annual report - Harvey Norman Company Reports & Announcements

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CORPORATE GOVERNANCE STATEMENT (CONTINUED) selecting candidates for the position of director. The nomination committee is comprised of nonexecutive directors, Christopher Herbert Brown (Chairman), Kenneth William Gunderson-Briggs and Graham Charles Paton through the year ended 30 June 2012. The nomination committee recognises the Corporate Governance Council's recommendation that the Chair should be an independent director. The nomination committee further recognises that it can be argued that Mr Christopher Herbert Brown does not meet the definition of independence. The nomination committee believes that Mr Christopher Herbert Brown is the most appropriate person to lead the nomination committee as non-executive Chairman and that he is able to and does bring quality and independent judgement to all relevant issues falling within the scope of the role of Chairman and that the Company as a whole benefits from his long standing experience of its operations and business relationships. For details of directors‟ attendance at meetings of the nomination committee, refer to the directors‟ report. For additional details regarding the nomination committee including its charter please refer to the website of the Company. Audit committee The board has established an audit committee, which operates under a charter approved by the board. It is the board‟s responsibility to ensure that an effective internal control framework exists within the Company. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations such as the benchmarking of operational key performance indicators. The board has delegated responsibility for oversight of the framework of internal control and ethical standards to the audit committee. The committee also provides the board with additional assurance regarding the reliability of financial information for inclusion in the financial reports. All members of the audit committee are non-executive directors. The members of the audit committee during the year were: Graham Charles Paton (Chairman) Christopher Herbert Brown Kenneth William Gunderson-Briggs Qualifications of audit committee members Graham Charles Paton is an experienced certified practising accountant, financially literate and Chairman of the audit committee. Christopher Herbert Brown is an experienced solicitor, financially literate and has been a Non-Executive Director of the Company since 1987. Kenneth William Gunderson-Briggs is an experienced chartered accountant, financially literate and has been an Independent Non-Executive Director of the Company since 2003. For details on the number of meetings of the audit committee held during the year and the attendees at those meetings, refer to the directors‟ report. For additional details regarding the audit committee, including a copy of its charter, please refer to the website of the Company. Risk The board acknowledges the Revised Supplementary Guidance to Principle 7 issued by the ASX in June 2008 and has continued its proactive approach to risk management. The identification and effective management of risk, including calculated risk-taking is viewed as an essential part of the approach of the Company to creating long-term shareholder value. In recognition of this, the board determines the risk profile of the Company and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. The board has established a separate risk committee, to assist the board. The board oversees an annual assessment of the effectiveness of risk management and internal compliance and control. The tasks of undertaking and assessing risk management and internal control effectiveness are delegated to management through the Chief Executive Officer, ASX Listing Rule/ Recommendation ASX Rec 2.6 ASX Rec 4.4 ASX Rec 4.4 ASX Rec 7.1 37
CORPORATE GOVERNANCE STATEMENT (CONTINUED) including responsibility for the day to day design and implementation of the risk management and internal control system of the Company. Management reports to the board on the key risks of the Company and the extent to which it believes these risks are being adequately managed. Management is required by the board to carry out risk specific management activities in core areas, including strategic risk, operational risk, reporting risk and compliance risk. It is then required to assess risk management and associated internal compliance and control procedures and report back on the efficiency and effectiveness of these efforts by benchmarking performance in substantially accordance with Australian/New Zealand Standard for Risk Management (AS/NZS ISO 31000:2009 Risk Management). The board has a number of mechanisms in place to ensure that management‟s objectives and activities are aligned with the risks identified by the board. These include the following: (i) Board approval of strategic plans designed to meet stakeholders‟ needs and manage business risk. (ii) Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets, including the establishment and monitoring of KPIs of both a financial and non-financial nature. As part of its duties, the internal audit function of the Company is responsible for the objective assessment of: (i) the systems of internal control; (ii) the risk and control framework; and (iii) generally, objective assessment of compliance by the Company with risk management protocols of the Company. In order to ensure the independence of the internal audit function, the head of internal audit meets privately with the audit committee without management present on a regular basis and is responsible for making the final decision on the head of internal audit‟s tenure. Underpinning these efforts is a comprehensive set of policies and procedures directed towards achieving the following objectives in relation to the requirements of Principle 7: (i) Effectiveness and efficiency in the use of the resources of the Company (ii) Compliance with applicable laws and regulations (iii) Preparation of reliable published financial information CEO and CFO certification In accordance with section 295A of the Corporations Act, the chief executive officer and chief financial officer have provided a written statement to the board that: (i) Their view provided on the Company‟s financial report is founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the board (ii) The Company‟s risk management and internal compliance and control system is operating effectively in all material respects The board agrees with the views of the ASX on this matter and notes that due to its nature, internal control assurance from the CEO and CFO can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence available is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in control procedures. In response to this, internal control questions are required to be answered and completed by the key management personnel of all significant business units, including finance managers, in support of these written statements. Remuneration It is the Company‟s objective to provide maximum stakeholder benefit from the retention of a high quality board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. To assist in achieving this objective, the remuneration committee links the nature and amount of executive directors‟ and officers‟ remuneration to the Company‟s financial and operational performance. The expected outcomes of the remuneration structure are: (i) Retention and motivation of key executives. (ii) Attraction of high quality management to the Company. (iii) Performance incentives that allow executives to share in the success of Harvey Norman Holdings Limited. 38 ASX Listing Rule/ Recommendation ASX Rec 8.2
Page 1 and 2: 2012 ANNUAL REPORT HOLDINGS LIMITED
Page 3 and 4: 2 Contents Company Information 1 Co
Page 5 and 6: CHAIRMAN‟S REPORT Business Perfor
Page 7 and 8: CHAIRMAN‟S REPORT (CONTINUED) Our
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Page 15 and 16: DIRECTOR‟S REPORT Your directors
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Page 19 and 20: DIRECTOR‟S REPORT (CONTINUED) Div
Page 21 and 22: DIRECTOR‟S REPORT (CONTINUED) Rem
Page 29 and 30: DIRECTORS‟ REPORT (CONTINUED) Rem
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Page 33 and 34: DIRECTORS‟ REPORT (CONTINUED) Aud
Page 35 and 36: CORPORATE GOVERNANCE STATEMENT (CON
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Page 41 and 42: CORPORATE GOVERNANCE STATEMENT (CON
Page 43 and 44: STATEMENT OF FINANCIAL POSITION AS
Page 45 and 46: STATEMENT OF COMPREHENSIVE INCOME F
Page 47 and 48: STATEMENT OF CHANGES IN EQUITY FOR
Page 49 and 50: STATEMENT OF CASH FLOWS FOR THE YEA
Page 51 and 52: OPERATING SEGMENTS (CONTINUED) Oper
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Page 57 and 58: STATEMENT OF SIGNIFICANT ACCOUNTING
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Independent auditor’s report to t
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SHAREHOLDER INFORMATION Distributio
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DIRECTORY OF HARVEY NORMAN, DOMAYNE
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