The Roles of Board and Management

The Directors are conscious that a primary objective is to increase shareholder value within an appropriate framework, which ensures that the interests and rights of shareholders are protected and that the affairs of the company are conducted in a professional and ethical manner. For example, the role of chairman and senior executive has not been carried out by one person since 18^th October 2004.

The functions reserved for the Board include setting the strategic direction of the company, appointing or removing the CEO, setting corporate objectives, approving financial budgets and major capital expenditure, defining the limits of management's authority and establishing capital, funding and dividend policy. In order to perform their duties, all board members have the right to seek independent professional advice at the economic entity's expense.

Operational Management of CCI is carried out by subsidiary Managing Directors, some of whom attend parent company board meetings although they are not members of that Board.

Board Structure

The Board seeks to ensure that its membership comprises persons with the appropriate skills, knowledge and experience to maximise its effectiveness and contribution to the company. The Board of CCI Holdings Limited is comprised of three independent directors with a significant financial interest in the company. The Chairman is a non executive director who is elected by the full board and this role is separate from that of the CEO.

Due to the relative small size of the business, the full board assumes the role of the nomination committee of directors and chief executive officer. Such assessments of board membership are made on a regular basis, and in the event of a vacany, independent advice may be considered if deemed necessary. Appointments of directors by the full board must be ratified by election by shareholders at the next Annual General Meeting. Directors must retire and submit themselves for re-election every three years.

The Board has an Audit Committee which comprises a non-executive Director as Chairman and two other non-executive Directors.

Ethical Business Practices

The Board of CCI is committed to ensuring that the group' affairs are conducted in a judicious and ethical manner. The Board does not have a formal code of conduct for directors and executives because it believes that one of the company's best assets is the reputation of its directors and senior management. The Board is adamant that its members and staff act with the highest of integrity in all their dealings with stakeholders. This approach is endorsed by its operational requirements to meet various government and non-government technical standards.

The Board has a policy in dealing in the company's securities. Directors are prohibited from dealing in CCI securities outside of a four week window after a general meeting or after the release of the annual or half year financial statements, without prior approval of the chairman.

Financial Reporting Integrity

The Board has upgraded financial reporting procedures over the last twelve months to reflect a stronger stance on corporate governance compliance in this area. A key policy is that it requires the CEO and the Chief Financial Officer to state in writing that the company's financial reports repsent a true and fair view in all material respects of the company's financial condition and operational results and are in accordance with relevant accounting standards.

CCI also has an Audit Committee. This Committee consists of three non-executive directors and the independent chairman is not the chairman of the CCI Board. The functions of the Audit Committee include reviewing external audit reports to ensure that, where major deficiencies or breakdowns in controls or procedures have been identified, appropriate and prompt remedial action is taken by management, reviewing the financial report and other financial information distributed externally, examining new accounting policies to ensure compliance with the Australian Accounting Standards and generally accepted accounting principles, monitoring the establishment of an appropriate internal control framework and considering enhancements and monitoring procedures in place to ensure compliance with the requirements of the Corporations Act 2001, ASX and all other regulatory requirements.

The Audit Committee does not presently have a formal charter because it cannot justify rigidity in compliance duties where some flexibility is required in the case of CCI's relatively small size.

Timely Disclosure of Material Factors

The Board aims to ensure timely, balanced and continuous disclosure to the market of all material matters concerning CCI in accordance with the ASX continuous disclosure regime and appropriate corporate transparency. The Board is sensitive to the requirements of an informed market. It seeks to keep its shareholders informed through reports to the ASX, half and full-year profit disclosures, annual reports and material shareholder information announcements.

The company does not have a written list of policies and procedures concerning disclosure because it believes its performance in recent times verify a highly diligent approach. This is reinforced by the fact that CCI is a relatively small company with active Board participation, where two of its Directors have had extensive experience in financial markets. Board members work closely in regard to releases to the market. Management has been instructed that only the Chairman may undertake shareholder communication with external parties, thereby minimising potential risks re confidentiality breaches. The Directors do not believe a formal prescriptive code is neither necessary nor practical for CCI.

Rights of Shareholders

The shareholders of CCI have both formal and informal rights provided by the Company's Constitution, regulatory bodies and proper public company behaviour. These rights include their entitlement to financial statements, attendance at shareholder meetings, and participation by voting on the election of Directors at the AGM and on other important issues. Shareholder meetings are conducted in an open forum with wide discussion encouraged by the Chairman. CCI believes it satisfies the rights of shareholders to effective communication through its fully distributed Annual Report, regular disclosures to the ASX, mailouts and explanatory memoranda where resolutions may be put to a vote at shareholder meetings. It believes it encourages open discussion of items at such meetings.

CCI does not have a formal communications strategy because of the Board's recognition of the importance of the issues, their professional backgrounds, their extensive time devoted to CCI and the increased expense of creating and maintaining rigid academic doctrine.

A senior partner of the firm of auditors attends the AGM, although the auditor is professionally restricted from providing detailed financial information. However the auditor is available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor's report.

Risk Management

In their deliberations the Directors of CCI consider risk assessment in conjunction with other analyses and considerations. The Board recognises risk management is important to identify, assess and quantify business risks, develop and implement a response action and to monitor the risk to the company, its shareholders, employees and other stakeholders.

The CCI Board in the last twelve months has strengthened its approach to assessing business risk to the organisation. Current areas of focus include potential changes in the business environment, competition, technology, staff retention, customer relationships, interest rates, OH&S, legal and statutory requirements, insurance and internal controls. The Chief Executive Officer and Chief Financial Officer are required to state to the Board in writing that risk management is founded on a sound system and that the company's risk management control is operating efficiently.

CCI does not have formally established policies on risk and management because of the wide nature of CCI' business activities requires considerable flexibility and there are significant costs of creating and maintaining such a formal approach. The Board believes its current approach is appropriate for a company of CCI's size.

Encourage Enhanced Performance

The Board of CCI Holdings Limited and senior management monitor the performance of all divisions through the preparation of monthly management accounts which are compared with budgets and forecasts. Each division has key performance indicators and reports to the Board monthly. Additionally, and senior management monitor the performance of all divisions. The monitoring of CCI's performance by the board and management assists in identifying the areas where additional attention is required.

The CEO evaluates the performance of the senior management team on an informal basis throughout the year and on a formal basis once per year. The Board believes that the shareholders of the company ultimately assess the performance of the Board, its committees, individual directors and senior management based on the financial performance of the company in the context of the commercial, legal and ethical framework within which the company operates.

Employees participate in CCI's performance through the CCI-ESAT employee share scheme and the Board is presently establishing a new incentive scheme.

Fair and Responsible Remuneration

The full Board of CCI operates as a remuneration committee. The primary function of the Directors in this regard is to review senior executive performance and reward. All personnel are assessed at least on an annual basis and the company has various formal wage agreements in place. Employees of more than two years standing participate in the CCI-ESAT employee share scheme where CCI equity is provided gratis.

CCI does not at present have a formal process for evaluating the performance of its Board and Committee because it believes its present approach is suitable for a company of CCI's size. In particular, the Directors believe they are very open and transparent in disclosing their plans, aspirations and financial results to the shareholders. They believe that the annual shareholder meetings provide a good opportunity for shareholders to evaluate their performance.

Stakeholder Interests

The Board is aware of its formal and informal obligations to shareholders and other stakeholders. The Board accepts that appropriate recognition of these interests will enhance shareholder value in the long term. Management is also aware of its obligations in respect to these issues, especially as CCI's businesses carry many formal reporting obligations to regulatory bodies.

CCI does not have a formal prescriptive code in relation to these repsonsibilities because it believes the Board and management are both aware of their importance and a formal code is not practical for a company of CCI's size.