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Governance

The Board of Directors (‘Board’) of Moneysupermarket.com Group PLC (‘Company’) is committed to high standards of corporate governance and supports the principles laid down in the revised Combined Code on Corporate Governance published in June 2006 by the Financial Reporting Council (‘Combined Code’). This Corporate Governance Report describes how the principles of the Combined Code are applied by the Company and reports on the Company’s compliance with the Combined Code’s provisions.

The Board considers that the Company has complied with the provisions of the Combined Code throughout the year ended 31 December 2008 and to 24 February 2009 (being the latest practicable date prior to the publication of this report) except as set out below.

Board of Directors
The Board currently has eight members, comprising the Non-Executive Chairman, Gerald Corbett, two Independent Non-Executive Directors, Michael Wemms and Rob Rowley, and five Executive Directors, Simon Nixon, Paul Doughty, Peter Plumb, Graham Donoghue and David Osborne. Michael Wemms has been designated as the Senior Independent Non-Executive Director. All of the Directors bring strong judgement to the Board’s deliberations. The Chairman and the Non-Executive Directors contribute external expertise and experience in areas of importance to the Group and they also contribute independent challenge and rigour to the Board’s deliberations. Throughout the financial year ended 31 December 2008, half of the Board excluding the Chairman, comprised Non-Executive Directors determined by the Board to be independent.

The Board considers that all the Directors are able to devote sufficient time to their duties as Directors. Biographies of the Board are set out on pages 34 and 35 including details of the significant commitments of the Chairman. The Board is satisfied that these appointments do not conflict with the Chairman’s ability to carry out his duties and responsibilities effectively for the Group.

The Board considers that Gerald Corbett was independent on appointment as Chairman and considers Michael Wemms and Rob Rowley to be independent, being independent in character and judgement and free from relationships or circumstances which are likely to affect, or could appear to affect, their judgement. When determining the Chairman’s independence on appointment, the Board had regard to his share award (‘Share Award’). Under the Share Award, Gerald Corbett purchased ordinary shares in the Company on the listing of the Company on 31 July 2007 (‘Listing’) at £1.70 per ordinary share to the value of £200,000 and provided he completes three years’ service as Chairman of the Company from Listing and retains the ordinary shares he purchased on Listing during that three year period, he will be entitled to subscribe at nominal value for two times the number of ordinary shares he purchased on Listing. The Board believes that the number of ordinary shares subject to the Share Award is not sufficient to have an impact on his independence and thus concludes that the Chairman was independent on appointment. Shareholder approval was obtained prior to the entry by the Company into the Share Award.

To enable the Non-Executive Directors to more freely discuss the performance of the Group’s management, the Chairman meets with the Non-Executive Directors at least once each year without the Executive Directors present.

The Directors have direct and unrestricted access to the advice and services of the Company Secretary. Both the appointment and removal of the Company Secretary are matters for the Board as a whole. The Company Secretary is responsible for good information flow, ensures that Board procedures are followed and provides advice to the Board on corporate governance. Directors can, where they judge it necessary to discharge their responsibilities as Directors, obtain independent professional advice at the Company’s expense. Directors have the right to require that any concerns they may have are recorded in the appropriate Board or Committee minutes.

The practice of the Company is to appoint Non-Executive Directors for specified terms of three years, subject to a maximum of up to 12 months’ notice within that period and also subject to re-election and to Companies Act provisions relating to the removal of a Director. Each of the Non-Executive Directors, including the Chairman, currently holds a letter of appointment reflecting this.

The service agreements of each of Simon Nixon, Paul Doughty, Peter Plumb, Graham Donoghue and David Osborne provide for 12 months’ notice to be given by either the Director or the Company.

The Company’s Articles of Association require that new Directors appointed by the Board must retire and submit themselves for re-election by shareholders at the next Annual General Meeting following their appointment. Each of Peter Plumb, Graham Donoghue and David Osborne were appointed by the Board after the 2008 Annual General Meeting and will offer themselves for re-election at the forthcoming Annual General Meeting. The Company’s Articles of Association further require that all Directors must retire and submit themselves for re-election at least every three years.

The positions of Chairman and Chief Executive Officer are not combined, ensuring a clear division of responsibility at the head of the Company. The division of roles and responsibilities between the Chairman and Chief Executive Officer is clearly established, set out in writing and has been approved by the Board.

All members of the Board take collective responsibility for the Group’s performance. The Board has a formal schedule of matters reserved to it for decision making and matters delegated to Committees of the Board which are available on the Group’s website at www.moneysupermarket.com. The Board determines the Group’s strategy; risk management policies; business plan and annual operating budget; acquisitions and disposals and other major investments and capital projects; accounting policies and changes thereto; dividend policy; shareholder communications; prosecution, defence or settlement of material litigation; remuneration policy; the terms of reference of Board committees; and Board structure, composition and succession.

Board members are given appropriate documentation in a timely manner in advance of each Board or Committee meeting. This normally includes a detailed report on current trading and full papers on matters where the Board or Committee will be required to make a decision or give its approval. Specific business related presentations are given when appropriate.

There is an established procedure for the preparation and approval each year by the Board of business plans and the annual budget. The Board receives reports on performance against the business plan and budget and reviews any significant variances each time it meets. This information enables business performance to be monitored, evaluated, discussed and challenged where necessary and enables informed, sound decisions to be made.

Save for matters reserved for decision making by the Board, the Executive Directors are responsible for the day-to-day running of the Group, carrying out the agreed strategy adopted by the Board and implementing specific Board decisions relating to the operation of the Group.

The Company provides Directors’ and officers’ insurance cover for the benefit of Directors in respect of claims arising in the performance of their duties.

Conflicts of interest
Following the changes made to the Company’s Articles of Association at the 2008 Annual General Meeting and the subsequent introduction of section 175 of the Companies Act 2006 on 1 October 2008 which gave boards the statutory power to authorise conflicts of interest, formal conflict management procedures have been prepared and approved by the Board. In the future, the Nomination Committee will be responsible for reviewing annually any conflict authorisations granted by the Board and will make recommendations to the Board as to their continuation, and any changes to any terms or conditions or other limitations which may have been applied. Conflicts were authorised in 2008 by the Board in compliance with the formal conflict management procedures. It is the Board’s intention to report annually on the Company’s procedures for ensuring that the Board’s powers of authorisation of conflicts are operated effectively and that the procedures have been followed.

Relationship Agreement
The majority shareholder of the Company is Simon Nixon. The Company and Simon Nixon entered into a relationship agreement on 11 July 2007 to regulate the ongoing relationship between them (‘Relationship Agreement‘). The principal purpose of the Relationship Agreement is to ensure that the Company is capable of carrying on its business independently of Simon Nixon, and that transactions and relationships with Simon Nixon are at arm’s length and on normal commercial terms.

The Company and Simon Nixon have agreed in the Relationship Agreement that Simon Nixon is entitled to appoint (such number including himself as a Director) one Non-Executive Director for as long as he holds the beneficial interest in at least 15% of the ordinary shares of the Company, two Non-Executive Directors for as long as he holds the beneficial interest in at least 30% of the ordinary shares of the Company and three Non-Executive Directors for as long as he holds the beneficial interest in at least 50% of the ordinary shares of the Company. The Relationship Agreement will terminate if Simon Nixon holds less than 15% of the ordinary shares of the Company.

The Relationship Agreement also includes a protocol to be observed in relation to any Non-Executive Director appointed by Simon Nixon to deal with potential conflicts of interest and the provision of confidential information.

As at 24 February 2009 (being the latest practicable date prior to the publication of this report) Simon Nixon had not appointed any Non-Executive Directors pursuant to his rights in the Relationship Agreement.

Board Committees
The Board has three principal Committees (Audit, Nomination and Remuneration) to which various matters are delegated. The Committees all have formal written terms of reference that have been approved by the Board and are published on the Group’s website at www.moneysupermarket.com. They are also available in hard copy form on application to the Company Secretary.

The Directors who served on each of the Committees during the financial year ended 31 December 2008 are set out below:

Details of the work of the Audit, Nomination and Remuneration Committees are given in the reports of those Committees on pages 46 to 52.

Board and Committee attendance
The Board meets regularly to review the operation and performance of the Group. If and when required, meetings in addition to the scheduled meetings are held either in person or by telephone conference. The Board normally meets on at least eight occasions in each financial year.

The attendance record of the Directors at Board and Committee meetings during the financial year ended 31 December 2008 is set out in the following table:

The Executive Directors of the Company may attend meetings of the Committees at the invitation of the Chairman of the respective Committee.

The Chairman is primarily responsible for the workings of the Board and is not involved in day-to-day operational issues. He sets the agendas in consultation with the Executive Directors and Company Secretary. The Chairman periodically holds meetings with the Non-Executive Directors without the Executive Directors being present.

Performance reviews and Directors’ development
The Board has established a formal process for the annual evaluation of the performance of the Board, its Committees and individual Directors. Questionnaires were prepared which provided the framework for the evaluation process. Each Director completed the questionnaires commenting on the performance of the other Directors, the Board and each Committee and submitted the completed questionnaires for collation. Utilising the responses to the questionnaires, the Chairman has conducted interviews with each Director and assessed their individual performance. The Chairman has carried out an evaluation of the performance of the Board as a whole and of each Committee and, led by the Senior Independent Non-Executive Director, the Non-Executive Directors have met and assessed the performance of the Chairman taking into account the views of the Executive Directors. The conclusions of those evaluations have been presented to the Board by the Chairman and the Senior Independent Non-Executive Director. The evaluation process is designed to cover Board processes, the structure and capability of the Board, strategic alignment, Board dynamics and the skills brought to the Board by each Director.

The Chairman and Company Secretary are responsible for preparing and implementing an induction programme for Directors, including guidance as to their duties, responsibilities and liabilities as a Director of the Company and business familiarisation. Business familiarisation involves Directors visiting the Company’s offices and giving the Directors the opportunity to meet the executive management team and other senior managers in the business. They also have the opportunity to discuss organisational, operational and administrative matters. Every Director has access to appropriate training as required following their appointment.

Shareholder relations
The Board is committed to establishing and maintaining good relationships with shareholders. Senior executives, including the Chairman, Chief Executive Officer and Chief Financial Officer regularly meet with analysts and institutional shareholders to keep them informed of significant developments and to develop an understanding of their views which are reported back to the Board. Formal presentations are given to analysts and investors covering the full year and half year results. The Company Secretary deals with questions from individual shareholders.

The results and results presentations, together with all information reported to the market via the regulatory information service, press releases and other shareholder information, are published on the Group’s website at www.moneysupermarket.com to be viewed and accessed by all shareholders.

The Senior Independent Non-Executive Director, Michael Wemms, is available to shareholders if they have concerns which contact through the normal channels of Chairman, Chief Executive Officer or Chief Financial Officer has failed to resolve, or for which such contact is inappropriate.

All shareholders will have the opportunity to ask questions at the forthcoming Annual General Meeting and at all other times, by e-mailing or writing to the Company. The Chairmen of the Audit, Nomination and Remuneration Committees will be available to answer questions at the forthcoming Annual General Meeting. Shareholders may also contact the Chairman, the Chief Executive Officer or, if more appropriate, the Senior Independent Non-Executive Director to raise any issue with one or all of the Non-Executive Directors of the Company.

The Company will prepare separate resolutions on each substantially separate issue at the forthcoming Annual General Meeting. The result of the vote on each resolution will be published on the Group’s website after the Annual General Meeting and will be announced via the regulatory information service.

Internal control and risk management
The Board is responsible for the Group’s system of internal control and risk management and for reviewing its effectiveness. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material misstatement or loss.

The key features of the Group’s system of internal control and risk management are:

• A comprehensive annual business planning and budgeting process, requiring Board approval, against which the Group’s actual performance and any significant variances are reviewed by the Board.
• A schedule of matters reserved for the Board’s approval to ensure it maintains control over appropriate strategic, financial, organisational, compliance and capital investment issues.
• An organisation structure with clearly defined lines of responsibility and delegation of authority.
• A clearly defined control policy and procedures for matters including appropriate authorisation levels.
• An executive management team which has the responsibility for identifying and evaluating risks facing the Group and for putting in place procedures to manage and monitor those risks.
• An annual two day strategy event to identify, evaluate and appropriately manage the key risks facing the Group using an external independent facilitator.

In addition, the Audit Committee receives:

• Reports from the external auditors in relation to the Financial Statements and the material financial reporting judgements contained in them.
• Reports from the external auditors in relation to the system of internal control and the testing by the external auditors of that system.

The Audit Committee has conducted a review of the effectiveness of the Group’s system of internal control and risk management during the financial year ended 31 December 2008. The Board considers that in the context of the control environment described above, the Group’s system of internal control and risk management is effective and satisfactory.

Compliance with the Combined Code
The Directors consider that during the financial year ended 31 December 2008 and to 24 February 2009 (being the latest practicable date prior to the publication of this report), the Company complied with the Combined Code except as follows:

A.3.2 – During the financial year ended 31 December 2008, at least half the Board, excluding the Chairman, comprised Independent Non-Executive Directors. With effect from the appointment of Peter Plumb as an Executive Director on 1 January 2009 to succeed Simon Nixon as Chief Executive Officer, and the appointments of Graham Donoghue and David Osborne as Executive Directors on 23 February 2009, at least half the Board, excluding the Chairman, does not comprise Independent Non-Executive Directors. The Company has commenced the process, with the assistance of an external search company, to appoint additional Independent Non-Executive Directors.

B.2.1 – The Remuneration Committee comprises Michael Wemms and Rob Rowley, both of whom the Board has determined to be Independent Non-Executive Directors, and Gerald Corbett. Accordingly, the Remuneration Committee does not currently comprise at least three Independent Non-Executive Directors. The Company has commenced the process, with the assistance of an external search company, to appoint additional Independent Non-Executive Directors. It is currently anticipated that at least one of the appointees will become a member of the Remuneration Committee.

C.3.1 – The Audit Committee comprises Rob Rowley and Michael Wemms, both of whom the Board has determined to be Independent Non-Executive Directors, and Gerald Corbett. Accordingly, the Audit Committee does not currently comprise at least three Independent Non-Executive Directors. The Company has commenced the process, with the assistance of an external search company, to appoint additional Independent Non-Executive Directors. It is currently anticipated that at least one of the appointees will become a member of the Audit Committee.

D.1.1 – As a result of regular feedback provided to the Board by the Chairman, Chief Executive Officer and Chief Financial Officer following their dialogue with major shareholders, the Senior Independent Non-Executive Director believes he is aware of the views of major shareholders. Unless requested by major shareholders, the Senior Independent Non-Executive Director does not attend meetings with them.

Audit Committee Report
The Audit Committee presents a separate report in relation to the financial year ended 31 December 2008.

Composition of the Audit Committee
The Audit Committee comprises the three Non-Executive Directors, Rob Rowley (Chairman of the Audit Committee), Gerald Corbett and Michael Wemms. Rob Rowley and Michael Wemms are considered by the Board to be independent. Gerald Corbett was considered by the Board to be independent on appointment. Biographies of the members of the Audit Committee are set out on pages 34 and 35. Rob Rowley is a qualified accountant and was formerly finance director of Reuters plc and chairman of the audit committee at Prudential plc. He is currently chairman of the audit committee at Liberty International plc. The Board is satisfied that Rob Rowley has recent and relevant financial experience.

Operation of the Audit Committee
The Audit Committee met on four occasions during the financial year ended 31 December 2008. Details of the attendance at Audit Committee meetings are set out in the Corporate Governance Report on page 44.

The Chief Financial Officer, together with the external auditors, will normally attend meetings at the invitation of the Chairman of the Audit Committee. At each Audit Committee meeting, the external auditors are invited by the Audit Committee to advise them of any matters which they consider should be brought to the Audit Committee’s attention without the Executive Directors present.

The Company Secretary acts as secretary to the Audit Committee. The members of the Audit Committee can, where they judge it necessary to discharge their responsibilities, obtain independent professional advice at the Company’s expense. The external auditors may also request a meeting with the Audit Committee if they consider it necessary.

The Audit Committee’s duties include:

• Reviewing the Group’s Financial Statements and the material financial reporting judgements contained in them.
• Reviewing the Group’s internal control and risk management systems.
• Advising the Board on the appointment and removal of the external auditors and the remuneration and terms of engagement of the external auditors.
• Developing and implementing policy on the engagement of the external auditors to supply non-audit services.
• Considering the requirement for an internal audit function.
• Reviewing the Group’s whistleblowing procedures.

The terms of reference of the Audit Committee are published on the Group’s website at www.moneysupermarket.com and are available in hard copy form on application to the Company Secretary.

The Audit Committee undertakes its activities in line with an annual work plan. The Audit Committee agrees the scope of the audit work and discusses the results of the full year audit and half year review each year.

In order that the Board is kept fully informed of the Audit Committee’s work, the Chairman of the Audit Committee reports on the Audit Committee’s work at the next Board meeting. The Board also receives a copy of the minutes of each meeting of the Audit Committee.

During the year, the Audit Committee approved a new formal whistleblowing procedure whereby employees may, in confidence, disclose issues or concerns about possible malpractice or wrongdoing by the Group or any of its employees without fear of reprisal. This includes arrangements to investigate such matters and for appropriate follow-up action.

Internal control and risk management
The Board is responsible for the Group’s system of internal control and risk management and for reviewing its effectiveness. The Audit Committee monitors and undertakes an annual review of the effectiveness of, and the framework for, the Group’s system of internal control and risk management. This includes annual consideration as to whether there is a need to establish an internal audit function.

The Audit Committee undertook a review of the effectiveness of, and the framework for, the Group’s system of internal control and risk management, including financial, operational and compliance controls during the year. The external auditors were engaged to review and test the effectiveness of the Group’s system of internal control and to assist the Audit Committee in its review of the effectiveness of that system. The Audit Committee received comprehensive reports from the external auditors at each Audit Committee meeting on the results and progress of this review and the tests undertaken by the external auditors.

During the financial year ended 31 December 2008, the Audit Committee considered the need to establish an internal audit function and concluded that the control systems are sufficient for the size and complexity of the Group such that an internal audit function is not required at this time. This will be reviewed in 2009.

Review of the work of the external auditors
Subject to the annual appointment of the external auditors by shareholders, the Audit Committee regularly reviews the relationship between the Group and the external auditors. This review includes an assessment of their performance, cost-effectiveness, objectivity and independence.

The Audit Committee is responsible for ensuring that an appropriate relationship is maintained between the Group and the external auditors. The Group has implemented a policy of controlling the provision of non-audit services by the external auditors in order to maintain their independence and ensure that their objectivity and independence is safeguarded. This control is exercised by ensuring that all non-audit services are subject to the prior approval of the Audit Committee. During the year, the Audit Committee approved the appointment of other accountancy firms to provide non-audit services to the Group and anticipates that this will continue in 2009.

The Audit Committee, having considered the external auditors’ performance during their period in office, recommends their re-appointment. A full breakdown of the audit and non-audit related fees is set out in note 5 to the Group Financial Statements on page 64. The Audit Committee discussed the level of fees and considered them appropriate given the current size of the Group. The Audit Committee is satisfied that the level and scope of non-audit services undertaken by the external auditors does not impair their independence and objectivity.

Nomination Committee Report
The Nomination Committee presents a separate report in relation to the financial year ended 31 December 2008.

Composition of the Nomination Committee
The Nomination Committee comprises the three Non-Executive Directors, Gerald Corbett (Chairman of the Nomination Committee), Michael Wemms and Rob Rowley. Rob Rowley and Michael Wemms are considered by the Board to be independent. Gerald Corbett was considered by the Board to be independent on appointment. Biographies of the members of the Nomination Committee are set out on pages 34 and 35.

Operation of the Nomination Committee
The Nomination Committee met on two occasions during the financial year ended 31 December 2008. Details of the attendance at Nomination Committee meetings are set out in the Corporate Governance Report on page 44.

The Nomination Committee meets as necessary and is responsible for evaluating the balance of skills, knowledge and experience of the Board, considering the size, structure and composition of the Board and, where necessary, considering and recommending to the Board persons who are appropriate for appointment as Directors.

The Nomination Committee has a formal, rigorous and transparent procedure for the appointment of new Directors to the Board. The process involves the Nomination Committee interviewing suitable candidates who are proposed by either existing Board members or by an external search company. Careful consideration is given to ensure appointees have enough time available to devote to the role and that the balance of skills, knowledge and experience on the Board is maintained.

When dealing with the appointment of a successor to the Chairman, the Senior Independent Non-Executive Director will chair the Nomination Committee instead of the Chairman.

When the Nomination Committee has identified a suitable candidate, the Chairman of the Nomination Committee will make a recommendation to the Board with the Board making the final decision.

During the year, the Nomination Committee reviewed the balance of skills, knowledge and experience of the Board together with the size, structure and composition of the Board, and considered the appointment of additional Executive Directors of the Company including the appointment of a Chief Executive Officer to succeed Simon Nixon.

After meeting with Nomination Committee members, Peter Plumb was appointed an Executive Director with effect from 1 January 2009 and each of Graham Donoghue and David Osborne were appointed Executive Directors with effect from 23 February 2009.

The Nomination Committee has commenced the process, with the assistance of an external search company, to appoint additional Independent Non-Executive Directors.

The Company Secretary acts as secretary to the Nomination Committee. The members of the Nomination Committee can, where they judge it necessary to discharge their responsibilities, obtain independent professional advice at the Company’s expense. At the invitation of the Chairman of the Nomination Committee, the Chief Executive Officer, Chief Financial Officer and Human Resources Director may attend meetings of the Nomination Committee.

The terms of reference of the Nomination Committee are published on the Group’s website at www.moneysupermarket.com and are available in hard copy form on application to the Company Secretary.

Each of the Non-Executive Directors has written letters of appointment. Their respective letters of appointment set out their expected time commitment to the Company. Each of the Non-Executive Directors has undertaken that they have sufficient time to meet what is expected of them.

In order that the Board is kept fully informed of the Nomination Committee’s work, the Chairman of the Nomination Committee reports on the Nomination Committee’s work at the next Board meeting. The Board also receives a copy of the minutes of each meeting of the Nomination Committee.

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