CORPORATE
GOVERNANCE
PRINCIPLES

ADOPTED BY THE BOARD OF DIRECTORS OF BLACKMORES LIMITED

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Principle 1 : LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

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Principle 2: STRUCTURE THE BOARD TO ADD VALUE

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Principle 3: PROMOTE ETHICAL RESPONSIBLE DECISION-MAKING

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Principle 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

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Principle 5: MAKE TIMELY AND BALANCED DISCLOSURE

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Principle 6: RESPECT THE RIGHTS OF SHAREHOLDERS

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Principle 7: RECOGNISE AND MANAGE RISK

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Principle 8: REMUNERATE FAIRLY AND RESPONSIBLY

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Page 1

Principle 1 : LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

Board’s Conduct of its Affairs
1.0

Purpose and Scope
The Company recognises that corporate governance is fundamental to the effective operation of the Company. The Board is the pivotal element of corporate governance, and the Company desires its Board to be an effective and independent representative of stakeholders and valuable to the organisation.
This Charter sets out the responsibilities, structure and composition of the Board of
Directors of the Company.

2.0

Role and Responsibilities
The Board’s role is to provide governance of the Company in the best interests of shareholders, having regard to the interests of all stakeholders of the Company.
The specific responsibilities of the Board include:
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The appointment of the Chairman or Executive Chairman;
The overall corporate governance of the Company including its strategic direction, financial objectives, and overseeing (or supervision) of control and accountability systems;
Input into and approval of strategic plans and goal and performance objectives, key operational and financial matters, as well as major investment and divestment proposals;
Appointing and removing the Chief Executive Officer “CEO” (or equivalent);
Ratifying the appointment and, where appropriate, the removal of the Chief
Financial Officer “CFO” (or equivalent) and the Company Secretary;
Approving the nominations of Directors to the Board;
Ensuring Management maintains a sound system of internal controls to safeguard the assets of the Group;
Monitoring the performance of the Group;
Reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct, and legal compliance;
Monitoring senior management’s performance and implementation of strategy, and ensuring appropriate resources are available;
Approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures;
Approving and monitoring financial and other Board reporting;
The approval of the annual and half yearly financial report.

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Transactions that require approval by the Board are:
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Acquisitions or disposals of major operating assets;
Acquisitions or disposals of properties;
Major corporate or financial restructuring;
Issue of the Company’s shares;
Declarations of dividends to shareholders; and
Major out of budget expenditure.

To assist in the effective execution of its responsibilities, the Board has established a number of Board Committees including an Audit and Risk, Nominations and People and Remuneration Committees.

3.0

Access to Information
The Board is provided with complete and adequate information prior to Board meetings and on an on-going basis. Board papers are generally sent to the
Directors at least three working days in advance. They will include financial management reports, annual budgets and performances against budget, announcements of results, matters requiring Board’s decision, updates on key outstanding issues and disclosure documents.
Subject to approval by the Chairman or the CEO (or similar) of their need, individual
Board members have access to staff members to enable clarification of and further information regarding matters of Board interest or responsibility.
The Company Secretary attends all Board meetings and is responsible for ensuring proper Board procedures are observed. He/she also has responsibility to ensure that the Company complies with the requirements of the Companies Act, Listing
Rules and other applicable regulations.

4.0

Draft Standard Letter to new Directors
Any letter of appointment of a Director will include the following details:
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Time and commitment envisaged;
Powers and duties of Directors;
Any special duties or arrangements attaching to the position;
Circumstances in which an office of Director becomes vacant;
Expectations regarding involvement with committee work;
Remuneration and expenses;
Superannuation arrangements;
Requirement to disclose Directors’ interests and any matters which affect the
Director’s independence;
Fellow Directors;
Trading policy governing dealings in securities (including any share qualifications) and related financial instruments by Directors, including notification requirements;
Induction training and continuing education arrangements;
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Access to independent professional advice subject to prior approval from the
Chairman or CEO (or similar);
Indemnity and insurance arrangements;
Confidentiality and rights of access to corporate information;
A copy of the Constitution.

An orientation program will be organised for new Directors to ensure that incoming
Directors are familiar with the Company’s business and governance practices.

5.0

Performance Evaluation Process for Senior Executives

The Company has comprehensive performance guidelines in place. Underpinned by clearly defined objectives and measures developed through the overall process of performance management, each senior executive has their performance assessed in line with the program.

6.0

Induction Process for Senior Executives

To provide a consistent experience for all senior executives that ensures an effective and efficient induction into the culture and practices of the Company. All new senior executives are required to complete an induction program in their first three months of employment.
This program not only covers generic induction experiences across the company, it also covers department or role specific inductions and training programs that are required.
The induction program specifically aims to:
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Convey the importance of Company values and an understanding of the culture of the Company;
Assist with workplace orientation;
Meet regulatory obligations.

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Principle 2: STRUCTURE THE BOARD TO ADD VALUE

1.0

Board Composition
The Board reviews its composition and assesses nominations for new appointments from time to time to ensure the right balance of skills and experience.
Currently, Marcus C Blackmore AM holds the position of Chairman. Mr Blackmore is also the major shareholder of the Company. Given the depth of his company experience and industry standing, he is considered to be excellently placed to serve as Chairman, notwithstanding that pursuant to ASX guidelines, he is not considered
“independent”.
The Chairman and CEO (or similar) roles are to be held by different persons.
Summary of duties for the Chairman and the CEO are reviewed and agreed by the
Board and included in job descriptions for each role.
The CEO (or similar) may also be a Director of the Company.
Directors retire by rotation in accordance with clause 89 of the Constitution.
Newly appointed Directors must stand for re-election at the next Annual General
Meeting in accordance with clause 93 of the Constitution.
The Board regularly assesses the independence of each Non-Executive Director in the light of interests disclosed by them. The Company does not consider length of tenure as a relevant disqualifying criteria for independence.
The Board has created a number of standing committees:
Audit and Risk Committee
Nominations Committee
People and Remuneration Committee
Details are set out elsewhere in these documents.
Where the independence of a Director is lost, this will be immediately disclosed to the market.

2.0

Board Meetings
In a typical year, six Board meetings would be held. These formal meetings can be supplemented as required by additional meetings and/or teleconferencing. Directors meet with Management each year for two to three days to review the Strategic Plan and Budget of the Company.
The Company Secretary will maintain a Register of Directors’ Interests.
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3.0

Board Nominations Committee
3.1.

General Scope and Authority

The Nominations Committee comprises the full Board and is a Committee of the
Board established under Rule 122 of the Constitution of the Company.
Proceedings and meetings of the Nominations Committee are governed by the provisions of the Constitution.
The primary purpose of the Nominations Committee is to support and advise the
Board in fulfilling its responsibilities to shareholders by ensuring that the Board is comprised of individuals who are best able to discharge their responsibilities as
Directors, having regard to the law and the highest standards of governance.
The responsibilities of the Nominations Committee include:
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Assessing the skills and competencies required on the Board;
From time to time assessing the extent to which the required skills are represented on the Board;
Establishing processes for the review of the performance of individual
Directors and the Board as a whole;
Encouraging and supporting Directors’ professional development to enhance
Director competencies;
Establishing processes for the identification of suitable candidates for appointment to the Board;
Developing Board succession plans to maintain an appropriate balance of skills, experience and expertise on the Board;
Considering recommendations for the appointment and removal of Directors.

3.2

Composition

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The Committee comprises the full Board.
In the event that a member of the Committee retires, is removed or resigns from the
Board, that member shall cease to be a member of the Committee.
3.3

Meetings

The Committee shall meet as frequently as required.
Any Committee members may call a meeting of the Committee.
A notice of each meeting confirming the date, time, venue and agenda shall be forwarded to each member of the Committee in accordance with Article 109 of the
Articles. The notice to members will include relevant supporting papers for the agenda items to be discussed.
The Committee shall have access to professional advice.
The Committee shall elect a Chairman and a Secretary.

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Minutes of proceedings and resolutions of the Committee meetings shall be kept by the Secretary. Minutes should be distributed to all Committee members and the
Chairman of the Board, after the preliminary approval has been given by the
Committee Chairman. Minutes, agenda and supporting papers will be made available to any director upon request to the Secretary, providing no conflict of interest exists.
3.4

Quorum

A quorum will comprise any 3 (three) Directors in accordance with Clause 107 of the
Constitution.
3.5

Duties and Responsibilities

The Committee shall periodically assess the appropriate balance of skills required to competently discharge the Board’s duties, having regard to the strategic direction of the Company, and report the outcome of that assessment to the Board.
The Committee shall make recommendations to the Chairman of the Board on means by which skill levels of existing Non-Executive Directors can be enhanced.
The Committee shall, as and when it considers appropriate, but in any event on each occasion when an existing Non-Executive Director retires, assess the balance of skills, experience and expertise represented on the Board by the Non-Executive
Directors and determine appropriate competencies required to enable the Board to carry out its mandate and complement Board effectiveness.
Having regard to the skills required and the skills represented, the Committee shall implement a process that is formal and transparent, for the identification of suitable candidates for appointment to the Board of Non-Executive Directors.
The Committee shall make recommendations to the Board on candidates it considers appropriate for appointment.
In carrying out all its functions the Committee will have due regard to the provisions of the Australian Stock Exchange with a view to ensuring that the Group seeks to adhere to the highest standards of corporate governance.
3.6

Disclosure

The Committee will ensure that the Annual Report includes suitable disclosure of
Directors’ information. Notice of meetings which include Directors standing for reelection will include biographical details, independence, competencies and qualifications to enable shareholders to make an informed decision on their reelection.
4.0

Independent Directors
An independent Director is a Director who is not a member of management (a NonExecutive Director) and who (to the satisfaction of the Board) meets the following criteria: Page 7

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5.0

Is not a shareholder of the Company holding more than ten percent of the voting shares or otherwise associated directly or indirectly with a shareholder holding more than ten percent of the voting shares;
Has not within the last three years been employed in an executive capacity by the Company;
Is not a principal or employee of a professional adviser to the Company and its entities whose billings exceed five percent of the adviser’s total revenues;
Is not a significant supplier or customer of the Company or its entities or an officer of or otherwise associated directly or indirectly with a significant supplier or customer. A significant supplier is defined as one whose revenues from the
Company exceed five percent of the supplier’s total revenue. A significant customer is one whose amounts payable to the Company exceeds five percent of the customer’s total operating costs;
Has no material contractual relationship with Company;
Has no other interest or relationship that could interfere with the Director’s ability to act in the best interests of the Company and independently of management.

Board Evaluation

The Chairman of the Board evaluates the performance of individual Directors and the
Board collectively on an ongoing basis. Performance criteria to which he has reference include attendance and participation at meetings, contribution to valid Board debate on key issues and the effectiveness of the Board as a whole in providing the Company with clear guidance and direction.
Periodically, a comprehensive review of Board and member performance is conducted.
The Board determines whether the review will be externally or internally conducted.
Recommendations for ongoing improvements to both Board and member performance are discussed by the Board and monitored for implementation and effect.
Various company events are organised throughout the year which the Directors attend, enabling the Directors to keep themselves engaged and up to date on key company developments. Coupled with their more formal duties, this allows the Directors to build up a deep level of knowledge around the Company’s activities and accordingly optimise their contribution to the Board.
Particular attention is paid to ensure that any new Directors appointed to the Board benefit from an effective induction program, designed to enable Directors to gain an understanding of: 
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The Company’s financial, strategic, operational and risk management position;
Their rights, duties and responsibilities as Directors; and
The role of the Board Committees.

It is the responsibility of the Chairman to ensure the effectiveness of this induction program, which combines review of company information materials/policies and meetings with key executives employed in the business.
Subject to approval by the Chairman, Directors have access to continuing education to update and enhance their skills and knowledge. This includes education concerning key developments in the Company and within the industry and environments within which it operates. Page 8

Periodically, a comprehensive review of the Board and member performance is conducted.
The Board determines whether the review will be externally or internally conducted.
Recommendations for ongoing improvements to both Board and member performance are discussed by the Board and monitored for implementation and effect.
The Board is provided with the information it needs to efficiently discharge its responsibilities and in particular:
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All Directors have access to the Company Secretary;
The appointment and removal of the Company Secretary is a matter for decision by the Board as a whole; and management is required to supply the Board with information in a form, timeframe and quality that enables the Board to effectively discharge its duties.

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Principle 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING

The Directors of Blackmores Limited have adopted a “Directors’ Code of Conduct”, outlined in 1.0 below. It aims to ensure that the Board of Directors acts in a manner consistent with best practice of public and commercial business across activities.
1.0

Directors’ Code of Conduct

A Director must act honestly, in good faith and in the best interests of the Company as a whole. A Director has a duty to use due care and diligence in fulfilling the functions of office and exercising the powers attached to that office.
A Director must use the powers of office for a proper purpose, in the best interests of the
Company as a whole.
A Director must recognise the primary responsibility is to the Company’s shareholders but should, where appropriate, have regard for the interests of all stakeholders of the
Company.
A Director must not make improper use of information acquired as a Director.
A Director must not take improper advantage of the position of Director.
A Director must not allow personal interests, or the interests of any associated person, to conflict with the interests of the Company.
A Director has an obligation to be independent in judgment and actions and to take all reasonable steps to be satisfied as to the soundness of all decisions taken by the Board of
Directors.
Confidential information received by a Director in the course of the exercise of directorial duties remain the property of the Company from which it was obtained and it is improper to disclose it, or allow it to be disclosed, unless that disclosure has been authorised by the
Company, or the person from whom the information is provided, or is required by law.
A Director should not engage in conduct likely to bring discredit upon the Company.
A Director has an obligation, at all times, to comply with the spirit, as well as the letter, of the law and with the principles of this Code.
To ensure probity, a Director has an obligation to declare any vested interest in any matter discussed at the Board meetings and to remain separate from and independent of the process. Directors are encouraged to report unlawful/unethical behaviour and actively promote ethical behaviour whilst protecting those who report violations in good faith.
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2.0 Senior Executive and Employee Code of Conduct
The Company has published a Code of Conduct to provide employees with guidance on what is acceptable behaviour. Specifically, the Company requires that all Directors, managers and employees maintain the highest standards of integrity and honesty.
The Company considers the successful management of occupational safety, health and environmental issues as vital for our employees, customers, communities and business success. The key elements of the Code are characterised by:
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Fairness, honesty and loyalty supporting all actions
Being aware of and obeying the law
Individually and collectively contributing to the wellbeing of shareholders, customers, the economy and the community and avoiding behaviour which is likely to reflect badly on employees and the company
‘Openness’ and ‘public disclosure’ as the test for all actions

Blackmores’ staff must ensure that they:
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Treat all employees, suppliers, customers and visitors with courtesy and respect Declare any conflict of interest between their role as an employee of
Blackmores and their involvement in an outside activity. Deal honestly, fairly and equitably with all employees, suppliers, customers and visitors
Are aware of Blackmores’ codes, policies and procedures as set out in the policy manual and that they comply with them
Maintain the highest standard of quality in the provision of services
Always acknowledge other people's work and ideas
Always put safety first and do their utmost to comply with health and safety requirements Comply with all environmental laws and standards

Staff must also ensure that they do not:
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Engage in harassing behaviour towards other employees, suppliers, customers or visitors
Discriminate on the basis of irrelevant characteristics, such as sex, race, disability, pregnancy, age, marital status, transgender, or sexual preference
Perpetrate, permit or fail to report violations of any federal, state or local government law or regulation
Use drugs or alcohol on the premises or come to work while affected by either
Use the Internet for personal use, except with express permission of their manager Use the Internet to access sexually explicit material
Use email to send sexually explicit, suggestive, or other harassing material
Use Blackmores’ information or work time for private gain
Divulge confidential Blackmores’ information to competitors, suppliers, customers or the media
Misappropriate Blackmores’ funds or property
Misappropriate funds or property of suppliers or customers
Falsify reports
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Breach copyright.

In addition to complying with all of the above, managers and supervisors also have the responsibility to execute their managerial and supervisory duties with fairness.
Managers and supervisors must also ensure that they:
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3.0

Promote a team spirit amongst employees through their own behaviour
Maintain confidentiality when conducting investigations into employee grievances Avoid bias in decision making
Do not accept bribes, gifts or benefits
Ensure compliance with Blackmores’ procedures when counselling and disciplining employees.

Policy Regarding Buying and Selling Blackmores' Shares
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The Company acknowledges that from time to time, Directors and members of
Management and Staff may in the course of their duties become aware of
Inside Information in respect of the Company.

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The Company also acknowledges that from time to time, Directors and members of Management and Staff may in the course of their duties become aware of Inside Information in respect of other companies that the Company may be negotiating with.

Insider Trading (all Employees and all Directors)
The law requires Directors, Management and Staff not to buy or sell the Company's shares (or other securities) at any point in time where the person involved has knowledge which constitutes Inside Information. This requirement also includes a restriction not to trade in other company securities where Inside Information has been obtained in relation to negotiations that the Company may be involved in.
3.1

Additional Restriction for Directors and Certain Employees (Designated
Officers only)
Additional restrictions apply to the Directors and certain employees - “Designated
Officers”.
The Designated Officers are:
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Blackmores Directors (including executive Directors)
CEO
Executive Team
Employees specifically notified by the CEO, CFO or an Executive Team member. Designated Officers are NOT permitted to buy or sell shares in the Company other than in exceptional circumstances approved by the Board during the closed period commencing two weeks prior to the last day of the quarter and ending 24 hours after the release of the quarterly results announcement (or the half year or full year results as the case may be).
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Designated Officers are permitted to buy or sell shares in the Company at any other time so long as they:
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Are not in possession of “Inside Information” (as the insider trading prohibitions continue to apply at all times), and
Follow the Notification Requirements set out in point 3.2 below.

Short term buying and selling of shares in the Company should be avoided where possible. Designated Officers are not permitted to buy and sell shares in the
Company within any 3 month period.
3.2

Notification Requirements - Designated Officers Only
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Where a Designated Officer intends to buy or sell shares in the Company, that person is required first to notify the CFO and the Company Secretary
Where the person is either the CFO or Company Secretary then the notification must also be to the CEO (or similar)
All notifications must be in writing (includes email)
No prior notification is required for participation in the Company dividend reinvestment plan or other share plans or actions open to all shareholders.

The officers of Blackmores to whom the intention to buy or sell shares must first be notified are not authorised to prevent persons from trading, but will provide guidance as to whether or not, in their opinion, the person should trade at that particular time. The Company (via the Company Secretary) requires subsequent confirmation of the trading that has occurred.
Should a staff member choose to ignore the above guidance, then they may have to show cause to the CEO (or similar) or the Board of Directors.
Directors and all employees are reminded that it is inappropriate to procure others to buy or sell shares in the Company (e.g. friends, associates) when the director/employee is precluded from buying or selling, and are also reminded of the need to enforce confidentiality against external advisers.
3.3

Loan Security, Margin Loans and Share Lending Arrangements Designated Employees

A Designated Officer is prohibited from using the Company’s shares:
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As security in any loan arrangement where the shares or rights to shares have yet to vest or be issued to you under the offer document of any share incentive plan of the Group.
In any margin loan arrangements (including where the loan terms are a function of the Blackmores share price) unless prior approval is provided by the Board of Directors or joint approval of the CEO/CFO.
To engage in any share lending arrangements, unless prior approval is provided by the Board of Directors.

Arrangements entered into prior to 27 November 2009 are permitted to continue.
4.0

Share Plans – Hedging – Designated Employees Only

A Designated Officer who is a participant under a Company share incentive plan is prohibited from entering into any transaction which operates to hedge the exposure of
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shares or share rights that are unvested or have yet to be issued by the plan manager under any share incentive plan, unless prior approval is provided by the Board of Directors

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Principle 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING

1.0

Audit and Risk Committee Charter
The Board of Blackmores established an audit committee and by resolution in
October 2007 broadened it to include risk to be known as the Audit and Risk
Committee (Committee). The Committee reports to the Board of Blackmores.

2.0

Objectives
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3.0

To monitor the reliability and integrity of the Company’s financial information to be included in statutory financial reports and statements;
To monitor the Company’s Risk Framework for the identification, assessment, management and control of risk;
To review the performance of the Company’s external auditor;
To make recommendations to the Board for the appointment/removal and remuneration of an independent external auditor;
To maintain open communication between the Committee, external auditor and executive managers.

Responsibilities
3.1 Financial Reporting
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Assess whether external reporting meets the needs of stakeholders;
In conjunction with management and the external auditor, review the applicable
Company accounting policies and any changes that have been adopted to ensure they are in accordance with the stated financial reporting framework;
Make recommendations to the Board on significant accounting and financial policy changes;
Review the audited half-yearly and yearly financial reports and statements with management and the external auditor and recommend the approval or otherwise by the Board;
Review significant accounting and financial reporting issues raised by the external auditor with management;
Review the regulatory certifications from the CEO (or similar) and CFO;
Review the financial reports and statements for the Company’s subsidiaries where relevant.

3.2 Risk Management and Internal Control
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Review the Company’s Risk Framework for identifying, assessing, monitoring and managing material business risks which incorporates meeting the reasonable expectations of stakeholders;
Review whether a sound and effective approach has been followed in developing operational risk management plans for major projects or undertakings; Page 15

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Critically review and monitor the risks, controls and risk action plans reported by management;
Review and consider the effectiveness of the Company’s internal control system; Monitor management’s responsiveness to findings and recommendations of the external auditors with respect to internal control systems and procedures;
Ensure that a discussion of the Company’s Risk Framework occurs periodically with the Board.

3.3 External Audit
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4.0

Insurance Program
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5.0

Evaluate the Company’s insurance strategy at least annually in terms of the
Company’s risk assessment.

Compliance
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6.0

Review and recommend the appointment of the external auditor;
Review the terms of engagement and fees;
Consider and review the intended scope of work, process and reports of the external auditor;
Review the performance and remuneration of the external auditor taking into account the opinions of management;
Establish and review polices as appropriate in regards to independence of the external audit Policy on Appointment of External Auditors;
Establish policies as appropriate and consider the independence of the external auditor. In determining auditor independence the Committee is to consider:
 The external auditor’s confirmation of the firm’s continuing independence and the independence of the senior audit partner;
 Company policies on the provision of non-audit services by the external auditor;  The fees for audit and non-audit services provided by the external auditor on a regular basis;
 The rotation of audit partners;
 Company policy on the employment of former employees of the external auditor. Review the effectiveness of the Company’s Risk Framework for ensuring compliance with laws and regulations;
Review regular updates from management with respect to the Company’s compliance with significant statutory requirements;
Consider the findings of any examinations by regulatory bodies.

Authority and Access
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The Committee reports to the Board;
The external auditor reports to the Committee and the Board;
The Committee has direct and unlimited access to all records and staff of the
Company and the external auditors;
The Chair of the Committee receives all reports between the external auditor and management;
The Committee has the authority to:
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7.0

Composition and Membership
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8.0

The Committee is to consist of
 only Non-Executive Directors;
 at least 3 (three) members;
 a majority of independent Directors and
 members who are financially literate (that is are able to read and understand financial statements);
The Chair of the Committee is appointed by the Board;
The Chair of the Committee must be an independent Non-Executive Director as assessed by the Board;
The Chair of the Committee must not be the same person as the Chair of the
Board, and will be a person regarded as having a strong level of financial expertise, that is, an accountant or financial professional with experience in accounting and financial matters;
The Company Secretary is the secretary of the Committee.

Meetings and Attendance
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9.0

Conduct or overview any investigation required to fulfil its responsibilities or any matters specifically requested by the Board;
Obtain independent professional advice and engage independent experts to assist the Committee to carry out its duties;
Obtain reports and additional information from any Company personnel as it deems necessary.

The Committee will meet as often as is required to discharge its responsibilities and the schedule of meetings will be agreed in advance;
Additional meetings may be convened as required or as requested by the Chair of the Committee, any member of the Committee, the external auditor or the
Chair of the Board;
An agenda will be prepared and circulated to members and other Directors prior to the meeting;
A minimum of 2 (two) non-executive Directors shall constitute a quorum;
Should the Chair be absent from the meeting, the members of the Committee have the authority to choose one of their number to chair that particular meeting; Attendance by members at Committee meetings will be disclosed in the annual report; The Chair may invite members of management, representatives of the external auditors and/or other external advisors to be present at a meeting of the
Committee as necessary or desirable. Board members may attend any meeting of the Committee;
At least once per year, the Committee shall meet with the external auditor without management present;
The meetings and proceedings of the Committee shall be governed by the provisions of the Company’s constitution regulating meeting and proceedings of
Directors so far as these provisions are applicable and not inconsistent with this
Charter.

Reporting Lines to the Committee
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For the purpose of the independence of their function, the external auditor has a direct line of reporting access to the Committee;
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10.0

Reporting Responsibilities
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11.0

Under the terms of the Company’s Good Faith Policy, the Company’s staff has access to the Committee’s Chair if required.

Proceedings of all meetings are minuted, approved by the Committee and signed by the Chair of the meeting. Minutes of meeting are tabled at Board meetings; The Chair of the Committee or delegate will report to the Board after each
Committee meeting any matter that in the Committee’s opinion should be bought to the attention of the Board.

Rules and Review of the Charter
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The Committee may adopt rules and regulations it deems appropriate for the conduct of its affairs provided only that they are not inconsistent with the Terms of Reference delegated by the Board;
The Charter is reviewed annually by the Committee to
 ensure it remains consistent with the Committee’s authority, objectives and responsibilities;
 confirm all activities listed in this Charter have been addressed;
The Charter maybe amended by resolution of the Board.

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Principle 5: MAKE TIMELY AND BALANCED DISCLOSURE

The Company is concerned to ensure that disclosure of all material matters concerning the
Company occurs in a timely, honest and balanced manner.
The Company is listed on the ASX and must comply with Listing Rule 3.1 (Continuous
Disclosure). Executives are made aware of the requirements and a separate Board agenda item covering the requirement of continuous disclosure is discussed at every Board meeting. Procedure for Directors and Executive Management who become aware of material information which may require disclosure under the ASX Listing Rules
1.0
1.1

Responsibilities
Executive Management must:
Understand the continuous disclosure regulations;
Report potentially material information immediately to either the Company
Secretary, the CEO (or similar), the CFO or the Chairman.




1.2

Company Secretary must
Liaise with the CFO on information supplied to determine if it needs to be disclosed under continuous disclosure regulations;

Where authorised, report the material information to the ASX.


2.0

Policy







3.0

Executive Management is to be aware of the continuous disclosure regulations in the ASX Listing Rules;
In the event that any member of management becomes aware of any fact or circumstance which may give rise to a requirement to disclose such information under the Listing Rules, they are required to immediately inform either the
Company Secretary, the CEO (or similar), the CFO or the Chairman;
Prior to disclosure, the CFO will review the information to enable a judgement as to the appropriate disclosure, if any, to be made;
If there is uncertainty over the requirement to comply with the continuous disclosure requirements, then the Company will seek external legal advice;
The Company, through the Company Secretary, will notify the ASX of any information it is determined is required to be disclosed.

Balanced and Factual Announcements
Where announcements are made to the market through the ASX, such announcements are pre-vetted by the CFO, Chairman and Board of Directors to ensure that such statements are:

factual;

do not omit material information; and

are expressed in a clear and objective manner.
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Principle 6: RESPECT THE RIGHTS OF SHAREHOLDERS

The Company strives to convey to its shareholders and the investing public pertinent information in a detailed, regular, factual and timely manner. Information is communicated to shareholders through:






The Annual Financial Report (for those shareholders who have requested a copy); Disclosures to the ASX;
Notices and explanatory memoranda of Annual General Meetings;
Half yearly reports and shareholders’ newsletters which provide shareholders with details of profit performance and other matters of interest; and
Blackmores’ website at blackmores.com.au

The annual report is distributed to all shareholders (unless a shareholder has specifically requested not to receive the document). The Board ensures that the annual report includes relevant information about the operations of the Company during the year, changes in the state of affairs of the Company and details of future developments, in addition to the other disclosures required by the Corporations Act 2001.
Half-year Financial Statements prepared in accordance with the requirements of applicable
Accounting Standards and the Corporations Act 2001 are lodged with the Australian
Securities and Investments Commission and the Australian Stock Exchange. The financial statements are sent to any shareholder who requests them and the shareholders’ newsletter is distributed to all shareholders (unless a shareholder has specifically requested not to receive the document). Copies are lodged with the Australian Stock
Exchange.
Our internet site, blackmores.com.au also gives information on the Company’s products, five years of annual reports and public announcements and is updated regularly.
External Auditors are asked to attend the Annual General Meeting and be prepared to answer shareholder questions about the conduct of the audit and the preparation and content of the auditors’ report.
Shareholders are encouraged to ask questions at the Annual General Meeting to ensure a high level of accountability and identification with the Company’s strategy and goals.

Page 20

Principle 7: RECOGNISE AND MANAGE RISK

It is the responsibility of the Board and management to establish, maintain, operate and demonstrate an appropriate framework of business controls. This framework covers all activities of the Company whether operational, technical, commercial, financial or administrative. 1.0

Risk Management
The Company has in place a number of arrangements and internal controls intended to identify and manage areas of material business risk. These include the maintenance of:














Board Committees;
Information management systems;
Risk Register Reporting;
Detailed and regular budgetary, financial and management reporting;
Established organisational structures;
Standard operating procedures, manuals and policies covering all aspects of business; Audits (including financial, environmental and safety audits);
Comprehensive insurance programs;
Occupational Health and Safety requirements;
Building maintenance and surveys;
Human resources policies and procedures;
Financial control policies and procedures;
Injury management programs for employees.

The Board’s Audit and Risk Committee is expected to work closely with the Finance department on the Company’s financial risk management and the business units responsible for other aspects of risk management.
Based on feedback from Company management a risk register is reviewed by the
Audit and Risk Committee and progress reported to the Board.
The Company Secretary reports to the Board on these risk management items every six months. The formal report prepared by the Company Secretary is based on the framework which focuses on:




Risk Register – A full list of the material risks or inherent risks, ordered by key category (Operational / Strategic / Financial);
Risk Priorities – the residual risks defined as “tolerable with continuous review”, for priority attention;
Control Priorities – illustrates risks in order of highest material divergence between inherent and residual ratings.

Page 21

The key categories reported are:
Strategic Risks

such as reputational risk due to product tampering, product recalls or risks due to demand shortfalls and failures to address competitor moves

Financial Risks

such as high debt, inadequate reserves, poor financial management Operational Risks

such as asset loss, cost overruns, third party injury and regulatory breach

The policies and procedures in place cover the following areas:
Area of Risk

Comment

Marketing

Standard Operating Procedures “SOP” - Advertising, Privacy,
Competition and Consumer Act,

Updated half-yearly and staff seminars are held

All new staff receive a copy of the SOPs and explanation is included in Induction.

Personnel

Industrial Relations

A Certified Agreement is in place.

Letters of Employment set out employment requirements.

Any possible redundancies are discussed with our legal advisors prior to action.

The Company has policy documents called “Values at Work” on computer ethics, harassment, emails, share trading, drugs and alcohol, etc.

Company Policies

OH&S






We have a strong, qualified and certificated committee controlling safety.
We do half-yearly audits of premises.
We review occupational health and safety procedures.
Certified first aiders are always on the premises.

Workers
Compensation




We use the insurance company’s safety advisors.
Rehabilitation providers are employed for all appropriate claims to expedite the return to work.

Induction Procedures



Detailed programmes are tailored to individual position needs and include many SOPs, the Values at Work and various instructions.

Building Surveys



Legal




Operations




We have yearly building surveys by our insurance carriers and adopt safety recommendations.
All legal documents are reviewed by our external solicitors.
We have a follow-up system to ensure all Intellectual
Property, Agreements, Leases etc are renewed or renegotiated before termination or cessation dates.
We audit our Suppliers.
We have closed circuit television in place at all critical access points and a key entry system to the premises.
The production area is controlled by quality staff.
All purchase orders set down strict specifications regarding quality and certificates of analysis etc.




Page 22

Area of Risk

Comment




Finance



Quality Assurance









On occasions we have an independent auditor carry out a
“TGA Compliance” audit of our premises.
Access to the manufacturing areas has been restricted with the use of electronic access.
There is a detailed computer breakdown recovery plan. The plan is regularly tested.
Our external auditors supply a very detailed management report. This report is reviewed by the Audit and Risk
Committee. There is a detailed report given to the Audit and Risk Committee prior to the approval of the half year and yearly accounts.
As we manufacture therapeutic goods, we have a manufacturer’s licence from the Therapeutic Goods
Administration (“TGA”). This requires us to have a quality assurance system in place which is audited by the TGA and by an independent auditor.
We employ qualified staff who monitor compliance with the
TGA regulations and our Code of Good Manufacturing
Practice. Our staff regularly audit our major raw material suppliers by visiting their plants.
SOPs are in place to ensure appropriate process within our manufacturing area. A detailed and comprehensive training matrix is in operation to ensure the competency of all manufacturing staff.
There is an ongoing review of warnings on labels.

Senior executives and management are expected to practise sensible risk management in the day-to-day performance of their duties and are required to escalate any material issues which arise or have the potential to arise. The CEO (or similar) has the primary responsibility to advise the Board of material risk items which arise and together, the Board and senior management are responsible for taking all reasonable steps to address and mitigate such risk items.
2.0

Statements of Compliance with Best Practice in Integrity of Financial
Statements
In conjunction with the Audit and Risk Committee sign off on Blackmores’ annual accounts, the CEO (or similar) and the CFO provide the Board in writing in accordance with section 295A of the Corporations Act that the full year financial statements are founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board and that the Company’s risk management and internal compliance and control systems are operating efficiently and effectively in all material respects in relation to financial reporting risks.

3.0

Continual Updating and Monitoring of Procedures
Company procedures are continually being updated to meet changes in the law, (eg.
Privacy Act, Competition and Consumer Act etc). Risks deemed unacceptable are, where possible, insured through reputable insurance companies. In some instances
Page 23

the Company may choose to self-insure. A Disaster Recovery Plan is in place and is updated regularly.
The Board is responsible for monitoring the Company’s system of internal controls.
The Board constantly monitors the operational and financial aspects of the
Company’s activities and, through the Audit and Risk Committee, the Board considers the recommendations and advice of external auditors on the financial risks that face the Company.
The Board ensures that recommendations made by the external auditors and other external advisers are investigated and, where considered necessary, appropriate action is taken to ensure that the Company has an appropriate internal control environment in place to manage the key risks identified.

Page 24

Principle 8: REMUNERATE FAIRLY AND RESPONSIBLY
People and Remuneration Committee Charter
Blackmores Limited (Blackmores) established by a resolution of Directors in April
1996 a committee of Directors known as the Remuneration Committee and broadened it to include an overview of Company Remuneration practices for all personnel to be known as the People and Remuneration Committee (Committee).
The Committee reports to the Board of Blackmores.
1.0

People and Remuneration Committee Vision

Make People Happy – Be the employer of choice - “Marcus Blackmore”
To retain Blackmores’ position as Australia's leading natural health brand, and to achieve ongoing success for our company and shareholders, it is important for Blackmores to retain and attract the best and brightest in the industry who will develop a deep understanding of the Company’s culture, products and essence of the business.
To invoke an appropriate balance between fixed and incentive remuneration reflecting the short and long term objectives appropriate to Blackmores circumstances and goals and aligned to shareholders interests.
2.0

Responsibilities

Blackmores remunerates its people fairly and responsibly. The remuneration policy is transparent and linked to both the individuals’ and company performance. The
Remuneration policies and programs are underpinned by clearly defined objectives and measures with each senior executive assessed in line with Blackmores’ performance management program.
The Committee’s primary responsibility is to review and consider remuneration strategy and employment policies and to make recommendations to the Board that are in the best interests of Blackmores and its shareholders, and to assist the Board in fulfilling its corporate governance responsibilities in regard to:






Remuneration policies for Non-Executive Directors;
Remuneration policies for the CEO, CFO and Executive Management;
Executive equity grants;
Human resource strategies; and
Other matters referred to the Committee by the Board.

In particular, the Committee is to undertake the functions of the Remuneration Committee set out in the ASX Corporate Governance Council’s Corporate Governance Principles and
Recommendations.

Page 25

3.0

Membership






4.0

Meetings









5.0

The Committee is appointed by the Board in accordance with Clause 122 of the
Blackmores Constitution.
The Committee is to consist of:
 a majority of independent Non-Executive Directors;
 at least three (3) Members;
The Chairman of the Committee is to be an Independent Non-Executive
Director and is to be appointed by the Board;
The Company Secretary is to attend all Committee Meetings to ensure minutes are taken of the Meeting.

The Committee is to meet as requested by its Chairman, at least twice per year; The Secretary will be responsible for Committee agendas (in consultation with the Committee Chairman), the co-ordination of Committee papers, the despatch of Committee papers and the preparation of minutes of Committee meetings; A minimum of three (3) non-executive Directors shall constitute a quorum and be competent to transact the affairs of the Committee;
The CEO and the Director of People and Communications are to attend such portion of each Meeting as requested by the Committee Chairman;
The Chair may invite other members of management, and/or other external advisors to be present at meeting of the Committee as necessary or desirable.
Board members may attend any meeting of the Committee;
All recommendations of the Committee are to be referred to the Board for approval. Access to information and Independent Advice
The Committee:

Has the authority to seek any information it requires from any employee of the
Blackmores group;

May take such independent legal, financial, remuneration or other advice as it considers necessary;

Will be responsible for briefing and commissioning remuneration advisors.
Management working with a commissioned remuneration advisor will work under the guidance of the Committee and within the context of the approved brief. Remuneration advisors do not include legal or accounting professionals engaged by management to assist in implementing changes approved by the
Committee or to ensure compliance due to minor taxation or regulatory changes. Where a Remuneration Advisor is engaged for purposes of Executive Team remuneration, that consultant is not to be used for any other remuneration advice and another company is to be used for such purpose.

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6.0

Remuneration Policies for Chairman of the Board and Non-Executive Directors

In assisting the Board, the Committee will review and make recommendations to the Board on remuneration policies for the Chairman and Non-Executive Directors (including fees, and other benefits). In making its recommendations, the Committee should take into account the following guidelines:
Non Executive Directors:

Should be remunerated by way of fees in the form of cash, non-cash benefits, superannuation contributions or equity;

Should not participate in schemes designed for remuneration of executives;

Should not receive options or bonus payments; and

Effective from 1 October 2003 should not be provided with retirement benefits other than statutory superannuation, excluding retirement benefits accrued on behalf of Directors prior to 1 October 2003.
Chairman:





7.0

An annual review of the Chairman’s total remuneration package including annual fee plus incentives will be linked to the Executive program and achievement of predetermined targets and hurdles and short and long term incentives; The payment of the Company Profit Share plan to the Chairman will be calculated at the same rate as which applies to the Executive Management;
The Chairman’s long term incentive payment will be paid in cash calculated to reflect similar benefit as the Blackmores Executive Share Plan.

Remuneration Policies for the CEO, CFO and Executive Management

In assisting the Board, the Committee will review and make recommendations to the Board on the remuneration of the CEO, CFO and Executive Management including:

Annual review of the CEO’s total remuneration package, including performance reviews, achievement of predetermined targets and hurdles and short and long term incentives;

Appropriate grants of securities under the Blackmores Executive Share Plan (or any alternate or replacement plan). Grants made to the CEO are to be placed before shareholders for approval;

The development of any equity based plan; and

The development or changes to short or long term incentive programs.
In making it recommendations, the Committee’s objectives are that the remuneration policies: 
Motivate the CEO and Executive Management to pursue the long-term growth and success of Blackmores aligned to Blackmores strategy and culture and aligned to shareholder interests;

Involve an appropriate balance between fixed and incentive remuneration, reflecting the short and long-term performance objectives appropriate to
Blackmores’ circumstances and goals.
8.0

People Policy

The Committee will review Blackmores human resource strategy, (“Blackmores Improves
Peoples Lives”), remuneration policies and practices, including performance assessment
Page 27

processes, organisation structure and culture, consistent with the Blackmores Values
(PIRLS)
Monitor recruitment and personnel development policies which encourage workplace diversity both in gender and skills
Approve the standard contract of employment for Executive Team positions (and, on a case by case basis, any variations from the standard contract)
Review and encourage succession planning for executive and senior management
9.0

Delegated Authority

The Committee has delegated authority to undertake the following functions:



10.0

Approve annual Blackmores Executive Team Salary Program
Oversee Blackmores incentive schemes for senior executives and the
Company performance Incentive Plans and, in particular, approve the following aspects of the program:
 Structure;
 Rules;
 Eligibility parameters and participants;
 Targets; and
 Incentive pools.

Reporting and Records

Minutes will be minuted, approved by the Committee and signed by the Chair of the meeting. Minutes of meeting will be tabled at Board meetings.
The Chairman of the Committee shall report to the Board at the next meeting of the Board of Directors following a Committee meeting, on matters contained in this Terms of
Reference.
11.0

Review of Committee Performance

To determine whether it is functioning effectively, once each year the Committee shall:.

Review this Charter; and

Undertake an evaluation of its performance

Review committee work plan

Page 28