EBOS GROUP LIMITED — Governance Information 2013

Dec 4, 2013

EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
Principle 1 Lay solid foundations for management and oversight. Companies should establish and disclose the respective roles and responsibilities of board and management.
Recommendation 1.1 Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions		The Board is responsible for directing the Company and enhancing its value for shareholders in accordance with good corporate governance principles. The Board has adopted a formal Corporate Governance Code (theCode). The Code details the Board's responsibilities, membership and operation. The main functions of the Board are to: • approve, and from time to time review, the Company’s corporate mission statement; • select and (if necessary) replace the CEO; • ensure that the Company has adequate management to achieve its objective and to support the CEO and that a satisfactory plan for management succession is in place; • review and approve the strategic, business and financial plans prepared by management and develop a depth of knowledge of the Company’s business so as to understand and question the assumptions upon which such plans are based and to reach an independent judgment on the probability that such plans can be achieved; • review and approve individual investment and divestment decisions which the Board has determined should be referred to it before implementation; • review and approve material transactions not in the ordinary course of the Company’s business; • approve all dividend policies and distributions to shareholders and lending and borrowing policies; • review and approve the Company’s risk management policies; • approve the appointments by, or at the request of, the Company (including its related entities) to the boards of directors of subsidiary and associate companies; • monitor the Company’s performance against its approved strategic, business and financial plans and to oversee the Company’s operating results on a regular basis so as to evaluate whether the business is being properly managed; • ensure ethical behaviour by the Company, the Board and management, including compliance with the Company’s Constitution, the relevant laws, listing rules and regulations and the relevant auditing and accounting principles; • implement and from time to time review the Company’s Code of Ethics, foster high standards of ethical conduct and personal behaviour and hold accountable those directors, managers or other employees who engage in unethical behaviours; • ensure the quality and independence of the Company’s

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EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
		external audit process; and • assess from time to time its own effectiveness in carrying out these functions and the other responsibilities of the Board. The main responsibilities of the CEO as the Company's senior executive are to: • formulate the vision for the Company; • recommend policies and the strategic direction of the Company for approval by the Board; • manage the day to day operations of the Company; and • act as the spokesperson of the Company.
Recommendation 1.2 Companies should disclose the process for evaluating the performance of senior executives		Performance of senior executives is reviewed by the CEO and is supervised by the Remuneration Committee. That Committee is responsible for: • reviewing and advising the Board on the terms of appointment and the remuneration of the CEO; • reviewing working environments and succession planning for management; • reviewing the terms of the employment arrangements with management so as to develop consistent group-wide employment practices subject to regional differences; and • advising the Board on the remuneration of the CEO and senior management. In addition, the Board monitors the performance of the CEO against the Board's requirements and expectations and takes timely action if the objectives of the Company (that is, to enhance corporate profit and shareholder gain) require it, or a correction to management is required. The Chairman is principally responsible, in conjunction with the Board, for evaluating the CEO's performance and meets with the CEO to discuss the Board's requirements and expectations.
Recommendation 1.3 Companies should provide the information indicated in the Guide to reporting on Principle 1		The Code, which contains a statement of matters reserved for the Board, is available on the Company's website (www.ebos.co.nz ). The Company intends to provide in its annual report, the information indicated in the Guide to reporting on Principle 1, as applicable.
Principle 2 Structure the board to add value. Companies should have a board of an effective composition, size and commitment to adequately discharge its responsibilities and duties.
Recommendation 2.1 A majority of the board should be independent directors		The Board consists of eight Directors, three of which are considered to be independent, as that term is defined in the NZX Main Board Listing Rules, the ASX Listing Rules and the ASX Corporate Governance Council Principles and Recommendations (theASX Recommendations). The independent Directors are Rick Christie, Elizabeth Coutts and Sarah Ottrey.

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EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
		The Board considers that its current composition is appropriate for the following reasons: 1 Peter Kraus has had a long and substantial involvement with the Company, with interests associated with him having significant equity interests in the Company. He has been a strong supporter of the Company’s expansion in recent years. 2 The involvement of Peter Williams and Stuart McGregor reflects the confidence of Sybos Holdings Pte Limited as a 40% shareholder in the Company that they will bring their experience and knowledge as former directors of Symbion Pty Limited (recently acquired by the Company) to the Board. 3 A further enlargement of the Board for the sole purpose of complying with the Recommendation that a majority of the Company’s directors should be independent is not justified at this time given the calibre of the current Board.
Recommendation 2.2 The chair should be an independent director		Rick Christie is the Chairman of the Board and is an independent Director.
Recommendation 2.3 The roles of chair and chief executive officer should not be exercised by the same individual		The role of Chairman of the Board is exercised by Rick Christie and the role of CEO is exercised by Mark Waller.
Recommendation 2.4 The board should establish a nomination committee		The Board has established a Nomination Committee which is responsible for recommending director appointments to the Board and establishing a formal and transparent process for the nomination and appointment of directors. The Nomination Committee Charter which outlines the Committee's authority, duties, responsibility and relationship with the Board is set out as Appendix D to the Code and is available on the Company's website (www.ebos.co.nz ).
Recommendation 2.5 Companies should disclose the process for evaluating the performance of the board, its committees and individual directors	Partially satisfied	The Board, led by the Chairman, is responsible for ensuring that rigorous, formal processes for evaluating the performance of the Board, its committees and individual Directors are in place. In particular, the Nominations Committee is responsible for formally evaluating the Board's performance and for considering whether any changes to the Board are necessary and / or desirable to enhance the performance of the Board. The Board also has an on-going self assessment of its performance. The Company's annual report will include information about each director, identify which directors are independent and include information on the Board's appointment, training and evaluation processes.
Recommendation 2.6 Companies should provide the information indicated in the Guide to reporting on Principle		The Code, which contains a description of the procedure for the selection and appointment of new directors and the re-election of incumbent directors, the Nomination Committee Charter (see Appendix D), and the Board's policy for the nomination and

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EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
2		appointment of directors, is available on the Company's website (www.ebos.co.nz ). The Company intends to provide in its annual report, the information indicated in the Guide to reporting on Principle 2, as applicable.
Principle 3 Promote ethical and responsible decision-making. Companies should actively promote ethical and responsible decision-making.
Recommendation 3.1 Companies should establish a code of conduct and disclose the code or a summary of the code as to: • the practices necessary to maintain confidence in the company’s integrity • the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders • the responsibility and accountability of individuals for reporting and investigating reports of unethical practices		The Company has a code of conduct in the form of its Code of Ethics in accordance with Recommendation 3.1. The Code of Ethics is set out as Appendix A to the Code and is available on the Company's website (www.ebos.co.nz ). The Code of Ethics is the framework of standards by which the Directors and employees of the Company and its related companies are expected to conduct their professional lives. Directors, senior executives and other employees of the Company who are proven to have breached the code will face disciplinary action which, depending of the seriousness and severity of the beach, could include dismissal or legal action or both. The Code of Ethics covers conflicts of interest, receipt of gifts, confidentiality, expected behaviour, delegated authority and compliance with laws and policies. The Code of Ethics also details the procedure for Directors, senior executives and other employees to report actual or suspected violations of the code.
Recommendation 3.2 Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measurable objectives for achieving gender diversity for the board to assess annually both the objectives and progress in achieving them	Partially satisfied	The NZX Main Board Listing Rules, until recently, have not required companies to have diversity policies and, as a result, the Company has yet to adopt a formal policy concerning diversity. However, the Board is committed to the establishment and maintenance of appropriate ethical standards and in its recruitment practices is committed to recruiting individuals with the appropriate skills and qualifications required for the role. In particular, the Company's Code of Ethics requires Company employees to treat people in the workplace with respect in accordance with the Company's philosophies of equal employment opportunities, and anti-harassment and discrimination policies. The Board intends to implement a formal diversity policy in accordance with Recommendation 3.2 from the beginning of the financial year of the Company commencing 1 July 2014.
Recommendation 3.3 Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving	Partially satisfied	As mentioned above, the Company intends to adopt a formal policy concerning diversity with effect from the financial year of the Company commencing 1 July 2014 at which point measurable objectives for achieving gender diversity will be put in place.

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EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
them
Recommendation 3.4 Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board		The Company intends to make the disclosures recommended by Recommendation 3.4 in its annual report.
Recommendation 3.5 Companies should provide the information indicated in the Guide to reporting on Principle 3		The Code, which contains the Code of Ethics (see Appendix A), is available on the Company's website (www.ebos.co.nz ). However, as mentioned above, the Company has yet to adopt a formal policy concerning diversity. The Company intends to provide in its annual report, the information indicated in the Guide to reporting on Principle 3, as applicable.
Principle 4 Safeguard integrity in financial reporting. Companies should have a structure to independently verify and safeguard the integrity of their financial reporting.
Recommendation 4.1 The board should establish an audit committee		The Company has established an Audit and Risk Committee which is responsible for: • monitoring all aspects of the external audit of the Company's affairs; • reviewing the half-year and annual financial statements, and any other financial statements to be released by the Company, before submission to the Board; • reviewing any non-routine statement to be issued by the Company; and • the matters detailed in the Audit and Risk Committee Charter.
Recommendation 4.2 The audit committee should be structured so that it: • consists only of non- executive directors • consists of a majority of independent directors • is chaired by an independent chair, who is not chair of the board • has at least three members	Partially satisfied	The current members of the Audit and Risk Committee are Barry Wallace (Chairman), Rick Christie and Elizabeth Coutts. The Company complies with Recommendation 4.2 in relation to establishing an audit committee with the recommended composition, but for the fact that the Chairman of the Audit and Risk Committee is not an independent chair. Despite not being an independent Director, the Board considers Barry Wallace to be an appropriate Director to chair the Audit and Risk Committee given his qualifications as a chartered accountant and his background in financial management.
Recommendation 4.3 The audit committee should have a formal charter		The Audit and Risk Committee Charter which outlines the Committee's authority, duties, responsibility and relationship with the Board is set out as Appendix B to the Code and is available on the Company's website (www.ebos.co.nz ).
Recommendation 4.4		As mentioned above, the Code, which contains the Audit and

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EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
Companies should provide the information indicated in the Guide to reporting on Principle 4		Risk Committee Charter (see Appendix B), is available on the Company's website (www.ebos.co.nz ). Information on the procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners, is set out in section 9 (External Audit Policy) of the Code. The Company intends to provide in its annual report, the information indicated in the Guide to reporting on Principle 4, as applicable.
Principle 5 Make timely and balanced disclosure. Companies should promote timely and balanced disclosure of all material matters concerning the company.
Recommendation 5.1 Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies	Partially satisfied	The Company currently has a written policy which is designed to ensure compliance with the NZX Main Board Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance. The Chief Financial Officer is responsible for the Company's compliance with statutory and NZX continuous disclosure requirements and the Board is advised of, and considers, continuous disclosure issues at each Board meeting. The Company intends to amend the Code in due course to reflect that the Company is also required to comply with the ASX Listing Rule disclosure requirements.
Recommendation 5.2 Companies should provide the information indicated in the Guide to reporting on Principle 5		The Code, which contains the Company's current policy for complying with the NZX Main Board Listing Rule disclosure requirements and which the Company intends to update for the ASX Listing Rule disclosure requirements, is available on the Company's website (www.ebos.co.nz ). The Company intends to provide in its annual report, the information indicated in the Guide to reporting on Principle 5, as applicable.
Principle 6 Respect the rights of shareholders. Companies should respect the rights of shareholders and facilitate the effective exercise of those rights.
Recommendation 6.1 Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy		The Company has developed a set of shareholder participation principles which are designed to promote effective communication with shareholders and encourage shareholder participation at general meetings. These principles are set out in section 12 (Shareholder Participation) of the Code.
Recommendation 6.2 Companies should provide the information indicated in the Guide to reporting on Principle		The Code, which contains the Company's policy on shareholder communication and participation, is available on the Company's website (www.ebos.co.nz ). The Company intends to provide in its annual report, the

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EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
6		information indicated in the Guide to reporting on Principle 6, as applicable.
Principle 7 Recognise and manage risk. Companies should establish a sound system of risk oversight and management and internal control.
Recommendation 7.1 Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies		The Company has established an Audit and Risk Committee whose purpose is to, among other things, assist the Board in discharging its responsibility to exercise due care, diligence and skill in relation to identifying and monitoring material business risks. A summary of the functions of the Audit and Risk Committee is set out in the Audit and Risk Committee Charter which is available on the Company’s website (www.ebos.co.nz).
Recommendation 7.2 The board should require management to design and implement the risk management and internal control system to manage the company's material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company's management of its material business risks		The management team reports to the Board and / or the Audit and Risk Committee on whether the Company's material business risks are being managed effectively. The management team is required to immediately report urgent matters to both the Chairman of the Board and the CEO. The Board intends to disclose in its annual report the fact that management has reported to it as to the effectiveness of the Company's management of its material business risks.
Recommendation 7.3 The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded 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	Not applicable	Recommendation 7.3 is not applicable as the provisions of Chapter 2M of the Corporations Act do not apply to the Company. Nevertheless, the Company's CEO and Chief Financial Officer do provide assurances to the Board as part of the process for finalising the half-year and annual financial statements.
Recommendation 7.4 Companies should provide the information indicated in the Guide to reporting on Principle 7		The Code, which contains a summary of the Company's policies on risk oversight and management of material risks, is available on the Company's website (www.ebos.co.nz ). The Company intends to provide in its annual report, the information indicated in the Guide to reporting on Principle 7, as applicable.
Principle 8

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EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
Remunerate fairly and responsibly. Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to performance is clear.
Recommendation 8.1 The board should establish a remuneration committee		The Company has established a Remuneration Committee with the responsibilities set out under Recommendation 1.2 above. The Remuneration Committee Charter which outlines the Committee's authority, duties, responsibility and relationship with the Board is set out as Appendix C to the Code and is available on the Company's website (www.ebos.co.nz ).
Recommendation 8.2: The remuneration committee should be structured so that it: • consists of a majority of independent directors • is chaired by an independent chair • has at least three members	Partially satisfied	The current members of the Remuneration Committee are Rick Christie (Chairman), Barry Wallace and Mark Waller. The Company complies with Recommendation 8.2 in relation to establishing a remuneration committee with the recommended composition, but for the fact that the Committee does not consist of a majority of independent Directors. Barry Wallace is not an independent Director and Mark Waller is the CEO of the Company. The Board intends that the Remuneration Committee will comply with Recommendation 8.2 from 1 July 2014,
Recommendation 8.3 Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives		The Company distinguishes the structure of non-executive Directors' remuneration from that of executive Directors and senior executives. This information is set out in detail in the Company's annual report. The total monetary sum of fees approved for non-executive Directors is allocated as decided by the Board, by way of fees payable to all non-executive Directors and additional fees payable to the Chairman. CEO and executive remuneration is recommended by the Remuneration Committee by reference to market surveys, job size, and individual responsibilities, skills, knowledge, experience, competencies and accountabilities. Executive remuneration is structured to include a base salary and an 'at risk' component paid upon achievement of Company and individual targets agreed at the commencement of each year. Executive remuneration is reviewed annually and a table of remuneration bands above NZ$100,000 is disclosed in the Company's annual report.
Recommendation 8.4 Companies should provide the information indicated in the Guide to reporting on Principle 8		The Code, which contains the Remuneration Committee Charter (see Appendix C), is available on the Company's website (www.ebos.co.nz ). The Remuneration Committee Charter does not currently include a policy on prohibiting entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes, nor does it currently have (or in the future intend to have) any equity- based remuneration schemes in place. However, in the event that at some point in the future it does decide to put such a scheme in place it will, prior to implementing any such scheme, adopt a policy of prohibiting the inclusion of terms therein which limit the economic risk of participation, and will include that policy in the Remuneration Committee Charter.

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EBOS Group Limited Corporate Governance Statement

Recommendation	Compliance	Description
		The Company intends to provide in its annual report, the information indicated in the Guide to reporting on Principle 8, as applicable.

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