Corporate Governance

The Board recognises the importance of sound corporate governance and intends to comply with, the main provisions of the Corporate Governance Guidelines for AIM Companies published in July 2005 by the Quoted Companies Alliance (“the QCA Guidelines”) to the extent which the Directors consider practical and appropriate to a company of the size and nature of Eatonfield. Other aspects of the QCA Guidelines are complied with save that a nomination committee has not been appointed. The Board will handle nomination issues. The Board considers that given the size and nature of activities of the Company, such non-compliance with the QCA Guidelines is not unreasonable and does not compromise the overall principles of corporate governance which the Board strongly supports. The Board has recently established audit and remuneration committees, each of which has formally delegated duties and responsibilities.

Audit Committee The Audit Committee comprises Paul Williams, who will act as Chairman and Rob Lloyd. The Committee will meet not less than twice a year. It is responsible for the maintenance of sound governance and for ensuring that the financial performance of the Company is properly reported on and monitored. The Audit Committee will consider the appointment of, and fees payable to, the external auditors and discuss with them the scope of the annual audit. The Audit Committee will also review the external auditors’ management letter. As part of its duties, the Audit Committee will review the half-year and annual financial statements for compliance with accounting standards, statutory obligations and the requirements of the AIM Rules and the QCA Guidlines. The Audit Committee will also review the effectiveness of the internal controls of the Company, together with all risk management, treasury and banking arrangements.

Remuneration Committee The Remuneration Committee comprises Paul Williams, who will act as Chairman and Rob Lloyd will meet, not less than twice a year. It is responsible for determining and reviewing the Company’s policy on executive remuneration. Executive remuneration packages are designed to ensure that the Company’s executive directors and senior executives are fairly rewarded for their individual contributions to the Company. In addition, the Remuneration Committee will administer the operation of the Share Option Scheme established by the Company. It is the Remuneration Committee’s intention to use this scheme to incentivise and motivate executive directors, senior executives and other employees. The members of the Remuneration Committee will have no personal interest in the outcome of their decisions and seek to serve the interests of shareholders to ensure the continuing success of the Company. The remuneration of the non-executive directors will be determined by the executive directors and confirmed by the full Board, excluding the non-executive director concerned.