Tanfield Group PLC
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CORPORATE GOVERNANCE
Principles of Corporate Governance

The company is committed to high standards of corporate governance. The Board is accountable to the company's
shareholders for good corporate governance. The company has partially complied throughout the year with the code
of best practice set out in Section 1 of the Combined Code 2006 (effective for periods commencing on or after 1
November 2006) appended to the Listing Rules of the Financial Services Authority.

The role of the Board is to provide entrepreneurial leadership of the company within a framework of prudent and
effective controls, which enables risk to be assessed and managed. The Board sets the company's strategic aims,
ensures that the necessary financial and human resources are in place for the company to meet its objectives and
reviews management performance. The Board sets the company's values and standards and ensures that its
obligations to its shareholders and others are understood and met.

Board Structure

During the year the Board comprised the Non-Executive Chairman and Chief Executive, three other Executive
Directors, and three independent Non-Executive Directors. Geoffrey Allison was appointed to the board on 23
September 2008.

Board Role

The Board is responsible to shareholders for the proper management of the Group. The Non-Executive Directors
have a particular responsibility to ensure that the strategies proposed by the Executive Directors are fully
considered. To enable the Board to discharge its duties, all Directors have full and timely access to all relevant
information and there is a procedure for all Directors, in furtherance of their duties, to take independent
professional advice, if necessary, at the expense of the Group. The Board has a formal schedule of matters
reserved to it. It is responsible for overall group strategy, approval of major capital expenditure projects and
consideration of significant financing matters. The Board met on six separate occasions in the year and all
Directors attended.

Appointment and Induction of Directors

The composition of the Board is kept under review with the aim of ensuring that the directors collectively
possess the necessary skills and experience to direct the Group's business activities.

Board Committees

The Board delegates certain matters to its two principal committees, which deal with remuneration and audit.

Remuneration Committee

The Remuneration Committee comprises John Bridge (Chair) and Martin Groak.

The Remuneration Committee determines and agrees with the Board the framework of remuneration for the
Executive Directors. The Board itself determines the remuneration of the Non-Executive Directors.

There was one remuneration committee meeting in the period which was fully attended.

The report on Directors' remuneration is set out on pages 13 to 16.

AnnualReport2008 Page 13
Tanfield Group PLC
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CORPORATE GOVERNANCE (continued)
Audit Committee

The Audit Committee comprised the Non-Executive Directors Martin Groak (Chair), Colin Billiet and John
Bridge. Meetings are also attended, by invitation, by the Non Executive Chairman, Chief Executive and Group
Finance Director.

The Audit Committee is responsible for:
·
Reviewing the scope of external audit, to receive regular reports from Baker Tilly UK Audit LLP.
·
Reviewing the half-yearly and annual accounts prior to their recommendation to the Board.
·
Reviewing the Group's internal financial controls and risk management systems and processes.
·
Making recommendations on the appointment, re-appointment and removal of external auditors and
approving the terms of engagement.
·
Reviewing the nature of the work and level of fees for non-audit services provided by the external
auditors.
·
Assessing the independence, objectivity and effectiveness of the external auditor.
The committee met on two occasions during the year and they were fully attended.
Internal Control

The Board has overall responsibility for the Group's system of internal control and risk management and for
reviewing the effectiveness of this system. Such a system can only be designed to manage, rather than eliminate,
the risk of failure to achieve business objectives and can therefore only provide reasonable and not absolute
assurance against material misstatement or loss.
The Board are of the view that due to the current size and composition of the Group, that it is not necessary to
establish an internal audit function.
Relations with Shareholders

The Company values its dialogue with both institutional and private investors. Effective two-way
communication with fund managers, institutional investors and analysts is actively pursued and this encompasses
issues such as performance, policy and strategy.

Private investors are encouraged to participate in the Annual General Meeting at which the Chairman presents a
review of the results and comments on current business activity. The Chairmen of the Audit and Remuneration
Committees will be available at the Annual General Meeting to answer any shareholder questions.

Notice of Annual General Meeting will be issued in due course.









AnnualReport2008 Page 14
Tanfield Group PLC
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CORPORATE GOVERNANCE (continued)
Going Concern

The directors confirm that they are satisfied that the Company and Group have adequate resources to continue in
business for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing
the financial statements.
Statement by the Directors on compliance with the Provisions of the Combined Code

Throughout the year ended 31 December 2008, the Group has complied with the provisions set out in Section 1
of the Combined Code.

Darren Kell
Chief Executive
16 April 2009