The Australian Stock Exchange Listing Rules were amended effective 1 January 2003, requiring companies to disclose the extent to which they have complied with the best practice recommendations of the ASX Corporate Governance Council (the ‘ASX Council’) – the Corporate Governance Principles and Recommendations (the ‘ASX Principles’). While implementation of the Council’s recommendations is not mandatory, the Company will disclose when it has not adhered to any of the recommendations in accordance with ASX Listing Rule 4.10.3.

Foundations for management and oversight

The Board has the overall responsibility to shareholders for all governance matters of the Group. The Board remains primarily responsible for the strategic direction and financial aspirations of the Group, whilst delegating the responsibilities of management to the Managing Director and the senior management team.

The Board aims to fulfil its responsibilities by creating value for all stakeholders that is sustainable and beneficial. Stakeholders include shareholders, employees, customers, the community and the environment. The Board has adopted a Charter that includes, amongst other items, the specific roles and responsibilities of the Board. Without limiting the Board’s function, its specific responsibilities include:

• approving objectives, strategies and financial plans and monitoring the Company’s performance against these plans
• appointment of the Managing Director and reviewing his performance and remuneration
• monitoring compliance with the regulatory requirements, and ensuring all Norfolk Group employees act with integrity and diligence in the interests of the Company and stakeholders
• reviewing and approving all significant policies and procedures across the Group.

Board structure

As at 31 March 2008, the Board was comprised of five directors, three of whom were independent directors.

Each director is required to disclose any interest which might create a potential conflict of interest with their duties as a director of Norfolk Group Limited or which would affect the director’s independence.

Directors are appointed in accordance with the Constitution of Norfolk Group Limited and are re-elected to that position by shareholders every three years.

The Company supports the appointment of directors who bring a wide range of business and professional skills and experience, details of which are recorded in the directors’ report.

The Board has reviewed the position of all current directors in light of the Company’s adopted definition of independence. This definition is consistent with the guidelines provided by the ASX Council. The Board will continue to monitor compliance with those guidelines but notes that currently no director has any external business relationship with the Company.

Chairman and Managing Director

The Chairman is responsible for leading the Board, ensuring directors are properly briefed in all matters relevant to their role and responsibilities, facilitating Board discussions and managing the Board’s relationship with the Company’s senior executives.

The Managing Director is responsible for implementing Group strategies and policies. The Board Charter specifies that these are separate roles to be undertaken by separate people.

Independent professional advice

Non-executive directors have the right to seek independent professional advice in the furtherance of their duties as directors at the Company’s expense. The Chairman’s prior approval of any expenditure is required, however, this will not be unreasonably withheld.

Performance of Chairman and directors

The full Board is responsible for reviewing the performance of the Chairman. It is the responsibility of the Chairman, with advice from the Board and the Nomination and Remuneration Committee, to assess the performance of the Board, its committees, each of the directors and senior executives. The Board has a formal performance review process which involves open and constructive dialogue between the respective parties, taking into account the objectives and measurable results that have been achieved.

The performance of the Managing Director is reviewed annually by the Chairman and non-executive directors. The performance of other key executives is reviewed annually by the Managing Director against predetermined goals and criteria and then is also reviewed by the Nomination and Remuneration Committee and, if required, the Board.

As the Company has yet to complete a full year following its listing on the ASX, and given a number of changes on the Board and its committees, the Board intends to establish a more formal process of review of the performance of the Board and its committees and to implement that review in the last quarter of the financial year ending 31 March 2009.

Board committee structure

The Board’s function is to address issues in their broadest context. It is through the committee structure that specific areas of detail are examined. Currently there are two committees in place:

• Audit and Risk Committee; and
• Nomination and Remuneration Committee.

Audit and Risk Committee

The Company established an Audit and Risk Committee comprised of only non-executive directors, the majority of whom are independent.

This committee was chaired by Deborah O’Toole (non-executive director) and included Paul Chrystall and Rod Keller. The committee is responsible for risk management and oversight of the Company’s financial reporting policies and other operational risk areas.

Furthermore, the committee monitors the internal controls and the integrity of the Company’s financial statements in compliance with the regulatory requirements. The committee is also responsible for the appointment, evaluation and oversight of the external auditor, and ensuring that the independence of the external assurance function is maintained.

The committee is required to address issues in relation to risk management and oversight of the Company’s financial reporting policies and other operational risk areas.

The committee’s Charter sets out that membership will only comprise of non-executive directors, the majority of whom will be independent. The committee must appoint a Chairman who is not the Chairman of the Board. The committee must comprise of a minimum of two members and shall include at least one member who is a ‘financial expert’ as defined by the Board.

The committee together with executives has established a process for the identification, review and management of significant risks across the Group, incorporating the definition and establishment of an internal audit function. While, that risk management framework is currently being implemented and refined, the Board has received a report from the Managing Director and senior management as to the effectiveness of the Company’s existing management of its significant business risks.

Nomination and Remuneration Committee

The Board established a Nomination and Remuneration Committee chaired by Peter Abery (non-executive Chairman) with one other member, Rod Keller (non-executive director). The committee is responsible, among other things, for making recommendations to the Board with respect to the Company’s compensation policies, including equity-based programmes. This committee is also responsible for making recommendations to the Board for identifying individuals suitably qualified to become Board members. The committee comprises a majority of independent directors.

The committee reviews, considers and evaluates the remuneration and performance of executive directors and senior officers. As the Company has been operating for less than one year, the Board has not as yet adopted formal evaluation processes but intends to do so during the coming financial year.

External auditors

The Company’s and Audit and Risk Committee’s policy is to appoint external auditors who clearly demonstrate quality and independence. The performance of the external auditor is reviewed annually and applications for tender of external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs. PricewaterhouseCoopers was appointed as the external auditor in 2007. It is PricewaterhouseCoopers’ policy to rotate audit engagement partners on listed companies at least every five years.

An analysis of fees paid to the external auditor is provided in the directors’ report and in note 29 to the financial statements. It is the policy of the external auditors to provide an annual declaration of their independence and content of the audit report.

The external auditors will attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

Policies and procedures

A summary of the Company’s key policies and procedures is provided below.

Code of conduct

These policies (articulated in the Board Charter and Corporate Governance Statement) set out the ethical standards that govern the conduct of all directors and employees. The Company recognises the interests of all stakeholders in the community and their role in creating shareholder value. Every director and employee is required, at all times, to conduct themselves in a manner consistent with the principles of honesty and integrity.

The Code requires directors and employees, amongst other things, to comply with the law, to disclose relevant interests that they may have, and to act in the best interests of the Company. The Code also covers confidentiality of information and respect of privacy.

Continuous Disclosure Policy and External Communication Policy

The Company recognises the importance of timely disclosure of the Company’s activities to shareholders and the market, in accordance with the legal and regulatory obligations. This policy (articulated in the Board Charter and Corporate Governance Statement) sets out the principles that guide the Company in fulfilling its responsibilities to act with integrity to satisfy the disclosure and effective communication requirements of the ASX and the Corporations Act.

The policy requires that once information is disclosed to the ASX, it should also be made available on the Company’s website.

Securities Trading Policy

This policy (articulated in the Board Charter and Corporate Governance Statement) provides guidance to all directors, officers and staff dealing in Norfolk Group Limited securities. The Securities Trading Policy prohibits trading for all persons aware of unpublished price sensitive information about the Company.

Significant accounting policies

Details of significant accounting policies are set out in note 1 to this financial report.

Publicly available information

In accordance with the ASX Corporate Governance Council, the best practice recommendations provide that specific documents should be made publicly available, ideally on the Company’s website. The Company has an existing policy for communication with shareholders and undertakes to update its website on a regular basis to provide all material announcements and information. In addition, the Company attempts to respond to shareholder queries as soon as possible when such queries are raised.