Internal Control

The Board acknowledges that it is responsible for the Group’s system of internal control and has reviewed its effectiveness in accordance with the provisions of the Code. The internal control system implemented at Pinewood Shepperton plc for the year under review, and continuing, is structured in order that the Group’s risks are effectively identified, evaluated and managed to provide reasonable but not absolute reassurance that there is no material misstatement or loss. This process is consistent with the requirements of the Turnbull Guidance. The main elements of the Group’s internal control system, including risk identification, are as follows:

Board

The Board of Directors is responsible for the Group’s internal control procedures, with an organisational structure that supports clearly defined authority levels. Board meetings include consideration of strategic, financial, operational and compliance issues, which is endorsed through assessment by the Audit Committee of the effectiveness of the internal, financial and operating control environment.

Operating Company controls

The identification and mitigation of major business risks is the responsibility of the Executive Directors and senior management with ongoing operational responsibility. A part of this remit includes the maintenance and regular review of procedures to identify and mitigate potential areas of risk, supported by the Group’s in-house legal counsel, in addition to external advisor guidance, as required.

Financial reporting

In advance of each financial year, the Board approves a comprehensive budget, incorporating a detailed appraisal of underlying assumptions and business risks. On a monthly basis, the Board is provided with financial information, detailing historical and forecast results against budget and prior year, incorporating monthly and year to date trading results, balance sheet and summary notes, cash flow statements, cash forecasts, capital expenditure and levels of indebtedness. In addition, monthly Board meetings include an appraisal of current forecasts, treasury policy, financial resources, borrowing facilities and hedging strategy, as well as, on an annual basis, the continuing adequacy of the insurance cover for the Group.

Shareholder communication

Pinewood Shepperton plc maintains a strong communication strategy with its shareholders, the majority of whom are institutional. The Company also regularly communicates with its employees, a number of whom are direct shareholders in the Company, or are members of the Company Sharesave Scheme, a further invitation to which was issued to all employees during 2007. All Company announcements are posted on the investor relations section of the Company’s website at www.pinewoodgroup.com as they are released. Relevant shareholder presentations, notably those given to institutional shareholders on publication of the interim and final results for the year, and those relating to significant corporate transactions, are also accessible to all investors via the website. The Company’s dedicated investor relations section of its website includes historical financial and share price information, as well as summary information on the business, members of the Board and senior management.

Additionally, the Annual General Meeting, to be held this year on 23 June 2008, will provide shareholders with a further opportunity to meet and question the Company’s Board, and to review the previous year’s results and business.

Employees

The Company actively considers the position of its employees’ rights through comprehensive and regularly reviewed employment practices in the areas of recruitment, remuneration, employee relations and health and safety. The Finance Director has Board responsibility for these areas and regularly updates the Board on relevant issues. At a senior management level, the Head of Group HR and Health & Safety maintains responsibility for all operational human resources issues. In addition to a published grievance policy, Pinewood Shepperton plc maintains a ‘Whistleblower’ policy, providing an opportunity for employees to raise grievances with senior management initially and ultimately with the Chairman of the Audit Committee.

The Company’s stated policy on Equal Opportunities recognises the diversity of individuals, and has procedures in place to ensure that recruitment and promotion recognises such diversity and is not biased by any consideration of age, gender, disability, colour, racial origin, religion or sexual orientation, as well as seeking to provide employees with reasonable conditions of employment and prospects.

Employees also receive regular and relevant communication in terms of operational issues and trading performance, and where appropriate, the views of employees are sought in guiding business practices and strategy.

The Company has adopted a training policy whereby all members of staff are actively encouraged to contribute to their own development. Pinewood Shepperton believes that personal development is a partnership between the individual and the organisation, and the attitude of the individual to their own development is key.

Training is seen as serving three main purposes:

• helping to meet Pinewood Shepperton’s corporate aims and objectives;
• helping to improve the individual’s performance in undertaking his/her current duties;
• developing the individual’s abilities and potential by extending knowledge, developing skills and influencing attitudes.