Financial aspects of corporate governance

The Company has adopted a framework for corporate governance which it believes is suitable for a company of its size and which aims to ensure it complies with the Principles of Good Governance and Code of Best Practice, (“the Combined Code”) prepared by the Committee on Corporate Governance, published in June 1998.

The Board

The Board currently consists of five members, three of whom are Non-Executive Directors.

The Board meets throughout the year and all major decisions are taken by the full Board. The Group’s day to day operations are managed by the Executive Directors. All Directors have access to the Company Secretary and any Director needing independent professional advice in the furtherance of his duties may obtain this advice at the expense of the Company.

Corporate Governance Committees

The composition of the committees are as follows:

The Audit Committee

The Audit Committee aims to meet at least once a year to review the published financial information, the effectiveness of external audit and internal financial controls.

The terms of reference of the Audit Committee are to assist all the Directors in discharging their individual and collective legal responsibilities for ensuring that:

• The Group's financial and accounting systems provide accurate and up-to-date information on its current financial position;
• The Group's published financial statements represent a true and fair reflection of this position; and
• The external audit, which the law requires in order to provide independent confirmation that these legal responsibilities are being met, is conducted in a thorough, efficient and effective manner.

The external auditors attend the Audit Committee meeting and as such it provides them with a direct line of communication to the Directors.

Remuneration Committee

The terms of reference of the Remuneration Committee are:

• recommend to the Board a framework for rewarding senior management, including Executive Directors, bearing in mind the need to attract and retain individuals of the highest calibre and with the appropriate experience to make a significant contribution to the Group; and
• ensure that the elements of the remuneration package are competitive and help in underpinning the performance-driven culture of the Group;

The Remuneration Committee met once during the year at which it was agreed to alter the share option agreements as detailed above.

Internal Control

The Board is responsible for maintaining an appropriate system of internal controls to safeguard shareholders' investment and Group assets.

The Directors monitor the operation of internal controls. The objective of the system is to safeguard Group assets, ensure proper accounting records are maintained and that the financial information used within the business and for publication is reliable. Any such system of internal control can only provide reasonable but not absolute assurance against material misstatement or loss.

Internal financial control procedures undertaken by the Board include:

• Review of quarterly financial reports and monitoring performance.
• Prior approval of all significant expenditure including all major investment decisions.
• Review and debate of treasury policy.

Risk assessment and the review of internal controls are undertaken by the Board in the context of the Group's overall strategy. The review covers the key business, operational, compliance and financial risks facing the Group. In arriving at its judgement of what risks the Group faces, the Board has considered the Group's operations in the light of the following:

• The nature and extent of risks which it regards as acceptable for the Group to bear within its overall business objective;
• The threat of such a risk becoming a reality;
• The Group's ability to reduce the incidence and impact of risk on its performance and;
• The cost and benefits to the Group of operating the relevant controls.

The Board has reviewed the operation and effectiveness of the Group's system of internal control for the financial year and the period up to the date of approval of these financial statements.

Relations with shareholders

Communication with shareholders is given a high priority by the Board and the Directors are available to enter into dialogue with shareholders. All shareholders are encouraged to attend and vote at the Annual General Meeting during which the Board is available to discuss issues affecting the Company.

Going Concern

The directors have considered the applicability of the going concern basis and confirm that it is appropriate that this basis be adopted.