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## Corporate Governance Report | continued 

Group management has responsibility for major strategic development and financing decisions. Responsibility for operational issues is devolved, subject to limits of authority, to product group and operating company management. Management at all levels is responsible for internal control over the business functions that have been delegated. This embedding of the system of internal control throughout the Group’s operations ensures that the organisation is capable of responding quickly to evolving business risks and that significant internal control issues, should they arise, are reported promptly to appropriate levels of management. 

During the year, the Board and Audit Committee received, on a regular basis, reports from management on the key risks to the business and the steps being taken to manage such risks. They also considered whether the significant risks faced by the Group were being identified, evaluated and appropriately managed, having regard to the balance of risk, cost and opportunity. In addition, the Audit Committee  met with internal auditors on a regular basis and satisfied itself as to the adequacy of the Group’s internal control system; met with the Chairman of the Remuneration Committee  to ensure that the Group’s remuneration policies and structures were in line with the Group’s “risk appetite” 

(which the Board has determined to be low) and reviewed the principal risks and uncertainties outlined in the Directors’ Report. The Audit Committee  also met with, and received reports from, the external auditors. The Chairman of the Audit Committee reported regularly to the Board on all significant issues considered by the Committee and the minutes of its meetings were circulated to all Directors. 

The Directors confirm that, in addition to the monitoring carried out by the Audit Committee under its terms of reference, they have reviewed the effectiveness of the Group’s risk management and internal control systems up to and including the date of approval of the financial statements. This had regard to all material controls, including financial, operational and compliance controls that could affect the Group’s business. 

## Compliance and Ethics 

The revised Code of Business Conduct was approved by the Board in February 2012, translated into 21 languages and distributed across the Group. It sets out clear guidelines on the application of the Group’s core values of integrity, honesty and respect for the law, requiring all employees to put business ethics at the forefront of dealings with customers, 

partners, suppliers and our communities and to treat all our people with respect and to embrace our responsibilities in the areas of health, safety and the environment. 

The Code of Business Conduct has been supplemented with the following new or updated policies: 

– Anti-Fraud Policy; 

– Competition/Anti-Trust Compliance Code; 

– Shares and Securities Dealing Policy; 

– Anti-Bribery Policy (in line with the requirements of the UK Bribery Act and the US Foreign Corrupt Practices Act); 

– Ethical Procurement Code; 

– Compliance and Ethics Mergers, Acquisitions and Joint Venture Due Diligence Programme. 

These codes and guidelines have been widely distributed across the Group with related training programmes underway. They have also been integrated into standard internal audit procedures and form part of an annual management certification process. A multilingual 24/7 “hotline” facility is also in place as a secure channel for employees to report ethical issues that concern them or suspected violations of these codes. 

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