Summary directors' report

Principal activity and business review

The principal activity of the Group is providing value-added distribution and outsourcing services in the Americas, Europe and Australasia. Details of the Group’s activities, developments and performance for the year and information which fulfils the requirements of the Companies Act 1985 relating to the production of a Business Review are set out in the Chairman’s Statement, the Chief Executive’s Review, the Financial Review and the Corporate Social Responsibility report on pages 4 to 15 and 17 to 23 and in the section entitled ‘Principal risks and uncertainties’ set out in the full Directors’ Report included within the Directors’ Report and Accounts.

Going concern

The directors, having made appropriate enquiries, consider that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, the directors believe it is appropriate to continue to adopt the going concern basis in preparing the financial statements.

Purchase of own shares

During the year ended 31 December 2007 the Company purchased 14,212,090 of its own shares into treasury at an aggregate cost including expenses of £100.0 million pursuant to the shareholder authorities granted at the 2006 and 2007 Annual General Meetings. As at 25 February 2008 the Company held a total of 23,325,000 shares in treasury.

Directors

Mr D J R Sleath was appointed to the Board in September 2007 and, being eligible, offers himself for election at the forthcoming Annual General Meeting in accordance with the Company’s Articles of Association (the ‘Articles’).

Mr P L Larmon and Dr U Wolters retire by rotation at the Annual General Meeting in accordance with the Articles and, being eligible, offer themselves for re-election.

Biographical details of the current directors are set out on page 16.

Directors’ interests in ordinary shares are shown in Note 20 to the consolidated financial statements in the Directors’ Report and Accounts. None of the directors was materially interested in any contract of significance with the Company or any of its subsidiary undertakings during or at the end of 2007.

Dividends

An interim dividend of 5.8p was paid in respect of the year and the directors recommend a final dividend of 12.9p, making a total for the year of 18.7p. This compares with 17.0p for the year ended 31 December 2006.

Corporate governance

The Company is committed to high standards of corporate governance. The Company confirms that it has complied throughout 2007 with the provisions of the Combined Code on Corporate Governance.

Directors’ indemnities

As at the date of this report, indemnities are in force under which the Company has agreed to indemnify the directors and the Company Secretary, in addition to other senior executives who are directors of subsidiaries of the Company, to the extent permitted by law and the Articles in respect of all losses arising out of or in connection with the execution of their powers, duties and responsibilities as a director or officer of the Company or any of its subsidiaries.

Internal control

The directors acknowledge that they have overall responsibility for the Group’s system of internal control and for reviewing its effectiveness. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. In accordance with the Turnbull guidance the Company has established the procedures necessary to ensure that there is an ongoing process for identifying, evaluating and managing significant risks to the Group. The directors confirm that such procedures have been in place for the year ended 31 December 2007 and up to the date of approval of these financial statements and have been reviewed during the year.

The directors also confirm that they have reviewed the effectiveness of the system of internal control in operation during 2007.

Annual General Meeting

The Annual General Meeting will be held at the The Park Suite, The Dorchester, Park Lane, London W1K 1QA on Wednesday 14 May 2008 at 11.00 am. The notice convening the Meeting is set out in a separate letter from the Chairman to shareholders which explains the items of special business.

External auditors

A resolution is to be proposed at the forthcoming Annual General Meeting for the re-appointment of KPMG Audit Plc as auditors of the Company at a rate of remuneration to be determined by the directors.

P N Hussey

Secretary
25 February 2008