The Board has overall responsibility for the Group’s system of internal control which includesrisk management. The Board has delegated the responsibility for reviewing the effectiveness of its internal control systems to the Audit Committee.

The Audit Committee will review these systems, including reviewing the risk matrix, policiesand processes for tendering, authorisation of expenditure, fraud and the resourcing of internal audit activity, on an annual basis. The day-to-day responsibility for managing risk and the maintenance of the Group’s system of internal control is collectively assumed by management.

The system

The system of internal control is designed to manage, rather than eliminate, the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Board regularly updates a risk matrix for identifying, evaluating and managing the significant risks the Group faces, building on work in identifying risks that was undertaken at the time of the Company’s listing on the London Stock Exchange.

This process aims to follow current guidance on internal control issued by the Financial Reporting Council (the "Turnbull Guidance"). The Audit Committee will assist the Board in discharging its review responsibilities.

There are a number of components to the system of internal controls within the Company which form the basis on which assurance is sought and these are detailed as follows:

• A risk matrix will continue to be developed and reviewed by management and monitored by the Audit Committee.
• A framework of transaction and entity level controls to prevent and detect material error and loss.
• A budgetary and periodic reporting review process performed by management.
• Financial reporting systems are managed and monitored by line and functional management through regular reporting.
• A documented structure of delegated authorities and approvals for transaction and investment decisions, including any with related parties.
• Controls, policies and procedures under the Financial Reporting Plan prepared at the time of the Company’s listing is being monitored.

Responsibility for maintaining an effective control environment for financial reporting has been delegated to the Chief Financial Officer. Management at various levels also have operational responsibility within their respective areas.

Financial

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of published financial statements. Consolidated financial statements are prepared on a semi-annual basis inaccordance with International Financial Reporting Standards (‘IFRSs’) issued by the International Accounting Standards Board (‘IASB’) and the Listing Rules of the United Kingdom’s Financial Services Authority (‘FSA’).

Data

Data consolidated into the Group’s financial statements is reconciled to the underlying financial systems and management accounts. A review of the consolidated data is undertaken by the Chief Financial Officer to ensure that the true position and results of the Group are reflected, through compliance with approved accounting policies and the appropriate accounting for non-routine transactions.

Audit

The Audit Committee reviews and discusses half-year and annual financial statements with management and the external auditors focusing on, without limitation, the quality and acceptability of accounting policies and practices, the clarity of the disclosures and compliance with financial reporting standards and relevant financial and governance reporting requirement.

Board

The Board has reviewed the effectiveness of the Group’s system of internal controls taking account of the matters summarised above. On the basis of this review and in view of a number of related party transactions with the Chairman, additional training of employees is necessary to ensure that the Group’s listing obligations are fully understood and complied with. The Board is committed to ensuring that the Group introduce appropriate levels of risk management and internal control for companies listed on the London Stock Exchange.