The Board intends, where practicable for a company of
its size, to comply with the main provisions of the principles of good
governance and code of practice prepared by the Committee on Corporate
Governance chaired by Sir Ronald Hampel and published in June 1998 (‘the
Combined Code’).
The Board has separate roles for Chairman and Chief
Executive.
The Board has established an Audit Committee, which
comprises the non-executive Chairman Nigel Wray and Peter Rigby. The Audit
committee has met once this year. It is responsible for: meeting the auditors,
reviewing the annual report and accounts before their submission to the board,
ensuring that the financial performance of the company is properly reported on
and monitored, reviewing the recommendations of the auditors on accounting
policies, internal control and other findings of the audit and making
recommendations to the board on the scope of the audit and the appointment of
the auditors.
The Board has established a remuneration committee,
which comprises the non-executive Chairman Nigel Wray and Peter Rigby. The
remuneration committee meets twice a year and reviews the performance of the
executive directors and the scale and structure of their remuneration having
due regard to the interests of the shareholders. The Committee also approves
the granting of share options.
The Board has not established a Nomination Committee
as it regards the approval and appointment of directors (whether executive or
non-executive) as a matter for consideration by the whole Board.
The policy of the Board is to manage the affairs of
the company in accordance with the principles of Good Governance and Code of
Best Practice as set out in Section 1 of the Combined Code annexed to the
Listing Rules of the Financial Services Authority. The directors support the principles underlying the requirements
insofar as is appropriate for a company of the size of Electric Word plc.
The directors are responsible for the group’s systems
of internal control. Although no systems of internal control can provide
absolute assurance against material misstatement or loss, the group’s systems
are designed to provide the directors with reasonable assurance that problems
are identified on a timely basis and dealt with appropriately. The key procedures that have been
established and which are designed to provide effective internal control are as
follows:
Management structure – Each of the group’s three
divisions are managed by an executive director. The Board meets once a quarter.
In addition, there is a monthly management meeting of the executive members of
the board and other senior staff.
Financial reporting – An annual forecast is prepared
by the executive directors and reviewed by the whole Board. Performance against
forecast is monitored quarterly.
Investment appraisal – Major investment decisions and
acquisitions are approved by the Chairman and Chief Executive and the Board
where appropriate.
Internal audit – The Board has reviewed the need for
an internal audit function and has concluded that whilst the group is not large
enough to warrant a full-time internal auditor, the financial controller and
operational management carry out various internal audit functions from time to
time and report findings to the Audit Committee.
The Board reviews the effectiveness of the systems of
internal control and considers the major business risks and the control
environment. No significant control deficiencies were reported during the year.
No weaknesses in internal controls have resulted in
any material losses, contingencies or uncertainty which would require
disclosure as recommended by the guidance for directors on reporting on
internal controls.
Having made appropriate enquiries and having examined the major areas which could affect the group’s financial position, the directors are satisfied that the group has adequate resources to continue in operation for the foreseeable future. Accordingly, they consider it appropriate to adopt the going concern basis in preparing the financial statements