Corporate Governance

Corporate governance is concerned with how companies are directed and controlled, in particular with the role of the Board and the framework of accountability. Although not required to do so by the AIM Rules, the Company is committed to the principles of corporate governance contained in the Combined Code on Corporate Governance which is appended to the Listing Rules of the Financial Services Authority and for which the Board is accountable to shareholders.

Compliance with Combined Code

The Company is in compliance with the Code provisions set out in Section 1 of the July 2003 FRC Combined Code on Corporate Governance.

The Company appointed a second non-executive director on 3 March 2008. As a consequence of this appointment the Company is now able to comply with the following Code provisions:

A3.2

The Company has only one independent non-executive director and therefore does not meet the requirement to have at least two independent non-executive directors.

A3.3

The Company does not have a "senior independent non-executive director".

B2.1

The Remuneration Committee does not consist of at least two independent non-executive directors.

C3.1

The Audit Committee does not consist of the recommended two non-executive directors for smaller companies.

These provisions had not been complied with for the period up to 3 March 2008. In view of the size and complexity of the Company the following code provision is not currently followed:

A4.1

The Company does not maintain a Nominations Committee.

The Board

The Board comprises four executive directors, and two independent non-executive directors. Roger Lockwood is the Chairman of the Board and the senior independent non-executive director and it is his responsibility to run the Board. Steve Hides, the CEO, is tasked with running the business. A reporting structure is in place so that the Board, which meets regularly, receives sufficient timely information to enable it to discharge its duties of overseeing the running of the business and its strategic direction. The Board has a formal schedule of matters specifically reserved for its decision. In outline summary, the Board’s decisions cover the following areas:

1. Board and management
   The structure and appointment of the management.
2. Operations
   The operational strategy and budgets, proposed corporate activity and decisions on significant investments and commitments.
3. Finance
   Raising capital, treasury policy, risk management, and the approval of dividends. In addition, the issue of annual and interim reports and appointment of professional advisers.
4. Business Control
   The overall framework of controls and authority limits.
5. Secretarial
   Calling shareholders’ meetings, delegating the Board’s powers, allotment of shares and litigation matters.

Appointments to the Board are reached through Board decision as there is no formal Nominations Committee. Given the size of the Board the need for such a formal sub-committee was not considered appropriate. The appointment of non-executive directors is decided on by the Board as a whole through a process of defining selection criteria and interview of suitable candidates. Executive directors are appointed on a similar basis.

Remuneration Committee

The Remuneration Committee consists of two non-executive directors; Roger Lockwood (as Chairman) and Michael Stevens. The purpose of the Committe is to establish a formal and transparent procedure for developing policy on executive remuneration and to set the remuneration packages of individual full-time Executive Directors. The key terms are as follows:

• to determine and agree with the Board the framework or broad policy for the remuneration of the full-time Executive Directors;
• to determine the total individual remuneration package of each full-time Executive Director including, where appropriate, bonuses, incentive payments and share options;
• to determine targets for any performance related pay schemes; and
• to determine the policy for and scope of pension arrangements for full-time Executive Directors.

Non-executive director remuneration is a matter for the executive directors.

Remuneration Committee Terms of Reference dated 16 August 2007 (18KB)

Audit Committee

The Audit Committee consists of two non-executive directors; Roger Lockwood (as Chairman) and Michael Stevens. The purpose of the Committe is to provide formal and transparent arrangements for considering financial reports and assessing how to apply the internal control principles set out in the Combined Code, and to maintain an appropriate relationship with the Company’s auditors. The key terms are as follows:

• to monitor the integrity of the financial statements of the Company, and any formal announcement relating to the Company’s performance;
• to monitor the effectiveness of the external audit process and make recommendations to the Board in relation to the appointment, re-appointment and remuneration of the external auditors;
• to keep under review the relationship with the external auditors including (but not limited to) their independence and objectivity;
• to keep under review the effectiveness of the Company’s financial reporting and internal control policies and systems; and
• to review, at least annually, the need for an internal audit function.

Audit Committee Terms of Reference dated 16 August 2007 (21KB)

Relations with Shareholders

One of the Board’s principal objectives is to manage the Company on behalf of its shareholders, and accordingly it is always willing to meet or talk with them. The directors maintain a dialogue with a number of private and institutional shareholders on an ongoing basis to discuss the business. The Annual General Meeting is used as a vehicle for both formal and informal liaison with shareholders, where the Chairman of the Committees is available for question.

Memorandum and Articles of Association

Memorandum of Association (48KB)

Articles of Association (236KB)