As a result of the amended composition of the board of directors on 29 June 2011, the composition of the audit committee has also been changed. Since then, the audit committee consists of Eric Spiessens (chairman), Sophie Manigart, Emile van der Burg, Urbain Vandeurzen (new member) and Johan Van den Driessche (new member). It is comprised solely of non-executive board members, two of whom are independent. All members of the audit committee more than meet the criteria of expertise regarding bookkeeping and audit.
Deviation of best-practice principle 5.2.1
The audit committee consists of five members, all of whom are non-executive directors. Two of those meet the independence criteria of the Corporate Governance Code as well. This means that the audit committee does not count a majority of independent directors.
Although the board of directors is aware of the role and value of independent directors, it is also convinced that membership of directors who do not qualify as independent directors is fundamental for a well-balanced composition of the audit committee. As such, the board of directors deems it wise to appoint directors nominated by a reference shareholder, for whom a good management of the resources of the company is of direct interest. In this manner, a well-balanced composition is achieved.
For the main assignments of the audit committee, the interests of the reference shareholder and the other shareholders are the same. The special role of the independent directors to protect the interests of the minority shareholders is only relevant in exceptional situations where there is a potential conflict of interest between the reference shareholder and the minority shareholders.
The board of directors feels that the current number of independent directors is sufficient to ensure a fair, independent and adequate functioning of the audit committee.
The main role of the audit committee is to direct and supervise the financial reporting, the accounting process and the administrative records. Each quarter, the financial reports are discussed, with special attention to valuation decisions regarding portfolio participations and funds. The audit committee also monitors the efficiency of internal control and risk management within Gimv.
In addition, during financial year 2011-2012, the audit committee has paid attention to a couple of particular subjects. The applied valuation methods, as set out in Gimv’s valuation guidelines, are continuously monitored by the audit committee, and during the past financial year, the committee focused more on the use of valuation multiples, the granting of discounts and the impact of highly fluctuating markets on the valuation of the portfolio companies. Furthermore, the activities and methodology of the auditor, for Gimv group as well as for the funds under management, were thoroughly investigated.
As in previous years, the internal control programme has been continued as a tool for management to continuously monitor and improve the accuracy and consistency of the applied processes within Gimv. This resulted in an internal audit for the following activities: Venture Capital’s investments and divestments, the management of the investments in third party funds, the governance of various funds under management, the administrative follow-up and reporting of the French activities and the implementation of the amended signing policy within the Company.
During a first phase, the design of the operational processes was evaluated. In a second phase, the effectiveness of the risk management processes was tested. This enabled Gimv to further improve the existing control mechanisms, where necessary, towards an even more efficient risk management. A more detailed description of the approach and methodology of internal control and risk management can be found in the chapter on internal control and risk management.
As independent auditor, Ernst & Young formally approved the effectiveness of the tested internal control mechanisms, based upon work done between 1 April 2011 and 31 March 2012.
Finally, the audit committee analysed the ongoing legal and tax disputes, as well as the off-balance sheet obligations, on the basis of internal and external reports. The audit committee concluded that the annual accounts and the annual report provide an accurate and complete view of all issues.
The auditor’s management letter contained no recommendations for material adjustments.
The audit committee has no knowledge of facts or circumstances with a potentially large impact on Gimv which are not included in the annual accounts or the annual report.
Number of meetings and attendances
During financial year 2011-2012, the audit committee convened five meetings.
On average, 92 percent of its members were present. The individual attendances of the members are listed in the remuneration report under the heading “Remuneration of the board of directors”.
The audit committee meets once a year without the members of the management committee and once without the auditor.