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The Company is committed to high standards of corporate
governance. The Combined Code on Corporate Governance, based
on the report of the Hampel Committee, is part of the listing rules of
the Financial Services Authority. It applied to the Company throughout
the year.
The paragraphs below and in the Remuneration Report set out how the Company has applied the principles laid down
by the Code. The Company has substantially complied with the
provisions of the Code, except where stated below or in the
Remuneration Report.
The Board
The Board comprises six executive Directors, including the Chairman
and the Chief Executive, and nine non-executive Directors. The Board
considers that five non-executive Directors may be considered to be
independent in the sense used in the Combined Code, namely
Messrs Hakkarainen, Lowy and Dunstone, Professor Schwab and
Mr Balsemão. This represents a majority of the non-executive directors
as recommended by the Code. The Board has not, as required by the
Code, identified a senior independent non-executive Director since it
believes that to identify such an individual is potentially divisive to a
unitary body, as the Board is, and disruptive to the role of the Chairman.
The Company’s Articles of Association were amended in February
1999 to meet the requirement of the Combined Code that all
Directors should submit themselves for re-election at least once
every three years.
The Board meets at least on a quarterly basis and at such other times
as are necessary. There is a schedule of matters reserved to the Board.
Procedures are established to ensure that the Board receives timely
and appropriate information both for those meetings and regularly
between meetings.
The Board has established a number of committees with mandates to
deal with specific aspects of its business. Details of the membership of
these committees are included on the Board of Directors page. All Directors have access to
the advice and services of the Company Secretary and are offered such
training as is considered necessary, both on appointment and at any
subsequent time. There is an agreed procedure for Directors to take
independent professional advice at the Company’s expense,
if necessary.
Relations with shareholders
The Company maintains a regular programme of contact with its
institutional shareholders. In the past year, this has included meetings
in London, Scotland and the US. Partly to assist private shareholders,
the Company operates a website at www.dmgt.co.uk on which it posts
all announcements and general presentations given to analysts and
institutions. Ordinary shareholders are welcome to attend the Annual General
Meeting, of which 20 working days’ notice is given.
Internal controls and management of risk
The Group adopts a prudent risk strategy, weighing opportunities
for potential gain against threats to overall business objectives and
profitability. Senior management addresses the opportunities and
uncertainties relating to the business activities of the Group. The risk
management process consists of the identification, evaluation and
control of risks, which could threaten the achievement of the Group’s
strategic, operational and financial objectives, as well as the active
management of opportunities.
The Group operates on a divisional basis with each of the divisions
having considerable autonomy as regards
its operation and establishment of control systems. Overseeing the
divisional structure is a central management responsible to the Board.
Certain functions are undertaken centrally, notably newsprint buying,
insurance, treasury, tax and pensions.
The Board of Directors has overall responsibility for the Group’s
system of internal control and has a schedule of matters reserved
for its consideration. This system is designed to provide reasonable
assurance of the safeguarding of assets and shareholders’ investment
and the reliability of financial information. Any such system can,
however, provide only reasonable, and not absolute, assurance of
these matters. The Directors confirm that they have reviewed the
effectiveness of the Group’s system of internal control.
The Board has delegated responsibility for the evaluation of the
benefits and risks of investment opportunities and financing proposals
to an executive committee, the Finance Committee. Above certain
defined levels, however, the Board must approve programmes relating
to acquisition and divestment proposals and capital expenditure.
The Board has established a process for the management of
significant risks across the Group. This has been in place for the year
under review and up to the date of approval of these accounts and
accords with the guidance provided by the Combined Code on
Corporate Governance.
Whilst the ultimate responsibility for the system of internal control
and the review of its effectiveness resides with the Board, a Risk
Committee assists the Board by giving assurance on risk management
issues and processes.
The Risk Committee considers reports prepared by central
management, by each of the divisions of the Group and by central
functions, on a quarterly basis. These reports identify business risks for
the Group as a whole and within the divisions and assess the controls
in place to manage those risks.
Members of the Risk Committee also maintain direct links with each
of the main divisions through attendance at divisional Board meetings.
The Committee reports regularly to the Group Board on the results
of these processes to enable the Board to determine the overall
effectiveness of the system of internal control.
A Risk Manager assists the Risk Committee and the divisions in the
overall risk management process and in its continued improvement.
In the year to 29th September, 2002, the Risk Committee has enhanced
the current divisional risk reporting processes by a formalisation of
the review by the divisional boards of the quarterly risk reports and
through a rotational programme of presentations on risk management
issues to the Risk Committee.
The Group’s Audit Committee, which has been in existence for
many years, comprises four non-executive directors: Messrs Gray
(its Chairman), Hemingway, Park and Dunstone. Only Mr Dunstone
is considered to be independent in the sense used by the Combined
Code, but the Board believes that the Committee nevertheless
operates independently.
The Audit Committee, on behalf of the Board, has maintained
responsibility for the review of financial risk management and of
internal financial controls during the year, as these directly relate to
the quality of financial reporting. In addition, the Committee reviews
a summary of all letters to management prepared by the Group’s
external auditors following their audit procedures, receives reports
from divisional finance directors on an ad hoc basis, throughout the
year, and approves any changes to Group accounting policies, which
are set centrally. Apart from these specific responsibilities, the
Committee is mandated to review all announcements of results issued
by the Group and to advise the Board on the appointment of external
auditors and on their remuneration.
The Board has commissioned a report from an independent firm of
accountants to assess whether it would be appropriate for the Group to
adopt a formal internal audit function to co-ordinate activities, carried
out across the Group. Its recommendations have been considered by
the Audit Committee and a decision will be taken in due course. In the
meantime, the Board has taken the view that control processes already
in place remain adequate. The Group does not maintain common
detailed accounting or operations manuals. Where applicable, divisions
maintain their own manuals and undertake regular internal audit work
as part of their control process.
One of the Group’s subsidiaries, Euromoney Institutional Investor plc,
is subject to the requirements of the Combined Code on Corporate
Governance in its own right. As disclosed in its latest annual
report, it has in place its own system of internal control and risk
management processes.
The joint ventures and associates of the Group are also not included
in the Group’s system of internal control described above. The most
significant associate, GWR Group plc, is also a listed company and its
own processes for the identification, evaluation and management of
significant risks are disclosed in its own annual report.
Directors’ Responsibilities for the Preparation of Accounts
The Directors are required by UK company law to prepare accounts for
each financial year which give a true and fair view of the state of affairs
of the Company and of the Group as at the end of the financial year
and of the profit or loss, total recognised gains and losses and cash
flows of the Group for that period.
The Directors confirm that suitable accounting policies have been
used and applied consistently, and that reasonable and prudent
judgements and estimates have been made in the preparation of
the financial statements for the year ended 29th September, 2002.
The Directors also confirm that applicable accounting standards have
been followed and that it is appropriate that the financial statements
have been prepared on the going concern basis.
The Directors are responsible for keeping proper accounting records,
for the system of internal control, for safeguarding the assets of the
Company and of the Group and for taking reasonable steps to prevent
and detect fraud and other irregularities.
On behalf of the Board
Rothermere
Chairman
27th November, 2002
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