Principal activity and business review
The principal activity of the Group is the operation of food stores and associated activities in the UK, Republic of Ireland, France, Czech Republic, Slovakia, Hungary, Poland and Thailand. The business review is within the summary financial statement.

Dividends
The directors recommend the payment of a final dividend of 2.87p per ordinary share to be paid on 1 July 1999 to members on the Register at the close of business on 23 April 1999. Together with the interim dividend of 1.25p per ordinary share paid in December 1998, the total dividend for the year comes to 4.12p, compared with 3.87p for the previous year, an increase of 6.5%.

Directors
Details of the current members of the Board are shown in Board of Directors. David Potts and Philip Clarke were appointed to the Board on 16 November 1998. Charles Allen was appointed to the Board on 19 February 1999 and Dr Harald Einsmann was appointed on 1 April 1999. Terry Leahy, John Gildersleeve, Tim Mason and Baroness O'Cathain will retire from the Board by rotation. David Potts, Philip Clarke, Charles Allen and Dr Harald Einsmann being appointed in the year will also retire. Being eligible, they offer themselves for re-election at the Annual General Meeting. Terry Leahy, John Gildersleeve, Tim Mason, David Potts and Philip Clarke have service contracts with two years' notice. Charles Allen, Dr Harald Einsmann and Baroness O'Cathain do not have service contracts.

Corporate governance
The company has complied with all the provisions of the Combined Code of Best Practice. The Board is committed to proper standards of corporate governance and will continue to keep procedures under review should the code develop. The company has established a framework of internal financial control which is reviewed by the Audit Committee and has a separate Executive Committee, Remuneration Committee and Nominations Committee. A full corporate governance statement is contained in the Annual Report and Financial Statements 1999.

Summary report of the directors on remuneration
Directors' remuneration policy
The remuneration packages, including contract periods, of executive directors are determined by the Remuneration Committee. It ensures that the remuneration package is appropriate for their responsibilities, taking into consideration the overall financial and business position of the Group, the highly competitive industry of which the Group is part and the importance of recruiting and retaining management of the appropriate calibre.

Compliance
The Committee is constituted and operated throughout the period in accordance with the principles outlined in the Stock Exchange Listing Rules derived from Schedule A of the Combined Code. In framing the remuneration policy, full consideration has been given to the best practice provisions set out in Schedule B, annexed to the Listing Rules.

A summary of directors' emoluments and interests, including executive options, is set out in Directors' emoluments and Summary of executive share options and disclosable shareholdings. A more detailed analysis is provided in the Annual Report and Financial Statements 1999. Copies of the executive directors' contracts of employment are available for inspection by shareholders as required.