Governance

Compliance with the Combined Code

As an AIM-listed company, there is no requirement to give a corporate governance report. However, the group recognises the importance of good corporate governance. The principles and provisions of the Combined Code 2003 have been considered by the board. The group does not comply with all aspects of the Combined Code, but has adopted it to the extent the directors consider appropriate for a group of its size and nature. Accordingly, the group has established an audit committee, a remuneration committee and a nominations committee.

Composition and operation of the board

The board is responsible for the direction and overall performance of the group with emphasis on policy matters, strategy, financial performance and major operational issues. The board meets at least ten times per year and a meeting timetable is agreed annually. The board currently comprises the chief executive officer, the chief financial officer and three non-executive directors, of whom one, Richard Farleigh, is the non-executive chairman.

Audit committee

The audit committee comprises the three non-executive directors (though not necessarily independent). This committee is chaired by Richard Farleigh. It is responsible for ensuring that the financial performance of the group is properly reported on and monitored, and for reviewing the auditors' reports relating to accounts and internal control systems.

Remuneration and nominations committees

The remuneration and nomination committees comprise all the non-executive directors and are chaired by John Hart. The remuneration committee is responsible for the review and recommendation of the scale and structure of remuneration for executive directors including the award of share options. Additionally the committee is also consulted on and reviews the remuneration proposals for senior management positions. The nominations committee will consider any future appointments to the board.

Internal control/risk management

The directors are responsible for the group's internal controls, and have established a framework intended to provide reasonable, but not absolute, assurance against material financial misstatement or loss.

Relationships with shareholders

The chief executive officer and chief financial officer meet on a regular basis with representatives of institutional shareholders to discuss their views and to ensure that the strategies and objectives of the group are well understood. Issues discussed with institutional shareholders include the group's performance and the impact of any major developments. The group also has a website which provides information on the group's aims, and includes a separate investor information section on which financial data and other significant announcements are published including the requirements of rule 26. The website can be found at www.clearspeed.com.

Terms of reference

Audit Committee

Nominations Committee

Remuneration Committee