Directors’ statement on corporate governanceInternal control (continued)Information on the Group’s significant risks,together with the relevant control andmonitoring procedures, is reviewed on amonthly basis by the heads of the businessunits under the guidance of a nominatedExecutive Director. This information ispresented to the Executive Directors to assessany identified risks and the overalleffectiveness of the system of internal control.An update on all significant risk managementissues is made to the Board at each quarterlymeeting. Additionally, companies annuallycomplete a review of specified risk areas andtheir local risk management processes underthe supervision of the trading division financedirectors, the Group Internal Auditor and theCompany Secretary. The Company also has asub-committee of the Audit Committee, theRisk Management Committee, that specificallymonitors and investigates potential areas ofrisk raised by the trading companies and bythe Group centralised administrativemanagement in areas such as Property,Human Resources and IT.Given the nature of the Group’s activities, theBoard recognises the risks associated with itsability to attract, motivate and retain talentedemployees. Accordingly, a significant part ofthe Group’s risk management procedures arefocused in this area and the Group continuesto utilise employee benefits schemes shownon 40 and 41 to meet this requirement.The Group has a number of companiesincluding overseas businesses in Germany,the USA and the Middle East. Control of theoverseas businesses is currently affected bydesignated senior executives reporting directlyto the Board.The Board recognises the need to ensure thatestablished risk management procedures andstandards are integrated into all acquiredbusinesses and accordingly potential areasof non-compliance are identified duringthe due diligence process and addressedpost-completion.The internal audit function reports directly tothe Audit Committee. A review of this functionhas been conducted and reported to theBoard within the annual review of the systemof internal controls. Recommended changesto the scope and application of internal auditprocedures have been adopted and theinternal audit programme for the <strong>year</strong> hasbeen presented to and approved by theAudit Committee.The Group has a clear, written whistleblowingpolicy and procedure available to all staffregarding concerns of employees aboutethical behaviour and non-compliance withregulatory requirements and/or the law.The Group has material investments in a smallnumber of associated companies that are notmanaged by the Group. Accordingly, theGroup can only influence, not control, theirmanagement practices and therefore thereview of internal controls for these operationsis less comprehensive than that for theGroup’s managed operations.Financial controlThe financial control procedures are describedunder the following five headings:1. Financial reporting – The Group has acomprehensive system for reporting financialresults to the Board; each trading companyprepares monthly results with a comparisonagainst budget. The Board reviews these forthe Group as a whole and determinesappropriate action. Towards the end of eachfinancial <strong>year</strong> the operating units preparedetailed budgets for the following <strong>year</strong>.Budgets and plans are reviewed andnecessary changes made by the Board beforebeing adopted formally.2. Quality and integrity of personnel – One ofthe Group’s core values is integrity; this isregarded as vital to the maintenance of theGroup’s system of internal financial control andis reflected in the quality and experience of theGroup’s financial staff.3. Operating unit financial controls – Keycontrols over major business risks includereviews against performance indicators andexception reporting. The trading companiesregularly assess their exposure to majorbusiness risks and appropriate action is takenboth at operating and Group level in order toensure that risk is minimised as far as possible.4. Computer systems – The Group’s financialand management information is processedby and stored on data systems. Accordingly,the Group has established controls andprocedures over the security of data held oncomputer systems. The Group has put inplace arrangements for computer processingto continue and data to be retained in theevent of complete failure of any system.5. Controls over central functions – A numberof the Group’s key functions, includingtreasury, taxation, acquisitions and insuranceare dealt with centrally. Each of thesefunctions has clear and detailed proceduresand is required to report to the Board on aregular basis; the treasury details are reporteddaily to the Finance Director.The Audit Committee and AuditorsThe Audit Committee has considered reportsmade to it by the executive management ofthe Group, which assesses the major businessrisks and the control environment against thecriteria for assessing internal financial controlswhich are set out in the guidance for directorson reporting on internal control. The AuditCommittee has reported to the Board that ithas been able to review the effectiveness ofthe Group’s system of internal financial controlfor the accounting <strong>year</strong> and the period to thedate of approval of the financial statements.The Group has a policy for the employment ofthe auditors for non-audit work. The auditorswork on tax issues for the Group butany increase in fees is strictly controlled bythe Audit Committee. Any other non-auditassignments can be awarded to the auditorsduring the <strong>year</strong> but only where fees are withinAudit Committee approved limits.Going concern basisAs required by UK company law the Directorshave considered and confirm that it isappropriate to adopt the financial statementson the basis that the Company and Grouphave adequate resources for the foreseeablefuture, as disclosed in the Finance Director’sreview. Therefore the Company and the Groupcontinue to adopt the going concern basis inpreparing the financial statements.Social responsibilityWe are in the business of managing brand andcorporate reputation on behalf of clients andthe Board acknowledges that being sociallyresponsible is an important factor in themanagement of our business.The Board confirms that regular considerationis given to the significance of social,environmental and ethical (SEE) issues (asdefined by the Association of British Insurers),and as part of our wider operational riskframework, identifies significant risksarising from these areas to short-term andlong-term value.The Group also considers corporateresponsibility to be an area of businessopportunity. Our subsidiary, CorporateCitizenship, provides not only a focus for ourinvestment in this field but provides the Groupwith specialist expertise.The Board believes that corporateresponsibility should underpin everythingthat we do. The Group is therefore committedto demonstrating the importance of this, notonly in our work for clients but in our ownworking practices.38<strong>Chime</strong> <strong>Communications</strong> plc
Directors’ statement on corporate governanceThe Company measures the performance ofeach of its businesses against a benchmark ofminimum corporate responsibility standards.The standards are designed to be stretchingand, as such, encourage continualimprovement in this important area.We continue to report our corporateresponsibility performance to our stakeholdersvia our website and printed media.These detail not only the principles of ourapproach but also give examples of theinitiatives undertaken.The Company is listed on the FTSE4GoodIndex, which evaluates companiesperformance on a number of corporateresponsibility criteria.EnvironmentThe business of <strong>Chime</strong> <strong>Communications</strong> isprimarily in the UK and delivers services toclients based on image, ideas, research andcontent. As such, our direct and indirectimpact on the environment is minimal andconsidered low-risk.However, we acknowledge that ourcustomers, staff and other stakeholders havean interest in our impact on the environmentand as such we have committed to monitorand improve our environmental performancewhere possible. We became Carbon Neutralat the start of 2007. In the first <strong>year</strong> wereduced our emissions by 37%, winning anaward from Business in the Community in theprocess. In 2008, our aim was to achievefurther reductions (our target was 5%) andembed the new behaviour and data collectionprocesses into our working practices. Ouremissions will be audited against our target inMarch by the Carbon Neutral Company andthe Edinburgh Centre for Carbon Managementand we are confident of meeting our target.Our companies regularly incorporate ourenvironmental performance in businesspresentations as we believe this is an importantconsideration when evaluating reputation.We continue to work with our customers andour supply chain in order to ensure that ourimpact is minimised and that best practiceis achieved.Health and safetyThe Board believes that our people are ourmost important asset. Our businesses do notinclude any industrial or manufacturingprocesses and our staff are mainly officebased.As such, risk of accidents is low.We do acknowledge that we may expose ourstaff to additional areas of risk which, whilstnot unique to <strong>Chime</strong> (for example, businesstravel, event organisation and lone or remoteworking), do require further scrutiny, mitigationand procedural guidance in order to maximisethe wellbeing of our staff.In 2008, the Board commissioned a review ofour health and safety systems by SafetyExchange Ltd, who provide the Group withspecialist expertise in this area. The findingsconfirmed that our procedures wereappropriate but that these should beformalised and publicised within the Groupmore cohesively. Enhancements weredeployed to improve the awareness and theassessment of risks where they do arise in ourday-to-day business. The revised policy andprocedures were published to staff inSeptember 2008.Employee issuesAs a people business, our reputation dependson the skills, knowledge and integrity of ourpeople. <strong>Chime</strong> has fostered an entrepreneurialculture and each of our businesses isencouraged to create a stimulating, rewardingand inspiring work environment for our people.Our people continue to be our main priority.We recognise that central oversight on humanresources issues is beneficial and continuallyreview the employment standards across theGroup as part of the general management andrisk identification processes.In order to attract and retain talented staff wecontinue to operate our Executive ShareOption and Savings-Related Share OptionSchemes together with our Deferred SharePlan. We also continue to review our incentiveschemes on an ongoing basis.EthicsThe Group meets all relevant laws, regulationsand codes of practice issued by any relevantGovernment or appropriate regulator. Weensure that all our people are aware andcomply with such standards. In addition,we recognise that integrity is essential tothe maintenance of our reputation in themarketplace. As part of our regular reviewprocess, issues of conduct are identified,reviewed and the Board is alerted asappropriate. We utilise our published Codeof Conduct which formalises the values,behaviour and ethical standards expectedof <strong>Chime</strong> employees. We maintain ourwhistleblowing policy and procedure andensure that our published standards ofbehaviour are communicated to both newand existing staff.Compliance statementThroughout the <strong>year</strong> ended 31 December2008 the Company has been in compliancewith the provisions set out in Section 1 of theJune 2006 FRC Combined Code onCorporate Governance, except for Code A.4.6– Processes used by the NominationsCommittee (the reason for non-complianceis shown on page 37); and B.1.4 – ExecutiveDirectors’ remuneration for external nonexecutivedirectorships is not stated, asthis information is available in the financialstatements of the companies concerned.Approved by the Board of Directors andsigned on behalf of the BoardRobert Davison, Secretary11 March 2009Annual Report & Accounts 2008 39
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