2016_Halma_ARA_160610_2

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Corporate Governance Report continued Board roles and responsibilities continued CHIEF EXECUTIVE’S RESPONSIBILITIES EXECUTIVE DIRECTORS SENIOR INDEPENDENT DIRECTOR INDEPENDENT NON- EXECUTIVE DIRECTORS COMPANY SECRETARY • providing coherent leadership and management of the Company with the Chairman; • developing objectives, strategy and performance standards to be agreed by the Board; • providing input to the Board’s agenda; • providing effective leadership of the Executive Board to achieve the agreed strategies and objectives; • securing an Executive Board of the right calibre, with specific responsibility for its composition, and ensuring that its succession plan is reviewed annually with the Chairman and the non-executive Directors; • monitoring, reviewing and managing key risks and strategies with the Board; • ensuring that the assets of the Group are adequately safeguarded and maintained; • building and maintaining the Company’s communications and standing with shareholders, financial institutions and the public and effectively communicating the Halma plc investment proposition to all stakeholders; • ensuring the Board is aware of the view of employees on issues of relevance to Halma plc; • living and fostering the Group values which promote ethical practices, integrity and a positive work environment, enabling the Group to attract, retain and motivate a diverse group of high quality employees; and leading by example in establishing a performance orientated, customer focused and publicly responsible Group culture. • implementing and delivering the strategy and operational decisions agreed by the Board; • making operational and financial decisions required in the day-to-day management of the Company; • providing executive leadership to senior management across the business; • championing the Group’s values and reinforcing the governance and control procedures; and • promoting talent management, encouraging diversity and inclusion. • acting as a sounding board for the Chairman; • serving as a trusted intermediary for the other Directors; and • providing an alternative channel for shareholders to raise concerns, independent of executive management and the Chairman. • contributing independent thinking and judgement, and providing external experience and knowledge, to the Board agenda; • scrutinising the performance of management in delivering the Company’s strategy and objectives; • providing constructive challenge to the executive Directors; and • monitoring the reporting of performance and ensuring that the Company is operating within the governance and risk framework approved by the Board. • acting as a sounding board for the Chairman and other Directors; • ensuring clear and timely information flow to the Board and its Committees; and • providing advice and support to the Board on matters of corporate governance and risk. CORPORATE GOVERNANCE FRAMEWORK Halma companies benefit from a highly decentralised organisational structure which delivers sustainable competitive advantage while maintaining the benefit of being part of a larger group (through collaboration with other Group companies and central investment in areas such as talent development, innovation and international expansion). A robust corporate governance framework is essential in a decentralised group in order to maintain good oversight and control over: financial and management reporting; compliance and regulatory matters; risk management; and the approval of significant decisions (such as acquisitions, disposals or material agreements). The operation of the Board and its Committees is described in this Report and further information on each Committee is detailed within the separate Committee Reports. The diagram opposite sets out the top level corporate governance framework for Halma and how the Board and its Committees interact. The interface between the operating companies and this governance framework is described below and is illustrated in the diagram on page 29 in relation to Group risk management. Each operating subsidiary company within the Group has its own board of directors, which meets regularly to fulfil its legal duties and operational and financial obligations in managing the affairs of the company. The Sector CEO, or a Sector Vice President, is appointed as a director of each subsidiary within their sector and acts as Chairman at each board meeting. Each subsidiary must operate in accordance with the Group’s internal procedures, which set out the minimum standards required in the areas of financial reporting, health and safety, ethics, administration and information technology. These procedures are made available throughout the Group via a centrally managed electronic portal and each procedure is subject to regular review. Each of the four sectors has a management board which meets regularly to review financial and operational performance and governance matters relating to companies within that sector. Reports prepared by each Sector CEO are provided to, and reviewed by, the Executive Board. 60 Halma plc Annual Report and Accounts 2016
Board governance structure Board Provides strategic leadership to the Group within a framework of robust corporate governance and internal control, setting the culture, values and standards that are embedded throughout our business to deliver long-term sustainable growth for the benefit of our shareholders and other stakeholders Nomination Committee • reviews the composition of the Board; • oversees the Board’s succession planning; and • keeps under review the leadership needs of, and succession planning for, the Company. Read more p66 Audit Committee • monitors the integrity of financial statements; • oversees risk management and control; • monitors the effectiveness of the Internal Audit function; and • reviews external auditor independence and will lead the audit tender process. Read more p69 Share Plans Committee Responsible for the administration arrangements relating to employee share based incentives (following approval of the award basis by the Remuneration Committee or the Board). Remuneration Committee • keeps under review the framework and policy on executive Director and senior management remuneration (including pension arrangements); and • approves the design, targets and framework for share plan awards. Read more p73 Bank Guarantees and Facilities Committee Agrees and approves arrangements for issuing guarantees, indemnities or other support for bank loans and other financing facilities. Executive Board • a management committee chaired by the Chief Executive, which reviews operational matters and business performance; • reinforces the operational and governance structures that are in place across the Group; and • acts as a forum for management decisions. Acquisition and Disposals Committee Reviews and approves the terms and structure of acquisitions or disposals which have been agreed in principle by the Board. STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS Reporting requirements chart Reporting requirement Description of the business model and strategy. Description of the significant issues that the Audit Committee considered in relation to the financial statements and how these issues were addressed, having regard to the matters communicated to it by the external audit team. Explanation of how the Audit Committee has assessed the effectiveness of the external audit process and the approach taken to the reappointment of the external auditor to enable shareholders to understand why it recommended reappointing. Identification of search consultancies used and any connections with the Company. Statement that the Directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides information necessary for shareholders to assess the Company’s position and performance. Future policy table and notes, performance scenario charts, remuneration obligations in service contracts and statement of shareholder vote on the 2015 remuneration report. Policy implementation, remuneration paid to service advisers, single total figure tables, CEO pay comparison to Company performance and relative importance of spend on pay. Directors’ shareholdings and variable pay awarded in the year. Location Chief Executive’s Strategic Review and Sector Reviews See pages 4 to 12 and 34 to 41 Audit Committee Report See page 69 Audit Committee Report See page 69 Nomination Committee report See page 66 Corporate Governance Report See page 54 Remuneration Committee Report See page 73 Remuneration Committee Report See page 73 Remuneration Committee Report See page 73 Halma plc Annual Report and Accounts 2016 61
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Halma plc Annual Report and Account
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Highlights Another record year of r
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Infrastructure Safety Products whic
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Revenue from outside the USA, UK an
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Our decentralised organisational st
Page 11 and 12: INCREASING HEALTH AND SAFETY REGULA
Page 13 and 14: INCREASING DEMAND FOR LIFE-CRITICAL
Page 15 and 16: Acquisition focus Insight Our marke
Page 17 and 18: Insight Trapped key interlocking is
Page 19 and 20: Insight Regulations around the worl
Page 21 and 22: Insight People are living longer th
Page 23 and 24: Insight Many processes rely on prec
Page 25 and 26: Resources and relationships Committ
Page 27 and 28: GROW INNOVATE ACQUIRE EMPOWER STRAT
Page 29 and 30: INNOVATE GROW ACQUIRE EMPOWER STRAT
Page 31 and 32: process and one which is subject to
Page 33 and 34: Mitigation Increased risk No change
Page 35 and 36: Mitigation Increased risk No change
Page 37 and 38: a considerable impact on the oil an
Page 39 and 40: towards the use of more sensors, no
Page 41 and 42: A third of American adults suffer f
Page 43 and 44: Today 1.8 billion people drink faec
Page 45 and 46: Adjusted profit bridge £m 160 155
Page 47 and 48: fell from 21% to 20% this year, and
Page 49 and 50: The Group accounts for post-retirem
Page 51 and 52: ENVIRONMENTAL MANAGEMENT SYSTEM (EM
Page 53 and 54: In return, we offer: • The opport
Page 55 and 56: Our intention is to create effectiv
Page 57 and 58: PEOPLE AND CULTURE I reported in la
Page 59 and 60: CAROLE CRAN NON-EXECUTIVE DIRECTOR
Page 61: Corporate Governance Report Leaders
Page 65 and 66: October 2015 • Group strategic pe
Page 67 and 68: The Board and Committee evaluations
Page 69 and 70: Jane Aikman is in her final term, h
Page 71 and 72: Audit Committee COMMITTEE CHAIRMAN
Page 73 and 74: POLICY ON AUDITOR INDEPENDENCE AND
Page 75 and 76: Remuneration Committee COMMITTEE CH
Page 77 and 78: REMUNERATION POLICY The remuneratio
Page 79 and 80: Opportunity Maximum opportunity: 15
Page 81 and 82: EXECUTIVE DIRECTOR SERVICE CONTRACT
Page 83 and 84: NON-EXECUTIVE DIRECTORS Unless othe
Page 85 and 86: SINGLE FIGURE OF TOTAL REMUNERATION
Page 87 and 88: The three-year period over which th
Page 89 and 90: PERCENTAGE CHANGE IN CEO REMUNERATI
Page 91 and 92: Date of grant As at 28 March 2015 G
Page 93 and 94: Other Statutory Information ACTIVIT
Page 95 and 96: The Companies Act 2006 also require
Page 97 and 98: Directors’ Responsibilities The D
Page 99 and 100: Risk Impairment of the carrying val
Page 101 and 102: AN OVERVIEW OF THE SCOPE OF OUR AUD
Page 103 and 104: Respective responsibilities of dire
Page 105 and 106: Consolidated Statement of Comprehen
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Page 109 and 110: Consolidated Cash Flow Statement Co
Page 111 and 112: Accounting Policies continued KEY A
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Critical accounting judgements Good
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Segmental reporting An operating se
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Accounting Policies continued Cash
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Cash and cash equivalents Cash and
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Notes to the Accounts continued 1 S
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Notes to the Accounts continued 1 S
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Notes to the Accounts continued 3 N
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Notes to the Accounts continued 6 P
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Notes to the Accounts continued 9 T
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Notes to the Accounts continued 11
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26 FINANCIAL INSTRUMENTS continued
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26 FINANCIAL INSTRUMENTS continued
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Company Statement of Changes in Equ
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Notes to the Company Accounts conti
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C12 RESERVES The Capital redemption
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C14 EXPLANATION OF TRANSITION TO FR
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2009/10 £000 2010/11 £000 2011/12
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Principal locations Telephone E-mai
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Principal locations Telephone E-mai
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DIVIDEND REINVESTMENT PLAN The Comp
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