Audit and Risk Committee

In accordance with the UK Corporate Governance Code 2024, the Board acknowledges its overall responsibility to shareholders to ensure that an adequate system of risk management and internal control is in place and for reviewing the effectiveness of this system. Such a system can only be designed to mitigate, rather than eliminate, the risk of failure to achieve business objectives, and can therefore only provide reasonable, and not absolute, assurance against material misstatement or loss. This is essential for reliable financial reporting and also for the effective management of the Group.

The internal control and risk management process for financial reporting processes is documented in the Essentra Accounting Manual (the “Manual”) that is updated as required. The Manual sets out the procedures and processes established for internal and external financial reporting and incorporates accounting policies that are adopted by the Company, as well as processes and controls relating to tax and treasury matters. The Manual also sets out clear processes that cover, amongst other matters, segregation of duties, reporting responsibilities and review and approval requirements. The Manual prohibits management overrides and the processes set out within the Manual are also reflected within financial reporting systems and the framework for financial controls within the Group.

A Delegation of Authority (DoA) is in place that is reviewed and updated on a regular basis. The DoA identifies approval processes for different matters. The DoA is applied across the entire Group and supported by twice-yearly confirmations from management in relation to adherence to the Group accounting policies.

Further details on the Company’s risk management system and internal controls can be found in the 2024 Annual Report and Accounts.

The following enables the Board to review the effectiveness of the system of internal control and the financial reporting processes:

• the Audit and Risk Committee (ARC) meets regularly and reports to the Board.
• the terms of reference provide a framework for the ARC to review and oversee the quality, integrity, appropriateness and effectiveness of the Group’s internal control framework. The Terms of Reference were reviewed and approved again by the Board at its meeting in December 2024.
• the Board receives updates on controls from each regional the MD alongside their Divisional Compliance Officer.
• each of the three regions submit monthly detailed operating and financial reports covering all aspects of performance. These are reviewed by the Chief Executive, the Chief Financial Officer and the Group’s central Finance function and reported to the GEC and the Board.
• certificates are required from each of the regions to confirm compliance with the Group’s policies (including financial) and procedures at both the half and full year.

Audit and Risk Committee Terms of Reference PDF 0.2MB