Reef Casino Trust

Managed by Reef Corporate Services Limited
 ABN 66 057 599 621

Click here to be redirected to The Reef Hotel Casino website.  http://www.reefcasino.com.au
 

Corporate Governance Statement

Adapted from the Annual Report for the year ended 31 December 2007.

The directors of Reef Corporate Services Limited, the Responsible Entity of Reef Casino Trust, support the principles of corporate governance developed by the ASX Corporate Governance Council, in order to promote investor confidence and credibility of Australian capital markets. 

The Responsible Entity complies with the majority of the ASX Principles.  Where it does not, reasons for the departure are noted in this statement.  The responsible entity has noted the revised Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council in August 2007 and will report by reference to the revised principles from 1 January 2008. 

The following corporate governance practices were in place throughout the financial year, unless otherwise stated.  In this statement, “the board” means the board of directors of the Responsible Entity of the Trust.

This corporate governance statement and other related information is available on The Reef Hotel Casino website www.reefcasino.com.au/trust/home.htm.

Principle 1: Solid foundations for management and oversight of the board

Reef Corporate Services Limited is jointly owned by Casinos Austria International Limited (CAIL) and Accor Casino Investments (Australia) Pty Ltd which are also substantial shareholders in the Trust. 

The Responsible Entity’s role is provided for in the Trust Constitution. Its role covers the provision of all corporate services in connection with the Trust, including investor relations, government and operator liaison, secretarial and administrative services, maintenance of financial and taxation records and statutory compliance plus overall corporate governance of the Trust, including the protection of unitholders’ interests. 

The responsibilities of the board are set out in the board Charter.  The board’s role includes:

• Final approval of the strategic plans of the complex operator
• Final approval of the annual budgets including capital expenditure of the Trust and complex operator
• Approving and monitoring the progress of major refurbishment programs, acquisitions or divestments
• Approving the issue of securities and establishment of debt facilities
• Approving the appointment of the CEO of the operator, the company secretary and the external auditor (taking guidance from the Compliance, Audit and Risk Committee)
• Distribution policy and approval of any distribution payment
• Approving (taking guidance from the Compliance, Audit and Risk Committee) all half yearly and annual financial reports including the directors’ report and corporate governance statement and any related announcements to the ASX or communications with unitholders
• Instigation of corporate governance policies including Code of Conduct, continuous disclosure, trading in units
• Approving and monitoring compliance with the Trust internal control system and risk management systems
• Monitoring (taking guidance from the Compliance, Audit and Risk Committee)  the Trust’s obligations and compliance with relevant regulatory requirements

Day to day management of the Trust and matters not specifically referred to have been delegated to the CEO of the complex operator but are subject to oversight by the board.   The separation of responsibilities between the board and management is clearly understood and respected. 

Principle 2: Structure of the board to add value

The board comprises seven non-executive directors (including the Chairman) and one executive director.  The names and details of the directors in office at the date of this Statement, and the period of office of each director, are set out in the directors’ report.

The board does not meet ASX Recommendation 2.1: A majority of the board should be independent directors.  The constitution of the Responsible Entity reflects its joint ownership by Casinos Austria International Limited (CAIL) and Accor Casino Investments (Australia) Pty Ltd and requires directors to be appointed as follows:

• two directors appointed by the unitholders (considered independent after consideration of their business and other relationships with the trust including their unitholding);
• three directors appointed by Casinos Austria International Limited (CAIL) (not considered independent); and
• three directors appointed by Accor Casino Investments (Australia) Pty Ltd (not considered independent).

The composition also reflects the majority ownership of the Trust by CAIL and Accor. 

The Responsible Entity’s constitution provides each of the directors shall have regard to the following interests (in descending order of priority)

• The interest of the unitholders of the Trust as a whole;
• The interests of the person who has a right to appoint and remove the director except to the extent those interests conflict with the interests of unitholders as a whole; and
• The interest of the members of the Company except to the extent that interest conflicts with either or both of the interests of the unitholders of the Trust as a whole or the appointer.

The board believes that it has an appropriate mix of skills and experience.  It is complimented by the Compliance, Audit and Risk Committee which comprises a majority of independent directors.

The Trust has no Chief Executive Officer, although similar roles are carried out by the Chief Executive Officer of the complex operator.   These functions have always remained separate from the functions performed by the Chairman.

The Chairman of the board of directors of Reef Corporate Services Limited is appointed by agreement of the directors.  Any of the directors may be appointed Chairman.  The board does not comply with ASX Recommendation 2.2: The chairperson should be an independent director.   The Chairman, Mr Benjamin Macdonald is appointed by CAIL as a director and therefore is not independent.  The board believes that he has the appropriate skills and experience and fulfils the responsibilities of the Chairman as outlined in ASX Recommendation 2.2.

Directors appointed by the unitholders remain in office for a term of 3 years (unless removed earlier) and are then subject to re-election.  All other directors remain in office until removed by their appointers.  All director appointments must be approved by the Queensland Treasurer.  The board does not comply with ASX Recommendation 2.4 The board should establish a nomination committee as given the limited involvement by the board in the appointment of directors a separate committee is not considered necessary. 

Each director is able to seek independent professional advice at the Trust’s expense, with prior approval of the Chairman.

Principle 3: Promote ethical and responsible decision making and Principle 10: Recognising the legitimate interests of stakeholders

Code of Conduct

The board supports the ongoing need for directors and employees to demonstrate the highest level of behaviour and ethics as set out in the Code of Conduct which applies to all employees and directors of the Responsible Entity, the Trust and the complex operator.   The Code of Conduct is available from The Reef Hotel Casino website www.reefcasino.com.au/trust/home.htm.

Unit trading policy

Trust policy requires directors to discuss a proposed trade in Trust units with the Chairman prior to any trade.  Unless there are unusual circumstances, directors should not trade in Trust units except during the period of one month after the lodgement of the Trust’s half-year and annual profit announcements with the ASX and in the period of one month after the holding of the Trust’s annual general meeting, provided that directors are not at the time in possession of price sensitive information which is not generally available to the market.

A copy of the policy on purchase or sale of units is available from The Reef Hotel Casino website www.reefcasino.com.au/trust/home.htm.

Principle 4: Safeguard integrity in financial reporting and Principle 7: Recognising and managing risk

Management representations

As part of each six monthly reporting process the Chief Executive Officer of the complex operator and the Company Secretary / Executive Manager Finance provide a written statement to the board in accordance with the ASX principles and the Corporations Act stating that in their opinion

• the financial report of the Trust presents a true and fair view, in all material respects, of the Trust’s financial position and performance in accordance with relevant accounting standards and the Corporations Act;
• is founded on a sound system of risk management and internal compliance and control systems which in all material respects implement the policies adopted by the board; and
• the Trust’s risk management and internal compliance and control systems in relation to financial reporting are operating effectively and efficiently in all material respects.

Compliance, Audit and Risk Committee

The Compliance, Audit and Risk Committee complies with ASX Recommendation 4.3. and comprises:

*4 meetings held during the year

Details of these directors’ qualifications are set out in the directors’ report.

The Committee Charter is available from The Reef Hotel Casino website www.reefcasino.com.au/trust/home.htm.   The responsibilities of the Compliance, Audit and Risk Committee include:

• exercising a high level of due diligence in relation to the accuracy and completeness of the Trust’s half-year and annual financial reports and any reports lodged with the ASX, and the Company’s annual financial report and Australian Financial Services Licence (AFSL) audit requirements; 
• reviewing the independence of the external auditor and timing of rotation of audit engagement partner having regard to requirements set out in the Corporations Act;
• recommending to the board the selection or replacement of the external auditor; 
• monitoring the audit plan, auditor’s findings and provision of non-audit services;
• considering the adequacy of the operational, financial and compliance risk management processes and internal control systems of the Trust, Company and sub-lessee of The Reef Hotel Casino by reviewing and assessing
• the process for identifying, assessing and monitoring key risk areas
• the existence of effective risk management and internal control systems; and
• performing the functions of a compliance committee identified in the Corporations Act and Compliance Plan.

The external auditors, Company Secretary / Executive Manager Finance, the Chief Executive Officer and other relevant experts attend committee meetings at the invitation of the committee.  The committee meets at least twice per year.  It is authorised to take such independent professional advice as it considers necessary

The external auditor, KPMG has a policy for rotating audit partners in accordance with the Corporations Act.

Risk management

Management maintains risk registers and is responsible for ongoing identification, assessment, monitoring and management of risk.

As a registered managed investment scheme the Trust has a compliance plan which has been lodged with ASIC.  The compliance plan sets out measures to ensure compliance with the Trust Constitution and the Corporations Act.  Compliance with the plan is audited annually.

The board has also instigated an internal control framework as described below:

• Financial reporting - there is a comprehensive budgeting system with an annual budget approved by the directors.  Monthly actual results are reported against budget.  The Trust reports to unitholders on a twice yearly basis.  Procedures are also in place to ensure that price sensitive information is reported to the ASX in accordance with continuous disclosure requirements.
• Functional specialty reporting - the board has identified a number of key areas which are subject to regular reporting to the board such as operational, legal and insurance matters.
• Investment appraisal - the Trust has clearly defined guidelines for capital expenditure.  These include annual budgets, detailed appraisal and review procedures and levels of authority.

Principle 5: Timely and balanced disclosures

The board has established policies and procedures, which are regularly reviewed, to ensure the Trust complies with legal obligations and ASX Listing Rules.  A copy of the continuous disclosure policy is available from The Reef Hotel Casino website www.reefcasino.com.au/trust/home.htm.

The Company Secretary is responsible for communications with the ASX including ensuring continuous disclosure requirements under the ASX Listing Rules and overseeing information to the ASX, unitholders and other interested parties. 

Principle 6: Respecting the rights of unitholders

The board aims to ensure that the unitholders are informed of all major developments affecting the Trust’s state of affairs.  Information is communicated to unitholders as follows:

• Half yearly financial report containing financial information and review of the operations of the Trust during the half year made available on the website, by email or by mail
• Annual report containing the relevant information about the operations of the Trust during the year, changes in the state of affairs of the Trust and details of future developments in addition to disclosures required by the Corporations Act 2001, ASX and accounting standards made available on the website, by email or by mail;
• Notice of all meetings of unitholders;
• Distribution advices with information including the components which make up the distributions.
• On the website www.reefcasino.com.au/trust/home.htm which includes information on the Trust and recent ASX announcements
• Other material matters are also announced as required.

Proposed major changes in the Trust which may impact on unitholders’ rights are submitted to a vote of unitholders.

The board encourages full participation of unitholders at general meetings to ensure a high level of accountability and identification with the Trust’s strategy and goals.  Important issues are presented to the unitholders as single resolutions. 

 A representative of the external auditor, KPMG, attends the annual general meetings and is available to answer questions about the audit from unitholders.  The unitholders are advised of this at the commencement of the meeting by the Chairman.

Principle 8: Encouraging enhanced performance

The board continuously reviews its performance and the performance of executive management. 

Each new director appointed undergoes an induction with the Chairman, and management is available for discussions as required.  In addition, management presents to the board regular financial and corporate updates which are relevant to the Trust. 

Principle 9: Remunerating fairly and responsibly

Details of the directors’ remuneration are set out in note 18 of the Annual Report.  The trust only pays directors fees to non-executive directors who are not full time executives of Casinos Austria International Limited group or Accor Asia Pacific group.  Other non-executive directors receive no remuneration from the Trust.  The Trust has no direct employees.  Executives involved in the management of the Trust are employed by Casinos Austria International Limited.  The Trust reimburses a portion of the payroll related costs based on time spent on Trust management.

A separate remuneration committee is not considered necessary due to the relatively small number of people remunerated by the Trust.  Instead the entire board fulfils the role of the remuneration committee.  Independent advice is obtained, as needed, on the appropriateness of the directors’ remuneration.

No shares or options are issued to directors and no retirement benefits are payable to directors.

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Last modified: 02/05/08

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