Corporate Governance Statement
The Board of Academies Australasia Group Limited (‘the Company’) is committed to the highest standards of corporate governance and enhancing shareholder value. The following Corporate Governance Statement outlines the framework in which the Board operates to ensure this commitment is upheld.
At the date of this report, the Board comprised the following:
Neville Thomas Cleary – Chairman, Non-Executive (Independent) / Appointed 2001
Christopher Elmore Campbell – Group Managing Director, Executive / Appointed 1996
Chiang Meng Heng – Director, Non-Executive / Appointed 2000
Dr John Lewis Schlederer – Director, Non-Executive / Appointed 2010
Philip Carroll – Director, Executive / Appointed 2011
Gabriela Del Carmen Rodriguez Naranjo – Alternate Director to Neville Cleary / Appointed 2011
Bridget Mary Carroll – Alternate Director to Philip Carroll / Appointed 2011
All were members of the Board throughout the year.
The Board endorses the Australian Securities Exchange (‘ASX’) Corporate Governance Principles and Recommendations with 2010 Amendments, Second Edition (‘Recommendations’). However, given the small size and composition of the Board, the small size of the Company, its activities, and its cost structures, it is neither reasonable nor practicable to comply with certain Recommendations or to increase the size of the Board at this time.
Key management of the group comprises the Board of the Company and the senior group executives, defined as the Group Finance Manager of the Company and the chief executive officers of each of the operating subsidiaries of the Company.
This statement identifies and explains where the Company has not complied fully with any of the eight principles stated in the Recommendations.
PRINCIPLE 1 – Lay solid foundations for management and oversight
Roles and Responsibilities of Board and Management
The Board is responsible for the overall corporate governance of the Company including setting its strategic direction and performance objectives, increasing shareholder wealth, meeting ethical and regulatory obligations, and managing business risk.
Key responsibilities include:
- appointing and removing the Group Managing Director;
- final approval and monitoring of corporate strategies and performance objectives;
- monitoring senior group executive performance and implementation of the Board approved strategies;
- reviewing and ratifying systems of risk management and internal compliance and control;
- approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestments;
- approving and monitoring financial and other reporting; and
- other matters required to be dealt with by the Board from time to time.
All senior group executives are subject to annual performance review. The Company evaluates their expected contribution, progress, and achievements. All senior group executives were reviewed in respect to performance during the year ended 30 June 2012.
The Board ensures that the terms of the approved performance incentive plan (‘PIP’) are complied with.
To assist in the execution of its responsibilities, the Board has established an Audit and Risk Committee and a Remuneration Committee.
The Board delegates responsibility for the day-to-day operation and administration of the Company to the Group Managing Director.
The Board meets regularly, at least four times per financial year to review the Company’s strategy and progress, with the Audit and Risk Committee meeting at least twice a year and the Remuneration Committee meeting at least once a year.
PRINCIPLE 2 – Structure the Board to add value
The relevant skills, experience, expertise, and terms of office of each director, who is in office at the date of the annual report, are detailed in the directors’ report.
The names of the independent directors of the Company are:
Neville Thomas Cleary (Chairman)
Dr John Lewis Schlederer
When determining whether a non-executive director is independent the director must not fail any of the following materiality thresholds:
• less than 5% of Company shares are held by the director and any entity or individual directly or indirectly associated with the director;
• no sales are made to or purchases made from any entity or individual directly or indirectly associated with the director; and
• none of the director’s income or the income of an individual or entity directly or indirectly associated with the director is derived from a contract with any member of the consolidated group other than income derived as a director of the group.
The Board regularly assesses whether each non-executive director is independent. In assessing a director’s independence, materiality is assessed on a case by case basis having regard to the individual circumstances of the director.
Chiang Meng Heng, Christopher Elmore Campbell and Philip Carroll each have relevant interests of 5% or more in the Company shares. In addition, Philip Carroll is the Managing Director of a subsidiary of the Company. Chiang Meng Heng, Christopher Elmore Campbell and Philip Carroll are not independent. Therefore, the Board does not meet the Recommendation that there be a majority of independent directors. However, the Board believes that its current composition is appropriate and wishes to state that nothing has come to its attention that would cause it to question whether current procedures and governance are inappropriate for a company of its structure and size. The skills, experience, and performance of the non-independent directors have led the Board to conclude that they do act in the best interests of the Company.
Consistent with the Recommendations, the roles of Chairman and Group Managing Director are exercised by separate individuals, Neville Thomas Cleary and Christopher Elmore Campbell respectively.
All directors – whether independent or not - should bring an independent judgement to bear on Board decisions. All directors have the right to seek independent professional advice in the furtherance of their duties as directors at the company’s expense. Written approval must be obtained from the Chairman prior to incurring any expense on behalf of the company.
The purpose of a Nominations Committee is to ensure that the Board comprises directors with a range of skills and experience appropriate for achieving its mandate.
Currently, the Board executes all of the same functions a Nominations Committee would. The Board determines the appointment of new directors, except where a director is elected by shareholders. When considering the appointment of a new director, the Board follows the same principles and guidelines a Nominations Committee would. These principles and guidelines are outlined below.
Procedure for Selection and Appointment of New Directors
The structure of the Board is determined having regard to the following criteria:
• The Chairman should be a non-executive director.
• A majority of the Board should be non-executive directors.
• The roles of Chairman and Group Managing Director should not be exercised by the same individual.
• The Board should comprise of directors with an appropriate range of qualifications and expertise.
The following principles and guidelines are adhered to in the selection and appointment of new directors:
• The Board is required to have a broad range of skills, experience, diversity, and commercial expertise to ensure that it is able to discharge its mandate effectively. Therefore, when an individual is nominated for consideration as a director, they are evaluated on their skills, experience, diversity, and how they would complement or enhance the Board's effectiveness.
• The composition of the Board needs to be conducive to making decisions expediently and in the best interests of the Company as a whole (rather than of individual shareholders or interest groups). Therefore, the size of the Board is limited so as to encourage efficient decision-making.
• Individuals being considered for non-executive roles will be required to provide the Company with details of their other commitments and an indication of the time involved. Candidates must be able to satisfy the Board that they will have sufficient time to meet what is expected of them.
• The Constitution of the Company provides that the Board may at any time appoint any person to be a director. That person shall hold office until the end of the next following general meeting and shall be eligible for election at that meeting.
• The Constitution of the Company provides that at every general meeting one-third of the directors or, if their number is not a multiple of three, then the number nearest to one-third, shall retire from office and be eligible for re-election.
The Board conducts a review of its performance, policies and practices annually. The review includes an examination of the effectiveness and composition of the Board, including the required mix of skills, experience, diversity and other qualities that the non-executive directors should bring to the Board. The Board also reviews the Company’s strategic direction, objectives, and corporate governance practices. The Board reviews the objectives and achievements of the Group Managing Director and senior group executives annually, with the Chairman regularly discussing performance with directors throughout the year.
The Board reviewed its performance and the performance of its committees and individual directors and all senior group executives in respect to the year ended 30 June 2012.
PRINCIPLE 3 – Promote ethical and responsible decision making
Code of Conduct
The Company has established a Code of Conduct to guide the Board and senior group executives as to the practices necessary to maintain confidence in the Company's integrity, as well as the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. The Company and its directors, managers, employees, and contractors are expected to act with high standards of honesty, integrity, independent judgement, fairness, and equity; striving at all times to enhance the reputation and performance of the consolidated group as a whole.
The Company’s Code of Conduct is on the Company’s website (www.academies.edu.au).
The Company is committed to diversity and inclusiveness. It aims to provide an environment in which employees have equal access to opportunities, are treated with fairness and respect, and are not judged by unlawful or irrelevant reference to their attributes. This commitment enables the Company to attract and retain people with the best skills and abilities.
To download a copy of the Company’s Diversity Policy please click here.
The Company does not favour or discriminate against females. As at 30 June 2012, 29% of the Board members (inclusive of alternates), 40% of senior group executives, and 51% of group employees (excluding academic staff) were female. The objective of 30% female composition of Board and senior group executives combined was therefore achieved.
Employees have a wide range of qualifications and experience and come from more than 20 countries.
Share Trading Policy
A copy of the Company’s policy on the trading of the Company’s securities by key management personnel can be downloaded here.
The policy also addresses the subject of ‘Insider Trading’ – i.e. trading while in possession of price sensitive information. Employees must not trade in the Company’s securities while in possession of price sensitive information. This prohibition applies to all employees at all times.
PRINCIPLE 4 – Safeguard integrity in financial reporting
Audit and Risk Committee
The names and qualifications of the directors appointed to the Audit and Risk Committee and their attendance at meetings of the committee are included in the directors’ report.
During the year the Audit and Risk Committee comprised of Neville Thomas Cleary, Chiang Meng Heng and Dr John Lewis Schlederer. The Committee was chaired by Dr John Lewis Schlederer. Consistent with the Recommendations, the Chair of the Audit and Risk Committee is independent and does not exercise the role of Chair of the Board.
The Group Managing Director, the Group Finance Manager and the external auditor attend Audit and Risk Committee meetings. The Audit and Risk Committee meets the Recommendation that it consist of a majority of independent directors.
The functions of the Audit and Risk Committee encompass:
• Financial reporting
• Risk management
• Authorities for financial risk management
• External audit
• Internal audit
• Insurance programme
• Legal proceedings
The Audit and Risk Committee’s Charter can be downloaded here.
PRINCIPLE 5 – Make timely and balanced disclosure
The Company has adopted a policy to ensure that it complies with its continuous disclosure obligations under the ASX Listing Rules, which state that:
Once an entity is or becomes aware of any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities, the entity must immediately tell ASX that information.
Employees must immediately notify the Group Managing Director if they become aware of any information that should be considered for release to the market. The information is reviewed and, if considered material, the appropriate disclosure is made to the ASX.
The Company will not release any information to any other party until acknowledgement has been received from the ASX that the information has been released to the market.
A copy of the Company’s Continuous Disclosure policy can be downloaded here.
PRINCIPLE 6 – Respect the rights of shareholders
The Company recognises that shareholders must receive high quality relevant information in a timely manner in order to be able to properly and effectively exercise their rights.
The Company aims to ensure that shareholders are informed of all major developments affecting the Company. Information is communicated to shareholders on a regular basis through continuous disclosures and half yearly and annual reports. The Board ensures that these reports include all relevant information about the operations of the Company, changes in the state of affairs of the Company and details of future developments.
All documents that are released publicly (i.e. ASX Announcements and Annual Reports) are made available on the Company's web site www.academies.edu.au.
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company's strategy and goals. Important issues are presented to the shareholders as single resolutions. The Board also requests that the external auditor 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 auditor's report.
PRINCIPLE 7 – Recognise and manage risk
The Board has established policies for the oversight and management of material business risks. The Audit and Risk Committee assists the Board in carrying out this function.
The following material business risks that have the potential to adversely impact the Company’s operations are addressed:
a. Financial risk: market price risk, liquidity risk, credit risk and corporate and bank guarantees.
b. Business risk: A range of policies and procedures dealing with specific business risks, including:
- Delegation of Authority;
- Capital investment;
- Business conduct; and
- Litigation reporting.
c. Operational risk:
- Health, safety and environment;
- Asset protection and operational security; and
Procedures exist to monitor risk, with ultimate reporting to the Board, through either the Audit and Risk Committee for financial and business risk or the Group Managing Director for operational risk.
The Board acknowledges that the policies are designed to provide reasonable but not absolute protection against errors and irregularities and that they are intended to identify control issues that require the attention of the Board or Audit and Risk Committee.
Management has reported that the material business risks are being managed effectively.
The Company has a number of financial control processes to ensure that the information that is presented to senior management and the Board is both accurate and timely. The control processes include, among other things:
- annual audit and half year review by the external auditor;
- management review of the balance sheet and internal control environment;
- monthly review of financial performance compared to budget and forecast; and
- analysis of financial performance and significant balance sheet items to comparative periods.
The Board reviews the implementation of the risk management and internal compliance and control system on an annual basis. The group currently does not have an internal audit function due to the small size and cost structure of the group. As the group grows, consideration will be given to establishing an internal audit operation – either staffed in-house or on contract with an external firm.
For the annual and half-year accounts released publicly, the Board has received assurance from the Group Managing Director (Chief Executive Officer) and the Group Finance Manager (Chief Financial Officer) that, in their opinion:
- the financial records of the group have been properly maintained;
- the financial statements and notes required by accounting standards for external reporting:
· give a true and fair view of the financial position and performance of the Company and the consolidated group; and
· comply with the accounting standards and applicable ASIC Class orders; and
· the above representations are based on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.
PRINCIPLE 8 – Remunerate fairly and responsibly
The Remuneration Committee annually reviews and makes recommendations to the Board on remuneration packages and policies applicable to the Group Managing Director, senior group executives and directors themselves. This role also includes responsibility for share option schemes, incentive performance packages, superannuation entitlements, any remuneration by gender, retirement and termination entitlements, fringe benefit policies and professional indemnity and liability insurance policies. Remuneration levels are competitively set to attract the most qualified and experienced directors and senior executives.
The directors and senior group executives are all on fixed remuneration. The Company has a PIP, which is structured around profitability and increase in the value of the Company’s shares. Non-executive directors are not eligible to participate in the PIP.
The role of the Remuneration Committee is to assist the Board with the application of its remuneration policies. The structure of this committee is consistent with the Recommendations in that it comprises at least 3 members and an independent Chair. However, only half of the members are independent directors, rather than a full majority. This is because its members are procured from the Board, of which the majority are non-independent.
The names of the members of the Remuneration Committee and their attendance at meetings of the Committee are detailed in the directors’ report.
There are no schemes for retirement benefits other than statutory superannuation for non-executive directors.
A copy of the Company’s Remuneration Committee Charter is on the Company’s website (www.academies.edu.au).
This Corporate Governance Statement and information about the Company’s corporate governance practices and policies (including ‘Charters’ referred to in this statement) is available on the Company’s web site at www.academies.edu.au.
27 Aug 2012