Corporate Governance

Contents

Corporate Governance Statement

The Australian Securities Exchange Corporate Governance Council has published a number of principles and best practice recommendations relating to the direction and management of companies. These guidelines form a corporate governance framework intended to provide a practical guide for listed companies and their investors.

The Company's directors are fully cognisant of the Corporate Governance Principles and Best Practice

Recommendations published by the ASX Corporate Governance Council (“CGC”) and have adopted those recommendations where they are appropriate to the Company's circumstances.

Under the Australian Securities Exchange Listing Rules companies are required to provide a statement disclosing the extent to which they have followed all the recommendations and identify the recommendations that have not been followed and give reasons for not following them.

Role of the Board

As mentioned in the Directors’ Report, due to the size and structure of the group and the nature of its operations, the three executive directors have a close involvement with the management of the businesses. Consequently, a Board Charter has not been formally adopted. The formal adoption of a Board Charter will be considered again in the current year.

The board’s primary objective is to oversee the group’s business activities and management for the benefit of all stakeholders by:

• setting objectives, goals and strategic direction with management with a view to maximising shareholder value;
• overseeing the financial position and monitoring the business and financial affairs of the Company;
• establishing corporate governance, ethical, environmental and health and safety standards;
• ensuring significant business risks are identified and appropriately managed;
• monitoring management’s performance and implementation of strategy;
• ensuring appropriate resources are available; and
• ensuring the composition of the board is appropriate, selecting directors for appointment to the board and reviewing the performance of the board and the contribution of individual directors.

The board has delegated responsibilities and authorities to management to enable management to conduct the Company’s day to day businesses. Matters which are not within these delegations, such as expenditure and activity approvals which exceed certain parameters, require separate board approval.

For the reasons set out below, the board is mainly composed of management personnel who have been employed by the Company for many years. Formal director’s letters of appointment were not issued on commencement and are not considered necessary at this stage.

Board Composition

The board comprises four directors including three executive directors. Due to the small size of the Company and its operations, and to avoid additional layers of management, the directors are necessarily involved in the day to day operations of the group businesses. The Company’s ability to appoint appropriate non-executive directors who can add value is limited and the costs involved are considered prohibitive in relation to the potential benefits obtainable. The board has, and will continue to consider the appointment of additional non-executive directors. A nomination committee is not considered necessary due to the small number of directors on the board and the relative infrequency of board changes.

The non-executive director is an independent director.

Due to the executive directors’ individual separate operational functions, the board is able to effectively review the performance of management and exercise independent judgment.

The directors have a broad range of qualifications, experience and expertise and details of individual directors is set out in the Directors’ Report. The role of chairman and chief executive officer is filled by the founder of the business who is also a substantial shareholder. His knowledge, experience and understanding of the small businesses comprising the group are considered essential to perform these roles. The board considers that no value could be added by separating the roles.

Due to the difficulty in finding appropriate independent directors the provision of a specific term for independent directors is not considered appropriate.

The board has adopted a formal policy on access to independent professional advice which provides that directors are entitled to seek such advice for the purposes of the proper performance of their duties. The advice is at the Company’s expense and is made available to all directors.

Ethical and Responsible Decision Making

The Company has clarified the ethical behaviour expected of directors and staff, as well as its attitude towards trading in the Company’s securities.

The Company’s business conduct and ethics policy along with the policy on trading in company securities are published on the Company’s web site, www.ctilogistics.com.

Integrity in Financial Reporting

The Company has formed an audit committee consisting of independent director Peter Leonhardt (chair) and executive director Bruce Saxild. Meetings are also attended by David Mellor (finance director) and the chief group accountant. The audit committee has a formal charter which has been approved by the board of directors. The charter is published on the Company’s website, www.ctilogistics.com. The size and composition of the audit committee is considered to be appropriate for the size and complexity of the Company.

The committee reports directly to the board of directors and has unlimited access to the Company’s external auditors and company employees. The committee meets regularly with the external auditors and reviews all comments and findings from them.

The external auditors meet with the board of directors at least twice a year to review their audit procedures and findings. It is the policy of the external auditors to rotate the audit partner at 5 yearly intervals. The board is satisfied with the external auditor’s competence and independence.

In accordance with the Australian Securities Exchange Corporate Governance Council best practices guidelines, the chief executive officer and the chief financial officer have written to the board giving assurances as the accuracy and integrity of the Company’s financial statements.

Timely and Balanced Disclosure

The board is committed to ensuring that all matters which should be disclosed to the market are disclosed in a timely and balanced manner. All matters for disclosure are vetted and authorised by the board prior to disclosure.

The Company does not have written polices for compliance with Australian Securities Exchange Listing Rules disclosure requirements, but as the three executive directors are necessarily involved in the day-to-day operations of the group businesses, all matters arising at board meetings, audit committee meetings and the executive directors’ meetings (a sub-committee of the board of directors) are considered and any matters that may require disclosure are vetted and authorised by the board prior to disclosure.

Rights of Shareholders

The Board of Directors encourages direct communication with shareholders.

Shareholders are encouraged to attend general meetings where formal and informal discussions can take place with board members, senior employees and the external auditors.

The Company’s external auditors are always invited to attend the Company’s Annual General Meeting and are available to answer shareholders’ queries at that time.

Shareholders may also communicate freely with Board members at any time.

The Company's website will continue to be developed as a medium to facilitate communication with shareholders.

Risk Recognition and Management

The board has established policies and procedures to recognise, minimise and manage all aspects of risk affecting the Company. Although in a number of cases these policies are not formally documented, they are considered appropriate for a small company.

The board has overseen with the management of each business unit the drawing up of a risk management plan. Management has submitted reports to the board on the areas of risk, the impacts and risk categorisation affecting the business units.

A more comprehensive review is now being undertaken with management to finalise a robust system for identifying, monitoring and mitigating material risk throughout the group.

The audit committee also has the ability to review internal financial control procedures.

A risk and disaster management plan covering the Company’s electronic data facilities is in place and is reviewed periodically.

Whilst there is no formal internal audit function, the Company’s finance director performs and delegates certain internal audit procedures on a rotational basis throughout the year.

The chairman and chief executive as well as the finance director sign a letter of representation to the external auditors in relation to the matters contained in the annual accounts.

The Australian Securities Exchange Corporate Governance Council best practices guidelines recommend that the chief executive officer and the chief financial officer write to the board giving assurances regarding risk recognition and management, so that the board is assured of considering all relevant factors. This was not considered necessary as the chief executive officer is also the chairman of the Company’s board of directors and the chief financial officer is also a member of the Company’s board of directors.

Enhanced Performance

The board evaluates the performance of key executives against a range of performance criteria.

The current composition of the board obviates a measurable review of the board’s performance and the size of the Company does not warrant an independent assessment.

Board members have access to continuing education within their spheres of operation and the board encourages directors and staff to embark on continuing professional development.

Directors have access to all information required to efficiently discharge responsibility and may request additional information from management at any time. Board meetings are rotated around the Company’s various locations and operational management are invited to attend board meetings on a regular basis to facilitate directors’ understanding of operational matters.

Remuneration

The Company has established a remuneration committee comprising Peter Leonhardt (chair) and David Watson. This committee reviews and makes recommendations on remuneration policies for the Company including, in particular, those governing the directors. Remuneration of directors is periodically benchmarked against similar small listed companies. Directors’ emoluments are set out in the remuneration report on pages 6 and 7 of the annual report.

Although the Company has an Employee Share and Option Plan the Company does not currently reward employees via equity based remuneration.

Interests of Stakeholders

The board acknowledges the legitimate interests of all stakeholders and its legal and other obligations to employees, clients and the community as a whole.

Being a small company, there is not a published code of conduct but the board has recognised these obligations through its policies on such matters as ethical standards, and occupational health and safety.

The board encourages all employees to conduct business in a fair and ethical manner and to report any instances where standards may be at risk.