CORPORATE GOVERNANCE STATEMENT The philosophy, structure, and general principles of IBA corporate governance are presented in the Company’s Corporate Charter (“Charter”). The Charter is available on the Company's website www.iba-worldwide.com. The Company has adopted the 2009 Belgian Code of Corporate Governance as its reference Code and believes that it is in compliance, with one exception: the composition of the Audit Committee. Because of the high-level, complementary expertise of the current membership, the Company currently has only one independent member out of three, instead of the majority suggested by the code. It will bring the membership fully in line with the code as soon as it is able to identify satisfactory candidates.
CHARACTERISTICS OF INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT In compliance with legal requirements stipulated in the Law of April 6, 2010 and following the recommendations of the Code of Company Governance of 2009, the principal characteristics of the internal control systems and risk management practices set up by IBA as part of the process of providing financial information can be described as follows:
CONTROL ENVIRONMENT After the Group has established its annual objectives, these are transferred to operational divisions, departments and each member of the staff. The annual evaluation procedure ensures that these objectives are followed. The organization of the accounting and finance department contributes to this process. The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) jointly agree department objectives and the CFO is then responsible for dividing these between the various levels of hierarchy. The human resources department, working with Management, has established a library of functions detailing descriptions of the functions required in the organization of IBA Group activities. Individual responsibilities for
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maintaining accounts and financial information are identified in this process. The accounting policies applied across the Group are defined in an accounting manual. This manual, which is available on the Company intranet, is followed by Company subsidiaries during their periodic accounting activities. The process of preparing consolidated financial information is supported by a collection of instructions aimed at guiding subsidiaries in the preparation of their local accounts.
RISK MANAGEMENT PROCESS Financial statements are consolidated on a monthly basis. This procedure enables any new accounting issues to be highlighted quickly. For this purpose, the finance department works closely with the legal department, as well as with external auditors, in order to ensure adequate adaptation to changes in legislation and the evolution of accounting standards. These efforts are made in order to meet Company objectives concerning the provision of financial information in total compliance with Company law, deadlines and quality standards. The control of risks which could affect the procedure of establishing financial information is informal. The identification and evaluation of these risks are undertaken by Company Management in its daily activities. Senior management has introduced a range of control and analysis tools in order to identify, evaluate and track financial and operational risks. Amongst these are: ➤ A monthly management dashboard (versus budget, versus previous year); ➤ A five-year strategic plan and annual budget; ➤ Treasury forecast tables; ➤ Project status reports; ➤ Procedures for establishing technical documents;