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 2009.

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.

The following statement is by reference to the revised Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council in August 2007 and illustrates that 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 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 our website www.reefcasino.com.au/trust/home.htm.

Principle 1: Lay solid foundations for management and oversight

Reef Corporate Services Limited is jointly owned by Casinos Austria International Limited (CAIL) and Accor Casino Investments (Australia) Pty Ltd (Accor) 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 and management are set out in the board charter which is available on www.reefcasino.com.au/trust/home.htm.  

The board’s role includes:

• Final approval of the strategic plans of the lessee
• Final approval of the annual budgets including capital expenditure of the Trust and lessee
• 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
• Considering the competencies of directors, board succession plans and board evaluations
• Reviewing the remuneration framework for directors

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

The board continuously reviews the performance of executive management.  For the CEO, an annual review is done by the Chairman against agreed performance targets. For the Company Secretary an annual review is done by the CEO against agreed performance targets.  The reviews for the year ended 31 December 2008 were conducted as described.  The reviews for the year ended 31 December 2009 will be completed following the finalisation of the annual results for the Trust.

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 skills, experience and expertise 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 Responsible Entity 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 CAIL and Accor and requires directors to be appointed as follows:

• two directors appointed by the unitholders - Mr De Lacy and Mr Hercus, who are considered independent following review of their annual independence declarations against the criteria for independence set out in the board charter; and
• three directors appointed by CAIL - Mr Macdonald, Mr Herzfeld and Mr Tan, who are not considered independent; and
• three directors appointed by Accor - Mr Issenberg, Mr Mooney and Mr Baffsky, who are not considered independent.

Materiality is assessed on a case-by-case basis and having regard to each director’s individual circumstances.  No director is a professional adviser, supplier or customer of the Trust or Responsible Entity.

The board composition also reflects the majority ownership of the Trust by CAIL and Accor.  A description of the structure of the board including appointment of directors is included in the board charter which is available on www.reefcasino.com.au/trust/home.htm.  

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

• the interests 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 interests of the members of the Company except to the extent those interests conflict 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 and the current composition does not affect the proper functioning of the board.  It is complimented by the Compliance, Audit and Risk Committee which comprises a majority of independent directors.

Each director is able to seek independent professional advice at the Trust’s expense, with prior approval of 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 Responsible Entity does not comply with ASX Recommendation 2.2: The chair should be an independent director.   The Chairman, Mr Benjamin Macdonald is appointed as a director by CAIL 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.

The Trust has no Chief Executive Officer, although similar roles are carried out by the Chief Executive Officer of the lessee, Mr Allan Tan.   These functions have always remained separate from the functions performed by the Chairman as are set out in the board charter.

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 Minister responsible for the administration of the Casino Control Act 1982 (Queensland).  The Responsible Entity 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.  Instead considering the competencies of directors, board succession plans and board evaluations is performed by the full board as set out in the board charter.

The board continuously reviews its performance.  On an annual basis the Chairman leads a formal discussion during a board meeting on the performance of the board, the Compliance, Audit and Risk Committee and the directors.   This was held on 26 November 2009.

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 3: Promote ethical and responsible decision making

Code of Conduct
The board has established a Code of Conduct which applies to all employees and directors of the Responsible Entity, the Trust and the lessee.   The Code of Conduct is available at www.reefcasino.com.au/trust/home.htm.  The Code of Conduct includes the practices necessary to maintain confidence in the integrity of the Responsible Entity, the Trust and the operator and covers conflicts of interest, insider trading, confidentiality, privacy, treatment of others, political contributions and gambling at The Reef Hotel Casino.  It also sets out the practices necessary to ensure compliance with legislation relevant to an employee’s responsibilities.   Employees are encouraged to report any actual or potential breaches of the code to management or the board without fear of retribution in accordance with the whistleblowers policy.

Unit trading policy
The board has established a unit trading policy which applies to Directors and Officers of Reef Corporate Services Limited and extends to senior managers of The Reef Hotel Casino and is available at www.reefcasino.com.au/trust/home.htm.

The policy

• Prohibits trading whilst in possession of price sensitive information which is not generally available to the market. 
• Requires prior discussion of any trade
• Provides that unless there are unusual circumstances, directors and officers should avoid seeking approval to 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.

Principle 4: Safeguard integrity in financial reporting

Compliance, Audit and Risk Committee

The board has established a Compliance, Audit and Risk Committee which complies with ASX Recommendation 4.2. with the following members:

*4 meetings held during the year

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

The Committee charter is available from 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, as well as the Company’s annual financial report and Australian Financial Services Licence (AFSL) audit requirements 
• Reviewing the performance, independence and timing of rotation of the external auditor
• 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
• Performing the functions of a compliance committee identified in the Corporations Act and Compliance Plan
• Reviewing the risk management plan and policy and keeping the board informed of material business risks
• Reviewing reports from management on the effectiveness of the management of material business risks
• Reviewing the external audit reports and any findings in respect of any breaches or weaknesses in internal controls relating to the compliance plan, Trust bank account, AFSL and any other external audit reports relating to risk management and consider the adequacy of management’s planned corrective action
• Considering the need for internal audit

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 Committee Charter includes procedures for the selection and appointment of the external auditor and for the rotation of external audit engagement partners.  The external auditor KPMG, has a process for rotating audit partners in accordance with the Corporations Act.

Principle 5: Make timely and balanced disclosure

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 www.reefcasino.com.au/trust/home.htm.

The CEO has primary responsibility for making sure that the Responsible Entity complies with its disclosure obligations for the Trust.  The Company Secretary is responsible for communications with the ASX. 

Principle 6: Respect the rights of unitholders

The board has approved the following unitholder communications policy. 

The board aims to ensure that the unitholders are informed of all major developments affecting the Trust’s state of affairs. 

Communication with unitholders occurs by a range of means:

• annual report and half year report available on the website, by email or by mail (on request);
• annual general meeting;
• website;
• through the unit registry (Computershare);
• ASX announcements; and
• other mail outs, eg. distribution statements, notice of meetings.

Annual general meeting

An Annual General Meeting (AGM) is convened each year, usually in May.  The board encourages full participation of unitholders to ensure a high level of accountability.

A representative of the external auditor, KPMG, attends the AGM and is available to answer questions from unitholders concerning the audit.  Transcripts of the Chairman’s address are released to the ASX upon the commencement of the AGM.

Website
The website of the Trust is located at www.reefcasino.com.au/trust/home.htm.  The website enables unitholders to obtain a range of information, and includes links to the unit registry and ASX as well as a copy of this Corporate Governance Statement.

Principle 7: Recognise and manage risk

The board has established a risk management policy for the oversight of material business risks which is available from www.reefcasino.com.au/trust/home.htm.  The board has also adopted a risk management plan which sets out the detailed risk management process which is based on AS/NZS 4360: Risk Management and identifies the material business risks.  The risk management plan has adopted the following risk categories:

• The Reef Hotel Casino complex
• Compliance risks, including the Australian Financial Services Licence (AFSL)
• Financial reporting risks

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, the Corporations Act, the AFSL and other material legislation and contracts.   The compliance officers provide a written report to the Compliance, Audit and Risk Committee twice yearly regarding compliance with the plan.  The external auditor, KPMG, conducts an annual audit of compliance with the compliance plan.

The board requires management to maintain risk registers and be responsible for ongoing identification, assessment, monitoring and management of risk and reporting to the board via the Compliance, Audit and Risk Committee on the effective management of the Responsible Entity’s and Trust’s material business risks by interim and final (coinciding with sign off of the annual financial statements) reports on the effectiveness of the Responsible Entity’s management of the material business risks. 

The board received and reviewed management’s report on the effectiveness of the Responsible Entity’s management of the material business risks for the year ended 31 December 2009. 

The board received the written assurance from the Chief Executive Officer of the lessee and the Company Secretary / Executive Manager Finance 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.

Principle 8: Remunerate fairly and responsibly

Details of the directors’ remuneration are set out in note 21 to the financial statements.  The Trust pays directors fees only to non-executive directors who are not full time executives of Casinos Austria International 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 CAIL.  The Trust reimburses a portion of the payroll related costs based on time spent on Trust management.

The Responsible Entity does not comply with ASX Recommendation 8.1: The board should establish a remuneration committee.  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 with the board charter (available on www.reefcasino.com.au/trust/home.htm) setting out the board’s responsibility for reviewing the remuneration framework for directors.  Independent advice is obtained, as needed, on the appropriateness of the directors’ remuneration.

There are no equity based remuneration schemes in operation. No retirement benefits are payable to directors.

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Last modified: 02/05/08

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