OUR APPROACH
The ABB Board of Directors believes that sound corporate governance practices address conformance, and send a positive signal to our workforce, our suppliers, customers and our shareholders about our culture. We further believe that responsiveness to the interests of other stakeholders and the undertaking of responsible and sustainable practices, including the safety and welfare of our employees and the protection of the environment in which we work, will help build a long-term future for the Company.

THE ROLE OF THE BOARD
We see good corporate governance practices as a framework to allow the Board to fulfil these important roles:

• Providing strategic direction and approving the resulting business plans and budgets.
• Monitoring management’s performance against those plans.
• Appointing the Managing Director and working through the Managing Director to achieve the Company’s strategic goals.
• Overseeing remuneration policy for the group and approving remuneration arrangements for senior executives.
• Ensuring regulatory and ethical standards are met, and risks are appropriately managed.
• Reporting the Company’s financial condition and outlook to shareholders.

ASX CORPORATE GOVERNANCE COUNCIL GUIDELINES
The Company supports the “Principles of Good Corporate Governance and Best Practice Recommendations” issued by the Australian Stock Exchange Corporate Governance Council (“CGC Guidelines”). Unless otherwise stated, the policies, practices and structures referred to in this Statement, and required by the CGC Guidelines to be discussed, have been in place for the whole of the reporting period.

DELEGATION TO MANAGEMENT
Under the Company’s Constitution, the Board is responsible for the management of the Company. The Board delegates the responsibility for day-to-day management of the Company to the Managing Director, who operates under strict limits on operating and capital expenditure and the ability to commit the company to financial obligations. The Managing Director in turn delegates these limits to his or her management team subject to the approval of the Board.  As well as performing the roles identified above, the Board reserves to itself a number of important functions including approval of:

• long term strategic plans
• the annual business plan
• the annual operating and capital budgets
• the financial reports to shareholders
• major acquisitions and divestitures.

BOARD SIZE AND COMPOSITION
The Board is comprised of eight non-executive directors and the Managing Director. The maximum number of directors permitted by the Constitution is ten directors. At least three of the directors are required by the Constitution to be active rural producers.

BOARD SKILLS AND EXPERIENCE
The Board has a broad range of skills and experience to enable it to perform its role. The background and qualifications of each of the current directors and the Company Secretary are set out elsewhere in the Directors’ Report.

SELECTION OF CHAIRMAN
The Chairman of the Board is elected by the Board for an indefinite term. The Chairs of each of the Committees are selected on an annual basis by the Board.

RETIREMENT AND RE-ELECTION OF DIRECTORS
Due to the transition from dual class share structure to a single class of ordinary shares, at the 2008 AGM Mr Kevin Osborn is the only director that must retire (but is eligible for re-election).  Beyond 2008, at each AGM one-third of the directors or, if their number is not a multiple of three then the number nearest one-third, must retire from office (but are eligible for re-election).  The Managing Director’s tenure is not subject to rotation.

NOMINATION AND APPOINTMENT OF NEW DIRECTORS
The directors may appoint, or the shareholders may elect a person either as an additional director or to fill a casual vacancy. However, if a casual vacancy in the number of directors who are active rural producers occurs, the directors must appoint an active rural producer to fill the vacancy within 60 days of the vacancy occurring.

Recommendations for nominations of new directors are made by the Board Nomination Committee, and considered by the Board as a whole.

The Committee may use external recruitment consultants to identify candidates. In all cases, the Committee assesses candidates in terms of their ability to augment the existing skills and experience of the board, their personal qualities and their availability to commit to the board’s activities.

If the directors appoint a new director prior to the AGM as an additional director or to fill a casual vacancy, that person must stand for election by shareholders at the next occurring AGM.

BOARD CODE OF CONDUCT
In November 2004, the Board adopted a Board Code of Conduct which codifies the Board’s views, expectations and standards regarding a diverse range of matters, some of which are referred to in this Statement. The Code is reviewed on an annual basis.  A summary of the Code is available on the Company’s website, www.abb.com.au.

MAXIMUM TENURE
The Board Code of Conduct provides that directors should not hold office for more than 12 years, except for the incumbent Chairman who may be on the board as a director for up to 16 years. Service prior to the 2006 Annual General Meeting will not be taken into account.

INDEPENDENCE OF THE BOARD
All of the non-executive directors of the Company are considered independent, as measured against the CGC Guidelines. 

The Chairmen of the Board and the Audit & Finance and Corporate Risk & Compliance Committees are considered to be independent directors.

It is board policy that the roles of the Chairman and Managing Director should not be combined.

The Board Finance & Audit Committee is comprised of three independent non-executive directors. The Managing Director attends by invitation.

REVIEW OF BOARD PERFORMANCE
It is the policy of the Board to conduct a self review of its performance on an annual basis and, every 2 years, to engage the service of an external facilitator to conduct a formal exercise to assess and critically review the Board’s performance as a whole. The Board will also assess the quality of interaction between the Board and the Chairman and Managing Director. The external facilitator’s report will be used as the basis to address any issues of concern or opportunities for improvement. The Chairman will also meet individually with each director to review individual performance and establish training and development needs.

REVIEW OF MANAGEMENT PERFORMANCE
The Board maintains a management performance system and reviews senior management performance against clear and, where practical, measurable objectives on an annual basis. This process is aligned with the remuneration system to provide incentives for superior performance against those objectives.

REMUNERATION
The Company’s remuneration policies are set out in the Remuneration Report forming part of the Directors’ Report. It is the policy of the Board, as set out in the Board Code of Conduct, that directors’ fees should not be tied to the performance of the Company.

ACCESS TO INDEPENDENT ADVICE
Each director has the right, subject to prior consultation with the Chairman, to seek independent professional advice at the Company’s expense, to assist directors to carry out their duties and to resolve any issues of concern.

AUDIT INDEPENDENCE
It is the policy of the Board to tender the external audit every 3 to 4 years. In the event that the incumbent auditors are re-appointed, the Company supports the requirement for partner rotation every 5 years.

It is Board policy that the external auditors are excluded from providing advice to the Company on a range of matters including systems and accounts implementation, and the provision of internal audit and clerical services.

BOARD COMMITTEES
The Board has established an active committee structure that capitalises on the skills and experience of individual directors. Each committee is established by the Board under a charter. Both the terms of reference of each committee and the composition of each committee are reviewed annually by the Board.

Finance & Audit Committee: Recommends to the Board the appointment of the external auditor, coordinates the quality and scope of the internal audit program related reports, ensures that the Company’s capital and operating business plans support its strategic objectives, oversees the timeliness and quality of financial reporting and assesses the adequacy of accounting and financial reporting systems.

Corporate Risk & Compliance Committee: Oversees the development and implementation of risk and credit management policies and procedures across the Group. The Committee reviews and monitors the Company’s risk identification and risk transfer strategies and business continuity planning and receives regular reports on the adequacy of risk controls and risk treatment programs within the Company from the Group Risk Assurance Manager and other responsible officers. The Committee establishes and monitors compliance with position trading limits and authority limits. The Committee monitors compliance with safety, health and environmental policies and the law and monitors performance against key measures in these important areas. Information system risk oversight is also the responsibility of the Committee.

Nomination Committee: Oversees the selection of directors, the process for the election of directors, the selection, recruitment and initial remuneration of the Managing Director and succession planning.

Remuneration Committee: Monitors remuneration of the Managing Director and senior management, sets performance targets and evaluates the performance of the Managing Director and senior management. Establishes policies for staff remuneration including performance based profit and equity participation arrangements.

Grower Links Committee: Provides mechanisms for growers to communicate their need and concerns to the Company and facilitates discussions amongst growers on issues affecting growers, the Company and/or the grains industry.

CONTROLLING AND MANAGING RISK
ABB’s activities across its revenue generating business units and corporate services entail a number of major risk categories ranging from market risk (including currency risk, interest rate risk and commodity price risk), credit risk, statutory compliance risk, information systems risk and operating risk (including safety and environmental risk).

The Corporate Risk & Compliance Committee has responsibility, amongst other things, for the implementation of risk management strategy, policy and procedures to ensure the Company’s achievement of its corporate objectives is not compromised by unforeseen or uncontrolled adverse events.

The Company has recognised that a fully integrated approach to identifying and managing risk is required not only for the business streams of trading, storage & handling and malt but also across the entire corporate body. ABB’s Group Risk Assurance Manager has commenced a process to introduce the methodology outlined in the Australian standard for risk management – AS/NZS 4360 during the 2004/05 year. The initial stage in this process has been completed with the development of a risk framework for the Group and the identification of strategic and operational risks on an enterprise-wide basis. This information was used to develop a risk-based internal audit plan for 2005 through to 2008, which was reviewed and approved by the Corporate Risk & Compliance Committee and the Finance & Audit Committee.

The Group Risk Assurance Manager reports to the Chief Financial Officer, and is responsible for overseeing the Company’s insurance program, the introduction and the ongoing maintenance of a risk management system. Internal Audit is responsible for evaluating the adequacy and effectiveness of management controls and risk treatments through regular internal audit reports.

The Managing Director and the Chief Financial Officer have stated in writing to the Board that, to the best of those officers’ knowledge and belief, the integrity of the financial statements for the reporting period is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board, and that the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects.

ANNUAL ACCOUNTS ASSURANCE
The Managing Director and the Chief Financial Officer have provided the Board with a statement in writing that the Company’s financial report for the reporting period presents a true and fair view, in all material respects, of the Company’s financial condition and operational results and is in accordance with relevant accounting standards.

All relevant executives have completed a directors’ questionnaire providing assurances to the Board in respect of the content of the financial report, within the limits of each executive’s area of knowledge and responsibility.

ETHICAL STANDARDS
The Board Code of Conduct requires directors to observe the highest standards of ethical behaviour when engaging in Company business.

The ABB Code of Business Conduct for employees sets out the Board’s expectation of our people to be trustworthy and to deal ethically and responsibly with the Company’s stakeholders. Employees must:

• comply with the law and the terms of our operating licences
• produce accurate records and accounts
• not exceed delegations
• follow guidelines to avoid conflicts of interest with the Company
• respect confidential information and the privacy of information gathered from individuals
• deal courteously and professionally with suppliers and customers
• not accept bribes or lavish gifts
• refrain from misleading or deceiving our suppliers and customers or taking unconscionable advantage of them
• compete vigorously but fairly with our competitors
• protect the human rights, safety and health of our people and
• respect the communities and the environments within which we operate.

The Code of Business Conduct also outlines a mechanism to allow employees to report unethical practices under appropriate protections both internally and externally to an independent fraud hotline.

INTERNATIONAL BUSINESS POLICY
The Company has an International Business Policy which prohibits the company from being a party to bribery, kickbacks and like payments in both Australia and in the countries with which we trade. Our overseas agents are required to be reputable and to adhere to the policy. Our people must not falsify documents and are required to report any transactions which they reasonably suspect to involve money laundering or the financing of crime or terrorism.

The Company has undertaken an education program for all relevant staff and has established a panel of senior executives to review any transactions which any of our people believe to be in breach of the Policy. The internal auditor is charged with the responsibility of auditing our international transactions on a periodical basis to ensure adherence.

SHARE TRADING
In general the Company encourages directors and employees to hold shares in the Company, in order to better align their interests with the interests of shareholders. They are, however, made aware that they should never trade in the Company’s shares when in possession of market sensitive information.

In addition, the Company has a strict policy for directors and senior officers relating to the buying and selling of ABB securities (including options and share derivatives). Trading is prohibited outside periods (or “windows”) of six weeks commencing 48 hours after specified events (announcement of annual and half year results, the Annual General Meeting and any other major public announcement disclosing major market sensitive information), except with the consent of the Chairman in special circumstances. Executives are prohibited from entering into securities contracts which have the effect or purpose of hedging the failure to achieve performance hurdles under ABB’s variable remuneration plans.

CONTINUOUS DISCLOSURE
The Company has nominated the Company Secretary as the person responsible for communications with the ASX. This role includes responsibility for ensuring compliance with the continuous disclosure requirements of the ASX listing rules and overseeing and coordinating information disclosure to the market.

The Company has policies and procedures to elevate to the attention of the Managing Director or the Company Secretary any material market sensitive information. All information disclosed to the ASX is available on the Company’s website as soon as it is disclosed to the ASX.

STAKEHOLDER COMMUNICATION
The Company has a stakeholder communication plan dealing, amongst other things, with strategies for regular communication to stakeholders via:

• regular news releases on subjects of interest, plus associated media interviews
• attendance of directors and senior management at industry conferences, field days and country meetings throughout the year
• regular newsletters and the Grain Business magazine
• website updates
• contributions to rural newspapers
• investor and financial media briefings
• the half yearly and annual reports; and
• the Annual General Meeting.

The Company does not publish the plan because it is considered to be commercially sensitive.

The external auditor attends the Annual General Meeting and is available to answer questions from shareholders about the audit.

CORPORATE RESPONSIBILITY
The Board recognises that the long term success of the Company will depend not only on its financial strength but also on the welfare of its staff and the responsible interaction of the Company with the community in general. The Board ensures that, within prudent financial bounds, there are no constraints on capital expenditure for essential safety equipment and maintenance, and that appropriate policies and procedures are in place. The Board receives regular reports on the Company’s environmental and occupational health and safety performance. The Company sponsors programs and projects that benefit the Company and its standing in the community, and publishes guidelines on its website on how to apply for community grants and sponsorships.

• Download PDF version of Corporate Governance Statement.

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