Introduction

The Board of Frigrite is accountable to shareholders for the proper management of the Company's business and affairs. The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable.

The Board is committed to fostering an environment that allows the principles of good governance to thrive. The Board will follow the ASX Corporate Governance Council Principles of Good Corporate Governance and Best Practice Recommendations.

The Board of Directors

The primary role of the Board is to provide effective governance over the Company's affairs to ensure the interests of shareholders are protected and the confidence of the investment market is maintained, whilst having regard for the interests of all stakeholders including customers, employees, suppliers and local communities. To this end the Board has adopted a charter, which formalises the Board's role and duties and the powers delegated to management.

The responsibility for the operation and administration of the Company is delegated by the Board, to the CEO and the executive management team. The Board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and had in place procedures to assess the performance of the CEO and the executive management team.

Whilst at all times the Board retains full responsibility for guiding and monitoring the Company, in discharging its stewardship, it makes use of the following sub-committees:

• Audit and Risk Committee; and
• Nomination and Remuneration Committee

Board Committees and individual Directors may seek independent external professional advice for the purposes of proper performance of their duties at the expense of the Company.

Board Composition

The composition of the Board is determined using the following principles:

• Minimum of 3 and maximum of 10 Directors (including the Chairman) unless a smaller number is determined by the Board;
• Non-executive Chairman; and
• Majority of independent non-executive Directors

It is the Board's policy that there should be a majority of independent, non-executive Directors. An independent director is independent of management and free of any business or other relationship that could materially interfere with - or could reasonably be perceived to materially interfere with - the exercise of their unfettered and independent judgment.

The Board will consider the materiality of any given relationship on a case-by-case basis and has adopted materiality guidelines to assist it in this regard. The Board reviews the independence of each Director in light of interests disclosed to the Board from time to time.

Frigrite currently has five Directors of which 3 are considered to be independent non-executive Directors. The Chairman of the Board is an independent non-executive Director.

Board Committees

The Board has established 2 committees to assist in the discharge of its duties. Each committee has its own written charter setting out its role and responsibility, composition, structure and the manner in which it is to operate.

The Audit And Risk Committee

The Audit and Risk Committee provides assistance to the Board of Directors in fulfilling its corporate governance and oversight responsibilities in relation to the Company's financial reporting, internal control structure, risk management systems, and the internal and external audit functions. In so doing, it is the responsibility of the committee to maintain free and open communication between the committee, external auditors and management of the Company.

The Committee discharges these responsibilities by:

• Understanding the Company's structure, controls, and types of transactions in order to adequately assess the significant risks faced by the Company in the current environment;
• overseeing the Company's financial reporting process on behalf of the Board and reporting the results of its activities to the Board;
• ensuring the adequacy and effectiveness of the accounting and financial controls, including the Company's policies and procedures to assess, monitor and manage business risk and legal and ethical compliance programs; and
• making recommendations to the Board regarding the appointment of the external auditor and conducting an annual assessment of the external auditor, including assessing the independence of the auditor.

The committee's charter provides that the committee will comprise at least 3 non-executive Directors, a majority of whom are independent. The current members of the committee are:

• Ian Veal (Chairman);
• Andrew Barton; and
• John Eady

Members of management and the external auditors attend meetings of the committee by invitation. The committee may also have access to financial and legal advisers, in accordance with the Board's general policy.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee is responsible for matters related to succession planning, recruitment and the appointment and remuneration packages of the Directors and senior management. In making recommendations to the Board regarding appointment of Directors, the committee periodically assesses the appropriate mix of skills, experience and expertise required on the Board and assesses the extent to which the required skills and experience are represented on the Board. The committee may obtain information from, and consult with, management and external advisers, as it considers appropriate.

The committee's charter provides that the committee will comprise at least 2 non-executive Directors and the Managing Director. The majority of the committee must be independent directors and the Managing Director may not participate in deliberations of the committee where he has a personal interest. The current members of the committee are:

• Andrew M Barton (Chairman); and
• Ian Veal; and
• John Carew

Members of management will attend meetings of the committee by invitation. The committee may also have access to financial and legal advisers, in accordance with the Board's general policy.

Organisation

This charter governs the operations of the audit and risk committee. The committee shall review and reassess the charter at least annually and obtain the approval of the board of directors.

Membership

The committee shall be members of, and appointed by, the board of directors and shall comprise at least three directors that have diverse, complementary backgrounds, and are independent of management and the company. However, the committee chair shall have leadership experience and a strong finance, accounting and/or business background.

All committee members shall be financially literate, or be made financially literate within a reasonable period of time of appointment. Furthermore, at least one member shall have accounting and/or related financial management expertise as determined by the board of directors.

Members of the committee shall be considered independent so long as they do not have any relationship with the company that may interfere with the exercise of independent judgment. This means they shall not accept any consulting, advisory, or other compensatory fee from the company and are not an affiliated person of the company or its related entities. They should also meet the definition of what constitutes an 'independent director' in the Investment and Financial Services Association's Guidance Note No 2.00, Corporate Governance: A Guide for Investment Managers and Corporations (1999) and the Auditing and Assurance Standards Board, the Australian Institute of Company Directors and the Institute of Internal Auditors jointly published Audit and risk committees: Best Practice Guide. The only compensation shall be directors' fees for services provided to the audit and risk committee.

Meetings

The committee shall meet at least four times each year. The purpose of these meetings shall be to:

• Review and approve the external audit plan
• Review and approve the half-year financial report
• Update the external audit plans
• Review and approve the annual financial report

Furthermore, the committee shall meet in private session at least annually to assess management's effectiveness.

Minutes

Minutes of meetings of the committee shall be kept by the Secretary and, once those minutes have been approved by the chair of the committee, shall be distributed to all members of the board for confirmation at the next board meeting.

Purpose

The audit and risk committee shall provide assistance to the board of directors in fulfilling its corporate governance and oversight responsibilities in relation to the company's financial reporting, internal control structure, risk management systems, and the internal and external audit functions. In so doing, it is the responsibility of the committee to maintain free and open communication between the committee, external auditors and management of the company.

In discharging its oversight role, the committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the company and the authority to engage independent counsel and other advisers as it determines necessary to carry out its duties.

Duties and Responsibilities

Understanding the business

The committee shall ensure it understands the company's structure, controls, and types of transactions in order to adequately assess the significant risks faced by the company in the current environment.

Financial reporting

The primary responsibility of the audit and risk committee is to oversee the company's financial reporting process on behalf of the board and report the results of its activities to the board.

Whilst the audit and risk committee has the responsibilities and powers set forth in this charter, it is not the duty of the audit and risk committee to plan or conduct audits.

The board of directors is responsible for the company's financial reports including the appropriateness of the accounting policies and principles that are used by the company. The external auditors are responsible for auditing the company's financial reports and for reviewing the company's unaudited interim financial reports.

The committee, in carrying out its responsibilities, believes its policies and procedures should remain flexible, in order to best react to changing conditions and circumstances. The committee should take appropriate actions to set the overall corporate 'tone' for quality financial reporting, sound business risk practices, and ethical behaviour. The following shall be the principal duties and responsibilities of the audit and risk committee. These are set forth as a guide with the understanding that the committee may supplement them as appropriate.

Assessment of accounting, financial and internal controls

The committee shall discuss with management and the external auditors the adequacy and effectiveness of the accounting and financial controls, including the company's policies and procedures to assess, monitor, and manage business risk, and legal and ethical compliance programs.

Any opinion obtained from the internal or external auditors on the company's choice of accounting policies or methods should include an opinion on the appropriateness and not just the acceptability of that choice or method.

The committee shall meet separately periodically with management and the external auditors to discuss issues and concerns warranting committee attention, including but not limited to their assessments of the effectiveness of internal controls and the process for improvement. The committee shall provide sufficient opportunity for the external auditors to meet privately with the members of the committee. The committee shall review with the external auditor any audit problems or difficulties and management's response.

The committee shall receive regular reports from the external auditor on the critical policies and practices of the company, and all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management.

Appointment of external auditors

The committee shall be directly responsible for making recommendations to the board of directors on the appointment, reappointment or replacement (subject, if applicable, to shareholder ratification), remuneration, monitoring of the effectiveness, and independence of the external auditors, including resolution of disagreements between management and the auditor regarding financial reporting. The committee shall pre-approve all audit and non-audit services provided by the external auditors and shall not engage the external auditors to perform any non-audit/assurance services that may impair or appear to impair the external auditor's judgment or independence in respect of the company. The committee may delegate pre-approval authority to a member of the audit and risk committee. The decisions of any audit and risk committee member to whom pre-approval authority is delegated must be presented to the full audit and risk committee at its next scheduled meeting.

Assessment of the external audit

At least annually, the committee shall obtain and review a report by the external auditors describing (or meet, discuss and document the following with them):

• The audit firm's internal quality control procedures.
• Any material issues raised by the most recent internal quality control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues.
• All relationships between the external auditor and the company (to assess the auditor's independence).

In addition, the committee shall set clear hiring policies for employees or former employees of the external auditor in order to prevent the impairment or perceived impairment of the external auditor's judgment or independence in respect of the company.

Independence of the external auditors

The committee shall review and assess the independence of the external auditor, including but not limited to any relationships with the company or any other entity that may impair or appear to impair the external auditor's judgment or independence in respect of the company. Furthermore, the committee shall draft an annual statement for inclusion in the company's annual report of whether the committee is satisfied the provision of non-audit services is compatible with external auditor independence.

Scope of the external audit

The committee shall discuss with the external auditors the overall scope of the external audit, including identified risk areas and any additional agreed-upon procedures. In addition, the Committee shall also review the external auditor's compensation to ensure that an effective, comprehensive and complete audit can be conducted for the agreed compensation level.

The committee shall review the full year and half-year financial reports prior to the filing of these with the ASX. Also, the committee shall discuss the results of the half-year review and any other matters required to be communicated to the committee by the external auditors under generally accepted auditing standards. The chair of the committee may represent the entire committee for the purposes of this review.

The committee shall review all representation letters signed by management to ensure that the information provided is complete and appropriate. Also, the committee shall discuss the results of the annual audit and any other matters required to be communicated to the committee by the external auditors under generally accepted auditing standards.

The committee shall establish procedures for the receipt, retention, and treatment of complaints received by the company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of the company of concerns regarding questionable accounting or auditing matters.

The committee shall receive corporate legal reports of evidence of a material violation of the Corporations Act, the ASX Listing Rules or breaches of fiduciary duty.

Committee Performance

The committee shall perform an evaluation of its performance at least annually to determine whether it is functioning effectively by reference to current best practice.

The Nomination and Remuneration Committee Charter sets out the operations and responsibilities of the Nomination and Remuneration Committee.

The Committee's Purpose and Responsibilities

The Committee's purpose is to discharge the Board's responsibilities relating to the nomination and selection of directors and the compensation of Frigrite's executive, directors and managers. The Committee will meet as and when required to discharge its responsibilities, but not less than twice annually.

The Committee's responsibilities include:

• sourcing new directors;
• reviewing regularly the succession plans in place for membership of the Board to ensure that an appropriate balance of skills, experience and expertise is maintained;
• instituting procedures for evaluating the performance of the Board, individual directors and board committees;
• reviewing the time commitment required from a non-executive director and assessing whether individual directors are meeting this requirement;
• devise packages to attract and retain directors and executives of the calibre necessary to ensure the success of Frigrite while ensuring that Frigrite avoids paying more than is necessary or deemed reasonable to achieve this aim;
• evaluating its performance at least annually to determine whether it is functioning effectively by reference to current best practice; and
• reviewing and reassessing the charter at least annually and obtaining the approval of the Board of directors for any amendments to the charter

The Committee's Powers

The Committee is able to obtain or retain outside professional advice at the Company's expense as appropriate. The Committee is also able to obtain any information it requires from any employee of the company.

Membership Requirements

The Committee will have a minimum of three members at all times. A majority of those members will be independent directors. At least one member of the Committee must have an understanding of remuneration policies and practices.

The current members of the Committee are Mr Andrew M Barton (Chairman), Mr Ian Veal and Mr John Carew.

Frigrite has adopted a Code of Conduct for all directors and employees. The Code of Conduct reflects Frigrite's standards and values, and sets the standard of conduct expected of all of those who are a part of Frigrite.

The directors of Frigrite believe that Frigrite's Approach - and getting it right - is a vital part of ensuring the success of our business and maintaining effective relationships with the people we do business with. The Code of Conduct recognises Frigrite's Approach. It also highlights for directors and employees the way Frigrite expects its people to conduct themselves to ensure that Frigrite continues to achieve sustained success.

Set out below is a summary of some of the key features of Frigrite's Code of Conduct.

Frigrite's Approach

Frigrite's Mission

• To be recognised by our customers as an organisation that provides the highest quality in every aspect of our service delivery.
• We will be recognised by the way we keep our customers informed and by being responsive to their needs.
• We will be recognised as excellent communicators of information with a desire to be flexible and understanding.
• We will be recognised by the knowledge we impart and by our ability to convey trust and integrity in our business dealings.
• Deliver a satisfactory level of capital growth and return for our shareholders, which in turn will generate further career opportunities for our employees.

Operating Style

In striving to meet its mission, Frigrite's operating style emphasises:

• safety as a core value;
• decisions based on facts;
• respect for people;
• approach which is aligned and adaptable;
• one-company; and
• work from market back.

Strategies

Frigrite's strategies emphasise:

• operational excellence;
• optimising the business portfolio;
• people providing the competitive advantage; and
• focused strategic expansion whether that be geographic, new products or new markets.

Aims

Frigrite's aims emphasise:

• Longer in market and shorter in production;
• Facility rationalisation and consolidation;
• Less complexity with fewer products and people but more services and solutions;
• Capitalising on differentiated products;
• Being able to demonstrate through clearly accepted benchmarking: operational excellence; customer focus; competitive advantage
• Integrated marketing/sales, logistics and inventory, production planning, finance and systems and product profitability;
• "Business to business" capability; and
• Growth through acquisitions and selective capital investment.

Accountabilities with the Code

Responsibilities of Directors & Employees

All directors and employees are expected to be familiar with the contents of the Code. Employees must also have a detailed understanding of Company business practices and policies that directly relate to their job. It is every employee's responsibility to comply with the Code. Employees should seek assistance from a manager or supervisor, or another source of advice identified in the Code if they do not fully understand how it should be applied.

Responsibilities of Managers & Supervisors

Managers and supervisors must take all reasonable steps to ensure that Frigrite's employees and where appropriate, consultants, contractors and partners are aware of and comply with the Code. They must consult the next level of management if problems occur. Managers and supervisors must also:

• Ensure that all employees have access to Company policies and procedures;
• Respond promptly and seriously to employees' concerns and questions about business conduct issues and seek further assistance if required; and
• Demonstrate exemplary behaviour that other employees can follow

Responsibilities of Senior Management

Management is responsible to the Board, through the Managing Director, for the Company's performance under this Code.

Under the Managing Director, the heads of each division and the senior managers who report directly to them have operational responsibility for ensuring compliance with the Code.

Breach of the Code

Any individual who breaches this Code or any of the guidelines or policies under it, or who authorises or permits any breaches by a subordinate will be subject to disciplinary action including possible dismissal.

The highest standards of corporate conduct are critical to Frigrite's image and success and therefore employees are encouraged to report any actual or suspected breach of the code and guidelines.

It is Frigrite's policy that any employee who reports in good faith a breach or suspected breach of legal or ethical standards will not be subject to retaliation, or retribution or other recriminations for making that report.

Key Features of the Code

Legal and ethical issues

To maintain the highest standards of legal and ethical behaviour, the Code requires employees to:

• ensure that they fully understand all laws and regulations relevant to their work;
• safeguard and maintain accurate records regarding the use of company resources under their control, including proprietary and confidential information;
• avoid conflicts of interest or the appearance of conflicts, including accepting gifts which could be reasonably regarded as unduly influencing the recipient or creating business obligation on the part of the recipient;
• comply with insider trading and trade practices laws; and
• avoid conduct (such as making payments or payments in kind) to induce others to act illegally or dishonestly

Health and Safety

Frigrite is committed to achieving the highest performance in occupational health and safety. Accordingly, the Code reflects this aim and provides that the Company will:

• seek continuous improvement in occupational health and safety performance;
• train and hold individual employees accountable for their area of responsibility;
• manage risk by implementing management systems to identify, assess, monitor and control hazards and by reviewing performance;
• ensure that employees, contractors and visitors understand their obligations in respect of this policy; and
• take appropriate steps to prevent workplace injuries and illnesses and for contributing to a safe and healthy work environment

The Code requires employees to behave responsibly with respect to the use of alcohol, drugs and tobacco at work when conducting company business and at company sponsored activities (as a general guide, alcohol, drugs and tobacco are not to be consumed in the workplace).

Environment

Frigrite is committed to achieving a high standard of environmental care by complying with current legislation and seeking continuous improvement in performance by taking account of evolving scientific knowledge and community expectations. This includes ensuring that Frigrite has management systems to identify, control and monitor environmental risks arising from its operations.

Recruitment and selection

Frigrite is committed to maintaining an efficient, skilled and flexible workforce through a range of employment practices and arrangements. Our selection process strives to:

• be thorough, consistent and efficient;
• be (and appear to be) fair, valid and non-discriminatory; and
• assess merit against specific and multidimensional criteria (relevant and demonstrable knowledge, skills, qualifications, experience and operating style)

Frigrite has an Equal Employment Opportunity and Anti-Harassment approach that is based on the following principles:

• all employees will be treated with respect, in a workplace free of harassment and intimidation;
• all employment decisions will be fair, reasonable, non-discriminatory and based on merit;
• no individual or group will be treated less favourably than another; and
• all communication will be free of bias, prejudice and discriminatory language

Frigrite management will promptly investigate and respond to all complaints of discrimination or harassment. Investigations will be conducted in a professional, discreet, confidential and impartial manner.

Employee Concerns

Where to go for assistance

Whenever possible, employees are encouraged to first discuss issues with their immediate supervisor or manager. If they unable to do this, there are a number of other avenues for raising a question or concern, including elevating the concern to other levels of management or contacting specified employees who have been nominated for such a purpose.

Employees who raise genuine concerns will not be subject to retribution or disciplinary action.

At times, compliance with the standards described in the Code will affect Frigrite's chances of winning or retaining business. Situations that involve a conflict between upholding Frigrite's policies and protecting the Company's short-term commercial interests should be openly and honestly discussed. These situations must be resolved in a manner that does not comprise Frigrite's business conduct standards.

The Company is aware of the obligations it has as to keep the market fully informed as required by the ASX Listing Rules of information which may have a material effect on the price or value of the Company's securities. Frigrite is committed to:

• ensuring compliance with the continuous disclosure obligations contained in the ASX Listing Rules and the disclosure requirements under the Corporations Act;
• promoting investor confidence and ensuring that shareholders and the market are provided with timely and balanced disclosure of all material matters concerning the Company; and
• ensuring that all stakeholders have equal and timely access to externally available information issued by the Company.

The Company's continuous disclosure and shareholder communication policy establishes procedures to ensure that Directors and management are aware of and fulfil their obligations in relation to the timely disclosure of material price-sensitive information.

In addition to releasing information to meet continuous disclosure obligations, the Company will also communicate with shareholders through interim and annual financial reports, the AGM and via the Company website, www.frigrite.com.au. All information provided to the ASX will be immediately posted onto the website in a dedicated investor relations section.

Introduction

The securities transaction policy (the policy) outlines the rules under which Frigrite directors, executives and certain other employees may buy and sell shares and other securities in the company. The purpose of the policy is to set a standard of good practice which will give comfort to the market by demonstrating that directors and officers are constrained in the way they can deal with securities and cannot take advantage of their position against those whom they represent - their shareholders.

Insider Trading

The requirements imposed by this policy are separate from, and additional to, the legal prohibitions in the Corporations Act on insider trading.

Insider trading is the illegal practice of trading in a company's securities on the basis of "inside information", that is information that is not generally available and, if it were generally available, a reasonable person would expect it to have a material effect on the price or value of the securities of the company. The insider trading prohibitions apply to all persons dealing in shares.

Application of the Policy

This policy applies to all directors and nominated persons. Nominated persons are defined as executives of the company, the company secretary, specified managers, and all employees involved with the monthly financial accounting process.

An executive is defined as a person who makes, or participates in making, decisions that affect the whole, or a significant part of, the business of the company.

The specified managers' to whom this policy applies is determined by the board and may change from time to time. It is based on the position held by the person and / or the particular projects that the person is working on at any given time.

General Rule

No director or nominated person shall buy or sell securities which are in any way associated with Frigrite either for short term speculative gain (sales within a year of purchase) or while in possession of information which, if disclosed publicly, might have a material effect on the price or value of the companies' shares.

Buying or selling securities in Frigrite at all other times is only permitted if the procedure detailed immediately below is followed.

Directors and nominated persons are permitted to buy and sell securities only within the specified trading times detailed below:

• For a period of two months immediately following the release of the half yearly announcement to the ASX
• For a period of two months immediately following the release of the preliminary full year announcement to the ASX Irrespective of the above;
• The chair of the board must advise the chair of the audit and risk committee;
• Directors must advise the chair; and
• Nominated persons must advise the Managing Director at all times before they propose to buy or sell their shares.

Directors and nominated persons must not buy or sell securities through their family or through a trust or through a trust company, which they have influence or control if they are prohibited from buying or selling in their own name.

Securities include all ordinary shares, preference shares, debentures, convertible notes and other equity instruments that may be issued by Frigrite.

Informing the Board and the ASX

Directors and nominated persons, on each occasion on which they buy or sell securities in the company, must advise the company secretary in writing of the details of their completed transaction within two days of each such transactions. The company secretary will then inform the board at its next regular meeting. In respect of directors, the secretary will also lodge a notification with the ASX within two days of the trade (in accordance with listing rule 3.19A the ASX must be informed within 5 days of the trade occurring). Details required to be notified are: (i) a description and number of securities traded, (ii) consideration received or receivable or paid or payable, (iii) the date of transaction and (iv) the name of the registered holder.

Formal Acknowledgement

Written acknowledgement of the policy and acceptance of its requirements is a condition of appointment for Frigrite directors and a condition of employment of a nominated person.

Signed acceptance forms will be returned to the company secretary before, or as soon as possible after, the employee takes up the new position.

Records

The Frigrite company secretary will maintain a securities transaction policy register and keep a permanent record of all:

• Notices of request to buy or sell; and
• Transactions which are subject to the policy.

The Company's Audit Committee is directly responsible for making recommendations to the Board on the appointment, reappointment or replacement of the external auditor (subject to ratification by shareholders).

Whilst the procedures adopted by the Audit Committee are flexible, each of the following matters will be taken into account when considering the choice of external auditor:

• Ability to add value to the Company's operations;
• Resources available to conduct the audit;
• Industry experience and expertise;
• Audit approach and methodology;
• Means and frequency of reporting;
• Transitional issues and arrangements required;
• Independence and conflicts;
• Professional fees;
• Other services offered; and
• Insurance coverage.

The Company has not previously adopted a strict policy of rotation of external audit engagement partners. However, the Company's current external audit engagement partner will rotate off this engagement after the 30 June 2006 financial year.

The Board of the Company is responsible for reviewing and ratifying the Company's systems of risk management and internal control. These systems and frameworks are designed to ensure that the Company's various operations run efficiently and the risks of failure to achieve the Company's business objectives are appropriately managed. It must be recognised however that the Company's internal control systems, whilst providing a reasonable level of assurance, cannot completely eliminate the risk of errors, irregularities or losses occurring.

The Board is assisted in monitoring risk by the Company's Audit and Risk Committee, whose Charter is available on this website. The Audit and Risk Committee has responsibility for monitoring the effectiveness and appropriateness of the accounting and internal control systems of the Company, as well as more general responsibility for reviewing the adequacy and effectiveness of the Company's risk management framework.

Risks are identified and assessed by the Company's executive management team and business unit managers, in consultation with functional staff, as well as by the Company's auditors. Controls (which may include policies, procedures, reviews, audits and/or obtaining appropriate insurance) are implemented to deal with risks based on an assessment of:

• The nature and extent of the risk facing the Company;
• The extent and categories of risk which the Board considers it is acceptable to bear;
• The likelihood of the risk materialising;
• The Company's ability to reduce the incident and impact on the business of the risk if it materialises; and
• The costs of operating particular controls relative to the benefit obtained in managing the relevant risk.

Details of relevant risks and risk control profiles are reviewed by the Audit and Risk Committee on a periodic basis. Management report to the Board and the Audit and Risk Committee any instances of control or policy failure or breach to enable them to consider whether relevant controls require reassessment, strengthening or improvement and whether the level of monitoring by the Audit and Risk Committee and the Board is adequate.

In accordance with the ASX Corporate Governance Council Best Practice Recommendations, the Managing Director and Chief Financial Officer are required to state to the Board in writing that:

• The Company's financial reports present a true and fair view, in all material respects, of the company's financial position and operational results and are in accordance with relevant accounting standards;
• The statement above is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and
• The company's risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

The Nomination and Remuneration Committee is responsible for instituting internal procedures for evaluating the performance of the Board, individual directors and board committees.

As Frigrite Limited listed on ASX in March 2005, the Board is likely to first undertake a detailed evaluation of its performance and individual directors' performance, after an appropriate period of time has elapsed. After that time, the Board will follow the procedures outlined below.

Board and Director Evaluation

The Board undertakes an evaluation of its own performance during the year against the objectives set for the year. The evaluation also reviews the Board's structure and operation to determine whether they are appropriate for the present and future needs of the Company.

Individual directors are evaluated against performance criteria, which take into account each director's contribution to:

• developing the direction, strategy and financial objectives of Frigrite;
• monitoring compliance with regulatory requirements and ethical standards;
• monitoring and assessing management performance in achieving strategies and budgets approved by the Board

The evaluation uses a range of techniques, including:

• the distribution of surveys regarding all directors and the perceptions on their performance; and
• one-on-one interviews with directors and the Chairman specifically addressing performance criteria. The Chairman then reports to the Board on the outcome of these meetings

When directors are seeking re-election, the Board will consider the performance report and the Chairman's report to determine whether re-election of a Director at the Annual General Meeting should receive Board support.

Committee Evaluation

All Directors must complete a questionnaire for each Committee to assess the performance of the Committees against the requirements of their respective Charters and goals set for the year. The suitability of the Charter and any areas for improvement are also assessed. The Board, as a whole, then considers any recommendations made by a Committee.

Executive Evaluation

Executives are evaluated by their immediate superior against:

• the extent that key job specifications and goals have been achieved; and
• contribution towards specific business plan objectives.

The outcomes of performance reviews are reported to the Nomination and Remuneration Committee.

1. Introduction

To maintain the highest standards of corporate governance in relation to auditor independence, the Company has adopted a policy regarding non-audit services that may be performed by its external auditor.

The purpose of this policy is to ensure that the independence of the external auditor is not compromised, or perceived to be compromised, by its performance of non-audit services.

2. Fundamental principles of independence

In order for the external auditor to be eligible to perform any non-audit services for the Company, the external auditor must not, as a result of the engagement:

1. have mutual or conflicting interests with the Company;
2. audit their own work;
3. act in a management capacity or as employee; or
4. act as an advocate for the Company.

3. Services that may not be provided by the external auditor

Consistent with the fundamental principles of independence, the external auditor shall not be permitted to perform any of the following services for the Company:

1. preparation of accounting records and financial statements;
2. design and/or implementation of IT systems and financial controls;
3. valuation services;
4. internal audit services;
5. management functions, including senior management secondments;
6. recruitment and human resources services;
7. actuarial, legal and investment banking services;
8. other services designated by the Audit Committee from time to time; or
9. any other services prohibited by law or relevant professional standards.

4. Services that may be provided by the external auditor

The external auditor will be permitted to provide non-audit services that do not conflict with the role of auditor. Services that may be provided without audit committee approval are:

1. tax compliance services;
2. advice on applying accounting standards; and
3. audits or verification of regulatory returns.

5. Services that may be provided by the external auditor with Audit Committee approval

The external auditor may be permitted by the Audit Committee to perform certain services where the external auditor's detailed knowledge of the Company and its activities permits cost and output efficiencies, provided that the Audit Committee is satisfied that the engagement will not affect the actual or perceived independence of the external auditor. Examples of such services include:

1. Strategic tax advice;
2. Due diligence on potential investments or acquisitions;
3. Investigating accounting assignments.

Such services may only be provided with the prior approval of the Chair of the Audit Committee.