Board Policies

Ethics and Business Integrity Policy

Carillion has a clear and unequivocal approach to business integrity and ethics which underlies the Group’s values of openness, collaboration, mutual dependency, professional delivery, focus on sustainable, profitable growth and innovation. The policy requires Carillion to conduct its business to the highest ethical standards. It applies to all employees and the way Carillion delivers this policy is and will be reflected in the way the Group competes for business, through the quality and value of its work and the reputation of its employees.

The requirements of the policy are in summary:

• Business Integrity: we do not give or accept bribes. We do not sanction or accept any illegal payments, allowances, or gifts-in-kind. We will investigate fully all alleged breaches. We will dismiss any employee who has breached this policy.

• Mutual Respect: we do what we say we will do. We treat our people fairly and with respect at all times, avoiding discrimination and bullying. We provide a safe and healthy working environment, and respect sustainable principles in all our dealings.

• Trust: we engender trust within our work groups and companies, respecting diverse traditions and cultures. We respect the trust placed in us by others, not least when we are asked to take responsibility for aspects of their business or resources. We maintain and demand high professional standards and demand honesty and openness. We avoid conflicts of interest wherever possible, and we proactively declare any unavoidable conflicts for open scrutiny and resolution.

• Legality: we respect the rule of law in all our dealings. We clearly communicate procedures for disciplining those who do not comply with the law or our standards and policies. We maintain a system for confidential reporting of breaches of our standards and policies.

• Human Rights: we support the belief that human rights are universal and adhere to the principles of human rights in our operations. We support the United Nations Declaration on Human Rights.

Policy on external appointments

Recognising that external appointments can broaden their knowledge and so be of benefit to the Company, Executive Directors are permitted, at the discretion of the Board, to accept a limited number of such appointments and retain the fees received for such appointments. John McDonough was a Non-Executive Director of Exel plc until he retired from the Board on 13 December 2005 following that Company’s takeover. Chris Girling is a Non-Executive Director of Elementis plc.

Nomination and remuneration of Directors

The appointment of a Director is a matter for resolution by the Board as a whole, taking advice from the Nominations Committee.

For the Board appointments made in 2005, the Nominations Committee used the services of executive recruitment consultants, Odgers Ray & Berndtson. Details of potential candidates were provided by Odgers Ray & Berndtson and initially reviewed by a sub-committee of the Nominations Committee. Meetings with selected candidates were then held with Directors. Subsequently, the Nominations Committee met to recommend appointments which were then approved by the Board.

In the case of Non-Executive Directors, initial appointments are normally for three years; re-appointment is subject to review and is not automatic.

The fees of Non-Executive Directors are determined by the Board as a whole, taking into account the commitment required and participation in the work of committees and other advisory services in relation to the business of the Group. In advising the Board on such fees, it is the policy of the Executive Directors to seek independent external advice concerning the appropriateness of the amounts by comparison with general practice. The level of fees currently payable to the Non-Executive Directors is based on independent external advice.

Retirement of Directors by rotation

The Articles of Association of the Company provide that each Director shall retire from office and shall be eligible for re-election at the third Annual General Meeting after the meeting at which he was elected or last re-elected.

All Directors appointed by the Board are subject to retirement and election by shareholders at the first Annual General Meeting following such appointment.

The service contract of the Executive Directors and the terms and conditions of appointment of the Non-Executive Directors are available for inspection at the registered office of the Company during normal business hours on any weekday (bank holidays excepted) and at the Annual General Meeting.

Induction and development of Directors

Directors are provided with a comprehensive information pack on joining the Company and are advised of their legal and other duties and obligations as a director of a listed company. In addition, all new Directors receive induction on their appointment covering such matters as the operation and activities of the Group, the role of the Board, the Company’s corporate governance procedures and social, environmental and ethical (SEE) matters. Directors are also briefed by the Company’s external advisors, where appropriate, on changes to legislation, regulation or market practice, as well as receiving briefings from business groups throughout the year.

At least once a year, the Board visits an operational site and in October 2005, the Directors visited the Group’s operations in Canada. Directors are also encouraged to visit other operations and staff.

The regular updating of Directors’ skills and knowledge is encouraged and a procedure has been established whereby the Company Secretary is notified by Directors of their requirements in this respect.

Relations with shareholders

In addition to communicating with shareholders generally from time to time, the Executive Directors and the Director of Group Corporate Communications meet regularly with representatives of major shareholders in order to foster the mutual understanding of objectives. The details of these meetings are reported to the Board. The Chairman is available for meetings with representatives of major shareholders as required.

Private and institutional shareholders are encouraged to attend the Company’s Annual General Meeting.

The Company complies fully with the provisions of the Combined Code in respect of the notice, content of agenda and conduct of its Annual General Meetings. The Chairmen of the Remuneration and Audit Committees were present at the Annual General Meeting on 10 May 2006 to respond to shareholders’ questions.