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Carlton fully endorses the Principles of Good Governance
and Code of Best Practice encompassed in the Combined
Code ("the Code"). Throughout the accounting period the
Company has complied fully with the provisions set out in
Section 1 of the Code, other than in respect of the
appointment of a senior independent non-executive director
and directors’ notice periods. The ways in which the
Company applies the principles of the Code, together with
explanations for any areas of non-compliance, are described
in the Directors´ report including the remuneration report.
Internal Control
The Code requires that companies review all internal controls
including financial, operational, compliance controls and risk
management. The Turnbull Report provides guidance to
directors in complying with the internal control requirements
of the Code. In the opinion of the Board, the Company has
complied throughout the year with the guidance contained
in the Turnbull Report.
The Board is responsible for the Group’s system of internal
control and for reviewing its effectiveness. Any internal control
system can only provide reasonable and not absolute
assurance against material misstatement or loss. Key control
procedures are designed to manage rather than eliminate risk
and can be summarised as follows:
Management policies and procedures – management
responsibilities are established for the executive directors
and the directors of the operating companies. These are laid
down in the Company’s Management Policies.
Strategy and financial reporting – the Group performs
a comprehensive annual strategy and budgeting process. The
executive directors review budgets and strategies and the
Board approves the overall Group budget as part of its
normal responsibilities. The results of operating units are
reported monthly, compared with individual budgets and
forecasts formally updated twice each financial year.
Organisational structure and authorisation
procedures – the Group has an established organisational
structure with clearly stated lines of responsibility and
reporting. Authorisation procedures in respect of matters
such as capital expenditure, investments and treasury
transactions are clearly defined.
Risk assessment – management has responsibility for the
identification of risks facing each of their businesses, and for
putting in place controls and procedures to mitigate and
monitor those risks. Formal bi-annual risk assessments are
performed at each subsidiary and for the Group as a whole.
Key risks, mitigating controls and required actions are
identified and monitored by the audit committee and the
Board. The risk assessment process is co-ordinated by the
Group’s internal audit function.
Reviewing and monitoring the effectiveness of
internal controls – controls are monitored by management
review, Group internal audit and the audit committee. Directors
of all operating subsidiaries are required to complete an
annual self-certification questionnaire confirming compliance
with key controls and procedures. Completed questionnaires
are reviewed by Group internal audit and the results are
reported to the audit committee. Serious control weaknesses
will be reported to the Board as appropriate.
The results of the bi-annual risk assessment are reported
to both the audit committee and to the Board.
The audit committee and Board have reviewed the
effectiveness of the internal controls of the Group for the
period from 1 October 2001 to 30 September 2002.
GOING CONCERN
Based on normal business planning and control procedures,
the directors have a reasonable expectation that the
Company and the Group have adequate resources to
continue in operational existence for the foreseeable future.
For this reason, the directors continue to adopt the going
concern basis in preparing the accounts.
SHAREHOLDER MATTERS
Relations with shareholders
The Company maintains good communications with
shareholders. Senior executives of the Company, including
the Chairman, Chief Executive and Finance Director meet
frequently with representatives of institutional shareholders
to discuss their views and to ensure that the strategies and
objectives of the Company are well understood.
Substantial shareholdings
As at 26 November 2002, the Company had been notified of
the following interests held, directly or indirectly, in 3 per cent
or more of the Company’s issued Ordinary share capital:
Artisan Partners Limited Partnership – 26,904,819 shares
CGNU plc – 32,396,390
D C Thomson & Co. Limited – 24,250,000 shares
Fidelity International Limited/FMR Corp. – 85,011,598 shares
Legal & General Investment Management Limited –
20,176,586 shares
Putnam Investment Management, Inc/The Putnam Advisory
Company, Inc. – 20,757,069
Conversion and redemption of preference shares
During the year, the Company repurchased 30,349 non-voting
deferred shares. These deferred shares were issued upon
the conversion of preference shares and were immediately
repurchased by the Company and cancelled. Further details
are set out in note 26.
2003 Annual General Meeting
Full details of the resolutions to be proposed at the meeting
are set out in the Notice of Annual General Meeting
enclosed with this document, and a summary can be found
here. Carlton encourages the participation of all
investors at its Annual General Meetings. Procedures at
the Company’s Annual General Meeting will continue to
be in compliance with the Code.
AUDITORS
A resolution to reappoint PricewaterhouseCoopers as auditors
will be proposed at the 2003 Annual General Meeting.
CREDITOR PAYMENT POLICY
The Group does not follow any particular code on payment
practice. Operating businesses are responsible for agreeing
the terms and conditions under which business transactions
with their suppliers are conducted and making those suppliers
aware of the terms of payment. It is Group policy that
payments to all suppliers are made in accordance with the
agreed terms, provided that the supplier is also complying
with all relevant terms and conditions.
Trade creditor days of the Company for the year ended
30 September 2002 were 30 days, based on the ratio of
Company trade creditors at the year-end to the amounts
invoiced during the year by trade creditors.
DONATIONS
The Group made charitable donations of £0.3m (2001: £1.1m)
in the year. The Group made no political donations.
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