Statement

The Company is committed to applying the highest principles of corporate governance commensurate with its size.

Compliance
As the Company is listed on the Alternative Investment Market, it is not required to comply with the provisions set out in the Combined Code prepared by the committee on corporate governance, nor is it required to comment on its compliance with such provisions.

However, the following information is provided, which describes how the principles of corporate governance are applied by the Company.

Directors
The Company supports the concept of an effective Board leading and controlling the Group. The Board is responsible for approving Group policy and strategy and meets regularly. Executive management supply the Board with appropriate and timely information and the Directors are free to seek any further information they consider necessary. All Directors have access to advice from the Company secretary and independent professionals at the Company's expense. Training is available for new Directors and other Directors as necessary.

The Board consists of one Executive Director, who holds a key operational position in the Company and three Non Executive Directors, who bring a breadth of experience and knowledge. This provides a balance whereby an individual or small group cannot dominate the Board's decision making. Certain Non Executive Directors have interests in shares of the Company and all the Non Executive Directors hold share options, as set out in note 5. The Non Executive Directors have each considered their independence in light of the above interests and other business relationships as laid out in note 19. The Directors and the Board as a whole consider that these factors do not impinge upon their objectivity or independence and so all Non Executive Directors are considered to be independent from the Group and management.

The Chairman of the Board is David Lees. The Board members are described on page 5. All Directors are subject to re–election every three years and at the first Annual General Meeting (‘AGM’) after their appointment. The Board has not appointed a Nomination Committee.

Relations with shareholders
The Company values the views of its shareholders and recognises their interest in the Company's strategy and performance, Board membership and quality of management. It therefore holds regular meetings with its institutional shareholders to discuss objectives.

The AGM is used to communicate with investors and they are encouraged to participate. The Chairman of the Audit and Remuneration Committees is available to answer questions. Separate resolutions are proposed on each issue so that they can be given proper consideration and there is a resolution to approve the annual report and accounts. The Company counts all proxy votes and will indicate the level of proxies lodged on each resolution after it has been dealt with by a show of hands.

Accountability and audit
The Board presents a balanced and understandable assessment of the Group's position and prospects in all interim and price sensitive reports and reports to regulators, as well as in the information required to be presented by statutory requirements.

The Audit Committee meets as required and comprises David Lees (Chairman) and Keith Lassman both of whom are Independent Non Executive Directors. The terms of reference of the Committee include keeping under review the scope and results of external audits and their cost effectiveness. The Committee reviews the independence and objectivity of the external auditor. This includes reviewing the nature and extent of non–audit services supplied by the external auditor to the Group, seeking to balance objectivity and value for money.

Internal controls
The Board is responsible for maintaining a sound system of internal control to safeguard both the shareholders' investment and the Group's assets.

The Board has reviewed its risk management framework and identified areas where procedures need to be changed or installed.

The Board has considered the need for an internal audit function but has decided that the size of the Group does not justify this at present. However, it will keep the decision under review. The Board has reviewed the operation and effectiveness of the Group's system of internal control for the financial period and the period up to the date of approval of the financial statements.

The Directors are responsible for the Group's system of internal control and reviewing its effectiveness. The system of internal control is designed to provide reasonable, but not absolute, assurance against material misstatement or loss.

The key features of the Group's system of internal control are as follows:

Steps taken to ensure an appropriate control environment
The Board, acting through the Audit Committee, has put into place an organisational structure with clearly defined responsibilities for internal financial control.

Process used to identify major business risks and to evaluate their financial implications
The identification of major business risks is carried out in conjunction with operational management and steps are taken to mitigate or manage these risks where possible.

Major information systems that are in place
There are comprehensive financial management reporting systems in place, which involve the preparation of detailed annual budgets by the Group and longer–term financial forecasting. The budgets are generated by the responsible member of the management team and passed to the Board for approval. The Board monitors performance against budget on a regular basis.

Main control procedures, which address the financial implications of the major business risks
The Group maintains financial controls and procedures appropriate to the business environment conforming to overall standards and guidelines, which are set by the Board.

Monitoring system the Board uses to check the system is operating effectively
The external auditor review the control procedures to the extent necessary for expressing their audit opinion, and report on any weakness arising during the course of their audit work. The Board has reviewed the operation and effectiveness of the Group's system of internal financial control for the financial period and for the period up to the date of the approval of these financial statements.

Going concern
After making appropriate enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

David Lees
Chairman

report on remuneration

for the year ended 31 December 2007

Directors' remuneration
The Board recognises that Directors' remuneration is of legitimate concern to shareholders and is committed to following current best practice. The Group operates within a competitive environment and its performance depends on the individual contributions of the Directors and employees and it believes in rewarding vision and innovation. The Board has decided to present this remuneration report for shareholder approval so that the shareholders can approve the policy set out in this report.

Policy on executive director's remuneration
The policy of the Board is to provide an executive remuneration package designed to attract, motivate and retain Directors of the calibre necessary to maintain the Group's position and to reward them for enhancing shareholder value and return. It aims to provide sufficient levels of remuneration to do this but to avoid paying more than is necessary. The remuneration should also reflect the Directors' responsibilities and include incentives to deliver the Company's objectives. The notice period for termination of the Executive Director service contract is between three and twelve months.

The Remuneration Committee has responsibility for making recommendations to the Board on the Company's general policy on executive remuneration and also specific packages for individual Directors. It carries out the policy on behalf of the Board.

The membership of the Committee is as follows:

David Lees (Chairman)
Keith Lassman

David Lees and Keith Lassman are Independent Non Executive Directors. Neither of them have any personal financial interest in the matters to be decided (other than as shareholders, share option holders, and those disclosed in note 19 related party transactions), potential conflicts of interest arising from cross directorships nor any day–to–day involvement in running the business.

The Committee meets as required to determine executive remuneration policy.

Main elements of executive remuneration
There are four main elements of the Executive Directors' remuneration package:

i. fees;

ii. annual bonus payments;

iii. share option incentives; and

iv. pension contributions.

Fees
The Executive Director's basic salary is reviewed by the Committee. In deciding upon appropriate levels of remuneration, the Committee believes that the Group should offer average levels of base pay reflecting individual responsibilities compared to similar jobs in comparable companies, as well as internal factors such as performance.

Annual bonus payments
The Committee establishes the objectives, which must be met for a bonus to be paid. A performance related award scheme incorporating audited earnings per share, share price performance and Group profitability has been established which recognises the success of the business for which the Executive Directors are responsible for a bonus to be awarded. Bonus payments are non–pensionable.

Pensions
All pension entitlements for the Directors are disclosed in note 5.

Non executive directors
The Board as a whole, within the limits set out in the Articles of Association, determines the remuneration of the Non Executive Directors. Share options were granted to the Non Executive Directors in February 2004. Non Executive Directors do not have contracts of service but letters of appointment.

Share options incentives
The interests of Directors in the Company's share options are detailed in note 5 of the financial statements.

Details of directors' remuneration
This report should be read in conjunction with notes 5 and 19 to the financial statements, which also form part of this report. Full details of all elements of the remuneration package of each Director are given in note 5 to the financial statements, together with details of Directors' share interests.

David Lees
Chairman of the Remuneration Committee

Investor Relations

Statement

report on remuneration