Investors: Company Information: Corporate Governance:

Corporate Governance

The directors recognise the value of the Principles of Good Governance and the Code of Best Practice prepared by the Committee on Corporate Governance chaired by Sir Richard Hampel published in June 1998 (the "Combined Code").

There is commitment to high standards of corporate governance throughout the group. The board confirms that the group complies with the provisions set out in Section 1 of the Combined Code, except that: The company only has two non-executive directors; and the audit committee is composed of two non executive directors.

The company complies with the Combined Code so far as it is practicable and appropriate for a public company of its size. The company also follows the recommendations on corporate governance of the City Group for Smaller Companies (CISCO).

The board is accountable to the company's shareholders for good governance and the statement set out below describes how the principles identified in the Combined Code (appended to the Stock Exchange Listing Rules) are applied by the group.

Directors

The Company currently has one executive and three non-executive directors. Each of the non-executive directors is considered by the board to be independent of management and free of any relationships which could materially interfere with the exercise of their independent judgment.  The biographies of the directors can be found here.

Communication

The group places a great deal of importance on communication with its shareholders and ensures that shareholders are kept informed of significant company developments. All shareholders have the opportunity to put questions at the company's annual general meeting and the board makes a presentation at the meeting to highlight the key business developments during the financial year.

Audit and internal control

The board of directors has overall responsibility for the accounting policies and ensuring that the group maintains an adequate system of internal controls to provide them with reasonable, but not absolute assurance regarding the reliability of financial information used for the business and for publication, and that assets are safeguarded. The board confirms that there is an ongoing process for identifying, evaluating and managing the significant risks faced by the group which complies with the guidelines Internal Control: Guidance for directors on the Combined Code. There is a regular review, at least once a year, to review the controls over business risk assessment and response, financial management, compliance with laws and regulations and the safeguarding of assets, including minimising the risk of fraud. However such a system can only provide reasonable, but not absolute assurance against material misstatement or loss.

The key procedures that the directors have established to ensure that the internal controls are effective are as follows:

Audit Committee: The group has an audit committee comprising the two non-executive directors. It examines and reviews, on behalf of the board, internal controls; financial and accounting policies and practices; the form and content of financial reports and statements; and the work of the external auditors. The audit committee has unrestricted access to the external auditors. The audit committee, on behalf of the board, has reviewed the effectiveness of the system of internal financial control.

Management information: The chief financial officer provides the board with monthly financial information.

Compliance

As well as complying with the provisions of the Combined Code as disclosed in the corporate governance statement, the company has applied the principles relating to directors' remuneration as described below.

Details of each individual director's remuneration and share options are included in note 5 to the financial statements and those of directors' shareholdings are set out in the report of the directors.

Remuneration policy

The group has a remuneration committee comprising the two non-executive directors. It makes recommendations to the board on the group's policy for executive remuneration. It determines the individual remuneration packages on behalf of the board for the executive directors and makes recommendations to the board on the individual remuneration packages for the senior management of the group. The committee has access to professional advice, both inside and outside the company, in the furtherance of its duties.

The remuneration committee endeavours to offer competitive remuneration packages which are designed to attract, retain and motivate executive directors and senior executives of the highest calibre. Packages are reviewed each year to ensure that they are in line with the group's business objectives.

The main components of determining pay are:

a) Basic salary: Salary ranges are established by reference to those in selected group of comparable companies, for executives of similar stature, responsibility and skill.

b) Annual bonus payments: The director's bonus is divided into two elements. The first is payable for the achievement of specific objectives, while the second and larger part is payable according to the performance of the business. The performance bonus represent approximately 40% of total renumeration.

c) Share options: The company believes that share ownership by executive directors and senior executives strengthens the link between their personal interests and those of the shareholders. It therefore has share option schemes under which options have been granted. The approved share options are awarded to all staff as part of the company's employee retention package. The unapproved share options are granted to assist in the incentivisation and recruitment of key staff.

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