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Corporate governance:part 2

Attendance at meetings

The table sets out the attendance at meetings of the Board and its Committees by each member during the year.

Board Audit
Committee		 Remuneration
Committee
Number of Meetings Held 10 3 3
Meetings attended  
B H Whitty1 10
R D Harpin 10
M J Bennett2 7
J Florsheim 10
J Simpson-Dent3 2
J M B Gibson 10 3 3
I Chippendale 10 3 3
A Sibbald 10
M Morris 10 3 3
  • 1Brian Whitty left the company on 31 March 2010.
  • 2Martin Bennett was appointed on 26 June 2009.
  • 3Jonathan Simpson-Dent left the company on 26 June 2009.

Relationships with shareholders

The Board, on the Company's behalf, recognises the need to maintain an active dialogue with its shareholders. The Chief Executive and Chief Financial Officer meet regularly with institutional investors and analysts to discuss the Company's performance and all shareholders have access to the Chairman and independent Senior Non- Executive Director, who are available to discuss any questions which investors may have in relation to the running of the Company. The Board encourages shareholders to attend the Annual General Meeting and is always willing to answer questions, either in the meeting itself or, more informally, afterwards. In addition, shareholders may contact HomeServe direct, either through its website or by telephoning its offices.

The Board also recognises the need to ensure that all Directors are fully aware of the views of major shareholders about the Group. Copies of all analysts' research relating to the Company are circulated to Directors upon publication, monthly analyses of the Company's shareholder register are made available to the Board and written feedback from shareholders and analysts, prepared by the Group's brokers and public relations advisers is provided to all Directors after every significant corporate event and at least twice a year.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's statement and the Chief Executive's review. Principal risks and uncertainties are detailed in the Financial review. In addition, the Financial review includes, amongst other things, cash flow and financing information.

The Directors confirm that, after reviewing the Group's budget and projected cash flows, they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.

Internal controls

As required by the UK Listing Authority, the Company has complied throughout the year with the provisions of the Code relating to internal controls, having implemented the procedures necessary to comply with the guidance on internal control published in October 2005 (Turnbull Guidance) and to report in line with that guidance.

The Board is responsible for the Group's system of internal control and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss.

There is an established internal control framework in place, which is continually reviewed and updated taking into account the changing nature of the Group's operations. This process has been in place for the whole of the year and up to the date of approval of this Annual Report and Accounts.

The key elements of the system operated by the Group to identify, evaluate and manage significant risks include the following:

  • The Group's management operates a formal process for identifying, managing and reporting on operational and financial risks faced by each of the Group's businesses, whereby each of the risks identified is reviewed in detail by the Executive Directors on a regular basis. Weekly telephone meetings of the Executive Committee monitor its day-to-day performance, and full Executive Committee meetings are held at least eight times a year at which the Group's senior managers report on the progress of the companies or discipline for which they are responsible and share best practice.
  • A clearly defined organisation structure is in place with clear lines of accountability and appropriate division of duties. The Group's financial regulations specify authorisation limits for individual managers and for local Boards of management, with all material transactions being approved by the Board.
  • Three year business plans, annual budgets and investment proposals for each business are formally prepared, reviewed and approved by the Board.
  • The Group has a dedicated Internal Audit function which reports directly to the Audit Committee and a formal audit plan is in place to address the key risks across the Group.
  • Financial results and cash flows, including a comparison with budgets and forecasts, are reported to the Board on a monthly basis, with variances being identified to initiate action to mitigate them.
  • Appropriate treasury policies are in place.
  • The Committee has adopted a formal 'whistleblowing' policy for employees, franchisees and sub-contractors who wish to raise any issues of concern relating to the Group's activities on a confidential basis.
  • A mechanism exists to extend the Group's formal risk management processes to any significant new business acquired or established immediately upon acquisition or start-up. In this way, the Board is able to confirm that the necessary process has been operated by the Group for the whole of the year.
  • The Risk Committee reviews a register summarising the significant risks faced by the businesses or the Group as a whole, the likelihood of those risks occurring and the steps being taken to minimise or otherwise manage those risks on a quarterly basis and updates the Audit Committee and the Board regularly.

As required by the Turnbull Guidance, the Board has carried out an annual assessment of the effectiveness of the system of internal controls. The processes applied by the Board include:

  • At the end of the year, the Executive Directors compile a report identifying the key risks faced by the Group. This report is considered by the Risk and Audit Committees and by the Board before the Annual Report and Accounts is approved.
  • The Group has an independent Internal Audit function which reviews the overall effectiveness of the risk management process for the key risks and reports independently to the Audit Committee.
  • At each meeting the Audit Committee reviews reports of the Executive Directors and the internal and external auditors, on any issues identified as having a potentially substantial impact on the results of the Group, or areas of control weakness.
  • The Audit Committee reviews the effectiveness of the Group's system of managing financial risk and refers any risks it considers significant to the Board for its consideration. The Risk Committee meets at least quarterly to assist the Audit Committee to monitor these risks, as well as to set the Group's risk appetite and to evaluate in detail risk registers compiled by the Group's businesses.
  • At least twice a year, the Audit Committee reviews the work plans and results of each of the internal and external auditors.
  • The Audit Committee Chairman reports the outcome of all Audit Committee meetings to the Board, which also receives minutes of all such meetings.
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