The Principles of Good Governance and Code of Best Practice (‘The Combined Code’) was issued by the Financial Services Authority in 1998. Revisions to The Combined Code were published on 23 July 2003, as a result of the Higgs Report on the role and effectiveness of non-executive directors and the Smith Report on company audit committees. These revisions are effective for companies with reporting years beginning on or after 1 November 2003.

The listing rules require that listed companies (but not companies traded on the Alternative Investment Market (“AIM”)) incorporated in the UK should state in the report and accounts whether they comply with the Code of Best Practice and identify and give reasons for any area of non-compliance. The Company was admitted to AIM and therefore no disclosure is required.

The Company however intends to comply, as far as is reasonably practicable given the size of the Group and the size and constitution of the board, with the Principles of Good Governance and Code of Best Practice. The directors have adopted the AIM Model Code and have appointed audit and remuneration committees.

The audit committee is chaired by George Elliott and comprises of Peter Denyer. It meets twice a year and is responsible for monitoring the quality of internal control, ensuring that the financial performance of the Group is properly measured and reported on, meeting with the auditors and reviewing reports from the auditors relating to accounting and internal controls. It meets with the auditors at least once a year.

The remuneration committee is chaired by Peter Denyer and also consists of George Elliott and Kenneth Innocent. It reviews the performance of executive directors and sets the scale and structure of their remuneration and reviews the basis of their service agreements with due regard for the interests of shareholders. The remuneration committee also makes recommendations to the directors concerning the allocation of share options to employees. No director is permitted to participate in discussions or decisions concerning his own remuneration.