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Wool Stocktake : AWI Annual Report 2008-09
Support operations Living within its means During 2008/09, AWI has simplified its support strategies to take complexity out of the business. Since last November, it has become apparent that in the current environment our business model was unsustainable. Since then we have cut $25 million in costs and 100 staff from the time of integration with The Woolmark Company Pty Ltd, and reduced the number of individual projects from 500 to 200. We have lifted the company's overall performance in the areas of governance and cost control based on a comprehensive review of business support functions, processes and systems. These include a revised approach to tendering and procurement; simplified workflows and redesigned project and contract management tools, and general process improvements in the support streams of finance, IT, human resources, legal and corporate communications. The business is now living within its means. However, there is more work to be done. The recent independent review of AWI's performance for the three years to July 2009 confirmed that AWI has ample room for improvement. We are already making positive changes in specific areas such as strategic planning, governance, stakeholder consultation and performance measurement. This change is what shareholders asked for when they elected the new AWI Board nine months ago. Corporate governance The AWI corporate governance framework is designed to support the strategic and operational objectives set out in the 2009/10 Strategic and Operational Plan by defining accountability and establishing controls. The framework aims to meet stakeholder expectations of sound corporate governance practice, and to foster a strong culture of good governance in the company. The Board and senior management team have identified areas for improvement in corporate governance at AWI, referred to in the three-year Review of Performance, and (with expert independent advice where needed) are overhauling the company's corporate governance structure. This includes developing and adopting new and more comprehensive methods of strategic planning, setting objectives, developing effective Key Performance Indicators, and measuring and reporting performance against objectives. It also involves developing vastly improved methods of monitoring compliance, as well as risk and fraud prevention, and improved opportunities for shareholder and stakeholder input. The Board has eight directors, nominated and elected by shareholders. AWI continues to defend the freedom of woolgrowers to nominate and elect the Board of their marketing and research and development company. It is central to wool grower freedom, and their right to choose their leadership. The AWI Board elected by shareholders includes grass roots connections and widespread industry experience, complete with marketing, research governance, accounting and business skills. This year, the AWI Board acknowledged the distraction and cost of annual elections of directors, and at the Annual General Meeting on 27 November, it is proposing that shareholders vote to change the AWI Constitution so an election of directors by rotation will be held every two years, not every year. In 2009, the Board also permanently reduced its membership from nine to eight. Additional directors may be appointed if specialist skills are required from time to time. The Board has a formal Charter that sets out its specific functions and responsibilities, as does each Board Committee. Board Committees are the Finance and Audit Committee, the Remuneration and Appointments Committee, the Marketing and Intellectual Property Committee, and the Science and Welfare Committee. Board meetings are held regularly, usually every month, and additional meetings are held when required. All AWI directors are involved in the wool industry, which is a key strength of the Board. Directors disclose their interests, and these are properly managed. A Conflicts of Interest Policy has been introduced by the Board, to give stakeholders transparency on this issue. The AWI corporate governance documentation is on the AWI website at www.wool.com and includes: • AWI's Constitution • Statutory Funding Agreement • Corporate Governance Policy • Code of Conduct -- Obligations to Stakeholders • Board Charter • Code of Conduct -- Directors and Officers • Charters of the Committees of the Board • Conflicts of Interest Policy • Rules and Procedures Governing Election of Directors. Audit AWI continues to maintain a strong focus on accountability and on its internal control environment. It engages the services of the following leading professional services firms: is engaged annually to conduct the external audit and report to shareholders. conducts a regular cycle of internal audits as part of a three year program, reporting on risk, internal controls, processes and the day-to-day management of AWI to the Finance & Audit Committee. and provide specific advice on taxation and other related matters pertaining to AWI and TWC respectively, as required. REPORT OF OPERATIONS -- SUPPORT
AWI Annual Report 2007-08
AWI Annual Report 2009-10