Financial Statements - Chemring Group PLC

C H E M R I N G G R O U P P L CStatement on Corporate Governance- continued■ The Board assesses the key risksassociated with achievement of theGroup’s business objectives as partof the annual strategic planningprocess. Out of this process, eachbusiness establishes a three year planand annual budget, which aresubject to approval by the Board.The performance of each businessagainst budget and prior years isreviewed on a monthly basis at bothoperational level and by the Board.Achievement of strategic businessobjectives and the associated risksare monitored by the Board on anongoing basis.■ All businesses hold monthlyoperating meetings, which areattended by at least one main Boarddirector, either in person or, in thecase of the overseas companies, byvideo conference. In the case of theUS businesses, formal Boardmeetings are held quarterly andthese are attended by both mainBoard directors and externalnon-executive directors appointedin the US. The US non-executivedirectors are available to provideguidance and monitor governancein the US businesses throughoutthe year.■ Each business is required to complywith the Group’s accounting policymanual, which sets out formalprocedures for incurring certaintypes of expenditure and makingcontractual commitments.Compliance with the accountingpolicy manual is reviewed by boththe Audit Committee and thefull Board.■ The Board retains primaryresponsibility for acquisitions anddisposals, and financingarrangements for the Group.Treasury management, IT strategy,insurance and significant legalmatters are dealt with centrally fromthe Group head office, and theBoard receives regular reports oneach of these items. Reviews of theGroup’s pensions, insurance and riskmanagement arrangements arecarried out by external advisers ona regular basis.■ A dedicated Group Health andSafety Manager, supported by aGroup Health and SafetyManagement Committee,co-ordinates and controls theactivities of each business in relationto health and safety, which is a keyfocus for the Board in view of thenature of the Group’s operations.A sub-committee of the main Boardhas also been constituted to focusspecifically on safety. Externalauditors carry out an annual reviewof the health and safety managementsystems at each of the Group’soperations.■ A Risk Management Committeeco-ordinates and reports to theBoard on the risk controlprocedures implemented by eachbusiness at an operational level.The Board confirms that it hasreviewed the effectiveness of theGroup’s systems of internal control andrisk management which were in placeduring the financial year ended31 October 2003, and it confirms thatsystems of internal control and riskmanagement compliant with theCombined Code and the TurnbullGuidance were in place throughoutthe year and have remained in placeup to the date of approval of thesefinancial statements. Notwithstandingthis, the Board will continue to takesteps to embed internal control andrisk management further into theoperations of the Group and to dealwith any areas of improvementwhich come to the attention ofmanagement and the Board.Audit Committee and AuditorsThe Company has an establishedAudit Committee, of which all threenon-executive directors aremembers. The Audit Committeemeets at least twice a year andoperates within formal written termsof reference. Meetings are attendedby the external auditors and theFinance Director by invitation. TheAudit Committee considers mattersrelating to the interim and annualresults, and also reviews internal andexternal audit requirements. TheAudit Committee has considered theneed for a dedicated internal auditfunction and has concluded that thisfunction is adequately covered byexisting procedures and controls atthe present time.Compliance with theProvisions of theCombined CodeThe directors confirm that theCompany has complied throughoutthe year with the provisions of theCombined Code, with the followingexceptions (references to the relevantP 20