The Directors are responsible for protecting the rights and interests of the shareholders through the implementation of sound strategies and action plans and the development of an integrated framework of controls over the consolidated entity's resources, functions and assets. The Company's corporate governance practices, which are summarised below, were adopted in October 2002 and are reviewed at appropriate intervals.

The Board draws on relevant best practice principles particularly those issued by the ASX Corporate Governance Council in March 2003. While Aeris will attempt to adhere to the principles proposed by ASX, it is mindful that there may be some instances where compliance is not practicable for a company of Aeris' size.

The March 2003 Australian Stock Exchange Corporate Governance Council publication 'Principles of Good Corporate Governance and Best Practice Recommendations' is for guidance purposes, however all listed companies are required to disclose the extent to which they have followed the recommendations; to identify any recommendations that have not been followed; and reasons for not doing so.

The Company's Board of Directors and its Corporate Governance Committee have reviewed the recommendations. In many cases the Company was already achieving the standard required. In other cases the Company will have to consider new arrangements to enable compliance. In a limited number of instances, the Company may determine not to meet the standard set out in the recommendations, largely due to the recommendation being considered by the Board to be unduly onerous for a company of this size.

A set of Revised Principles were issued by ASX in August 2007. Aeris will be reviewing these in the 2007-08 year with a view to reporting against the eight revised principles.

The following paragraphs set out the Company's position relative to each of the 10 principles contained in the ASX Corporate Governance Council's report.

Principle 1: Lay solid foundations for management and oversight
The Company has not yet formalised and disclosed the functions reserved to the Board and those delegated to management. However, the Company has a small Board of four directors (three non-executive directors) and a small management team, so roles and functions have to be flexible to meet specific requirements.

Principle 2: Structure the Board to add value
The Company complies with many of the recommendations within this area. The Chairman is not independent as he is a substantial shareholder. However, he is separate from the executive management of the Company. The Company does not comply with the recommendation that a majority of directors are independent, because three are substantial shareholders and the fourth director was employed in an executive capacity within the last three years. The Company does not have a Board nomination committee. Three of the Company's four directors are non-executives. Transactions with director related entities are set out in note 19 to the financial statements.

Each Director of the Company has the right to seek independent professional advice at the expense of the Company. Prior approval of the Chairman is required, but this will not be unreasonably withheld.

Principle 3: Promote ethical and responsible decision-making
The Company has a policy concerning trading in its securities by Directors, management, staff and significant consultants which is set out under Securities Trading and Trading Windows on page 50. The Company does not have a formal code of conduct, again reflecting the Company's size and the close interaction of individuals throughout the organisation.

Principle 4: Safeguard integrity in financial reporting
The Company periodically reviews its procedures to ensure compliance with the recommendations set out under this principle. Senior management confirms that the financial reports represent a true and fair view and are in accordance with relevant accounting standards. The Chief Executive Officer and the Chief Financial Controller state in writing to the Board that the Company's financial reports are complete and present a true and fair view, in all material respects, of the financial condition and operational results of the Company are in accordance with relevant accounting standards.

The Company has an Audit Committee and has adopted a formal charter, which has been approved by the Board. The Audit Committee consists of the two non-executive Directors, Messrs Bernard Stang (Chairman of Committee) and Maurie Stang. These Directors have applicable expertise and skills for this Committee. This structure does not meet the ASX's guidance regarding independence, in that it should have a majority of independent directors (both members being substantial shareholders) and have at least three members. The audit committee reports to the Board after each committee meeting. In conjunction with the full Board, the committee reviews the performance of the external auditors (including scope and quality of the audit).

The primary responsibilities of the audit committee are to oversee the existence and maintenance of internal controls, accounting systems and the financial reporting process, to nominate external auditors and review existing external audit arrangements.

Principle 5: Make timely and balanced disclosure
The Company, its Directors and staff are very aware of the ASX's continuous disclosure requirements and operate in an environment where strong emphasis is placed on full and appropriate disclosure to the market. The Company had adopted formal written policies regarding disclosure.

Principle 6: Respect the rights of shareholders
All significant information disclosed to the ASX is posted on the Company's website as soon as it is disclosed to the ASX. When analysts are briefed on aspects of the Group's operations, the material used in the presentation is released to the ASX and posted on the Company's website. Procedures have also been established for reviewing whether any price sensitive information has been inadvertently disclosed, and if so, this information is also immediately released to the market.

The Company does not have a communications strategy to promote effective communication with shareholders, as it believes this is excessive for small companies, the Company does communicate regularly with shareholders. The Company has requested the external auditor to attend general meetings and this has been supported by the Company's audit partner at UHY Haines Norton.

Principle 7: Recognise and manage risk
The Company is a small, technology company and has developed an appropriate formal policy on risk oversight and management of risk to fit the size of its business. Risk management arrangements are the responsibility of the Board of Directors and senior management collectively. Business risk factors are discussed at each Board Meeting.

Principle 8: Encourage enhanced performance
The Company has a Remuneration Committee (refer principle 9), to meet as and when required, to review performance matters. There has been no formal performance evaluation of the Board during the past financial year, although its composition has been discussed at Board meetings and will in the future be reviewed at a Board meeting at least annually. The Directors work closely with management and have full access to all the Company's files and records.

Principle 9: Remunerate fairly and responsibly
A Remuneration Committee was established in December 2004. The committee consists of Messrs M Stang and H Jones. Directors believe that the size of the Company makes individual salary and contractor negotiation more appropriate than formal remuneration policies.

The Company will seek independent external advice and market comparisons as necessary. In accordance with Corporations Act requirements, the Company discloses the fees or salaries paid to all Directors, plus its highest paid officers. The Company Employee Share Option Plan (ESOP) was approved by shareholders at the November 2004 Annual General Meeting.

Principal 10: Recognise the legitimate interests of stakeholders
Due to the Company's size and relative level of operational activity which makes legal compliance a less onerous task than with larger companies, the Company does not have a formal code of conduct to guide compliance with legal and other obligations. The Board of Directors continues to review the situation to determine the most appropriate and effective operational procedures.

Ethical standards
The Board's policy is for the Directors and management to conduct themselves with the highest ethical standards. All Directors and employees will be expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.

Securities Trading and Trading Windows
The Company has a Share Trading Policy under which Directors, members of Senior Management and other employees likely to be in possession of unpublished price sensitive information and their associates may not trade in the Company's securities during the following 'blackout periods' commencing:

	30 days prior to the release by the Company of its half-yearly results to the ASX and concluding two days after such release; and
	30 days prior to the release by the Company of its annual results to the ASX and concluding two days after such release.

In addition, consistent with the law, designated officers are prohibited from trading in the Company's securities while in the possession of unpublished price sensitive information concerning the Company. Unpublished price sensitive information is information regarding the Company, of which the market is not aware, that a reasonable person would expect to have a material effect on the price or value of the Company's securities.

Notice of an intention to trade must be given to the Aeris CEO (or Chairman in the case of the Directors) prior to trading in the Company's securities as well as a confirmation that the person is not in possession of any unpublished price sensitive information. The completion of any such trade by a Director must also be notified to the Company Secretary who in turn advises the ASX.