Combined Code.
