Analysis of AGL Energy Limited's Corporate Governance

The assignment analyzes the implementation of ASX principles in AGL Energy Limited's organization structure and working environment to ensure effective corporate governance. It examines the role of the Board and ARMC in managing risks and implementing risk assessment tools and models developed by the organization.

Audit, Assurance and
Compliance

Executive Summary
The main purpose of this report is to analyse the impact of ASX corporate governance
principles on AGL energy limited. The report will focus on each and every principles of ASX
corporate Governance Principles. Furthermore, the organisation will be analysed in order to
identify various risks and the ways of risk assessment used by AGL energy limited to enhance
their performance, and eliminate any kind of barrier in achieving goals or objectives of the
company. The report will also determine company's nature and market overview along with its
business strategy. The report will include a brief description about roles of the Board and
ARMC.

Table of Contents
Executive Summary.........................................................................................................................2
INTRODUCTION...........................................................................................................................4
Background of the company............................................................................................................4
Corporate governance .....................................................................................................................5
The Evolving nature of corporate governance ................................................................................5
1. ASX Principles implemented in AGL Energy Limited..............................................................5
2. Risk Assessment .........................................................................................................................9
Conclusion ....................................................................................................................................11

INTRODUCTION
The ASX principles are developed as the broad concepts which includes effective
corporate governance. These principles enclose common ideas with a broad relevance, they also
assist an organisation to ensure every business activity or operation is performed while
considering corporate governance. The present report in context to AGL Energy limited, a
leading gas, power and water supply company in Australia. The report will determine effective
implication of ASX principles in AGL Limited in order to ensure corporate governance.
Furthermore, the report will also analyze risk management within organisation along with the
various method of risk assessment procedures.
Background of the company
AGL Energy Limited (AGK) started exchanging the Australian Stock Exchange on the
twelfth of October 2006, and is the second most prominent supplier in the gas, power and water
supply in Australia holding a piece of the pie of 8.3% of year 2008 behind Origin Energy with a
12.6% piece of the pie.
Giving more than 3.2 million client accounts with superior to anything normal combination
crosswise over completed topography, fuel frame and age blend furnishing AGL with a liberal
merged age portfolio.
Key business zones combine the 'Retail Division' dealing with the buy, course of action and
progressing of gas and control, and besides the 'Merchant Business Division' which is
responsible for working and keeping up AGL's energy age resources. These breaker Gas
Development, related with upstream gas updates; Wholesale Gas, acquiring gas supplies for
AGL's retail business and markdown clients; and Energy Services, coordinating little scale
supportable power age. The business in the course of recent years in the years 2004 to 2009 the
normal development in income has been in the middle of 3.4% to 5.3 % per annum. (Honey and
et.al, 2017)New contestants into the market are resolved to pick up piece of the overall industry
and the reality of a risk from another participant relies upon the obstructions put in that market
and the normal responses from existing contenders to the upstarts (Schäfer and et.al, 2016).
Newcomers to the market face such things as economies of scale, item separation, capital
prerequisites, cost drawbacks, access to circulation and government approach

Because of the deregulation in the late 1990's, this has caused a substantial increment in
rivals in this industry. However, the business in its develop life cycle and because of high
hindrances of passage because of capital escalated start up expenses and abnormal state of skill
and experience expected to work in this field has prevented the level of new contestants. 2.1.2.
Industry contenders. AGL moreover claims and works the greatest boundless generation
portfolio with a consideration on hydro and wind control which fuses the Hallett Group wind
farms, Bogong Hydro Development hydro-control.
Corporate governance
Corporate association is "the game plan of tenets, affiliations, structures and techniques
inside and by which master is cleaned and controlled in wanders". It includes the instruments by
which affiliations, and those in charge, are held to account Corporate organization impacts how
the goals of the association are set and achieved, how chance is watched and assessed, and how
execution is progressed. Effective corporate organization structures encourage associations to
make regard, through entrepreneurial-ism, innovation, exploration and development, and give
duty likewise, control systems practically identical with the risks included.
The Evolving nature of corporate governance
Corporate governance practices will create in the light of the changing conditions of an
association and must be specially crafted to meet those conditions. Corporate organization
sharpens ought to similarly create concerning progressions both in Australia and abroad. There is
no single model of good corporate organization. This record communicates eight focus measures
the principles. Each Principle is cleared up in detail, with discussion about execution as
Recommendations. The ASX Corporate Governance Council's Recommendations are not
necessary and can't, in themselves, neutralize corporate dissatisfaction or poor corporate essential
authority. They are proposed to give a reference point for associations about their corporate
Organization structures and practices(Jizi and et.al, 2014).
1. ASX Principles implemented in AGL Energy Limited
The corporate governance statement 2017 clearly describe AGL'S corporate governance
framework, practices and policies. AGL is resolved to ensure that their corporate administration
system, polices and practices speaks to an elevated requirement of corporate administration. The
Board of AGL Energy Limited trusts that prescribed procedures corporate administration
benchmarks help supportable execution by AGL after some time. AGL has implemented various

corporate governance documents and policies according to ASX principles. The principles help
and support in developing corporate governance as well as performing each and every activity of
the organisation effectively.
Illu
stration 1: Corporate Governance Framework
(Source : Corporate Governance Statement, 2017)
AGL'S Board
The AGL's Board is in charge of the corporate administration of the association, the real
part of hierarchical execution and keep up economical esteem creation while thinking about the
enthusiasm of investors, workers, clients, the groups in which AGL works and other significant
partners. The Board is additionally in charge of endorsing and investigating AGL's key heading
and give powerful oversight of administration. The significant parts and duties of the Board in
AGL are as specified underneath -
1. Affirming and assessing AGL's vital bearing, its financial plan, its marketable strategy
and imperative vital activities and in addition designs.
2. Observing and naming the execution of the CEO and in addition ending the arrangement
of the CEO if fitting.
3. Favoring changes in the structure, size and sythesis of the Board and in addition the
arrangement and participation of Board advisory groups.
4. Observing the execution and favoring compensation systems and approaches applying to
the executive Team and other key administration parts. Supporting essential declarations

made by ASX and AGL, and different reports to different investors as per the
partnerships' demonstration and other vital laws.
4. Considering the moral, social and ecological effect of different exercises performed in AGL vitality
restricted alongside observing the framework to oversee consistence with organization's reasonable
practices and policies(Laoworapong and et.al, 2018).
 Monitoring operating and financial results on an ongoing basis, consisting the
effectiveness of company's financial and accounting management systems.
 Approving decisions influencing AGL's capital, including determination of organization's
Lay solid foundations for management and oversight:: AGL Energy Limited develop
likewise, reveal the individual parts an-commitments of its board and organization likewise, how
their execution is checked and evaluated.
Structure the board to add value: A recorded component should have a main gathering of a
reasonable measure, piece, aptitudes and feeling of obligation with regards to enable it to
discharge its commitments effectively. AGL hopes to keep up a Board of Directors with a broad
extent of industry, cash related and customer related experience relevant to dealing with a broad
vertically planned business encountering improvement and change. Moreover, likewise the
general aptitudes expected of Directors, AGL tries to keep up a Board which at any rate with
everything considered has:
 Gas and power association with control relevance to AGL's technique.
 Association with the organization of complex working assets(Schwarcz and et.al, 2017).
 A cognizance of corporate back and contemporary peril organization
 A cognizance of how to create things and organizations in an inflexibly electronic world
to drive customer backing.
 Contribution with ventures encountering change, and the usage of development to help
regard making progression.
 Inclusion with broad open association organization, including natural and social
organization.
 Inclusion with people and culture matters, including prosperity and security, amass
responsibility and remuneration.
 Grouped assortment of thinking and perspectives, fusing board expert concerning AGL
achieving sexual introduction change.

 The basic aptitudes and experience base required were joined into a Board Skills Matrix
that has been and is utilized to audit Board synthesis and illuminate the choice and choice
of future Directors.
 The Board Skills Matrix was resuscitated in 2016-2017 after an adjustment in the Board's
creation with three new Director game-plans.
 The Board Skills Matrix underneath exhibits the measure of current Directors with a
"made" level of the farthest point (having strong or solid commitment in a specific area),
inducing that a Director has a level of limit in a specific zone that can be utilized by the
Board from drawing upon the Director's associated information.
Safeguard honesty in corporate detailing:: The organization has formal and watchful
philosophy that freely check and secure the reliability of its corporate announcing.
Act ethically and responsibly: AGL Energy Limited act ethically and carefully. Advancing
moral and capable basic leadership
 Thinking about the social, moral and natural impact of association's activities what's all
the more, coordinating the structure for managing consistence with AGL's practicality
systems and practice(Bromiley and et.al, 2015).
 Approving and keeping up a Code of Conduct to control Directors, workersalso,
contractual workers in the practices important to keep up trust in company's uprightness;
 Approving and checking consistence with an arrangement concerning the exchanging by
 Chiefs, workers and contractual workers of offers in AGL or different organizations in
regard of which Directors, workers and contractual workers may come into ownership of
data not accessible to the more extensive market; and
 Monitoring the viability of the arrangement of responsibility for dishonest rehearses.
 Make convenient and adjusted revelation: AGL Energy Limited should make promising
and adjusted exposure of all issues concerning it that a sensible individual would plan to
materially affect the cost or estimation of its securities.
 Regard the privileges of security holders: A recorded part should regard the advantages
of its security holders by giving them proper data and working environments to enable
them to sharpen those rights effectively.
Recognize and manage risk: A recorded component should set up a sound danger organization
framework and discontinuously review the suitability of that structure.

7. Remunerate fairly and responsibly : AGL Energy Limited pay directory pay
satisfactory to attract and hold high quality directors and plan its authority pay to pull in,
hold and motivate splendid senior authorities and to change their interests with the
generation of critical worth for share holders.
2. Risk Assessment
AGL faces a wide collection of threats on account of the possibility of its assignments.
Purposes of enthusiasm of AGL's key risks are set out on pages 17 and 18 of the 2017 Annual
Report. Further, an unequivocal report about AGL's money related, natural and social viability
threats, including how these risks are directed, is consolidated into organization's Sustainability
Report. AGL is centered around ensuring that danger organization practices are introduced into
all business methods and undertakings with a particular ultimate objective to drive unsurprising,
convincing and mindful action, essential authority and organization sharpen. The Board has
grasped a Risk Management Policy that sets out company's objectives for possibility
Organization and clearly clarifies the commitments of all company's workforce in association
with the organization of risk(Aguilera and et.al ,2015). The company hopes to introduce risks
organization measures and practices into technique change also, regular business strategies to
achieve solid and great business comes about. AGL's Risk Management exhibit relies upon the
'three lines of security' and is spoken to in the graph underneath.

Illust
ration 2: Risk Management Model
(Source : Risk Management Model, 2017)
AGL purposefully evaluates all operational and money related exercises to perceive
material hazard exposures utilizing an endeavor wide hazard program concurred with ISO31000,
the around the globe standard for dangers association. This program is fortified by:
 AGL's Risk Management Policy; and
 AGL's Risk Management and Assessment Standard, the goals of which are to provide
guidance to AGL agents on the most ideal approach to lead risk examinations, ensure
consistency and ease in approach to manage risks ID, appraisal and organization and set
up a run of the mill 'risk' lingo over the business(Griffiths and et.al , 2016).
AGL has executed different diverse systems that direct or by suggestion serve to mitigate
also, regulate possibility (tallying the Securities Dealing Policy and the Market Disclosure
Policy). AGL also has set up different strength unit and in addition site based game plans and
procedures to consider the secured and strong movement of power generation plants and other
working assets.
Roles of the Board and ARMC

The Board is responsible for acknowledging and checking the execution of courses of
action regulating AGL's frameworks of internal consistence, dangers association and control.
The ARMC, despite various things, examines and proposes AGL's hazard administration
approaches plus, material major dangers to the Board for help and audits and screens the
utilization of courses of action and strategies for seeing, investigating, checking and managing
hazard. The ARMC gets introductions from association on AGL's material basic dangers and the
controls set up to coordinate or deal with those dangers each quarter. The ARMC and the Board
yearly outline organization's fundamental dangers and the hazard association system to guarantee
that it keeps working attractively. Amidst the money related year finished 30 June 2017, the
Board surveyed and affirmed AGL's threat association system including AGL's Tier 1 dangers,
Risk Consequence Assessment Criteria and General Statement of Risk Appetite (Tricker and et.al,
2015).
The ARMC gets general presentations from organization amid the time on specific
danger subjects. The ARMC similarly has commitment with regard to supporting the inside audit
configuration submitted consistently by Group Audit. The internal audit configuration is
fundamentally in perspective of an assessment of AGL's material indispensable risk exposures
Conclusion
The above report concluded that AGL energy limited effectively implement every ASX
principle in their organisation structure as well as working environment in order to ensure
corporate governance. This report determined the ways in which AGL implemented principles of
ASX corporate governance along with risk assessment tool and model developed by the
organization to manage and control risk. The roles of board in ensuring corporate governance are
had been determined in the above report. The report also determined evolving nature of
corporate governance.