As a result of the changed composition of the board of directors on 20 July 2010, the composition of the audit committee was also changed. From then on the audit committee consists of Eric Spiessens (chairman), Sophie Manigart (new member), Herman Daems, Leo Victor and Emile Van der Burg (new member). As such, it is comprised solely of non-executive board members, two of them independent. All members of the audit committee more than meet the criteria of expertise regarding bookkeeping and audit.
The audit committee wishes to thank Leo Victor for his vital role, as chairman of the committee, in the excellent performance of the committee.
Divergence of best-practice principle 5.2.1
The audit committee holds five members, all of which are non-executive directors. Two of those meet the independence criteria of the Corporate Governance Code as well. This means that the audit committee doesn’t consist in majority of independent directors.
Although the board of directors is conscious of the role and value of the independent directors, it is convinced that membership of directors who do not qualify as independent directors is necessary for a balanced composition of this committee. This is also why the board of directors finds it useful to appoint directors nominated by the reference shareholder, for whom a good management of the resources of the company is of direct interest. As such, a 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 the exceptional situations where there is a potential conflict of interests 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 working audit committee.
The main role of the audit committee is to direct and supervise the financial reporting, the accounting proces and the administrative records. Each quarter, the financial reports are discussed, with special attention to valuation decisions regarding portfolio participations and funds.
During the financial year 2010-2011 the audit committee paid special attention to the following subjects: the applied valuation method, as described in the valuation rules, was continuously evaluated, and the use of valuation multiples and valuation discounts was examined in detail.
Currency hedging was discussed and it was acknowledged that the USD currency risk, arising from portfolio investments in American dollars, is fully covered. As a result, fluctuations in the American dollar hold no longer a threat to Gimv’s net proceeds.
The audit committee also examined the ever increasing importance of third party funds under management of Gimv. It was concluded that the processes and financial-administrative handling and monitoring are in line with those used by Gimv. It was agreed that the audit committee will be updated on this matter on a yearly basis.
As explained further on, the internal control mechanism has been further developed as a management tool to ensure and continuously improve the accuracy and consistency of the applicable processes. In collaboration with Ernst & Young the functioning of the internal control of processes selected by the management were tested.
This resulted in a control of following sub-processes: accounting and reporting in the Netherlands and France, fund administration; the buyout & growth investment procedures were also re-tested for the whole Gimv group. During the first phase the design of the operational processes was verified. In a second phase the risk-control effectiveness of the processes was tested. This enabled Gimv, where necessary, to further improve the existing control mechanisms 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 attested over the effectiveness of the tested internal control mechanisms, based upon the work done between 1 April 2010 and 31 March 2011.
The audit committee also analyses the legal and tax disputes on a regular basis, as well as the off-balance sheet obligations and this on the basis of internal and external reports. The audit committee concluded that the annual account or the annual report provides a fair and complete view.
The management letter of the auditor contained no recommendations for material adjustments.
The audit committee has no knowledge of facts or circumstances with a potentially large impact on Gimv not included in the annual account or the annual report.
Number of meetings and attendances
During the financial year 2010-2011 the audit committee had five meetings.
On average 82 per cent of its members was present. The individual attendances of its 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 presence of any member of the management committee and once without the auditor.