2002 Report And Accounts - Guinness Peat Group plc

Directors’ ReportIn addition to the review of the scope and resultsof the audit and the activities of the external andinternal auditors (including the cost effectiveness ofthe audit and the independence and objectivity ofthe external auditors) the Audit Committee’s termsof reference include responsibility for overseeinginternal controls, including operational and financialcontrols and risk management.(ii) Risk Management – the Company haswell established risk management procedures.Monitoring of compliance is through selfassessment,and by external audits by the Group’srisk management and insurance advisers.During 2000, a procedure for risk review, appraisaland ranking was successfully introduced withinthe Group’s businesses using Jardine LloydThompson’s ‘RiskTrack’ system. This was repeatedduring 2001 and 2002, thus enabling operatingcompany management to maintain and update adetailed risk profile for all significant business risks.The results of the audits, which will continue tobe updated annually, are reviewed by the relevantoperating company and form the basis for futurerisk management objectives. Internal auditprocedures monitor all significant resultinginternal controls and agreed risk improvementrecommendations, and any significant findingsare brought to the attention of the Directors.(iii) Information Systems, ControlProcedures and Monitoring – the Company’sinternal control and monitoring procedures include:(a) clear responsibilities on the part of line andfinancial management for the maintenance ofgood financial controls and the production ofaccurate and timely financial managementinformation;(b) the control of key risks through clearly laiddown authorisation levels and propersegregation (so far as is practicable) ofaccounting duties;(c) detailed monthly budgeting and reporting oftrading results, balance sheets and cashflows, with regular review by management ofvariances from budgets; and(d) reporting on compliance with internal controlsand procedures by group internal audit andreview of reports by external auditors.These reports are also reviewed by the AuditCommittee prior to the issue of the interim andannual reports.Relations with ShareholdersThe Directors meet regularly with and presentto institutional shareholders to foster a mutualunderstanding of objectives. The Directorsencourage the participation of private shareholdersat the Annual General Meeting.European Monetary UnionThe Group has assessed the impact of EconomicMonetary Union and at present no specific actionis deemed necessary. However, the situationcontinues to be monitored on a regular basis.Substantial ShareholdingsAs at 16th October 2002 the Company has beenadvised of the following shareholdings amountingto 3% or more of the issued ordinary share capitalof the Company :Company having No. of % of issuedinterest Ordinary shares Ordinary sharesAberdeen AssetManagement plc 11,435,016 32.30Schroder InstitutionalRecovery Fund 4,050,000 11.44Clients ofVeer PaltheVoute N.V. 3,631,814 10.26Invesco AssetManagement 1,675,000 4.73Artemis UK SpecialSituation Funds 1,285,000 3.63The Company did not issue any new shares duringthe year, but issued 105,888 new ordinary sharesin July 2002 on the exercise of a warrant issued inconnection with the Company’s 6.5% UnsecuredLoan Notes 2001.Save-As-You-Earn Share Option SchemeThis scheme is made available to most employeesof the Group in the UK (their eligibility beingdetermined by a minimum period of service) andhelps the Group by generating a closer identitywith, and loyalty to, the Group. The rules of thescheme reflect current legislation and best13