Corporate governance

The board of directors is accountable to the Company’s shareholders for good corporate governance and the directors support the Combined Code as far as it is appropriate to the Group’s stage of development.

The Board of Directors

The Company is led and controlled by a Board comprising two executive directors and one non-executive director. Subsequent to the 2005 year end, two additional directors were appointed, replacing the existing executive directors who became non-executive. As PH Edmonds tendered his resignation with effect from the end of June 2006, Greg Hunter will act as Chairman until such time as an independent Chairman is appointed.

There are no matters specifically reserved to the Board for its decision, although board meetings are held when required and effectively no decision of any consequence is made, other than by the directors. All directors participate in the key areas of decision-making, including the appointment of new directors, although there is no separate Nomination Committee due to the current size of the Board.

The Board receives timely information on all material aspects about the Group to enable it to discharge its duties.

While all directors have equal responsibility in law for managing the Company’s affairs, it is the role of executive management to run the business within the parameters laid down by the Board and to produce clear and accurate reports to enable the Board to assess their performance. The executives make full use of the expertise and experience that the non-executive directors bring from their business careers.

There is no agreed formal procedure for the directors to take independent professional advice at the Group’s expense.

All directors submit themselves for re-election at the Annual General Meeting at regular intervals. There are no specific terms of appointment for non-executive directors.

Directors’ Remuneration

The Company has not yet established a Remuneration Committee.

The Chairman is responsible for consideration and approval of the terms of service, remuneration, bonuses, share options and other benefits of the other two directors and they, in turn, are responsible for his. All decisions made are after giving due consideration to the size and nature of the business and the importance of retaining and motivating management.

All directors have service contracts with the company.

Accountability and Audit

The Company has established an Audit Committee, and it met once in 2006. The Chairman and Chief Financial Officer are responsible for reviewing the scope and results of the audit, its cost effectiveness and the independence and objectivity of the auditors. A formal statement of independence is received from the external auditor each year.

Relations with Shareholders

The Chairman and Chief Executive is the Company’s principal spokesperson with investors, fund managers, the press, and other interested parties. At the Annual General Meeting, private investors are given the opportunity to question the Board.

Internal Control

The Board acknowledges its responsibility for establishing and monitoring the Group’s systems of internal control. Although no system of internal control can provide absolute assurance against material mis-statement or loss, the Company’s systems are designed to provide the directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately.

The key procedures that have been established and which are designed to provide effective control are as follows:

• Management Structure – The Board meets when required to discuss all issues affecting the Group.
• Investment Appraisal – The Group has a framework for investment appraisal, and approval is required by the Board where appropriate.

The Board reviews the effectiveness of the systems of internal control and considers the major business risks and the control environment. No significant control deficiencies have come to light during the period and no weakness in internal financial control has resulted in any material losses, contingencies or uncertainties which would require disclosure as recommended by the guidance for directors on reporting on internal financial control.