Although the Company is not obligated to comply with the Combined Code on the Principles of Good Governance published in June 2008 by the Financial Reporting Council (“the Combined Code”), the directors have stated their intention to comply with these principles in so far as practicable for a Company of this size. The Company is committed to high standards of corporate governance and the Board is accountable to the Company’s shareholders. The Company has adopted the Corporate Governance Guidelines for AIM Companies as published by the Quoted Companies Alliance in 2007.

Board of Directors and Committees

The Board currently comprises of two executive and two non-executive directors. Each non-executive director is appointed for a specified term. The reappointment of non-executive directors is not automatic. The provisions of the Companies Act 2006 and the Articles of Association of the Company relating to the removal of a director and retirement by rotation apply to all non-executive and executive directors.

The Board meets on average every two months and is responsible, inter alia, for setting and monitoring group strategy, reviewing trading performance, ensuring adequate funding, examining major acquisition opportunities, formulating policy on key issues and reporting to the shareholders.

The Chairman takes responsibility for the conduct of the Company and Board meetings and ensures that directors are properly briefed to enable full and constructive discussions to take place. However, no formal schedule of matters specifically reserved to the Board has yet been established.

To enable the Board to function effectively and to discharge its duties, directors are given full and timely access to all relevant information. They have free access to the advice and services of the Company Secretary and may seek independent advice at the expense of the Company where appropriate. However, no formal procedure has been agreed with the Board regarding the circumstances in which individual directors may take independent professional advice.

The Combined Code states that there should be a nomination committee to deal with the appointment of both executive and non-executive directors except in circumstances where the Board is small. The directors consider the size of the current Board to be small and have not therefore established a nomination committee. The appointment of executive and non-executive directors is currently a matter for the Board as a whole. This position will be reviewed should the number of directors increase substantially.

The directors have established the following two committees, both of which report to the Board and have written terms of reference which deal clearly with their respective authorities and duties.

Audit committee

The audit committee, which comprises Melissa Sturgess and Richard Jarvis, and which is chaired by Richard Jarvis, is responsible for ensuring the financial performance, position and prospects of the Group are properly monitored and reported on and for meeting the auditors and reviewing their reports relating to accounts and internal controls.   Meetings of the audit committee are required to be held at least twice a year, at appropriate times in the reporting and audit cycle. The audit committee is required to report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities and is required to compile a report to shareholders to be included in the annual report and accounts of the Group.  The members of the audit committee are re-elected annually by the Board.

The Board believes that the current size of the Company does not justify the establishment of an independent internal audit department. Finance personnel are periodically instructed to conduct specific reviews of business functions relating to key risk areas and to report their findings to the Board.

Remuneration committee

The remuneration committee, which comprises Martyn Churchouse and Melissa Sturgess, and which is chaired Melissa Sturgess, reviews the performance of executive directors and sets their remuneration, determines the payment of bonuses to executive directors and considers the future allocation of share options and other equity incentives pursuant to any share option scheme or equity incentive scheme in operation from time to time to directors and employees.  Meetings of the remuneration committee are required to be held at least twice a year.  The remuneration committee is required to report formally to the Board on its proceedings after each meeting on all matters within its duties and responsibilities. The members of the remuneration committee are required to be re-elected annually by the Board. 

The remuneration and terms and conditions of appointment of the non-executive directors are determined by the Board.

Internal control

The Board is responsible for establishing and maintaining the Company’s system of internal control. Internal control systems manage rather than eliminate risks to which the Company is exposed and such systems, by their nature, can provide reasonable but not absolute assurance against misstatement or loss. There is a continuous process for identifying, evaluating and managing the significant risks faced by the Company. The key procedures which the directors have established with a view to providing effective internal control are as follows:

• Identification and control of business risks
  The Board identifies the major business risks faced by the Company and determines the appropriate course of action to manage those risks.


• Budgets and business plans
  Each year the Board approves the business plan and annual budget. Performance is monitored and relevant action taken throughout the year through the regular reporting to the Board of changes to the business forecast.


• Investment appraisal
  Capital expenditure is controlled by budgetary process and authorisation levels. For expenditure beyond specified levels, detailed written proposals have to be submitted to the Board. Appropriate due diligence work is carried out if a business or asset is to be acquired.


• Annual review and assessment
  The Board is currently carrying out a detailed review and assessment of the effectiveness of the Company’s system of internal control, a process that will be maintained on an annual basis.