Dear Shareholder

I am pleased to present the Board’s Annual Report on corporate governance. I would like to reiterate my personal commitment and that of the Board to the continued maintenance of excellent governance across the Group and in ensuring the framework in place is meaningful, relevant and focused on our business.

This year we have heeded the Financial Reporting Council’s (FRC) drive to cut clutter from governance reporting. We have therefore sought to focus on what has changed rather than boiler plate disclosure seeking to cover all aspects of our governance framework. We will still make available online more detailed standing information and, to that end, we have signposted where this information can be found throughout this report. We hope investors and the governance community will support us in our endeavour to make the report more meaningful.

During the year the Board has particularly focused on the following areas.

Succession planning

As we announced on 2 June 2011, Keith Clarke will retire as chief executive and director at the end of July 2011, having steered the Group back to being a high performing business, successfully navigated a world recession and charted the course for growth. The Board and I are delighted to welcome Dr Uwe Krueger as his successor, who joined the Board on 14 June 2011. We are also pleased that Keith will remain with the Group as director of sustainability and to assist with the development of our Middle East business. This is an example of the proactive approach that we follow in succession planning throughout the Group. This succession planning exercise is explained in greater detail in the Nomination Committee section of this report.

Expanded geographic footprint

The transformation of the Group following our acquisition of The PBSJ Corporation in North America led to the restructuring of the business to follow a regional model. In response to our new regional business model, the Strategy Group was formed and is now the principal body through which managerial responsibility is discharged. Work to embed our systems and processes in the expanded Group, including our governance framework, continues. Progress to date has been good and we are confident that the acquired business is operating within an appropriate control framework whilst this work is completed.

Shareholder engagement

The Board engaged a third party to conduct an independent appraisal of shareholder engagement by the Company. The results of this exercise were presented to the Board in June 2010 and additional resource was committed to enhance our existing investor relations activities.

Gender diversity

The Board has led by example in driving diversity and, in particular, gender diversity within the Group. I am pleased to report that women now comprise 22.2% of the Board. The Board’s focus remains on attracting the right talent and skills irrespective of gender or ethnicity.

Whilst none of the Strategy Group and only 4% of the Group Executive are female, women account for 11% of the senior management population and 27.7% of employees. The Board recognises that this gender imbalance needs to be addressed and the Strategy Group has been tasked with doing so. To this end, the Board will continue to dedicate time to consider diversity over the coming months. Further information regarding the Group’s approach to diversity can be found within the Human Resources Review.

Best practice

The Company was required to comply with the Combined Code on Corporate Governance (the ‘Combined Code’) adopted by the FRC in June 2008 during the year ended 31 March 2011. In addition, the following report addresses the Company’s compliance with the provisions of the UK Corporate Governance Code (the ‘UK Code’), which applies to the Company from 1 April 2011. We have chosen to report on the requirements introduced by the UK Code to ensure the Group is operating in line with best practice.

With regard to the implementation of the UK Code, I can confirm that all directors of the Company will be subject to annual re-election with effect from the Annual General Meeting (‘AGM’) to be held in 2011. The externally facilitated evaluation of the Board’s performance originally planned to be undertaken in 2011 has been postponed in light of the appointment of Dr Uwe Krueger as chief executive from 1 August 2011.

Business conduct

The Board believes in conducting the Group’s affairs in a fair and transparent manner and in maintaining the highest ethical standards in its business dealings. The Group’s business conduct policy sets out the standards of behaviour we expect from our staff in our dealings with clients, suppliers, colleagues and other parties. The policy was reviewed and refreshed during the year.

The Board also updated the Group’s whistleblower policy to ensure it continued to support the business conduct policy. A new multi-lingual, multi-jurisdictional service run by an independent third party was launched to enable employees and third parties to raise matters of concern in confidence.

Allan Cook CBE

Chairman
15 June 2011