Corporate Governance
This statement outlines the corporate governance policies and practices of Photon Group, in the context of the best practice recommendations that have been set by the ASX Corporate Governance Council (ASX Guidelines). Since the listing of the Company on 30 April 2004, the Board has continually considered and reviewed the corporate governance practices and policies of the Company.
The table below sets down each of the recommendations made in the ASX Guidelines and indicates where the relevant disclosure can be found. Where Photon Group has not followed any of the recommendations, the recommendation and the reasons for not following it have been identified.
A copy of the Council's report can be obtained from the ASX website www.asx.com.au
1. BOARD OF DIRECTORS
1.1 Role of the Board
The Board has the responsibility of ensuring Photon Group is properly managed so as to provide and enhance shareholders' interests in a manner that is consistent with Photon Group's responsibility to meet its obligations to all parties with which it interacts. It is the role of senior management to manage the consolidated entity in accordance with the direction and delegations of the Board and the responsibility of the Board to oversee the activities of management in carrying out these delegated duties.
In carrying out its governance role, the main task of the Board is to drive the performance of the consolidated entity including formulating its strategic direction, approving and monitoring capital expenditure, setting remuneration, appointing, removing and creating succession policies for directors and senior executives, establishing and monitoring the achievement of management goals and ensuring the integrity of internal control. The Board must also ensure that the consolidated entity complies with all of its contractual, statutory and any other legal obligations, including the requirements of any regulatory body. The Board has the final responsibility for the successful operations of the consolidated entity.
To assist the Board in carrying out its functions, it has developed a Code of Conduct to guide the Directors, the Chief Executive Officer, the Chief Financial Officer and other key executives in the performance of their roles.
 Photon Group's Code of Conduct >
1.2 Composition of the Board
The names of the Directors of the Company in office at the date of this report are set out in the Directors' report. The constitution of the Company provides that the number of Directors must not be less than 3 and not more than 12. There are currently 6 Directors. There are 3 executive Directors and 3 non-executive Directors. Three of the non-executive Directors can be characterised as independent for the purposes of the definition that appears in the ASX Guidelines. Although the Chairman is not an independent Director, the Company believes that the Board, as currently composed, has the required skills and independence of thought and judgment to ensure that decisions are made by the Board in the best interests of the Company and that Photon Group continues to perform strongly.
The Chairman is an executive Director and not an independent Director. The roles of Chairman and CEO are not exercised by the same individual. The Company and the Directors believe that the Chairman can and does bring independent thought and judgment in his capacity as Chairman.
1.3 Responsibilities of the Board
In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies, practices, management and operations of the Consolidated entity. It is required to do all things that may be necessary to be done in order to carry out the objectives of the consolidated entity.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board include the following:
- Leadership of the Organisation: overseeing the Consolidated entity and establishing codes that reflect the values of the Company and guide the conduct of the Board, management and employees.
- Strategy Formulation: working with senior management to set and review the overall strategy and goals for the Company and ensuring that there are policies in place to govern the operation of the Company.
- Overseeing Planning Activities: overseeing the development of the consolidated entity's strategic plan and approving that plan as well as the annual and long term budgets.
- Shareholder Liaison: ensuring effective communications with shareholders through an appropriate communications policy and promoting participation at general meetings of the Company.
- Monitoring, Compliance and Risk Management: overseeing the Company's risk management, compliance, control and accountability systems and monitoring and directing the financial and operational performance of the Company.
- Company Finances: approving expenses in excess of those approved in the annual budget and approving and monitoring acquisitions, divestitures and financial and other reporting.
- Human Resources: appointing, and, where appropriate, removing the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) as well as reviewing the performance of the CEO and monitoring the performance of senior management in their implementation of the Company's strategy.
- Ensuring the health, safety and wellbeing of employees: in conjunction with the senior management team, developing, overseeing and reviewing the effectiveness of the Company's occupational health and safety systems to ensure the wellbeing of all employees.
- Delegation of Authority: delegating appropriate powers to the CEO to ensure the effective day-to-day management of the Company and establishing and determining the powers and functions of the Committees of the Board.
1.4 Board Policies
1.4.1 Conflicts of Interest
Directors must:
- disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interests of the Director and the interests of any other parties in carrying out the activities of the consolidated entity; and
- if requested by the Board, within seven days or such further period as may be permitted, take such necessary and reasonable steps to remove any conflict of interest.
If a Director cannot or is unwilling to remove a conflict of interest then the Director must, as per the Corporations Act, absent himself or herself from the room when discussion and/or voting occurs on matters about which the conflict relates.
1.4.2 Commitments
Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a Director of the consolidated entity.
1.4.3 Confidentiality
In accordance with legal requirements and agreed ethical standards, Directors and key executives of the consolidated entity have agreed to keep confidential information received in the course of the exercise of their duties and will not disclose non-public information except where disclosure is authorised or legally mandated.
1.4.4 Continuous Disclosure
The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX as well as communicating with the ASX. In accordance with the ASX Listing Rules, the Company immediately notifies the ASX of information:
- concerning the Company that a reasonable person would expect to have a material effect on the price or value of the Company's securities; and
- that would, or would be likely to, influence persons who commonly invest in securities in deciding whether to acquire or dispose of the Company's securities.
Photon Group's Continuous Disclosure Policy >
1.4.5 Education and Induction
New Directors undergo an induction process in which they are given a full briefing on the consolidated entity. This includes meetings with key executives, tours of the premises, an induction package and presentations. Information conveyed to new Directors include:
- formal policies on Director appointment as well as conduct and contribution expectations;
- details of all relevant legal requirements;
- a copy of the Board Charter;
- guidelines on how the Board processes function;
- details of past, recent and likely future developments relating to the Board including anticipated regulatory changes;
- background information on and contact information for key people in the organisation including an outline of their roles and capabilities;
- an analysis of the consolidated entity;
- a synopsis of the current strategic direction of the Company including a copy of the current strategic plan and annual budget; and
- a copy of the Constitution of the Company.
1.4.6 Independent Professional Advice
The Board collectively and each Director has the right to seek independent professional advice at the Company's expense, up to specified limits, to assist them to carry out their responsibilities.
1.4.7 Related Party Transactions
Related party transactions include any financial transaction between a Director and the consolidated entity and will be reported in writing to each Board meeting. Unless there is an exemption under the Corporations Act from the requirement to obtain shareholder approval for the related party transaction, the Board cannot approve the transaction.
1.4.8 Shareholder Communication
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights the Company is committed to:
- communicating effectively with shareholders through releases to the market via ASX, the Company's website, information mailed to shareholders and the general meetings of the consolidated entity;
- giving shareholders ready access to balanced and understandable information about the consolidated entity and corporate proposals;
- making it easy for shareholders to participate in general meetings of the consolidated entity; and
- requesting the external auditor to 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.
The consolidated entity also makes available a telephone number and email address for shareholders to make enquiries of the consolidated entity.
1.4.9 Securities Trading Policy
The consolidated entity has a securities trading policy which applies to all Directors, members of senior management and other employees. In addition to ensuring that all persons are aware of and understand the insider trading and other legal instructions that apply to the trading of securities generally, the policy also restrains the times when Directors, members of senior management and employees may trade the Company's shares.
Photon Group's Securities Trading Policy >
1.4.10 Performance Review/Evaluation
The ASX Guidelines require the disclosure of the process for performance evaluation of the Board, individual directors and key executives. The current Board was constituted immediately prior to the listing of the Company on ASX on 30 April 2004, and as a result, no formal appraisal has been undertaken at this time.
1.4.11 Attestations by CEO and CFO
In accordance with the Board's policy, the Chief Executive Officer and the Chief Financial Officer have declared, in writing to the Board that the Company's financial reports are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board
2. BOARD COMMITTEES
2.1 Audit Committee
2.1.1 Role
The Audit Committee monitors and reviews the effectiveness of the consolidated entity's controls in the areas of operational and balance sheet risk, legal and regulatory compliance and financial reporting. The committee discharges these responsibilities by:
- overseeing the adequacy of the controls established by senior management to identify and manage areas of potential risk and to safeguard the assets of Photon Group;
- overseeing Photon Group's relationship with the external auditor and the external audit function generally; and
- evaluating the processes in place to ensure that accounting records are properly maintained in accordance with statutory requirements and financial information provided to investors and the Board is accurate and reliable.
The committee has also adopted a policy on the provision of non-audit services and the rotation of external audit personnel.
Members of management and the external auditors attend meetings of the committee by invitation. The committee may also have access to financial and legal advisers, in accordance with the Board's general policy.
2.1.2 Composition
The Audit Committee consists of three members. The current members of the Audit Committee are Mr Brian Bickmore (Chairman), Ms Susan McIntosh and Mr Paul Gregory. All members can read and understand financial statements and are otherwise financially literate. The details of the member's qualifications can be found in their Director Profiles
The Audit Committee intends to meet with the external auditor at least twice a year. The first of which being in August 2004.
2.1.3 Responsibilities
The Audit Committee reviews the audited annual and half-yearly financial statements and other reports which accompany published financial statements before submission to the Board and recommends their approval.
The Audit Committee also recommends to the Board the appointment of the external auditor and the internal auditor and each year, reviews the appointment of the external auditor, their independence, the audit fee, and any questions of resignation or dismissal.
The Audit Committee is also responsible for establishing policies on risk oversight and management.
2.1.4 Risk management
Oversight of the risk management system
The Board oversees the establishment and annual review of the company's risk management system. Management has established and implemented the Risk Management System for assessing, monitoring and managing operational, financial reporting and compliance risks for the consolidated entity. The CEO and CFO have declared, in writing to the Board, that the financial reporting risk management and associated compliance and controls have been assessed and found to be operating efficiently and effectively. The operational and other compliance risk management have also been assessed and found to be operating efficiently and effectively.
The Audit Committee reports to the Board annually on the status of risks through integrated risk management programs aimed at ensuring risks are identified, assessed and appropriately managed.
2.2 Remuneration Committee
The Remuneration Committee was formed by resolution of the Board on 25 March 2004.
2.2.1 Role
The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies including but not limited to succession planning, recruitment and the appointment of the Chief Executive Officer, senior executives and Directors themselves and overseeing succession planning, selection and appointment practices and remuneration packages for management and employees of Photon Group.
The objectives of the committee include to:
- review, assess and make recommendations to the Board on the desirable competencies of the Board;
- assess the performance of the members of the Board;
- oversee the selection and appointment practices for non-executive Directors and senior management of Photon Group;
- develop succession plans for the Board and oversee the development of succession planning in relation to senior management; and
- assist the Board in determining appropriate remuneration policies.
2.2.2 Composition
Mr Brian Bickmore (Chairman), Mr Tim Hughes and Mr Paul Gregory are the current members of the Remuneration Committee the majority of whom are Independent Directors. The Remuneration Committee intends to hold two meetings throughout the year.
2.2.3 Responsibilities
The responsibilities of the Remuneration Committee include setting policies for senior officers' remuneration, setting the terms and conditions of employment for the Chief Executive Officer, reviewing and making recommendations to the Board on the Company's incentive schemes and superannuation arrangements, making recommendations to the Board on any proposed changes to the Board and undertaking an annual review of the Chief Executive Officer's performance, including setting with the Chief Executive Officer goals for the coming year and reviewing progress in achieving these goals.
2.2.4 Remuneration Policy
The Senior Executive Remuneration Policy will be tabled to the Board in September 2004 and the Non-Executive Director Remuneration Policy was approved by resolution of the Board on 25 March 2004.
2.2.4.1 Senior Executive Remuneration Policy
The consolidated entity is committed to remunerating its senior executives in a manner that is market-competitive and consistent with best practice as well as supporting the interests of shareholders. Consequently, under the Senior Executive Remuneration Policy, the remuneration of senior executive may be comprised of the following:
- fixed salary that is determined from a review of the market and reflects core performance requirements and expectations;
- a performance bonus designed to reward actual achievement by the individual of performance objectives and for materially improved Company performance;
- participation in the option scheme with thresholds approved by shareholders; and
- statutory superannuation.
By remunerating senior executives through performance and long-term incentive plans in addition to their fixed remuneration, the Company aims to align the interests of senior executives with those of shareholders and increase Company performance.
Details of the amount of remuneration, including both monetary and non-monetary components, for each of the five highest paid (Non-Director) Executives during the year (discounting accumulated entitlements) is detailed in the Directors' Report and Note 30 to the notes to the accounts.
2.2.4.2 Non-Executive Director Remuneration Policy
The Constitution provides that the non-executive Directors are each entitled to be paid such remuneration from the Company as the Directors decide for their services as a Director, but the total amount provided to all non-executive Directors for their services must not exceed in aggregate in any financial year the amount fixed by the Company in a general meeting. This amount is currently fixed as $450,000. The remuneration of non-executive Directors must not include a commission on, or a percentage of, profits or operating revenue. Directors may also be reimbursed for travelling and other expenses incurred in attending to the Company's affairs. Directors may be paid such additional or special remuneration as the Directors decide is appropriate where a Director performs extra services or makes exertions for the benefit of the Company.
Non-executive Directors are entitled to statutory superannuation.
Details of the amount of remuneration, including both monetary and non-monetary components, for each of the Directors paid during the year (discounting accumulated entitlements) is detailed in the Directors' Report and Note 30 to the notes to the accounts.
2.3 Other Committees
The Board has not established a formal nomination committee at this time, but will revisit this question on an ongoing basis as the Company continues to grow. Due to the relative size of Photon Group and its recent listing on ASX, the Board does not believe that it is necessary or appropriate for a nomination committee to be established at this time. In addition, a number of the responsibilities identified by the ASX Guidelines as being within the ambit of a nomination committee have been delegated to the Remuneration Committee.
3. COMPANY CODE OF CONDUCT
As part of its commitment to recognising the legitimate interests of stakeholders, the Company has established a Code of Conduct to guide compliance with legal and other obligations to legitimate stakeholders. These stakeholders include employees, clients, customers, government authorities, creditors and the community as whole. The Company Code of Conduct was adopted by resolution of the Board on 27 May 2004.
Photon Group's Code of Conduct >
Responsibilities to Shareholders and the Financial Community Generally
The Company complies with the spirit as well as the letter of all laws and regulations that govern shareholders' rights. The Company has processes in place designed to ensure the truthful and factual presentation of the Company's financial position and prepares and maintains its accounts fairly and accurately in accordance with the generally accepted accounting and financial reporting standards.
Responsibilities to Clients, Customers and Consumers
Each employee has an obligation to use their best efforts to deal in a fair and responsible manner with each of the Company's clients, customers and consumers. The Company for its part is committed to providing clients, customers and consumers with fair value.
Employment Practices
The Company endeavours to provide a safe workplace in which there is equal opportunity for all employees at all levels of the Company. The Company does not tolerate the offering or acceptance of bribes or the misuse of Company assets or resources.
Obligations Relative to Fair Trading and Dealing
The Company aims to conduct its business fairly and to compete ethically and in accordance with relevant competition laws. The Company strives to deal fairly with the Company's customers, suppliers, competitors and other employees and encourages its employees to strive to do the same.
Conflicts of Interest
Employees and Directors must avoid conflicts as well as the appearance of conflicts between personal interests and the interests of the Company.
How the Company Complies with Legislation Affecting its Operations
Within Australia, the Company strives to comply with the spirit and the letter of all legislation affecting its operations. Outside Australia, the Company will abide by local laws in all countries in which it operates. Where those laws are not as stringent as the Company's operating policies, particularly in relation to the environment, workplace practices, intellectual property and the giving of 'gifts', Company policy will prevail.
How the Company Monitors and Ensures Compliance with its Code
The Board, management and all employees of the Company are committed to implementing this Code of Conduct and each individual is accountable for such compliance. Disciplinary measures may be imposed for violating the Code.
Photon Group's Code of Conduct >
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