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>Corporate Governance

The Board is committed to maintaining high standards of corporate governance. Whilst the Company is not bound by the provisions of the Combined Code on Corporate Governance (the 'Combined Code'), the Board endeavours, so far as practical, to comply with the Combined Code.

The following is an abridged extract from the Corporate Governance Statement contained in the Annual Report and Accounts of May Gurney Integrated Services plc for the financial year ended 31 March 2011.

Board

The Board comprises seven directors, four of whom, including the Chairman, are non-executive directors.

The role of the Board

The Board's principal responsibility is to deliver shareholder value and provide an overall vision and leadership for the Group. It also has an oversight role, monitoring operational plans and ensuring internal controls and risk management are effective. There is a formal schedule of matters reserved for the Board, which provides a framework for the Board to oversee the control of the Group's direction and affairs. These include the approval of the financial statements and dividends, strategy, acquisitions and disposals, major projects, contracts, delegated authorities, major capital expenditure, risk management strategies, health and safety and succession planning. Whilst the Board is responsible for the overall strategy of the Group, and meets at least once a year to review strategy and the future of the business, the implementation of the strategy is delegated to the Chief Executive.

Board processes

All directors have access to the advice and services of the Company Secretary and there is a procedure for directors to seek independent professional advice, in furtherance of their duties, at the Company's expense. The Company Secretary is responsible for ensuring the Board procedures and applicable rules and regulations are followed. The Company Secretary, in consultation with the Chairman, ensures that the information presented to the Board is not only timely but of sufficient quality to enable members to make an informed decision.

All directors are subject to election by shareholders at the first opportunity after appointment. In addition, all directors are submitted for re-election at regular intervals of not more than three years at the Annual General Meeting subject to continued satisfactory performance. The Company has adopted the Model Code for Directors' dealings as applicable to AIM companies.

Board performance and evaluation

The Board is committed to evaluating its own performance. Each year the Board undertakes a formal evaluation of its own performance and that of its committees and individual directors. The evaluation process is led by the Chairman and is used constructively as a mechanism to improve Board effectiveness, maximise strengths and tackle weaknesses.

Committees of the Board

The Board has three committees, being the audit committee, the remuneration committee and the nominations committee, each of which operate within defined terms of reference.

Audit committee

The purpose of the audit committee is to provide formal and transparent arrangements for considering how to apply the financial reporting and internal control principles set out in the Combined Code, and to maintain an appropriate relationship with the Company's auditors.

The audit committee consists of David Galloway, as chairman, Tim Ross and Andrew Walker. The Chairman and Finance Director and other senior management also attend committee meetings by invitation.

The terms of reference for the audit committee give the committee responsibility for:

• Monitoring the integrity of the financial statements of the Company, and any formal announcements relating to financial performance;
• Reviewing significant financial reporting judgements and accounting policies;
• Reviewing the effectiveness of the Company's financial reporting and internal control systems;
• Considering, and making recommendations to the Board in relation to the appointment, reappointment and removal of the Company's auditors;
• Monitoring the external and internal auditor's independence and effectiveness; and
• Considering the requirements of the AIM rules.

The audit committee has responsibility for monitoring the independence of the Company's auditors, Grant Thornton UK LLP ('Grant Thornton').

In accordance with auditing standards, Grant Thornton has advised the Company in writing that the firm is independent within the meaning of regulatory and professional requirements and that the objectivity of the engagement partner and audit staff is not impaired. Having reviewed that opinion, the Board believes that the continuing provision to the Group of audit service has not compromised the independence of the auditors in relation to their audit of the affairs of the Company and the Group.

Sums payable to Grant Thornton in relation to the 2009 audit were £147,750 and in relation to non-audit services provided in the year were £154,736.

Following a formal review undertaken during the year Ernst & Young LLP were appointed to advise the Company on non-audit matters, such as tax compliance and tax planning.

Please click here for our Audit committee terms of reference

Internal audit

The Company undertakes a regular review of the audit and risk review processes that are in place across the Group and review the need to establish a formal internal audit function. An internal audit review was incorporated into a Corporate Assurance Report which was reviewed by the audit committee in November 2008.

Nominations committee

The purpose of the nominations committee is to establish a formal, rigorous and transparent procedure for the appointment of new directors to the Board. The committee comprises Tim Ross, as chairman, David Galloway, David Sterry and Andrew Walker. David Sterry was appointed as a member of the nominations committee following his appointment as non-executive Chairman of the Company. The terms of reference for the nominations committee give the committee responsibility for:

• Evaluating the structure, size and composition (including the skills, knowledge and experience) of the Board and, as appropriate, preparing a description of the role and capabilities required;
• Identifying, and nominating for approval by the Board, candidates to fill Board vacancies as and when they arise;
• Reviewing the leadership needs of the Company, both executive and non-executive, with a view to ensuring the ability of the Company to compete effectively in the marketplace;
• Considering succession planning; and
• Making recommendations to the Board concerning the composition of the audit and remuneration committees.

Please click here for our Nomination committee terms of reference

Remuneration committee

The purpose of the remuneration committee is to establish a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages for individual directors. The remuneration committee comprises Tim Ross, as chairman, David Galloway, David Sterry and Andrew Walker. The committee's report on directors' remuneration may be found on pages 41 to 45 of the annual report.

In addition to the executive directors' remuneration, the remuneration committee's terms of reference also extend to the top tier of senior management below the Board.

Please click here for our Remuneration committee terms of reference

Group executive committee

The executive directors, the Group Company Secretary, the sector managing directors, the Group commercial director and the Group director of human resources comprise a Group Executive Committee which meets to deal with all executive business of the Group not specifically reserved to the Board or its other committees. It is responsible for the ongoing management and monitoring of the Group's system of internal control. Additional meetings are held to discuss specific issues.

Non-executive directors

The non-executive directors are appointed by the Board, on the recommendation of the nominations committee, for specified terms. They are subject to periodic reappointment by shareholders and statutory provisions regarding removal.

The non-executives have significant external commercial experience, and bring expert advice and strong judgement to the Board. David Sterry is not considered by the Board to be independent by reason of his significant shareholding in the Company and previous service as Chief Executive of the Company. With the exception of David Sterry, the Board believes that the non-executive directors are independent of management and have no business or other relationships which could materially interfere with the exercise of their independent judgement. The Board believes that, with the exception of David Sterry, the relatively low value of shares held by non-executive directors does not impair their independence.

The roles of the Chairman and Chief Executive are separate and clearly defined. The senior non-executive director is Tim Ross.

Internal control and risk management

The Board is responsible for establishing, reviewing and maintaining the Group's systems of internal control and risk management and ensuring that these systems are effective for managing the business risk within the Group. The Group has established a framework for identifying, evaluating and managing significant risks faced by the Group. The framework of risk management and internal control operating within the Group has been in place throughout the year and is designed to safeguard shareholders' investments and the Group's assets whilst ensuring that proper accounting records are maintained. This framework is reviewed annually.

It is the responsibility of the management to ensure that the controls and procedures that operate within the framework are followed and that the Board is kept fully appraised of any risks and control issues, both operational and financial. The Board recognises that any system of internal control exists to minimise the risk of failure rather than eliminate it, and that any system of internal control can only provide reasonable, not absolute, assurance against material misstatement or loss.

The risk management of joint ventures and strategic partnerships is agreed between the parties and periodic reviews carried out where appropriate.

The Group annually reviews the effectiveness of the risk management system and its internal controls.

Relations with shareholders

The Board is committed to a continuing dialogue with its shareholders. Following the announcement and presentation of the interim and year-end results, there are a series of formal meetings with institutional shareholders. These meetings enable the executive directors to appraise the investors of the Group's business and future plans and the shareholders can communicate any concerns they may have. The Company's brokers and financial PR advisors provide feedback from the shareholder and analyst meetings and present the results to the Board.

The Company responds formally to all queries and requests for information from existing and prospective shareholders. In addition, David Sterry and Tim Ross are available to shareholders to ensure that any potential concerns can be raised directly. Additionally, the Annual General Meeting provides a useful interface with shareholders. All shareholders are invited to attend the AGM and all members of the Board will be available at the meeting to answer questions. Full interim and annual reports are sent to all shareholders.