CODEIFAI LIMITED — Governance Information 2017

Mar 28, 2017

Rules 4.7.3 and 4.10.31

Appendix 4G

Key to Disclosures Corporate Governance Council Principles and Recommendations

Introduced 01/07/14 Amended 02/11/15

Our corporate governance statement2 for the above period above can be found at:3

These pages of our annual report:

0 This URL on our website; www.ypbsystems.com/investors/corporategovernance

The Corporate Governance Statement is accurate and up to date as at 28 February 2017 and has been approved by the board.

The annexure includes a key to where our corporate governance disclosures can be located.

Date: 29 March 2017

Name of Director or Secretary authorising

1 Under Listing Rule 4.7.3, an entity must lodge with ASX a completed Appendix 4G at the same time as it lodges its annual report with ASX.

Listing Rule 4.10.3 requires an entity that is included in the official list as an ASX Listing to include in its annual report either a corporate governance statement that meets the requirements of that rule or the URL of the page on its website where such a statement is located. The corporate governance statement must disclose the extent to which the entity has followed the recommendations set by the ASX Corporate Governance Council during the reporting period. If the entity has not followed a recommendation for any part of the reporting period, its corporate governance statement must separately identify that recommendation and the period during which it was not followed and state its reasons for not following the recommendation and what (if any) alternative governance practices it adopted in lieu of the recommendation during that period.

Under Listing Rule 4.7.4, if an entity chooses to include its corporate governance statement on its website rather than in its annual report, it must lodge a copy of the corporate governance statement with ASX at the same time as it lodges its annual report with ASX. The corporate governance statement must be current as at the effective date specified in that statement for the purposes of rule 4.10.3.

2 'Corporate governance statement" is defined in Listing Rule 19.12 to mean the statement referred to in Listing Rule 4.10.3 which discloses the extent to which an entity has followed the recommendations set by the ASX Corporate Governance Council during a particular reporting period.

³ Mark whichever option is correct and then complete the page number(s) of the annual report, or the URL of the web page, where the entity's corporate governance statement can be found. You can, if you wish, delete the option which is not applicable.

Throughout this form, where you are given two or more options to select, you can, if you wish, delete any option which is not applicable and just retain the option that is applicable. If you select an option that includes "OR" at the end of the selection and you delete the other options, you can also, if you wish, delete the "OR" at the end of the selection.

$\ddot{.}$
; ;
i I
$\overline{a}$
i
ļ

	1.3 1.4	ANNEXURE - PRINCIPLE 1 - 1.1 1.2
	(b)	(a) (b) (a)
2 November 2015		A listed entity should:
+ See chapter 19 for defined terms	as a director; and provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. 4 If you have followed all of the Council's recommendations in full for the whole of the period above, you can, if you wish, delete this column from the form and re-format it.	KEY TO CORPORATE GOVERNANCE DISCLOSURES Corporate Governance Council recommendation LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT A listed entity should disclose: the respective roles and responsibilities of its board and management; and those matters expressly reserved to the board and those delegated to management. undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election,
	0 0	0 0
	at [insert location] the fact that we follow this recommendation: at [insert location] the fact that we follow this recommendation:	period above. We have disclosed the fact that we follow this recommendation: at [insert location] at [insert location] the fact that we follow this recommendation:
	in our Corporate Governance Statement OR in our Corporate Governance Statement OR	in our Corporate Governance Statement OR in our Corporate Governance Statement OR
	atwww.ypbsystems.com/investors/corporategovernance	We have followed the recommendation in full for the whole of the and information about the respective roles and responsibilities of our board and management (including those matters expressly reserved to the board and those delegated to management):
	is therefore not applicable an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable	Key to Disclosures Corporate Governance Council Principles and Recommendations We have NOT followed the recommendation in full for the whole of the period above. We have disclosed 4 an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation

	(a) (b) (a) (b)	(a) (b) (c)
+ See chapter 19 for defined terms 2 November 2015	Gender Equality Act, the entity's most recent "Gender Equality Indicators", as defined in and published under that Act. A listed entity should: have and disclose a process for periodically evaluating the performance of the board, its committees and individual 0 directors; and disclose, in relation to each reporting period, whether a 0 performance evaluation was undertaken in the reporting period in accordance with that process. A listed entity should: have and disclose a process for periodically evaluating the performance of its senior executives; and 0 disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting 0 period in accordance with that process.	Corporate Governance Council recommendation A listed entity should: have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to 0 assess annually both the objectives and the entity's progress in achieving them; 0 disclose that policy or a summary of it; and disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity's diversity policy and its progress towards achieving them and either: 0 (1) the respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined 0 "senior executive" for these purposes); or (2) if the entity is a "relevant employer" under the Workplace
	at [insert location] the evaluation process referred to in paragraph (a): in our Corporate Governance Statement OR and the information referred to in paragraph (b): in our Corporate Governance Statement OR at [insert location] the evaluation process referred to in paragraph (a): in our Corporate Governance Statement OR and the information referred to in paragraph (b): in our Corporate Governance Statement OR at [insert location]	We have followed the recommendation in full forthe whole of the period above. We have disclosed the fact that we have a diversity policy that complies with paragraph (a): in our Corporate Governance Statement OR and a copy of our diversity policy or a summary of it: and the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with our diversity policy and our progress towards achieving them: in our Corporate Governance Statement OR and the information referred to in paragraphs (c)(1) or (2): in our Corporate Governance Statement OR
	at www.ypbsystems.com/investors/corporategovemance at www.ypbsystems.com/investors/corporategovernance	Key to Disclosures Corporate Governance Council Principles and Recommendations at www.ypbsystems.com/investors/corporategovernance at www.ypbsystems.com/investorsfcorporategovernance at www.ypbsystems.com/investors/corporategovemance
	an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed 4 an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable

We have NOT followed the recommendation in full for the whole of the period above. We have disclosed ...4

	2.2
2 November 2015
		(a) (b)
+ See chapter 19 for defined terms	succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. 0 at [insert/ocaf/on] A listed entity should have and disclose a board skills matrix our board skills matrix: 0 setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. at [insert location]	Corporate Governance Council recommendation PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE The board of a listed entity should: have a nomination committee which: paragraphs (1) and (2): (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, a\ [insert location] and disclose: (3) the charter of the committee; at [insert location] (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those at [insert location] meetings; or , if it does not have a nomination committee, disclose that fact and the processes it employs to address board
	discharge its duties and responsibilities effectively: in our Corporate Governance Statement OR in our Corporate Governance Statement OR	period above. We have disclosed [If the entity complies with paragraph (a):] in our Corporate Governance Statement OR and a copy of the charter of the committee: in our Corporate Governance Statement OR [If the entity complies with paragraph (b):]
	the fact that we do not have a nomination committee and the processes we employ to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to	Key to Disclosures Corporate Governance Council Principles and Recommendations We have followed the recommendation in full for the whole of the We have NOT followed the recommendation in full for the whole of the period above. We have disclosed 4 0 the fact that we have a nomination committee that complies with and the information referred to in paragraphs (4) and (5):
	an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable	an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable

independence of the director, the nature of the interest, in our Corporate Governance Statement OR position, association or relationship in question and an 0 explanation of why the board is of that opinion; and at www.ypbsystems/investors/annualreports the length of service of each director. (c) and the length of service of each director: in our Corporate Governance Statement OR 0 at www.ypbsystems/investors/annualreports A majority of the board of a listed entity should be independent the fact that we follow this recommendation: 0 directors. in our Corporate Governance Statement OR at[/nserf/ocaf/or?] The chair of the board of a listed entity should be an independent the fact that we follow this recommendation: director and, in particular, should not be the same person as the in our Corporate Governance Statement OR CEO of the entity. at [insert/ocaf/on] A listed entity should have a program for inducting new directors the fact that we follow this recommendation: 0 and provide appropriate professional development opportunities in our Corporate Governance Statement OR for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. [insert location] PRINCIPLE 3 - ACT ETHICALLY AND RESPONSIBLY A listed entity should: our code of conduct or a summary of it: have a code of conduct for its directors, senior executives (a) in our Corporate Governance Statement OR and employees; and 0 at www.ypbsystems.com/investors/corporategovernance disclose that code or a summary of it. (b) + See chapter 19 for defined terms 2 November 2015
	(a) (b)
	Corporate Governance Council recommendation A listed entity should disclose: the names of the directors considered by the board to be independent directors; if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the
	We have followed the recommendation in full for the whole of the period above. We have disclosed the names of the directors considered by the board to be independent directors: 0 and, where applicable, the information referred to in paragraph (b):
	in our Corporate Governance Statement OR at www.ypbsystems/investors/annualreports	Key to Disclosures Corporate Governance Council Principles and Recommendations
0	We have NOT followed the recommendation in full for the whole of the period above. We have disclosed 4

We have NOT followed the recommendation in full for the whole of the period above. We have disclosed ...4

	4.2	4.1
2 November 2015	(b)	PRINCIPLE 4 -
		(a)
+ See chapter 19 for defined terms	meetings; or if it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including engagement partner: the processes for the appointment and removal of the 0 external auditor and the rotation of the audit engagement partner. at [insert location] The board of a listed entity should, before it approves the entity's 0 financial statements for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial at [insert location] statements comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.	Corporate Governance Council recommendation SAFEGUARD INTEGRITY IN CORPORATE REPORTING The board of a listed entity should: have an audit committee which: paragraphs (1) and (2): (1) has at least three members, all of whom are non executive directors and a majority of whom are independent directors; and at [insert location] (2) is chaired by an independent director, who is not the chair of the board, and disclose: at [insert location] (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and at [insert location] (5) in relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those
	the fact that we do not have an audit committee and the processes we employ that independently verify and safeguard the integrity of our corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit in our Corporate Governance Statement OR the fact that we follow this recommendation: in our Corporate Governance Statement OR	We have followed the recommendation in full forthe whole ofthe period above. We have disclosed [If the entity complies with paragraph (a):] the fact that we have an audit committee that complies with in our Corporate Governance Statement OR and a copy of the charter of the committee: and the information referred to in paragraphs (4) and (5): in our Corporate Governance Statement OR [If the entity complies with paragraph (b):]
		Key to Disclosures Corporate Governance Council Principles and Recommendations 0
	an explanation why that is so in our Corporate Governance Statement	We have NOT followed the recommendation in full forthe whole ofthe period above. We have disclosed 4 an explanation why that is so in our Corporate Governance Statement

2 November 2015		PRINCIPLE 5 - (a) (b) PRINCIPLE 6 -
	investors. security holders,	A listed entity should:
+ See chapter 19 for defined terms	A listed entity should design and implement an investor relations program to facilitate effective two-way communication with A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically.	Corporate Governance Council recommendation A listed entity that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. MAKE TIMELY AND BALANCED DISCLOSURE have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and disclose that policy or a summary of it. RESPECT THE RIGHTS OF SECURITY HOLDERS A listed entity should provide information about itself and its governance to investors via its website.
	0 0 0	0 0 0
	the fact that we follow this recommendation: in our Corporate Governance Statement OR at [insert location] participation at meetings of security holders: in our Corporate Governance Statement OR at [insert location] the fact that we follow this recommendation: in our Corporate Governance Statement OR at [insert tocaf/on]	period above. We have disclosed the fact that we follow this recommendation: in our Corporate Governance Statement OR at [insert location] in our Corporate Governance Statement OR at www.ypbsystems.com
		Key to
	our policies and processes forfacilitating and encouraging	Disclosures Corporate Governance Council Principles and Recommendations We have followed the recommendation in full forthe whole ofthe our continuous disclosure compliance policy or a summary of it: at www.ypbsystems.com/investors/corporategovemance information about us and our governance on our website:
	an explanation why that is so in our Corporate Governance Statement an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity that does not hold periodic meetings of security holders and this recommendation is therefore not applicable an explanation why that is so in our Corporate Governance Statement	We have NOT followed the recommendation in full for the whole ofthe period above. We have disclosed 4 an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity that does not hold an annual general meeting and this recommendation is therefore not applicable an explanation why that is so in our Corporate Governance Statement an explanation why that is so in our Corporate Governance Statement

We have NOT followed the recommendation in full for the whole ofthe period above. We have disclosed ...4

and that such a review has taken place in the reporting period covered by this Appendix 4G: in our Corporate Governance Statement OR at [insert location] + See chapter 19 for defined terms 2 November 2015
			PRINCIPLE 7 -
		(a) (b)	(a) (b)
		satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity's risk management framework. The board or a committee of the board should: review the entity's risk management framework at least annually to satisfy itself that it continues to be sound; and disclose, in relation to each reporting period, whether such a review has taken place.	Corporate Governance Council recommendation RECOGNISE AND MANAGE RISK The board of a listed entity should: have a committee or committees to oversee risk, each of which: (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or if it does not have a risk committee or committees that
		management framework: at [insert location] continues to be sound: at[/r)serf/ocaf/on]	period above. We have disclosed [If the entity complies with paragraph (a):] that comply with paragraphs (1) and (2): at [insert location] and a copy of the charter of the committee: at [insert location] at [insert location] [If the entity complies with paragraph (b):]
Page 8		satisfy (a) and the processes we employ for overseeing our risk in our Corporate Governance Statement OR 0 the fact that board or a committee of the board reviews the entity's an explanation why that is so in our Corporate Governance risk management framework at least annually to satisfy itself that it Statement in our Corporate Governance Statement OR	Key to Disclosures Corporate Governance Council Principles and Recommendations We have followed the recommendation in full for the whole of the We have NOT followed the recommendation in full for the whole of the period above. We have disclosed 4 0 an explanation why that is so in our Corporate Governance the fact that we have a committee or committees to oversee risk Statement in our Corporate Governance Statement OR and the information referred to in paragraphs (4) and (5): in our Corporate Governance Statement OR the fact that we do not have a risk committee or committees that

Corporate Governance Council recommendation We have followed the recommendation in full forthe whole ofthe We have NOT followed the recommendation in full forthe whole period above. We have disclosed of the period above. We have disclosed 4 A listed entity should disclose: [If the entity complies with paragraph (a):] an explanation why that is so in our Corporate Governance if it has an internal audit function, how the function is (a) how our internal audit function is structured and what role it Statement structured and what role it performs; or performs: if it does not have an internal audit function, that fact and (b) in our Corporate Governance Statement OR the processes it employs for evaluating and continually at [insert location] improving the effectiveness of its risk management and internal control processes. [If the entity complies with paragraph (b):] the fact that we do not have an internal audit function and the processes we employ for evaluating and continually improving the effectiveness of our risk management and internal control processes: in our Corporate Governance Statement OR 0 at www.ypbsystems.com/investors/corporategovemance A listed entity should disclose whether it has any material whether we have any material exposure to economic, an explanation why that is so in our Corporate Governance exposure to economic, environmental and social sustainability environmental and social sustainability risks and, if we do, how we Statement risks and, if it does, how it manages or intends to manage those manage or intend to manage those risks: 0 risks. in our Corporate Governance Statement OR at [/nserf location] + See chapter 19 for defined terms 2 November 2015		7.3 7.4
		Key to Disclosures Corporate Governance Council Principles and Recommendations
Page 9

	8.2 8.3	8.1
2 November 2015		PRINCIPLE 8 -
	executives. should: (a) (b)	(a) (b)
+ See chapter 19 for defined terms	composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. 0 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior 0 A listed entity which has an equity-based remuneration scheme 0 have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the scheme; and disclose that policy or a summary of it.	Corporate Governance Council recommendation REMUNERATE FAIRLY AND RESPONSIBLY The board of a listed entity should: have a remuneration committee which: paragraphs (1) and (2): (1) has at least three members, a majority of whom are independent directors; and (2) is chaired by an independent director, and disclose: (3) the charter of the committee; (4) the members of the committee; and (5) as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and
	such remuneration is appropriate and not excessive: in our Corporate Governance Statement OR at [insert location] executive directors and other senior executives: in our Corporate Governance Statement OR at www.ypbsystems/investors/annualreports our policy on this issue or a summary of it: in our Corporate Governance Statement OR at [/nserf location]	period above. We have disclosed [If the entity complies with paragraph (a):] in our Corporate Governance Statement OR at [mserf/ocaf/on] and a copy of the charter of the committee: at [insert location] in our Corporate Governance Statement OR at [insert location] [If the entity complies with paragraph (b):]
	the fact that we do not have a remuneration committee and the processes we employ for setting the level and composition of remuneration for directors and senior executives and ensuring that separately our remuneration policies and practices regarding the remuneration of non-executive directors and the remuneration of	We have followed the recommendation in full for the whole ofthe the fact that we have a remuneration committee that complies with and the information referred to in paragraphs (4) and (5):
		0
	an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable an explanation why that is so in our Corporate Governance Statement OR we do not have an equity-based remuneration scheme and this recommendation is therefore not applicable OR we are an externally managed entity and this recommendation is therefore not applicable	Key to Disclosures Corporate Governance Council Principles and Recommendations We have NOT followed the recommendation in full for the whole of the period above. We have disclosed 4 an explanation why that is so in our Corporate Governance Statement OR we are an externally managed entity and this recommendation is therefore not applicable
Page 10

2 November 2015	(a) (b)
	entities:
+ See chapter 19 for defined terms	Corporate Governance Council recommendation Alternative to Recommendation 1.1 forexternally managed listed The responsible entity of an externally managed listed entity should disclose: the arrangements between the responsible entity and the listed entity for managing the affairs of the listed entity; the role and responsibility of the board of the responsible entity for overseeing those arrangements. Alternative to Recommendations 8.1, 8.2 and 8.3 for externally managed listed entities: An externally managed listed entity should clearly disclose the terms governing the remuneration of the manager.
	Key to Disclosures Corporate Governance Council Principles and Recommendations We have followed the recommendation in full forthe whole ofthe period above. We have disclosed ADDITIONAL DISCLOSURES APPLICABLE TO EXTERNALLY MANAGED LISTED ENTITIES the information referred to in paragraphs (a) and (b): in our Corporate Governance Statement OR at [insert location] the terms governing our remuneration as manager of the entity: in our Corporate Governance Statement OR at [insert location]
	Statement Statement
Page 11	We have NOT followed the recommendation in full forthe whole of the period above. We have disclosed 4 an explanation why that is so in our Corporate Governance an explanation why that is so in our Corporate Governance

ASX/MEDIA ANNOUNCEMENT

ASX: YPB ^I 29 March 2017

CORPORATE GOVERNANCE STATEMENT YEAR ENDED 31 DECEMBER 2016

Brand Protection and Customer Engagement solutions company YPB Group Limited (ASX: YPB) is pleased to lodge the following Corporate Governance Statement ("CGS") for the year ended 31 December 2016

CORPORATE GOVERNANCE STATEMENT

Introduction

The Board of Directors of YPB Group is responsible for the Corporate Governance of YPB Group and its controlled entities. The Board guides and monitors the business and affairs of the group on behalf of the shareholders by whom they are elected and to whom they are accountable. The YPB Group Corporate Governance Statement and the governance practices adopted by the Company are structured with reference to the ASX Corporate Governance Council Principles and Recommendations, 3rd Edition issued in March 2014 ("ASX Recommendations").

The Company's practices are largely consistent with the ASX Recommendations. The Board considers that the implementation of a small number of ASX Recommendations is not appropriate, for the reasons set out below in relation to the items concerned. The Board uses its best endeavours to ensure that exceptions to the ASX Recommendations do not have ^a negative impact on the Company and the best interests of shareholders as a whole. The Board notes that subsequent to 31 December 2016, being the Reporting Period under review, the Company has undertaken a significant review and a subsequent updating of its Governance practices, including causing the formation of an Audit and Risk Committee together with a Nomination and Remuneration Committee.

As required by the ASX Listing Rules, this CGS discloses the extent to which the Company has followed the ASX Recommendations during the year ended 31 December 2016 ("Reporting Period") as summarized below

Principle 1: Lay solid foundations for management and oversight.

The Board is responsible to ensure the Company is structured such that there are clearly defined roles, segregation of duties and responsibilities and approved levels of authority between the management and the governance of the Company. The Board sets the overall corporate governance policy for the Company including determining the strategic direction, establishing policies and goals for management and monitoring the achievement of them. The Board delegates responsibility for the day-to-day management of the Company to the Chief Executive Officer and the senior executive team.

• setting the long-term strategy and annual business plan including objectives and milestones to be achieved;
• evaluating capital, cash and operating risk budgets and making appropriate recommendations on an annual basis;
• reviewing and approving the Company's financial, strategic and operational goals and assessing key business developments as formulated by management in line with the objectives and goals set by the Board;
• monitoring the performance of the Company against the financial objectives and operational goals set by the Board and reviewing the implementation of Board approved strategies;
• assessing the appropriateness of the skill sets and the levels of experience of the members of the Board, individually and as a whole and selecting new members to join the Board when a vacancy exists;
• appointing, removing and determining the terms of engagement of the Directors, Chief Executive Officer and Company Secretary;
• overseeing the delegation of authority for the day to day management of the Company;
• ensuring that the risk management systems, financial reporting and information systems, personnel, policies and procedures are all operating efficiently and effectively by establishing a framework of internal controls and compliance;
• reviewing major contracts, goods or services on credit terms, acceptance of counter-party risks and issuing guarantees on behalf of the Company;
• approving the capital structure and major funding requirements of the Company;
• making recommendations as to the terms of engagement, independence and the appointment and removal of the external auditors;
• setting the Code of Conduct for the Company and ensuring that appropriate standards of corporate governance and ethics are effectively communicated throughout the Company and complied with;
• reviewing the adherence by each director to the Directors' Code of Ethics;
• establishing policies to ensure that the Company complies with the ASX Continuous Disclosure Policy;
• approving the Company's half year and full year reports to the shareholders, ASX and ASIC; and
• ensuring compliance with policies and procedures that relate to recruitment, retention, termination, remuneration, performance review and succession planning.
• The Company has written agreements with its Directors and senior executives setting out the terms and conditions of their appointment.
• annually assess the performance of Senior Executives

Principle 2: Structure the Board to add value

The Board is structured to maximise value to the Company and the shareholders. The Board is of ^a size and composition that is conducive to making decisions expediently, with the benefit of a variety of perspectives, experiences and skills.

Board composition

The Board subsequent to the Annual General Meeting held on 13 May 2016 is composed of five directors. The skills, experience and expertise relevant to the position of each Director in office at the date of the annual report are included in the Directors Report included in the Annual Report.

ypbsystems.com brandreporter.com

investors@ypbsystems.com Lvl 29, 66 Goulburn St

It is noted that the Company's board composition is in keeping with the commentary and guidance to Best Practice Recommendations 2.1 as the majority of the Board is independent, the Executive Chairman is not independent. The Board is of the opinion that the current stage of its development requires the Company to have a board, which has more of a hands-on approach and technical experience in order to grow the Company. However, the board is committed to follow the guidance to Best Practice Recommendations 2.1 by appointing additional independent directors to the Board as appropriate in the future.

The Board has determined that there are sufficient appropriate alternative governance measures in place to ensure that any noncompliance with the recommendations does not give rise to undue risk or other material concerns relating to the management and oversight of the Company.

The performance of The Board is annually evaluated pursuant to Corporate Governance Policy 10.

The Company currently has no women on either The Board or amongst its Senior Executives. However, it employs on merit and suitability and follows its diversity policy. The Company intends to actively target female candidates in accordance with its diversity policy as roles become available at both Director and Senior Executive level in the future.

Term of office

The members of the Board are elected by the shareholders to ensure that the Board has the appropriate mix of expertise and experience.

In accordance with the Corporations Act 2001, if ^a person is appointed as Director during the year, the Company must confirm appointment by resolution at the Company's next Annual General Meeting.

One-third of the Board retires and makes themselves available for re-election at the following AGM, with the exception of the Executive Chairman. No Director, with the exception of the Executive Chairman, is allowed to retain office for more than 3 years without submitting himself or herself for re-election.

When a vacancy exists on the Board, the Board appoints the most suitable candidate from a panel of candidates, who then must stand for election at the next Annual General Meeting if he or she wishes to continue as a member of the Board.

Director	Type of Director	First appointed	AGM last Re-elected
John Houston	Executive Chairman	31 July 2014	N.A.
Robert Whitton	Executive	3 August 2012	18 November 2014
Su (George) Su	Non-executive	31 July 2014	27 April 2015
Ronald Langley	Non-executive	28 April 2015	13 May 2016
Gerard Eakin	Non-executive	4 March 2016	13 May 2016

Initial appointment and last re-election dates of each current Director:

Personal interests & conflicts

Directors must not take advantage of their position as Directors and must not allow their personal interests, or the interests of any associated person to interfere or exert undue influence on their conduct or decisions as a Director.

ypbsystems.com brandreporter.com

investors@ypbsystems.com Lvl 29, 66 Goulburn St

PROTECT DETECT CONNECT

Directors also have ^a duty to avoid conflicts of interest between the best interests of the Company and their own personal or commercial interests. Conflicts of interest can be either actual or potential. If ^a conflict of interest arises, Directors must disclose their interests to the Board immediately. The Directors concerned must not be present at the meeting while the matter is being considered and must not be allowed to vote on the matter either.

Independent professional advice

There are procedures in place, agreed by the Board, to enable directors in furtherance of their duties to seek independent professional advice at the Company's expense.

Board Standing Committees

During the year under review the Company had not formally established an Audit and Risk Committee nor a Nomination and Remuneration Committee however such Committees have been formed subsequent to the year end.

For the year under review the responsibilities and duties of such Committees were undertaken by the Board. The small size and the hands on approach of the Board enable it to handle particular issues relevant to verifying and safeguarding the integrity of the Company's financial reporting with the same efficiency as an Audit and Risk Management Committee.

Consequently, the Company did not comply with Best Practice Recommendations. However, the Board has now appointed such committees and as such will comply with such recommendations in the current financial period.

Board skills matrix:

SKILLS AND EXPERIENCE	RATING*
Financial acumen	4/5
Risk management	3.5/5
Governance	3.5/5
Compliance	4/5
Capital raising	4.5/5

• *The Board has assessed its rating considering the combined skills, competency and experience of each Board member in each key area deemed relevant.

Summary

In summary, the Company does meet the requirements of Principle 2 of the Corporate Governance Guidelines in that:

• (i) The Board does comprise a majority of independent Directors; The Executive Chairman however is not an Independent Director.
• (ii) The Company has now appointed an Audit and Risk Committee and a Nomination and Remuneration Committee

ypbsystems.com brandreporter.com investors@ypbsystems.com Lvl 29, 66 Goulburn St

Principle 3: Act Ethically and Responsibly

Code of Conduct & Ethics

The Company has a Code of Conduct, which sets the standards in accordance with which each director, manager and employee of the Company is expected to act. The code is communicated to all levels of the Company and deals with areas such as professional conduct, customers/consumers, suppliers, advisers/regulators, competitors, the community and the employees.

Share trading policy

The constitution permits Directors, Key Management Personnel and other officers of the Company to trade in Company shares as long as they comply with the Company's Share Trading Policy. The Share Trading Policy is ^a code that is designed to minimise the potential for insider trading.

The Policy provides that Directors, employees and consultants must not deal in The Company's securities when they are in possession of Price Sensitive Information.

Directors must notify the Chairman of the Board, before they buy or sell shares in the Company. If the Chairman of the Board intends to trade in the Company shares, the Chairman of the Board must give prior notice to the Chairman of the Audit & Risk Management Committee or the whole Board if there is no Audit & Risk Management Committee. The details of the share trading must be given to the Company Secretary who must lodge such details of such changes in with the ASX.

Key management Personnel must give prior notice to the Chief Executive Officer, while other officers must notify the Company Secretary, before trading in the Company shares and details of all such transactions must be given, in writing, to the Company Secretary within 7 business days.

Any changes in substantial shareholding of the Directors, Key management Personnel or other officers must be reported to the ASX within 2 business days of such trading. The policy also directs that trading in the Company securities must not only occur during the following Restricted Periods:

• from the balance date until the second trading day after The Company's annual or half-yearly results have been released to the ASX and
• any other period designated by the Board.

Principle 4: Safeguard Integrity in Corporate Reporting

It is the Board's responsibility to ensure an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records and the reliability of financial information as well as non-financial considerations such as benchmarking of operational key performance indicators.

Executive Certification

The Chief Executive Officer (CEO) and the Chief Financial Officer (CFO) are required to and have provided assurance to the Board stating that the financial statements and reports of the Company:

• Present ^a true and fair view, in all material respects, of the operating results and financial condition in accordance with the Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001;
• Are founded on ^a system of risk management and internal compliance and control, and these are operating efficiently and effectively in all material aspects.

ypbsystems.com brandreporter.com investors@ypbsystems.com Lvl 29, 66 Goulburn St

The Company requires assurances from the CEO and the CFO in relation to the financial statements, systems of risk management and internal controls.

Audit & Risk Management Committee - audit responsibilities

The Company did not during the year under review have an audit committee. The small size of the company and the hands on approach of the Board enabled it to handle particular issues relevant to verifying and safeguarding the integrity of the Company's financial reporting with the same efficiency as an audit committee.

The board is committed to following the Best Practice Recommendation 4.3, and has therefore established an independent Audit & Risk Management Committee for the coming financial year.

The Board also requires the Company's external auditor, to be present at the Annual General Meeting to answer questions that shareholders might have about the scope and conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the Company and the independence of the auditor.

Principle 5: Make timely and balanced disclosure

The Company's market disclosure policy is to ensure that shareholders and the market are fully informed of the Company's strategy, performance and details of any information or events that could be material to the value of the Company's securities. The Company is committed to ensuring that all information that may have ^a material impact on the Company's share value is disclosed to the market in a timely and balanced manner.

The Chief Executive Officer and the Company Secretary, in consultation with the Board, are responsible, for the review, authorisation and disclosure of information to the ASX and for overseeing and coordinating information disclosures to the ASX, shareholders, brokers, analysts, the media and the public.

The Company ensures that it also complies with the requirements of the Listing Rules of the Australian Stock Exchange ("ASX") and the Corporations Act in providing information to shareholders through:

• The half-yearly report to the ASX;
• The annual Report which is distributed to the ASX and to shareholders prior to the AGM;
• The AGM and other meetings called to obtain approval from shareholders where appropriate;
• Ad-hoc releases to the ASX as required under the ASX Listing Rules.

Principle 6: Respect the rights of security holders

Communication to shareholders

It is Company policy to maintain full and informative communications with all shareholders. This is achieved by way of detailed reports to shareholders on the half and full year, regular ASX releases and the Executive Chairman's addresses at General Meetings. All such reports and releases are available on both the ASX and The Company's websites Copies of documents covering Corporate Governance matters such as Board and Committee Charters, risk management policy, communications, code of conduct, continuous disclosure policy etc are available to shareholders on The Company's website www.ypbsystems.com.

ypbsystems.com brandreporter.com

investors@ypbsystems.com Lvl 29, 66 Goulburn St SYDNEY NSW 2000

L PROTECT DETECT CONNECT

Shareholders can contact The Company or its share registry. Boardroom Pty Limited, by mail, telephone or email.

The Company recognises the rights of its shareholders and other interested stakeholders to have easy access to balanced, understandable and timely information concerning the operations of the Group. The Chief Executive Officer and the Company Secretary are primarily responsible of ensuring communications with shareholders are delivered in accordance with this strategy and with our policy of continuous disclosure.

The Company strives to communicate with shareholders and other stakeholders in a regular manner as outlined in Principle 5 of this statement.

The Board encourages participation of shareholders at the Annual General Meeting or any other shareholder meetings to ensure a high level of accountability and identification with the Company's strategy and goals. Shareholders are requested to vote on the appointment and aggregate remuneration of Directors, the granting of options and shares to Directors, issue of shares and changes to the constitution.

Annual General Meeting

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.

Principle 7: Recognise and manage risk

Risk management responsibilities

The Company's risk management framework is designed to identify, assess, monitor and manage material business risks, both financial and non-financial, to minimise their impact on the achievement of organisational goals.

As no member has been appointed to the Audit & Risk Management Committee for the year under review the Board as ^a whole was responsible for reviewing and ratifying the system of risk management, internal compliance and control, codes of conduct and legal compliance.

The Board delegates to the Chief Executive Officer and the Chief Financial Officer the responsibilities for the establishment, implementation and maintenance of the system of risk management including measures of its effectiveness.

Principle 8: Remunerate fairly and responsibly

Remuneration responsibilities

The Company's remuneration policy is disclosed in the Directors' Report included in the Annual Report. The policy has been set out to ensure that the performance of Directors, key executives and staff reflect each person's accountabilities, duties and their level of performance, and to ensure that remuneration is competitive in attracting, motivating and retaining staff of the highest quality. A program of regular performance appraisals and objective setting for key executives and staff is in place. These annual reviews take into account individual and company performance, market movements and expert advice.

The Company has in place a Performance Rights Plan ("Plan") which was approved by shareholders on 14 November 2014, recipients of Rights under the Plan are prohibited from entering into schemes or arrangements that protect the value of Rights granted under the Plan prior to them becoming ^a Vested Right.

ypbsystems.com brandreporter.com

investors@ypbsystems.com Lvl 29, 66 Goulburn St

L PROTECT DETECT CONNECT

The Board determines any changes to the remuneration of key executives on an annual basis at the time of their review.

The Board determines and reviews compensation arrangements for the Directors and the executive team.

For further information please contact;

Mr. John Houston	Mr. Gerard Eakin
Executive Chairman	Director
YPB Group Limited	YPB Group Limited
T: +61458 701 088	T: +61427 011 596
E: john.houston@ypbsystems.com	E: eakin@manifestcapital.com
W: www.ypbsystems.com

ABOUT YPB

YPB Group (ASX: YPB) is a pioneer in advanced brand protection solutions. Listed on the Australian Securities Exchange, YPB is expanding its global footprint with an established presence in Australia, China, Thailand, USA, Mexico and India.

YPB's patented Anti-Counterfeit technology combined with its Security Packaging and Anti-Theft solutions, Consulting Services and YPB's proprietary CONNECT platform enables clients to PROTECT their high value brands from the risks of counterfeit, product diversion and theft while providing the tools to CONNECT directly with their customers.

PROTECT

Smart Security Packaging and labeling for Brands

YPB offers a wide range of Smart Security Packaging and Labeling solutions that can be incorporated into almost any material and offer cost effective strategies to PROTECT the integrity and value of products and brands in high-risk markets.

Government Vital Documents

YPB offers solutions to Governments to PROTECT their Vital Documents that include ID cards, Visas, Passports, Vehicle Labels and many other applications.

Retail Anti-theft

YPB offers clients the latest technology in Retail Anti-Theft and Labeling solutions effective for mainstream retailers, boutiques and exporters to PROTECT against theft.

IP solutions & forensic services

YPB's IP solution specialists work with quality brands and Governments, to develop bespoke brand protection strategies and solutions that will deliver real protection and safety for brands, products and consumers.

Secure Supply Chain

YPB offers secure supply chain solutions to Governments, banks and companies wanting to ensure the integrity of their supply chain using a combination of YPB's authentication technology and secure track and trace solutions, delivering real protection for high value documents, brands, products and consumers.

ypbsystems.com brandreporter.com

investors@ypbsystems.com Lvl 29, 66 Goulburn St

DETECT

Scanner and Tracer protection solutions

YPB's patent protected state-of-the art Tracer technology is invisible, cannot be copied or destroyed. Brand owners who include YPB's tracers in their packaging can use YPB's scanners to verify their product's authenticity. If a counterfeit is detected YPB's forensic services can consult with ^a brand owner to develop strategic, tailored solutions to protect the brand against counterfeiting and product diversion.

CONNECT

Smartphone applications to Detect and Connect

YPB's sophisticated, user friendly and powerful smartphone applications allow brand owners and consumers to identify and report suspected counterfeit or diverted products. They also allow brands to connect and engage directly with their customers via QR codes, Near Field Communication, secure track and trace and product scanning. The YPB CONNECT platform delivers brand owners valuable and actionable intelligence about their products and customers to measure, tailor and individualise direct marketing campaigns through a 'big data' analytics capability.

www.ypbsystems.com

ypbsystems.com brandreporter.com investors@ypbsystems.com Lvl 29, 66 Goulburn St