Corporate Governance Statement
The Australian Securities Exchange Listing Rules require 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 and accordingly, in accordance with ASX Listing Rule 4.10.3, Norfolk Group Limited will disclose when it has not adhered to any of the recommendations.
Norfolk’s Board Charter and Corporate Governance Statement as well as its Statement of Corporate Governance are available on the Company website (www.norfolkgl.com). The Board Charter and Corporate Governance Statement set out many aspects of the Company’s governance including Board and Committee composition and responsibilities and their charters, appointment of directors, and policies on corporate conduct, securities trading, performance reviews, continuous disclosure and shareholder communications.
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 performance of Norfolk Group, while 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 adopted a Charter that includes, among 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;
- Appointing 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; and
- Reviewing and approving all significant policies and procedures across the Group.
Board structure
As at 31 March 2009, the Board was comprised of five directors, three of whom were independent directors.
| Name and qualifications | Position | Term in office |
|---|---|---|
| Peter Abery | Non-executive director | Appointed 31 May 2007 |
| Glenn Wallace | Managing Director | Appointed 31 May 2007 |
| Paul Chrystall | Non-executive director | Appointed 31 May 2007 |
| Rodney Keller | Chairman | Appointed 31 May 2007 |
| Peter Lowe | Non-executive director | Appointed 8 April 2008 |
Each director is required to disclose any interest which might create a potential conflict of interest with the director’s 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.
| Director | Capacity | Position | Office held from |
|---|---|---|---|
| Rodney Keller | Non-executive | Independent | 31 May 2007 |
| Glenn Wallace | Executive | Not independent | 31 May 2007 |
| Peter Abery | Non-executive | Independent | 31 May 2007 |
| Paul Chrystall | Non-executive | Not independent | 31 May 2007 |
| Peter Lowe | Non-executive | Independent | 8 April 2008 |
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 senior executives.
The Managing Director is responsible for implementing Norfolk Group strategies and policies.
The Board Charter specifies that these are separate roles to be undertaken by separate people and specific responsibilities are delegated to the Managing Director and senior management under the Delegation of Authority put in place by the Board.
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.
The Board has had an ongoing process for the regular self-assessment and review of the performance of the Board and towards the end of the financial year, established and implemented a more formal process comprising the completion of a detailed questionnaire by directors for consideration by the Chairman and discussion with the Board. It is proposed that in the 2010 financial year the Board will establish and implement processes for the evaluation of the performance of the Audit and Risk Committee and the Nomination and Remuneration Committee as well as the individual directors.
Board committee structure
The Board’s function is to address issues in its 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
- Nomination and Remuneration Committee.
Audit and Risk Committee
The Company established an Audit and Risk Committee which is comprised of only non-executive directors, the majority of whom are independent.
This Committee was chaired by Deborah O’Toole (non-executive director) until 22 May 2008 when she stepped down and was replaced by Peter Lowe (non-executive director). This Committee includes Paul Chrystall and Peter Abery. Rod Keller stepped down from being a member of the Committee with effect from 29 April 2008 when Peter Abery and Peter Lowe were appointed. The Committee is responsible for risk management and oversight of Norfolk Group’s financial reporting policies and other operational risk areas.
Furthermore, the Committee monitors the internal controls and the integrity of Norfolk Group’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’s Charter sets out that membership will only comprise non-executive directors, the majority of whom will be independent. The Committee shall appoint a Chairman who is not the Chairman of the Board. The Committee shall comprise 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. Having considered Norfolk Group’s risk profile and the sufficiency of the risk management policies across Norfolk Group, the Committee recommended to the Board to defer the definition and establishment of a formal internal audit function, subject to ongoing review. The risk management framework has been implemented and continues to be refined, and as part of that process 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.
The Committee and the Board acknowledge that the integrity of Norfolk Group’s financial reporting depends upon the existence of a sound system of risk oversight and management and internal controls. The Committee and the Board receive appropriate sign-off from the Managing Director and the Chief Financial Officer in this regard.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee is chaired by Peter Abery (non-executive director) with two other members, Peter Lowe (non-executive director) and Glenn Wallace (Managing Director). Rod Keller stepped down from being a member of the Committee with effect from 29 April 2008 when Glenn Wallace and Peter Lowe were appointed. The Committee is responsible, among other things, for making recommendations to the Board with respect to the Company’s compensation policies, including equity-based programs. 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 management. The Managing Director reviews senior management performance against performance standards, position requirements, key personal targets and development plans and reports to the Committee. This report is considered by the Committee as part of the Committee’s review of remuneration and performance.
External auditors
Norfolk Group’s policy requires Norfolk Group 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 an independent auditor’s 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.
All directors and employees are required, at all times, to conduct themselves in a manner consistent with the principles of honesty and integrity.
The Code requires directors and employees, among 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 Australian Securities Exchange (‘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.
During the year, the Board amended the Board Charter and Corporate Governance Statement to include a revised Securities Trading Policy in order to reinforce the prohibition on trading by any director or employee who is aware of unpublished price sensitive information about the Company (insider trading) in addition to the existing prohibition on designated persons trading during blackout periods. The revised Securities Trading Policy also requires the disclosure to the Board of any margin loan arrangements by directors and key members of management and establishes a clear policy regarding managing exposure to fluctuations in price in relation to the Company’s securities under any equity-based component by key members of management.
Significant accounting policies
Details of significant accounting policies are set out in note 1 to this financial report.
Publicly available information
The ASX Council 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.