She can refuse the fixed penalty. A summons will be issued. She must then go to court and plead not guilty (presumably on the basis that the road was not properly signposted). If she does not turn up and enter a plea she will almost certainly be found guilty in her absence.
The prosecution's case will be that the signing was correct and they will produce evidence to support their claim. The onus will then be on your friend to prove that their claim is incorrect.
If the verdict goes against her she will pay a fine of probably around �150, incur prosecution costs (of preparing the matter for trial) of about �250. She will also pay a �15 victim surcharge.