ACADEMIES AUSTRALASIA GROUP LIMITED: CORPORATE GOVERNANCE STATEMENT

At the date of this report, the Board comprised five directors, namely, Neville Thomas Cleary (Chairman, Independent & Non-Executive), Christopher Elmore Campbell (Group Managing Director, Executive), Chiang Meng Heng (Non-Executive), Dr John Lewis Schlederer (Independent & Non-Executive) and Philip Carroll (Executive). In addition, there are two Alternate Directors: Gabriela Del Carmen Rodriguez Naranjo and Bridget Mary Carroll.

Neville Thomas Cleary, Christopher Elmore Campbell, Chiang Meng Heng and Dr John Schlederer were members of the Board throughout the year.

Philip Carroll joined the Board on 10 June 2011. Bridget Mary Carroll was appointed his Alternate Director from 10 June 2011.

Gabriela Del Carmen Rodriguez Naranjo was appointed by Neville Thomas Cleary as his Alternate Director from 10 May 2011.

The Board is committed to the highest standards of corporate governance and endorses the Australian Stock Exchange (‘ASX’) Corporate Governance Council’s Corporate Governance Principles and Recommendations (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.

In this corporate governance statement, where the Company has not complied fully with any of the eight principles stated in the Recommendations, this is identified and explained.

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 management's 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 Company senior executives are subject to annual performance review. This involves an evaluation of their expected contribution, their progress and what was achieved. All senior executives were reviewed during the year ended 30 June 2011.

The Board ensures that the terms of the approved performance incentives scheme are complied with.

To assist in the execution of its responsibilities, the Board has established an Audit and Risk Committee and a Remuneration Committee.

Responsibility for the day-to-day operation and administration of the Company is delegated by the Board to the Group Managing Director and members of the senior management team.

Principle 2 – Structure the Board to add value

Board Composition

The skills, experience, expertise relevant to the position of each director who is in office at the date of the annual report and their term of office 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 making the assessment of a director’s independence, materiality is assessed on a case by case basis having regard to the individual circumstances of the director.

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.

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. Nevertheless, the Board believes that Chiang Meng Heng, Christopher Elmore Campbell and Philip Carroll can, and do, make judgements in the best interests of the Company. The Board does not meet the Recommendations that there be a majority of independent directors.

Nominations Committee

Except where a director is elected by shareholders, the Board determines the appointment of new directors. There is no Nominations Committee as such. However, when considering the appointment of a new director, the Board would consider the same issues as a Nominations Committee would. The principles and guidelines are described 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, their selection will depend upon an evaluation of what skills, experience and commercial expertise they would bring to the Board and how these skills 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.

Performance Evaluation

The Board conducts an evaluation 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 which the non-executive directors should bring to the Board for it to function competently and efficiently; a review of the Company’s strategic direction and objectives, and an assessment of the corporate governance practices. The Board also conducts an annual review of the Group Managing Director and key executives.

Principle 3 – Promote ethical and responsible decision making

Code of Conduct

The Company has established a Code of Conduct to guide the directors and key executives as to the practices necessary to maintain confidence in the Company's integrity and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices. The Company and its directors, managers, employees and consultants are expected to act with high standards of honesty, integrity, 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).

Diversity Policy

The Company is committed to diversity and inclusiveness, and to providing 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.

A copy of the Company’s Diversity Policy is on the Company’s website (www.academies.edu.au)

The Company does not favour or discriminate against females. As at 30 June 2011, 29% of the Board members (inclusive of alternates), 43% of senior management and 51% of Group employees (excluding academic staff), were female.

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 was announced to the Australian Stock Exchange on 27 December 2010. A copy of that policy is on the Company’s website (www.academies.edu.au).

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 Neville Thomas Cleary up to 20 August 2010 and then by Dr John Lewis Schlederer from 21 August 2010. Christopher Elmore Campbell (as Group Managing Director), the Group Finance Manager and the external auditor also attend Audit and Risk Committee meetings.

The Audit and Risk Committee’s Charter is available on the Company’s website (www.academies.edu.au).

Principle 5 – Make timely and balanced disclosure

Continuous 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 is on the Company’s website (www.academies.edu.au).

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 reporting 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:

  1. Financial risk: market price risk, liquidity risk, credit risk and corporate and bank guarantees.
  2. Business risk: A range of policies and procedures dealing with specific business risks, including: Delegation of Authority, Capital investment, Business conduct, and Litigation reporting.
  3. Operational risk: Health, safety and environment, Asset protection and operational security, and Insurance.

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. 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 and the Group Finance Manager 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

Remuneration Policies

The Remuneration Committee reviews and makes recommendations to the Board on remuneration packages and policies applicable to the Group Managing Director, senior 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 executives are all on fixed remuneration. The Company has a performance incentive scheme structured around profitability and increase in the value of the Company’s shares. Non-Executive Directors are not eligible for this scheme.

Remuneration Committee

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).

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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.

The Company is initiating a review of all its, and its subsidiary companies’, corporate governance procedures, especially in light of its recent acquisitions, to streamline procedures and ensure consistency.

 

13 Sep 2011