Taking well-considered risks is part of creating value. Q-Park makes financial, commercial, operational and reputational risks controllable by carefully weighing risks and returns against each other.
The objectives of risk management are to protect the feasibility of Q-Park's strategic policy and operational objectives, the reliability of corporate reports and the compliance with relevant legislation.
The CFO is responsible for risk management, supported by the executive secretary and the internal and external auditors.
Q-Park’s risk profile differs per category. At a strategic level, the executive board is willing to take risks regarding the technical development of our infrastructure, our payment and parking systems, as well as our online services. We are also prepared to take risks with regard to developing our organisation and our people to maintain sustainable competitive advantage. We are less willing to take risks with our intellectual capital, the Q-Park brand and our quality, acquisitions and investments, and our liability. We wish to minimise all risks to health and our integrity.
Risks with the highest priority and their risk management measures:
Risk management measures
Q-Park supports its short-term and medium-term investment policy with sensitivity analyses based on financial parameters. Decisions on whether or not to invest in parking facilities are weighed carefully using the exposé and reference model.
The investment committee checks the investment terms and conditions for completeness and determines whether these comply with the guidelines. Only then will the proposals, together with recommendations from the committee, go to the executive board.
Interest exposure is covered by interest rate derivatives, so that at least half of the bank debt is insensitive to interest rate fluctuations. For a full description of the risk management with regard to financial instruments, please refer to the explanation given in the consolidated annual accounts.
Ethics and integrity are important conditions for confidence. Q-Park emphasises the integrity of its executive board and employees by applying a code of ethics.
The executive board is responsible for compliance to the code of ethics and ensures that that all employees are informed about the contents and the nature of this code.
More information on this topic can be found under Code of Ethics.
The ICT policy offers guarantees for the reliable provision of information.
Measures to guarantee the continuity of information systems include our own data centres, servers, backup & recovery procedures and an external data centre.
The portfolio strategy guarantees risk spread because we concentrate on selected cities in ten North-West European countries. In addition, we carefully balance the contract types and their duration.
In addition to the aforementioned risks with the highest priority, the following risks, per category, are considered significant.
Q-Park ensures a sufficient financial buffer so it does not have to depend too much on external financiers. A positive operational cash flow and long-term loans are the major instruments applied. Various financing strategies spread the dependence on investors.
Q-Park no longer hedges currency risks on investments in currencies other than the euro. The shareholders are informed quarterly about the exposure to currency risks.
To obtain a correct estimate of the investment property value, it is valued once a year by an independent valuer based on cash flow projections (discounted cash flow). The contract for this work is put out to tender once every six years. In 2011, DTZ was appointed as valuer.
Goodwill is tested annually for impairment based on a specially developed mathematical model. This model is based on cash flow projections, similar to that for investment property. An external party checks the outcomes with market values.
Q-Park has formulated performance indicators for the operational cash flows per operational company. These are monitored on a quarterly basis, and also take account of the ratios pertaining to investments. Q-Park Financial Services (QFS) streamlines operational cash flows centrally.
Q-Park pays a great deal of attention to keeping tax risks under control, and uses the tax control framework for each country. In addition, Q-Park continues to gather and update its knowledge and expertise on legal affairs, taxation and fund structures as well as on matters concerning compliance and tax concessions.
Changes in the economic climate have an impact on Q-Park. We reduce this risk through the geographic diversification of our portfolio and by monitoring and responding to developments.
Of particular interest to Q-Park are developments in payment systems. Q-Park also monitors changes in online shopping trends and the information search behaviour of consumers. We therefore invest heavily in online platforms for our customers and partners so that they can purchase our products online and can find and use up-to-date information. We also invest in our parking management systems so that these are prepared for modern access and payment solutions.
Politics and legislation
Political decisions concerning parking regulation influence our results. After all, under pressure from the general public, retailers, or due to changes following elections, national or local politicians can decide to implement measures that may be unfavourable to the parking sector. Q-Park reduces the chance of undesirable measures by working closely together with governments and taking this opportunity to highlight the relevance of regulated and paid parking to society.
The car parking market is very fragmented, which means that often local authorities have the majority share. There are many small local players and only a few large international parking companies. Q-Park monitors the competition at local level periodically and introduces changes where necessary.
We keep a close eye on developments among the payment services providers, whose main focus is currently on-street parking. We will enter into joint ventures where collaboration offers opportunities for both parties.
It would be fair to say that parking tariffs are relatively inelastic. Relatively speaking there is no strong relationship between the demand for parking spaces and the change in pricing. This doesn't mean that parking tariffs are not often under pressure, due to economic circumstances, public opinion or local government policy. Parking tariffs should be fair and dovetail with the mobility problem that has to be solved.
The principle of fairness must be in balance for all parties involved: society, motorists and the operator. At Q-Park we use a number of calculation models to work with different tariff steps, starting fees and whole day rates and simulate the effects of changing these parameters.
The business processes provide information about warning signals, preventive actions, and managing emergency situations, all under the motto ‘safety first’. Safety and security are guaranteed through comprehensive procedures. Daily operational monitoring ensures that risks are identified promptly and dealt with in a timely manner.
Q-Park prevents liability issues through knowledge transfer and by adhering to procedures concerning the health and safety of employees and customers and for maintaining the value of property. The insurance strategy covers the risks. Because Q-Park pursues this policy centrally, underestimating risks is prevented.
Dependency on suppliers is especially sensitive where parking management systems, ICT management and infrastructure are concerned. Q-Park has therefore opted for different systems from independent suppliers whereby efficient operating activities remain the primary objective.
Q-Park reduces the chance of unexpected interruptions to operations through preventive maintenance and targeted investments, by keeping systems up to date and expanding these with effective international supplier contracts.
Board of Directors
The members of the EB are chosen carefully and after much deliberation. The SB appoints the EB members, formulates their ongoing assignment and specifies their tasks and responsibilities. Q-Park's governance is based in the Dutch Corporate Governance Code to guarantee accountability and transparency for shareholders and other stakeholders.
More information on this topic can be found in the governance code section on our website, www.q-park.com.
Q-Park conforms to even more codes. For further information we refer you to the Corporate Codes section on our website, www.q-park.com.
Corporate social responsibility
Quality for our customers and return on investment for our shareholders are and remain our leading themes. Quality also forms the basis for the way we approach our corporate social responsibility. For detailed information and integrated results please see our Integrated report 2015.
Q-Park attaches great importance to its own reputation. To prevent damage to our reputation, we have defined responsibilities and basic principles in our PR policy. These relate to our own communications as well as to reactions to communication from other parties. The company contingency plan defines internal and external procedures for crisis management and communication in crisis situations through a single spokesperson.
Services and disagreements
Q-Park's services consist mainly of ‘paid parking’ solutions and parking enforcement services. At times, both types of service may invoke negative emotions in individuals, either because they consider the parking tariff too high or unfair, or because they disagree with a fine.
By providing transparent information on our websites – about mobility, parking tariffs and parking services, supplemented with clear enforcement protocols and appeals procedures – we endeavour to prevent prejudiced publicity, but on the other hand, we welcome substantiated complaints and dialogue.