Corporate governance

Risk committees /

The Board has ultimate responsibility for ensuring that the Group has an effective framework in place for managing its risks. The risk committee structure supports the Board via the Audit Committee in fulfilling these responsibilities.

The Group has 3 risk committees – one within each of its principal operating divisions, Aegis Media and Synovate, chaired by their respective chief executive officers, and a Head Office risk committee chaired by the Group Chief Financial Officer. Collectively, these committees provide a forum for the discussion of key risks faced by the Group, the development of risk assessment techniques and the consideration and approval of risk management action plans.

Each of the divisional risk committees comprises a varied range of senior representatives (from different markets, disciplines and business streams). The principal duties of these committees are to ensure that risks within the divisions are identified and appropriately managed and to approve minimum standards and procedures to enhance the control environment. Divisional risk registers were developed and expanded towards the end of the year and into 2011 and will continue to be reviewed and revised as appropriate.

The Head Office risk committee ensures that effective risk management policies and procedures are established for matters which relate to the Group Head Office’s functional expertise, such as tax, treasury and Group finance. The Head Office risk register has been reviewed in detail and updated during the year and into 2011, and will continue to be developed as appropriate. Meetings are attended by senior head office management drawn from all the Group’s principal Head Office functions.

Reporting lines for all 3 of the Group’s risk committees have been aligned during the year, with each committee now reporting directly to the Audit Committee. The Group Chief Financial Officer or other senior executives have attended all risk committee meetings to ensure a consistent approach to risk and the dissemination of good practice amongst the three committees. The risks identified, and the control mechanisms applicable to each risk and how well they are being managed, are maintained in the relevant risk registers. Following the re-launch of the Group’s policies and procedures and minimum control standards to mitigate Group risks, meetings of all risk committees now take place on a quarterly basis.

Internal audit

As noted above, the Group identified the need for, and recruited, a Director of Risk and Audit with broad responsibility for risk management and internal control, as well as oversight of the internal audit function. The Director of Risk and Audit will report to the Audit Committee and the Group Chief Financial Officer.

The internal audit function will continue to be strengthened in 2011 with additional resource being deployed.

The Group’s internal audit function is considered to be independent of the operations and monitors the business units’ application of the Company’s principles and policies and their overall control of risks.

The overall effectiveness of the internal audit function is monitored by the Audit Committee, which receives regular reports detailing the findings arising from the internal audit function’s work, issues reported under the Group’s whistle blowing procedures, and any actual or suspected frauds detected or reported anywhere in the Group.

Review of internal control effectiveness

The Audit Committee reports to the Board on the adequacy of the Group’s internal controls system. The Audit Committee receives reports from management and the head of internal audit on the integrity of the Group’s control environment. The external auditors report to the Audit Committee on the control environment by exception following their half year review and full year audit. Copies of minutes of all risk committee meetings, as well as copies of the risk registers, are made available to members of the Audit Committee.

The 2010 year-end annual compliance self certification process has been updated to ensure alignment with the revised Group policies and procedures. The chief executive officer and chief financial officer of each entity across the Group is required to complete an annual certificate to confirm, in relation to such entity, that:

  • the Group’s policies and procedures were adhered to
  • the accounts as submitted were accurate and complete and prepared in accordance with Group accounting policies
  • there were no actual or potential breaches of laws or regulations
  • there were no known frauds
  • there were no related party transactions other than those properly disclosed
  • there were no conflicted directorships
  • all relevant information was disclosed to the auditors.

Similar certifications have been required of regional, global and Group management.

The Board confirms that it has reviewed the effectiveness of the system of internal controls and considers that there are ongoing processes in place for identifying, evaluating and managing the significant risks faced by the Group and that these processes have been in place and improved during 2010 and up to the date of approval of the Annual Report and Accounts. The Board considers that the information received was sufficient to monitor the process and review its effectiveness in accordance with the Turnbull Guidance on Internal Controls.

A summary of the Group’s principal risks and uncertainties is included in the Business Review section.

Employee concerns /

As mentioned above, the Group has arrangements in place that allow employees, in confidence, to raise concerns about possible wrongdoing in matters of financial reporting or other matters, without fear of reprisal, provided that such concerns are raised in good faith. The Audit Committee reviews these arrangements to ensure that there is proportionate and independent investigation of any reported concerns and that appropriate follow up action is taken and has recently instigated a review to ensure the effectiveness of the Group’s worldwide “Speak-up” policy.

Relations with shareholders /

The Board encourages an active policy of constructive dialogue with its shareholders, which is led by the Chairman and Chief Executive Officer.

Executive directors meet regularly with major shareholders. The Board encourages investor contact, including holding one-to-one meetings and group events with existing shareholders and non-holders alike. During the year roadshows were held in North America and the UK. Non-executive directors are available to meet with institutional shareholders on request.

JP Morgan Cazenove, the Group’s joint financial advisers, provide the Board with written reports (covering changes in valuation and ownership, market and sector issues) on a monthly basis, and along with Numis Securities are available for shareholder relations advice.

The Annual General Meeting is an opportunity for shareholders to address questions to the Chairman and the respective chairmen of the Board committees or other members of the Board directly.

Published information, including press releases, presentations and webcasts of our results meetings, is available on our corporate website, www.aegisplc.com.

Further information about the Group can be obtained by contacting 0207 070 7700 or communications@aegisplc.com.

Andrew Moberly
Company Secretary

16 March 2011