Corporate Governance

This statement outlines the main Corporate Governance practices that were in place throughout the financial year, unless otherwise stated.

Company Charter

We at Ferngrove Vineyards Limited are proudly Australian.  Our business is that of a vertically integrated producer of fine wines.

Ferngrove’s mission is to grow and prosper as a respected producer of premier wines, providing our customers with outstanding products, performance and service, and our employees with a stimulating and rewarding environment.

Our vision is to be a respected and internationally competitive provider of quality wines, whilst achieving superior returns and benefits for our shareholders and other stakeholders.
 
Our values include:
Value our customers -  we are committed to each of our customers success
Urgency - a sense of urgency to act and take responsibility now
People - developing people and rewarding performance
Innovation - always looking for a better way
Pride - pride in doing our best every time
Ease - to make doing business with Ferngrove easy
Hard Yards – enduring success is forged on enduring effort
Professionalism -  taking pride in our work and in the way we represent the company.  We strive for industry best practice and believe in a culture of accountability and service.
Integrity and respect - we embrace high ethical standards and require our staff to demonstrate both personal and corporate responsibility.
Teamwork -  we believe in working as a team to achieve the best possible results.  Good relationships are imperative to creating value.
 
Culturally, Ferngrove operates within a team environment, with a vigorous performance management system that encourages effective planning, open and honest feedback and professional development.
 
We advocate strong corporate governance and support the ASX Principles of Good Corporate Governance recommendations.
 
Ferngrove’s main business streams comprise a focused strategy of vineyard manager, producer of premium wines on both a contract and direct basis and a marketer of wines to end customers.  Having restructured the business in recent years, Ferngrove is now poised for further growth from the production of premium wines and in the sales of bulk wine and bottled wines under the Ferngrove Vineyards Estate, Karri Oak Estate and Leaping Lizard wine labels.
 
Our growth is being facilitated by increased access to premium grapes grown by us and on contract and a greater recognition of our wines, together with strengthening distribution networks.
 
Profitability is obviously key to the further development of the business.  We believe that success in our core activities should enable highly competitive returns, whilst giving us the ability to seek out additional opportunities.  To this end we aim to grow and develop our areas of competitive advantage.
 
We aim for operational excellence through both innovation and personal accountability.  This means that we will not just refine our existing processes, but evolve to meet the more sophisticated needs of our clients in what is a far more value aware environment.
 
We believe that the Ferngrove brands are both strong and recognisable and are seen as a quality product.  Our history as an Australian business assists us to build these brands further over the longer term.
 
Board Charter
 
The Board of Ferngrove Vineyards Limited is constituted and empowered pursuant to its Constitution and the requirements of the Corporations Act.  The Board may delegate certain functions to Committees from time to time, but is ultimately responsible for the following:

  • Overseeing the strategies and financial objectives of the Group;
  • The corporate governance practices of the Group;
  • Monitoring the performance of management;
  • Monitoring and ongoing assessment of risk management policies and procedures;
  • Approving financial statements and reports to regulators and shareholders;
  • Appointing of the Chief Executive Officer and the Chief Financial Officer;
  • Reviewing and approving major acquisitions and corporate initiatives;
  • Approving capital expenditure;
  • Approving high level policies and Terms of Reference for Board Committees;
  • Allotment of securities in the company, including executive and employee share plans.

In addition, the Board considers capital management and issues of equity across the subsidiaries that form the Ferngrove Group.

Role of the Chairman  
The Chairman of Ferngrove is an Independent Director.  The roles of chairman and chief executive officer are not undertaken by the same individual.  Ferngrove is committed to a clear division of responsibility at the head of the company.

The Chairman provides leadership to the Board, ensuring appropriate setting of agenda, conduct of meetings and constructive interaction between directors.  The Chairman is also charged with overseeing the proper operation of Board Committees, on some of which he will act as member.  The Chairman is a primary spokesperson for the company and ensures that effective communications are made to shareholders.

Role of Independent Directors  
Independent directors are required to devote the necessary time to ensure that their responsibilities are effectively discharged.  Ferngrove requires that all directors consider the number and nature of their directorships and other commitments, and disclose these to the Board.

Their input is at a strategic level and a key component of their role is to monitor the financial controls and risk management framework of the company.  This includes ensuring that there are appropriate management structures and ongoing education in risk management at all levels.

Remuneration & Nomination  
The Board of Ferngrove has not established a separate Remuneration and Nomination Committee.  The Board considers at least annually 

  • appropriate remuneration policies which are designed to meet the needs of the company and to enhance corporate and individual performance; and
  • evaluates the Board’s structure, composition and necessary competencies.

Objectives

To:

  • Set suitable remuneration and other arrangements that enable the Group Board to continue to attract and retain high calibre non-Executive Directors.  These arrangements are aimed to link rewards to corporate and individual performance.
  • Ensure that the Professional Indemnity and Liability insurance policies provide satisfactory cover for all Directors.
  • Ensure that the CEO and Senior Management’s remuneration arrangements are performance based, correspond to prevailing market levels, and that suitable termination/retirement policies are in place for all Senior Managers.
  • Progressively enhance and improve the relationship between compensation and quality of performance throughout the organisation, the value to the Group of the outcomes and the transparency and effectiveness of adopted processes.
  • Appoint Directors who possess high levels of proven competence, independence and integrity; whose age, experience and skills complement and balance those of existing Directors; and whose prospective contribution in the Boardroom is expected to further the progress of the Group.
  • Ensure that a sustainable Management Succession Plan is in place.

Appointment of Directors

Directorship is generally reviewed annually, with the policy that there should be sufficient rotation of directors to meet good corporate governance standards.  The current policy of the company is to retire one third of directors each year.

The process for selection of new members includes confirmation of the specific criteria for Board membership, taking into account the necessary and desired competencies.  Confirmation of independence where appropriate, and the capacity to act are included.  

Performance evaluation
 
Ferngrove has a formal performance evaluation process which establishes objectives, Key Result Areas and Key Performance Indicators.  Underpinning this policy is the belief that performance planning and regular performance reviews constitute sound business practice.

The Board has established an Audit and Risk Committee, which has Terms of Reference.

These include quantifiable objectives which can be assessed and are reviewed annually.

Audit & Risk Committee

The Audit & Risk Committee plays a key role in assisting the Board of Directors with its responsibilities relating to accounting, internal control systems, reporting practices and risk management, and ensuring the independence of the company auditor.  The charter for this Committee incorporates policies and procedures to ensure an effective focus from an independent perspective.

The Audit & Risk Committee oversees and appraises the quality of the audits conducted by the Ferngrove Group’s external auditors and emphasises areas where the Committee believes special attention is required.  The appointment of our auditors is reviewed periodically, in line with industry best practice.  We believe in the ongoing assessment of our audit arrangements and will comply with any regulatory requirements to rotate our external audit partner.

The Audit & Risk Committee also reviews the effectiveness of administrative, operating and accounting controls.  This Committee is currently composed of a majority of non-executive Directors and is chaired by an experienced person who is a FCPA.

Risk Management

  • The Ferngrove Group has risk management policies and procedures in place to identify and manage its business risks including:
  • An insurance programme to meet insurable risks.  The programme is specifically tailored to the Group’s requirements.
  • A formal risk management framework which is aimed at identifying and controlling risks and reporting them to the Board via the Audit & Risk Committee.  This framework includes market risk, liquidity risk, credit risk, transaction and technology risk and operational risk.
  • The continual review of business risks and risk management practices.

Code of Conduct

The Board is committed to the Code of Conduct and to our mission, vision and values which are described in our Company Charter.  We communicate and assess our staff on our core values, together with a number of other key attributes that have been identified as being imperative to the success of the company.

  • Our employment practices include:
  • induction training for all staff;
  • a certified agreement that promotes a pay-for-performance culture;
  • an Equal Employment Opportunities framework;
  • an Occupational Health and Safety Policy;
  • assistance in professional development opportunities and industry based training for staff; and
  • encouragement of employee equity in the business; 

Our Code of Conduct requires all staff to exhibit honesty, loyalty, integrity and professionalism in their dealings both internally and externally.  We strive for good corporate governance and industry best practice.  We specifically require staff to:

  • avoid situations which may give rise to a conflict of interest;
  • avoid situations where they may gain any benefit which competes with the company’s business;
  • read and confirm that they understand the company’s policies;
  • comply with laws and regulations;
  • properly use the company’s assets for legitimate business purposes; and
  • maintain confidentiality in both the company’s business and the information of its customers and shareholders.

Conflicts of Interest

The Board of Ferngrove Vineyards Limited is committed to good corporate governance practices and aims for continuous improvement in these practices.  We embrace high ethical standards and require our staff to demonstrate both personal and corporate responsibility.  Directors, officers and employees are required to safeguard the integrity of the Group and act in the best interests of our stakeholders.

There must be no conflict, or perception of a conflict, between the interests of any director, officer or employee and the responsibility of that person to Ferngrove or its stakeholders.  All directors, officers and employees of the Group may never improperly use their position for personal or private gain to themselves, a family member, or any other associated person.

Other Shareholder Communications

Ferngrove seeks to enhance the usual financial and regulatory reporting to shareholders by producing Shareholder Bulletins.  The website at www.ferngrove.com.au also includes up-to-date news items about the company.  Our aim is to keep our shareholders informed about any developments that they may find of interest.

In accordance with our regulatory obligations, certain periodic reporting is also made to shareholders, including our Annual Report.  Directors are available at Ferngrove’s Annual General Meeting to answer shareholder questions and discuss issues of relevance.  Our aim is for informed shareholder participation.