G4S Annual Report and Accounts 2011

Overview Strategic review Performance
Corporate governance statement continued
Conflicts of interest
Each of the directors has disclosed to the board any situations which apply
to them as a result of which they have or may have an interest or position
which conflicts or may conflict with the interests of the company. In
accordance with the company’s articles of association, the board has
authorised such matters. The affected directors did not vote when their
own positions were considered. Where the board deemed it appropriate,
such authorisation was given subject to certain conditions. The board
reviews such matters on a regular basis.
Board meetings, information flow, development
and induction
Meeting attendance
Scheduled
meetings
Unscheduled
meetings
Executive directors
Nick Buckles (CEO) 6/6 7/7
Trevor Dighton (CFO) 6/6 7/7
Grahame Gibson (COO) 6/6 7/7
Non-executive directors
Alf Duch-Pedersen (chairman) 6/6 7/7
Lord Condon 6/6 7/7
Mark Elliott 6/6 7/7
Winnie Fok 5/6 3/7
Bo Lerenius 6/6 7/7
Mark Seligman 6/6 7/7
Clare Spottiswoode 5/6 4/7
Board meetings and information flow
Six scheduled board meetings were held during the year ended
31 December 2011 and there were a further seven additional meetings.
One of the scheduled meetings was an extended, two day, off-site board
and strategy session at which presentations on the development and
implementation of the company’s strategy were made to the board by
senior executives and the board debated the company’s strategy and
business plans. Each of the non-executive directors has undertaken an area
of special interest in relation to the group’s activities. In some cases this
relates to a particular geography about which the director has intimate
knowledge, in others it relates to business activities in which the director
has great experience. To further their understanding of the group and their
relationship with the operating businesses, some were able to attend
meetings and conferences held by various regions and business units,
following which they reported back to the board on matters of interest.
Prior to each meeting, comprehensive board papers are circulated to
the directors addressing not only the regular agenda items on which the
executives will report, but also details of any areas requiring approval or
decisions such as significant acquisitions or important market issues. At each
meeting, the board then receives reports from the chief executive, the chief
financial officer and the company secretary, an HR report which includes
summaries of developments on HR and health & safety matters and an
investor relations report which includes analysts’ reviews and any comments
received from major shareholders since the previous board meeting. After
meetings of the board committees, the respective committee chairmen
report to the board on the matters considered by each committee.
In addition, each month the board receives management accounts, trading
and financial updates, investor relations and HR reports.
There are seven board meetings scheduled for the current year, including
an extended strategy review session.
Induction and professional development
When new non-executive directors are recruited, they have the
opportunity to spend time with the executive directors to understand the
business, its structure and people as well as the company’s strategy and
financial performance. In addition, they visit businesses, usually within a
number of countries, so they can begin to get a feel for the group’s
operations. Meeting regional and country staff continues throughout a
director’s time on the board, as does continuing professional development
usually in areas where the director has specific committee responsibility.
Risk management and internal control
The directors acknowledge their responsibility for the group’s system of
internal control and for reviewing its effectiveness. The system 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 risks associated with the group’s activities are reviewed regularly by the
board, which assesses the group’s risk appetite/tolerance, considers major
risks and evaluates their impact on the group. Policies and procedures,
which are reviewed and monitored by the head of group internal audit, are
in place to deal with any matters which may be considered by the board to
present significant exposure.
The key features of the group’s risk management process, which was in
place throughout the year under review and since, are:
uu
uu
uu
uu
uu
A common risk management framework* is used to provide a profile
of those risks which may have an impact on the achievement of
business objectives.
Each significant risk is documented, showing an overview of the risk, how
the risk is managed, and any improvement actions. Risk appetite/tolerance
is considered in the context of the net (after controls and mitigation) risk
with a particular focus on “High” net risks. To be categorised as “High”,
a risk must meet at least one of the following criteria:
1. major impact on the achievement of the business strategy;
2. serious damage to business reputation;
3. severe business disruption; or
4. impact of > 5% on operating profit or assets.
Risk profiles ensure that internal audit reviews of the adequacy, application
and effectiveness of risk management and internal controls are targeted
on key risks.
Risk management committees have been established at regional and
group level. The regional committees meet at least annually and the group
committee meets quarterly. A standard agenda covering risk and control
issues is considered at each meeting and risk profiles are reviewed and
updated at each meeting.
Risk and control self-evaluation exercises are undertaken for each
operating company, for most companies at least twice a year, and updated
risk profiles are prepared. Similar exercises are undertaken as part
of the integration process for all major acquisitions. The results of the
company risk evaluations are assessed by the regional risk management
committees*.
*Because G4S Government Solutions, Inc. (“GSI”) is governed through a proxy agreement
under which the group is excluded from access to operational information, it is not subject
to the same risk management process as is applied to other group companies. The board
has however satisfied itself as to the adequacy of the internal control processes adopted by
GSI which include a risk review by an external advisor.
58
G4S plc
Annual Report and Accounts 2011