Corporate Governance

[Taken from pages 21-22 of the Annual Report and Accounts 2003]

The directors are responsible for the Company’s policy on Corporate Governance. The Company supports the Principles of Good Governance and the Code of Best Practice (‘the Combined Code’).

Whilst the Company is not required to comply with the provisions of the Combined Code, it has chosen to make the following voluntary disclosures.

Board and management reporting

The Board currently comprises the chief executive officer, the chief financial officer, the non-executive chairman and one other non-executive director and meets regularly throughout the year. The Board has adopted a schedule of matters to be specifically reserved for its decision, in accordance with the provisions of the Combined Code.

Each operating company and business unit produces comprehensive management reports each month. A summary of these reports is presented to the Board at its monthly meeting. Such information includes details of the key features of the Group’s performance and an analysis against budget of revenue and expenditure.

Directors’ remuneration

The Board has established a Remuneration Committee comprising the chairman and non-executive director. Details of the Company’s remuneration policy are contained in the Remuneration Report on pages 20 to 21 of the Annual Report 2003. The Committee makes its decisions following consultation with the chief executive officer and has access to external professional advice if required.

Accountability and audit

The Board seeks to ensure that its Annual Report and Financial Statements provide a balanced and concise assessment of the Company’s position. The Board has established an Audit Committee comprising the chairman and non-executive director. This Committee meets as necessary and provides a forum for the non-executive directors to meet with the external auditor.

Internal control

The directors are responsible for the systems of internal control. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group’s systems are designed to provide the directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately. The key elements of the Group’s system of internal control are as follows:

Financial management
Detailed annual budgets are prepared for the Group and each operating company. These budgets are reviewed and agreed by the Board and actual performance is reported against these budgets on a regular basis. The Company has in place documented authority levels for approving purchase orders, invoices and all bank transactions. Further information concerning financial risk management is detailed in note 17 of the Financial Statements (page 37 of the Annual Report 2003).

Company management
The chief executive officer chairs a global management board for the Group comprising the regional chief executives, certain subsidiary company directors and other senior executives with global responsibilities for sales, marketing, service support, technology, product development and finance. Additionally, there are regular meetings of a product strategy forum where the future direction of the Group’s product offerings and routes to market are considered. There are also regular board of management meetings of all subsidiary companies in the UK and overseas.

Quality management and accreditations
The Company’s businesses are focused on meeting the highest levels of customer satisfaction. Quality procedures for the development of the products, services and maintenance support are documented and kept under constant review.

Systems Union Holdings Limited’s management systems are certified BS EN 9001:2000 and TickIT for marketing and sales of SunSystems applications packages, designed, developed, maintained and supported globally on open and proprietary computer platforms in various national language versions, and the provision of associated consultancy and training.

MIS GmbH is a Microsoft Gold Certified Partner for Business Intelligence. MIS and Pegasus Software Limited are Microsoft Gold Certified Partners for Software Products.

Business risks and computer systems
The Company has established controls and procedures over the security of the data held on its computer systems. Such arrangements are tested regularly and reviewed. The Company has in place business continuity plans, off-site emergency facilities and appropriate insurance policies.

Internal audit
The Company has an internal audit function whose role is to provide independent verification to the Board and to management of the organisation’s day-to-day activities. The audit plan used to control the scope and frequency of audits is risk-based. Where any problems or opportunities are identified as the result of audits, they are logged formally and followed through to completion. The internal audit function may also carry out ad-hoc reporting and investigations for the Board, or for individual directors and managers.

Dialogue with institutional shareholders

The directors of the Company, together with their advisers, hold regular meetings with the key institutional shareholders, thereby helping to ensure that there is a mutual understanding of objectives.

Going concern

After making due and careful enquiry, the directors have formed a judgment at the time of approving the Financial Statements that there is a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, the directors continue to adopt a ‘Going Concern’ basis in preparing the Financial Statements.

Statement of Directors’ Responsibilities

Company law requires the directors to prepare Financial Statements for each financial year, which give a true and fair view of the state of affairs of the Company and Group and of the profit or loss for that period. In preparing those Financial Statements, the directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
• state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the Financial Statements;
• prepare the Financial Statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company and to enable them to ensure that the Financial Statements comply with the Companies Act 1985. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.