Corporate Governance Statement

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1 LifeHealthcare Group Limited (ACN ) Corporate Governance Statement ASX Corporate Governance Council Principle / Principle 1 Lay solid foundations for management and oversight 1.1 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. The Board has adopted a Board Charter which sets out the responsibilities of the Board including internal controls and a business risk management process. The responsibilities reserved for the Board include (amongst others): managing and directing LifeHealthcare s strategies, objectives and budgets; monitoring LifeHealthcare s operational and financial position; identifying principal risks faced by LifeHealthcare and ensuring that appropriate internal controls and monitoring systems are in place; monitoring and managing the social, ethical, environmental and economic impact of LifeHealthcare s activities; and approving and overseeing capital expenditure and major projects. The Board delegates authority to the Chief Executive Officer who leads the management team, for the day to day operations of LifeHealthcare, its subsidiaries and their respective operations. The Board Charter along with the respective roles and responsibilities of the Board and the Chief Executive Officer can be found at 1.2 undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, 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. The Board Charter requires the Board to: undertake appropriate checks before appointing a person as director which includes checks as to the person s character, experience, education, criminal record and bankruptcy history; provide to the shareholders any material adverse information revealed by the checks conducted on the director; provide sufficient information to enable an assessment of the independence of the candidate (including interests, position, association and relationships that may influence such independence, and details of relationships with LifeHealthcare and other directors); provide a statement whether it considers a candidate page 1

2 will qualify as an independent director; and provide to the shareholders any other material information in the Board s possession. 1.3 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. The current directors and the senior management have, and all new directors and executives are required to have formal letters of appointment setting out the terms and conditions of their appointment. 1.4 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. Under the Board Charter, the company secretary is accountable directly to the Board, through the chair of the Board, on all matters concerning the proper functioning of the Board. 1.5 (c) 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 assess annually both the objectives and the entity s progress in achieving them; 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: LifeHealthcare has established a Diversity Policy which covers factors such as gender, age, ethnicity, cultural background, language, disability, family status, sexual preference, gender identity, religion and other areas of potential difference. LifeHealthcare provides the proportion of women employees in its organisation, amongst its senior executives and on its Board in the annual report. The latest Diversity Policy can be found at The Diversity Policy is currently being updated. The revised document will be available on the above website, once it has been approved by the Board. (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 senior executive for these purposes); or (2) if the entity is a relevant employer under the Workplace Gender Equality Act, the entity s most recent Gender Equality Indicators, as defined in and published under that Act. 1.6 have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and An external consultant may be used to regularly carry out a formal review of the performance of the Board, its committees, and each non-executive director. If conducted, the review may involve interviews with directors and those senior LifeHealthcare people usually interacting with the Board and its committees. In such an event, the review may assess: page 2

3 disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. the effectiveness of the Board and each committee in meeting the requirements of its charter; whether the Board and each committee has members with the appropriate mix of skills and experience to properly perform their functions; the contribution made by each director at meetings and in carrying out their responsibilities as directors generally, including preparing for meetings; whether adequate time is being allocated to LifeHealthcare matters, taking into account each director s other commitments; the independence of each non-executive director, taking into account the director s other interests, relationships and directorships; whether the content and timelines of agendas, papers and presentations provided to the Board and each committee are adequate for them to properly perform their functions; and any other comments or suggestions made during the interviews. The Board Charter can be found at Information relating to the performance evaluation of the Board, its Committees and individual non-executive directors is conducted is disclosed in the annual report. 1.7 The Board Charter provides that the Board is responsible for ensuring there is an appropriate process in place to review the performance of senior management. have and disclose a process for periodically evaluating the performance of its senior executives; and disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with that process. Each year, the Board reviews the performance of the Chief Executive Officer and other executive directors. Each year the Chief Executive Officer of the Chief operating Officer reviews the performance of Senior Executives. The Evaluation of the Board and Senior Executives Performance document can be found at Information relating to the performance evaluation of the Board and Senior Executives is also disclosed in the annual report. Principle 2 Structure the board to add value 2.1 Due to the size of LifeHealthcare and the composition of the page 3

4 The board of a listed entity should: have a nomination committee 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; Board, the Board has not determined to establish a nomination committee at the present time. The functions that would be performed by such a committee will be performed by the Board. The process used by the Board for appointing new directors is set out in the Board Charter. The Board Charter can be found at (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 nomination committee, disclose that fact and the processes it employs 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 discharge its duties and responsibilities effectively. 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. 2.3 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 independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and The Board approves guidelines/charters against which the Board, committees established by the Board and individual directors are appraised. The outcomes of performance assessments, along with plans and objectives for the new financial year, are submitted to the Board for consideration. The skills matrix, detailing the mix of skills and diversity which the Board currently has within its membership, is provided in the annual report. The four directors whom the Board considers to be independent are Bill Best, John Hickey, Donna Staunton and Heith Mackay-Cruise. The skills, experience, relevant expertise and period of office of each Director is disclosed in the annual report and can also be found at (c) the length of service of each director 2.4 A majority of the board of a listed entity should be independent directors. 2.5 The chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO of the entity. The Board is comprised of five directors, the majority of which are considered by LifeHealthcare to be independent. The Chairman of the Board, Bill Best, is an independent Director. The CEO is Matthew Muscio. page 4

5 2.6 A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. The Board has a program for inducting new directors and provide appropriate resources and professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively, including ensuring that all directors receive ongoing briefings on developments in accounting standards. Principle 3 Act ethically and responsibly 3.1 have a code of conduct for its directors, senior executives and employees; and disclose that code or a summary of it. LifeHealthcare has established a Code of Conduct which provides an ethical and legal framework for all Directors, officers, employees, contractors and certain other individuals involved in the conduct of LifeHealthcare s business to safeguard the confidence of LifeHealthcare s stakeholders. The Code of Conduct can be found at Principle 4 Safeguard integrity in corporate reporting 4.1 The board of a listed entity should: have an audit committee which: (1) has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and (2) is chaired by an independent director, who is not the chair of the board, and disclose: (3) the charter of the committee; (4) the relevant qualifications and experience of the members of the committee; and (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 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 the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. 4.2 The board of a listed entity should, before it approves the entity s 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 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 The Board has established an Audit and Risk Management Committee, and a charter has been adopted by the Committee. Currently, John Hickey, Bill Best and Donna Staunton (each, an independent and non-executive director) are members of the Audit and Risk Committee. John Hickey will act as Chair. The relevant qualifications and experience of the members of the Committee can be found at ] LifeHealthcare reports on the number of Audit & Risk Management Committee meetings held and the names and qualifications of Audit and Risk Management Committee members and their attendance at committee meetings in the annual report. The Charter of the Committee can be found at Information relating to the number of times the Committee met throughout the reporting period along with the individual attendances of the members at those meetings is provided in the annual report. The Board seeks assurances from the Chief Executive Officer and Chief Financial Officer that the declarations provided under section 295A of the Corporations Act are founded, in their opinion, on a sound system of risk management and internal control and that the system is operating in all material respects in relation to financial reporting risks. The Board sought and received these assurances prior to approving the annual financial statements for the year ended 30 June 2015, and will do so prior to approving all interim and page 5

6 opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. 4.3 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. full year results. The Charter of the Audit and Risk Management Committee requires it to ensure that the external auditor attends the Annual General Meeting of LifeHealthcare and is available to answer questions from security holders relevant to the audit. Principle 5 Make timely and balanced disclosure 5.1 have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and disclose that policy or a summary of it. LifeHealthcare has established a Disclosure Policy which supports LifeHealthcare s commitment to the continuous disclosure obligations imposed by law for effective communication to the market. The Disclosure Policy can be found at Principle 6 Respect the rights of shareholders 6.1 A listed entity should provide information about itself and its governance to investors via its website. 6.2 A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. 6.3 A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security holders. 6.4 A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its security registry electronically. Information about LifeHealthcare and its corporate governance statement can be found at and LifeHealthcare has established a Shareholder Communication Policy that is designed to ensure an investor relations program that will facilitate effective two-way communication with its investors and that shareholders and other stakeholders are informed in a timely and readily accessible manner of all major developments affecting LifeHealthcare, as well as to encourage participation at general meetings. The Shareholder Communication Policy sets out the policies and processes in place to facilitate and encourage participation at meetings of shareholders. The Shareholder Communication Policy can be found at LifeHealthcare encourages shareholders to send communications to and receive communications relating to company information electronically by registering their address online with LifeHealthcare s shareholder registry. Information to register for sending and receiving electronic communication can be found at Principle 7 - Recognise and manage risk 7.1 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 LifeHealthcare has an Audit and Risk Management Committee which has its own charter. Please see entry at item 4.1 for related information. The Audit and Risk Committee Charter includes policies to address the management of risk, including the process of page 6

7 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 identification and assessment of any material financial and non-financial risks (including enterprise risks and risks in relation to occupational health and safety) that may impact the business. The Charter of the Committee can be found at Information relating to the number of times the Committee met throughout the reporting period along with the individual attendances of the members at those meetings is provided in the annual report. if it does not have a risk committee or committees that satisfy above, disclose that fact and the processes it employs for overseeing the entity s risk management framework. 7.2 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. 7.3 A listed entity should disclose: if it has an internal audit function, how the function is structured and what role it performs; or if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. The Charter of the Audit and Risk Management Committee requires it to evaluate the adequacy and effectiveness of the risk management framework established by management at least annually, which includes LifeHealthcare s policies and procedures effectively to identify, treat, monitor, report and manage key enterprise risks. Information relating to the Committee s review of the risk management framework is provided in the annual report. The Charter of the Audit and Risk Management Committee sets out the structure and role of LifeHealthcare s internal audit function. Due to the size of LifeHealthcare, there is no dedicated internal audit function at present. Due to the complexity of the control environment, the Audit and Risk Committee receives assistance from suitably qualified external consultants, in the ongoing evaluation of the risk management framework and improvements to internal controls and processes. The most recent review was conducted in September The Board reviews this approach annually, to ensure its continued appropriateness for LifeHealthcare. The CEO and the CFO have been delegated the task of implementing internal controls to identify and manage risks for which the Board provides oversight. The effectiveness of these controls is monitored and reviewed on a six-monthly basis. The Board requires the CEO and CFO to report on whether those risks are being managed effectively. The Charter of the Committee can be found at 7.4 A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. The Charter of the Audit and Risk Management Committee requires the Committee to review and confirm to the Board that LifeHealthcare s ongoing risk management program effectively identifies all areas of potential risk, including material exposure to economic, environmental and social sustainability risks. The Charter of the Committee can be found at page 7

8 Information relating to material exposure faced by, LifeHealthcare (if any) to economic, environmental and social sustainability risks and other connected information is provided in the annual report. Principle 8 Remunerate fairly and responsibly 8.1 The board of a listed entity should: have a remuneration committee which: (1) has at least three members, a majority of whom are independent directors; and Due to the size of LifeHealthcare and the composition of the Board, the Board has determined not to establish a remuneration committee at the present time. The functions that would be performed by such a committee will be performed by the Board. (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;43 or if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. The Board expects that the remuneration structure implemented will successfully result in the Company being able to attract and retain high performing executives. It will also provide executives with the necessary incentives to work to grow long term growth in shareholder value. The Remuneration Policy for the Board and Senior Executives can be found at 8.2 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 executives. LifeHealthcare distinguishes the remuneration of executive Directors and senior executives from that of non-executive Directors by offering the CEO and certain other senior executives a mix of fixed and incentive remuneration in certain circumstances (eg under the short term incentive plan and long term incentive plan). The Board reviews the salary packages of senior executives annually, with reference to the Company s performance, executive s performance and comparable information from industry sectors. Remuneration of non-executive directors is fixed, however, non-executive Directors may be paid such additional or special remuneration as the Directors decide is appropriate where a Director performs extra work or services which are not in their capacity as a director of the Company or a subsidiary of the Company. The Chief Executive Officer, who is also an executive Director, does not receive any additional remuneration, for fulfilling the role of an executive Director. 8.3 A listed entity which has an equity-based remuneration LifeHealthcare s Share Trading Policy generally prohibits its directors and employees from speculative trading (including in derivative markets amongst others) or entering into protective arrangements in relation to LifeHealthcare s page 8

9 scheme should: 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 securities which may have the effect of limiting the economic risk of the participants. The full Share Trading Policy can be found at disclose that policy or a summary of it. Adopted by the Board on 8 November 2013 and updated 27 January page 9