Annual Reports and Accounts 2007-2008

Financial Statements

• Financial Review
• Corporate Social Responsibility
• Corporate Governance Statement
  • The Board Constitution and Procedures
  • Board Committees
  • Audit Committee
  • Remuneration Committee
  • Nomination Committee
  • Evaluation
  • Communication with Investors
  • Accountability and Audit
  • Directors’ Attendance
• Directors' Report
• Remuneration Report
• Regulatory Developments
• Report of the Independent Auditor to the Members of Sportingbet Plc

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Corporate Governance Statement

Accountability and Audit

1. Internal control

   The Group has complied with provision C.2.1 of the Code and the Turnbull Guidance for the year ended 31 July 2008 and up to the date of approval of the Annual Report and Accounts. The Board has ensured that there has been an ongoing process for identifying, evaluating and managing the significant risks faced by the Group. This process has been regularly reviewed by the Board.

   Whilst acknowledging the overall responsibility for the system of internal control and for reviewing its effectiveness, the Board is aware that the system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable, but not absolute, assurance against material misstatement or loss.

   The Group’s internal control procedures continue to be reviewed, progressively developed and formalised to ensure that they sufficiently meet the requirements of the Group. Executive members of the Board are involved daily in all aspects of the business and they attend regular management meetings at which performance against plan and business prospects are reviewed. Additionally, the Board seeks to continually strengthen the internal control system where this is consistent with improving the relationship between risk and reward.

   Other key features and the processes for reviewing effectiveness of the internal control system that the Committee have applied during the current financial year are described as follows:

   • Monthly management information, including financial accounts and key performance indicators, have been defined and are produced on a timely basis for review by the Board.
   • A detailed formal budgeting process for all Group businesses culminates in an annual budget which is reviewed and approved by the Board. Results for the Group and for its main constituent businesses are reported monthly against the budget to the Board and revised forecasts for the financial year are considered each quarter.
   • A comprehensive financial and accounting package sets out the principles of the minimum standards required by the Board for effective financial control. This package sets out the financial and accounting policies and procedures to be applied throughout the Group. Compliance with the policies and procedures set out in this package is reviewed regularly. Formal reports for the Board are prepared by the senior executives on the operation of those elements of the system for which they are responsible.
   • The Company has clearly defined guidance for capital expenditure. These include annual budgets, detailed appraisal and review procedures, levels of authority and stringent due diligence requirements where businesses are being acquired.

   During the year, the Committee undertook an appointment process in respect of the Company’s change in Auditor. Following this comprehensive process, they recommended to the Board appointment of Grant Thornton UK LLP as the Group’s new auditors. Their appointment was latterly approved by shareholders at the Company’s Annual General Meeting on 28 December 2007.

2. External Audit

   The Audit Committee meets periodically to review the adequacy of the Group’s internal control systems, accounting policies and compliance with applicable accounting standards and to consider the appointment of external auditors and audit fees. The Group’s auditor is invited to attend its meetings. The Audit Committee is authorised by the Board to investigate any activity within its terms of reference and obtain outside legal or other independent professional advice as necessary. The auditor and individual Board members are afforded the opportunity for separate meetings with the Audit Committee.The Audit Committee consists wholly of Non-Executive Directors.

   The award of non-audit work to the auditor is subject to pre-clearance by the Audit Committee if the fee exceeds specified thresholds. As a matter of best practice and in accordance with the International Standard of Auditing 260, the auditor has held discussions with the Audit Committee on the subject of auditor independence and has confirmed their independence in writing.

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