Principle 1: Foundations of management and oversight

Board Charter

Our Board operates with a clear delineation between the roles and responsibilities of the Board and individual Directors, and the matters which are delegated to management.

These arrangements are set out in the Board's Charter.

Our Board holds monthly meetings which focus on matters of strategic guidance for the company and effective oversight of management.

Management's responsibilities are well defined through job profiles, performance agreements and the Board-approved Delegation of Authority framework.

Board Committees

Our Board has established the following Board Committees:

• Audit & Risk Committee
• Network & Technical Committee
• People Committee
• Regulatory Committee

Management has also established a number of committees to support the governance of Energex. Each committee's role is defined in a Charter.

Board Handbook

Our Directors' and Officers' Handbook is distributed to new Directors and is used as an integral part of the Directors' induction process.

The Handbook defines the Board governance systems and supports Directors and senior managers in their governance responsibilities.

It also facilitates Board operations and the performance evaluation processes.

Directors' induction

Contemporary standards of governance support the concept of a rolling induction program for newly appointed directors and the provision of information, training and mentoring over time (to meet the needs of the individual Director).

The objective of induction is to prepare the Director for their new role, thereby enhancing the performance of the Board.

Directors newly appointed to the Energex Limited Board (and subsidiaries) attend an initial induction session, to provide them with an overview of our operations and information on the Board and Committee functions.

The induction assists the Directors to enable them to gain an understanding of our financial, strategic, operational and risk management position to encourage a meaningful contribution to the Board as soon as possible.

The Director is then given further information and briefings over time as part of a three-month rolling induction program, including training and mentoring to suit the needs of the individual Director, depending on their knowledge of the industry and experience.

Site visits can also be arranged. The rolling induction can be extended beyond the three-month program as required.

An induction is also provided to new senior executives to allow them, at the earliest opportunity, to participate fully and actively in management decision making.

Assessing senior management performance

A comprehensive and formal management performance evaluation regime for the CEO and senior management is conducted on an annual basis.

The regime includes individual executive performance agreements based on the achievement of well-defined Key Result Areas (KRAs) and Key Performance Indicators (KRIs), involving corporate, commercial and personal goals.

Principle 2: Structure the Board to add value

Our Directors

Our Board of Directors, including the Chairman, are independent, non-executive Directors.

Our Directors are appointed by the Governor-in-Council in accordance with the GOC Act. As such, the Board does not play a formal role in selecting directors or the size of the Board.

Our Board continually assesses the ongoing independence of each Director, with reference to the materiality thresholds (relationships affecting independence status) in the ASX Corporate Governance Principles and Recommendations.

Where a Director has a related party or personal interest in a matter being considered by the Board, the Director will declare that interest.

The Constitution of Energex Limited provides that a Director must absent themselves from a meeting, including all deliberations and voting on a matter, where they have declared a material personal interest in the matter (the exclusions in section 195(2) of the Corporations Act 2001 do not apply).

The Annual Report for each year sets out:

• Details of Directors' skills, experience and expertise relevant to their position.
• Terms of office held by each Director, including the date when each Director's appointment expires.
• Each Director's attendance at Board and Committee meetings.

Directors' access to advice and training

Our Board Charter provides that Directors may seek independent professional advice, at the company's expense, to assist them to carry out their duties as a Director.

Our Board also has access to continuing education and training to maintain, update and enhance their skills, knowledge and experience.

Assessing Board performance

We conduct a Board performance evaluation biennially. Upon its completion, we provide a written report to the shareholding Ministers of Energy Queensland Limited outlining the results of the evaluation, including an assessment of how compliance has rated within the broader GOC policy framework.

Principle 3: Promote ethical and responsible decision making

Key governance policies

We are committed to ethical and responsible decision making and have in place a suite of governance policies to establish this framework.

These include the Compliance, Fraud Control, Delegation of Authority, Conflict of Interest, Reportable Gifts and Purchasing Policies and the Energex Purchasing Manual.

These policies apply to our Board and all personnel and are advocated through a top-down approach by our Board and senior management.

Additional obligations of Directors are set out in the Energex Board Charter and the Directors' and Officers' Handbook.

Code of Conduct

Our Code of Conduct sets the standard for how we operate in accordance with business ethics, social objectives, corporate values and associated policies.

Our Code of Conduct and Conflict of Interest policy align with Managing Conflicts of Interest in the Public Sector - Guidelines and Toolkit, jointly issued by the Crime and Misconduct Commission (Qld) and Independent Commission Against Corruption (NSW).

The Code and Policy also comply with the Code of Conduct and Conflicts of Interest Best Practice Guide (as set out in Annexure A to the Corporate Governance Guidelines for GOCs).

Our Code includes examples and scenarios to assist in ethical decision making.

A copy of the Code of Conduct is provided to all employees; it is readily available on the staff intranet and incorporated into the induction training on ethical business practices for new employees.

Our Board also has a Directors' Code of Conduct in the Board Charter to assist the Directors in their decision-making process.

Our advisers, consultants and contractors are expected to comply with high ethical standards aligned with the Code of Conduct.

Our tender packs and contracts with suppliers include a copy of, and a reference to, the Code of Conduct. View our Code of Conduct (PDF 332.3 kb).

Reporting breaches of governance policy

We have established processes for the reporting of breaches of governance policy and investigating reports of unethical practices.

Employees have the option to report breaches anonymously via the 24-hour Disclosure Line, which is facilitated by an external provider.

Our Chief Executive Officer has a duty to notify the Crime and Misconduct Commission of any suspected Official Misconduct as defined under the Crime and Misconduct Act 2001.

Trading policy

As our company is ultimately government owned, no Director or employee holds or trades securities in any Energex Group Company.

Our Conflict of Interest Policy includes a Share Trading Policy, which supplements the legal duties applying to Directors, officers and employees relating to the misuse of information or position and insider trading laws.

Principle 4: Safeguard integrity in financial reporting

Audit and Risk Committee

Our Board has in place the independent Audit & Risk Committee, which oversees matters of financial integrity, risk management, effectiveness of the control framework, ethics and integrity and assurance over business operations.

Its duties and responsibilities are set out in its Charter.

The role of Chairman of the Committee is not held by the Board Chairman. View details of the Committee members, including their qualifications.

Attendance at meetings is disclosed in the Annual Report.

Internal Audit

Our Internal Audit Group provides independent, objective assurance and advisory support, designed to add value and improve our operations.

Internal Audit assists the CEO and members of the Board to accomplish their objectives by bringing a systematic, disciplined approach to evaluation of the effectiveness of risk management, control and governance processes and supports management's improvement of these processes.

Our Group Manager Internal Audit attends the Audit  & Risk Committee meetings to report on the status of the Internal Audit Plan.

An external contractor supports our Internal Audit Group in carrying out the our Internal Audit Plan.

During the year, a range of reviews were carried out in conjunction with our Internal Audit Group, with the reports ultimately submitted to the Audit & Risk Committee.

In accordance with the provisions of the GOC Act, the Queensland Auditor-General is the external auditor for Energex Limited and its subsidiaries.

The Audit & Risk Committee reviews the performance of the external auditors on an annual basis.

Principle 5: Make timely and balanced disclosure

We adopt a broad approach to disclosure, with obligations set out in the GOC Act, relevant policies and other legislation, to ensure accountability to the shareholding Ministers of our ultimate holding company, Energy Queensland Limited. The shareholding Ministers are in turn accountable to Parliament.

The shareholding Ministers of Energy Queensland Limited have access to material information concerning our company, including our operations, financial performance, financial position and governance of our company and its subsidiaries.

This requirement is similar to the continuous disclosure obligations which apply to listed companies under the ASX Listing Rules.

In addition to submissions on specific matters, including regular briefing notes, we contribute content to a Quarterly Report  to the shareholding Ministers of Energy Queensland Limited.

We report to the shareholding Ministers of Energy Queensland Limited on any potential and actual breaches of the Code or Share Trading Policy by Energex directors, the CEO or senior executives and where material, by our employees.

Principle 6: Respect the rights of shareholders

Reporting to our shareholders

In accordance with our obligations under legislation and government guidelines, we report in a timely manner on all issues likely to have a significant financial, operating, social or environmental impact, in accordance with our obligations under legislation and government guidelines. We  report to our holding company, Energy Queensland Limited. We also work cooperatively with the shareholding Ministers of Energy Queensland Limited on these issues.

Our CEO, certain managers and employees liaise with representatives of shareholder departments on a regular basis.

Management seeks the approval of the shareholding Ministers of Energy Queensland Limited for projects in accordance with the GOC Act and GOC policy guidelines.

Principle 7: Recognise and manage risk

Risk management systems

We have adopted the international risk management standard (AS/NZS ISO 31000:2009 'Risk Management–Principles and Guidelines), as the guiding framework for managing risk.

We utilise this standard (together with Australian Standard AS 3806 - Compliance Programs) to manage a diverse and complex range of significant risks and enterprise-based risk management and compliance management frameworks.

Implemented throughout the organisation, they ensure material risks and compliance obligations are identified and appropriately managed.

View our Risk Management and Resilience Policy.

The universe of risks we manage includes financial, operational, strategic and reputational risks.

Details of those risks and the type of controls in place are set out in Risk Registers managed by each division.

Accountabilities within the Enterprise Risk Management (ERM) Framework are explained below:

• Our Board maintains oversight of the ERM Framework's effectiveness through its Audit & Risk Committee, which provides assurance that the corporation is properly meeting its obligations in relation to:
  • financial integrity
  • risk management
  • effectiveness of control framework
  • ethics and integrity
  • assurance over business operations
• Our Executive Management Team has active risk management responsibilities. Material business risks, and the effectiveness of their management are continuously monitored and reported to the Board monthly through these channels.
• Our Corporate Risk and Compliance Group supports the Audit & Risk Committee in the discharge of its governance responsibilities through the maintenance of the Enterprise Risk Management Framework and implementation of a Corporate Compliance Framework.

Internal control framework

Our Board is responsible for the overall internal control framework, which is designed to provide reasonable assurance regarding the achievement of the organisation's objectives in the following categories:

• effectiveness and efficiency of operations
• risk management systems
• governance processes

The internal control framework is comprised of:

• Our Internal Audit Group, which provides an independent, systematic and disciplined approach to support improved risk management, financial control and governance procedures.
• Our internal auditors work with the Queensland Audit Office to ensure that procedures are effectively implemented and to guarantee the quality of information we disclose.
• Policies and procedures including legal compliance training and auditing processes to ensure the affairs of the organisation are being conducted in accordance with relevant legislation, regulations and codes of practice.
• These procedures ensure that Executive Management and the Board are made aware, in a timely manner, of any material matters affecting our operations and the effectiveness of management of those risks.

Fraud control

We are committed to the prevention of fraud, including corruption.

Closely integrated with the broader ERM Framework, we have established an effective fraud control framework integrating the following suite of strategies and initiatives:

• Code of Conduct, which establishes our obligations in relation to ethical behaviour.
• Fraud Control Policy and Fraud Control Standard, which establish obligations for fraud identification and prevention.They set out processes for the ongoing monitoring and coordination of fraud control activities, including the processes for reporting, recording and investigating allegations of fraud.
• An independently operated 24-hour Disclosure Hotline. Our hotline is a means by which employees can report any concerns regarding unethical conduct, breaches of the Code of Conduct (and its supporting corporate policies) or breaches of the law (such as suspected fraud). Our Chief Executive Officer has a duty to notify the Crime and Corruption Commission of any suspected Corrupt Conduct as defined in the Crime and Corruption Act 2001.

Principle 8: Remunerate fairly and responsibly

People Committee

The People Committee of the Board oversees employee remuneration and performance policy.

View membership of the Committee.

The Charter sets out the roles and responsibilities of committee members.

Remuneration Policy

Our remuneration strategy and practices are aimed at ensuring we attract, retain and motivate high calibre employees at all levels by providing an appropriate combination of competitive, fixed and variable remuneration components.

We comply with the GOC Governance Arrangements for Chief and Senior Executives to achieve a balance between public accountability and transparency and our need to attract and retain high calibre staff from competitive labour markets.

We have a comprehensive suite of procedures and policies to govern remuneration practices in accordance with GOC guidelines.

Senior executive remuneration is disclosed in our Annual Report (in accordance with accounting rules and government guidelines).

Directors' remuneration is established independently by the shareholding Ministers of Energy Queensland Limited and is approved by Energy Queensland Limited in a general meeting in accordance with the Energex Constitution.

Directors' remuneration is disclosed in our Annual Report.

Assessing performance

Our performance management program, Team Success, aims to improve performance management processes and practices across Energex.

It strives towards a performance focused culture which is critical to our people and safety strategy.

The framework promotes continual performance and development conversations between the employee and the leader.

As part of the framework, a performance pay scheme is offered, which is linked to our Key Result Areas (KRAs) and Key Performance Indicators (KPIs).

Each year, we measure progress towards the achievement of our Vision and Purpose through success against defined KRAs and KPIs.

It is important that we continue to deliver balanced performance results.