Corporate Governance.

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Accountability, Audit and Control

In its reporting to shareholders, the board aims to present a balanced and understandable assessment of the group’s financial position and prospects. The statement of the responsibility of directors for the preparation of the Annual Report and Accounts is set out in the Responsibility of Directors section.

The group’s organisational structure is focused on its three divisions. These are all separately managed but report to the board through a board director. The CEC receives and reviews monthly summaries of financial results from each division through a standardised reporting process. The group has in place a comprehensive annual budgeting process including plans for the following two years. Variances from budget are closely monitored. In addition to the annual budgeting process, there is a ten year strategy review process.

The Group Control Manual, which is distributed to all group operations, clearly sets out the composition, responsibilities and authority limits of the various board and executive committees and also specifies what may be decided without central approval. It is supplemented by other specialist policy and procedures manuals issued by the group, divisions and individual businesses or departments. The high intrinsic value of many of the metals with which the group is associated necessitates stringent physical controls over precious metals held at the group’s sites.

Internal Control and Risk Management

The board has overall responsibility for the group’s systems of internal control, including in respect of the financial reporting process, and risk management systems and for reviewing their effectiveness. The internal control systems are designed to meet the group’s needs and manage the risks to which it is exposed, although these cannot be eliminated. Such systems can only provide reasonable but not absolute assurance against material misstatement or loss.

The board has delegated responsibility for the review of the effectiveness of the group’s internal financial control and risk management systems to the Audit Committee. The Audit Committee monitors and reviews the effectiveness of the group’s systems for internal control and risk management, considering regular reports from management and Internal Audit. The internal audit function is responsible for monitoring the group’s systems of internal financial controls. The Audit Committee approves the plans for internal audit reviews and receives the reports produced by the internal audit function on a regular basis. Actions are agreed with management in response to any issues raised by the internal audit reports produced. Internal Audit follows up the implementation of its recommendations, including any recommendations to improve internal controls, and reports the outcome to senior management and to the Audit Committee.

In addition, each year businesses are required to formally review their financial and non-financial controls and their compliance with group policies and statutory and regulatory obligations and to provide assurance on these. The results of these reviews are collated and summarised by the internal audit function and a report is made annually to the Audit Committee.

The Audit Committee also considers reports from the external auditors on their evaluation of the systems of internal financial control and risk management. Amongst other matters, the Audit Committee reviews the group’s credit control procedures and risks, controls over precious metals, IT controls and the group’s corporate social responsibility reporting arrangements and whistleblowing procedures. The Audit Committee also reviews the performance of both the internal and external auditors.

The Audit Committee reports to the board on the operation and effectiveness of internal financial controls and risk management systems. This is considered by the board in forming its own view of the effectiveness of the systems.

A report from the Audit Committee on its activities and on the work of Internal Audit is given in the Audit Committee Report.

There is a continuous process for identifying, evaluating and managing the significant risks faced by the company. This process, which is described in Risks and Uncertainties, has been in place during the year ended 31st March 2011 and up to the date of approval of the Annual Report and Accounts. The board regularly reviews this process.

The directors confirm that the system of internal controls for the year ended 31st March 2011 and the period up to 1st June 2011 has been established in accordance with the revised Turnbull Guidance on Internal Control published by the FRC included with the Code. The directors have reviewed the effectiveness of the group’s system of internal controls, including financial, operational and compliance controls and risk management systems. No significant failings or weaknesses were identified.

Corporate Social Responsibility Risks

Measures to ensure responsible business conduct and the identification and assessment of risks associated with social, ethical and environmental matters are managed in conjunction with all other business risks and reviewed at regular meetings of the board, the Audit Committee and the CEC.

A review of the group’s policies and targets for corporate social responsibility (CSR) is set out in the Sustainability section of the Business Review. A full version of the Sustainability Report is available on the company’s website.

The identification and monitoring of environment, health and safety (EHS), social and governance risks are the responsibility of the CSR Compliance Committee, which is a sub-committee of the CEC. It comprises the division directors, the Director, Group EHS and HR, the Group Legal Director and senior representatives of Internal Audit, Group EHS and other group functions. The Committee has specific responsibility for setting and overseeing compliance with the standards for group CSR performance through the development, dissemination, adoption and implementation of appropriate group policies and other operational measures. EHS performance is monitored using monthly statistics and detailed site audit reports. EHS performance is reviewed on a regular basis by the CEC and an annual review is undertaken by the board.

Risks from employment and employee issues are identified and assessed by the CEC and reported to the board.

Employment contracts, handbooks and policies specify acceptable business practices and the group’s position on ethical issues. The Group Control Manual and security manuals provide further operational guidelines to reinforce these.

The Audit Committee reviews risks associated with corporate social responsibility on an annual basis and monitors performance through the annual control self-assessment process conducted by the internal audit function.