Corporate Governance and Ethics Report: Seven Group Holdings Analysis

This report provides an analysis of the corporate governance and ethical practices of Seven Group Holdings (SGH), an Australian diversified investment and operating group. The analysis includes a review of SGH's financial reports to assess its corporate governance structure, board orientation, and communication strategies. The report examines the composition and orientation of the board of directors, considering its focus on stakeholder management and shareholder-agency, and how the board communicates with stakeholders. The study utilizes the ASX corporate governance principles and relevant theories, such as legitimacy theory, to interpret the company's communications. The report highlights the company's financial performance, including its investments in oil and gas, industrial services, and media. The report also considers how the company's disclosures reflect its ethical outlook, considering stakeholder perspectives and the impact of its actions on society. The report uses academic journal articles to support the discussion.

Running head: ETHICS AND GOVERNANCE
Ethics and governance
Name of the Student
Name of the University
Author Note

ETHICS AND GOVERNANCE
Executive summary:
The paper is developed to conduct a research and make a report n the corporate governance
of the company by reviewing its financial report published at the end of every year. The
chosen company for the analysis is Seven Group Holdings limited and the corporate
governance structure of the company has been evaluated in terms of different relevant
applicable theories. In addition to this, the orientation of the board has been done and
interpretation of the communications made using legitimacy theory. The later part of report is
prepared by reviewing the journal article that provided guidance in the discussion.

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Table of Contents
Introduction:...............................................................................................................................3
Introduce and summarize the company:....................................................................................3
Summary of the corporate governance:.....................................................................................5
Board orientation:.......................................................................................................................6
Interpretation of company communication using Legitimacy theory:.....................................14
Conclusion:..............................................................................................................................15
Reference list:...........................................................................................................................17

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Introduction:
The report demonstrate the evaluation of the corporate governance of one of the
companies chosen from the stock exchange of Australia. The chosen company for analyzing
the framework and the structure of the corporate governance is SVW (Seven group holding)
which is a leading diversified investment and operating group of Australia. The company has
leading investment and investment in oil and gas, industrial services and media and they are
also involved in the development of the expanding presence in the projects of oil and gas in
United States and Australia. In addition to this, the orientation of the board of directors of the
company has also been explained in the paper. Such analysis has been conducted by
analyzing the annual report of the company and retrieving the relevant information
concerning the topic that is discussed. In addition to these, the paper discusses about the
interpretation of the communications of company and this has been explained using
Legitimacy theory. For the presentation of the given case, the academic journal articles has
been used as an example.
Introduce and summarize the company:
Seven Holding Group limited (SGH) is a diversified investment and operating group
of Australia which is involved in the development of the oil and gas projects in United States
and Australia. In all the markets in which the company is operating, a unique position is held
by SGH along with leading market position of the industrial service business led by Coates
Hire and WesTrac. Some of the business that is held by the company include supplier of
generator, lighting towers and pump and largest equipment hire business of Australia. The
company has also interest in projects of oil and gas in the United States and Australia and a
considerable amount of shareholding is done by the company in Beach Energy Limited
(sevengroup.com.au 2019). Positioning of the group has been done uniquely that helps in

ETHICS AND GOVERNANCE
capturing the benefits of market thematic such as infrastructure investment, growth of mining
production and east coast. Performance of these three sectors has been remarkable with the
objective of growth and sustaining profitability level that was achieved in year 2019. It helps
in ensuring that the leading market position is continued to be held by the business.
The focus of the company in the financial year 2019 was to capture the growth of
business along with supporting the drive of company for the productivity and greater
efficiency. Focusing on the long term commitments of maintaining customer relationship and
excellence are the growth driver of the company.
The business of Allight Sykes held by SVW is the market leader in the
manufacturing, distribution and design of dewatering, lighting and power distributions. It has
an active business in stretching back thirty years and they are the equipment suppliers for the
construction, largest resource and hire companies providing high level of services and quality
products (sevengroup.com.au 2019).
Furthermore, the financial results of the company was outstanding because of an
improvement in the operating performance. Compared to year 2016, the underlying earnings
before tax and interest of the group has more than doubled. The share of the result of the
group from seven west media has impacted the statutory net profit after tax of the company.
Moreover, the price of domestic gas has been driven to historically higher level because of
gain in momentum on the shortage of domestic gas by the investment of group in energy
sector. The market value of the investment made by company in Beach Energy Limited has
grown considerably and this has contributed to the value of EBIT (sevengroup.com.au 2019).
Furthermore, the guidance of the group was updated because of strength of the performance
of Coates Hire, WesTrac and Beach energy. It is demonstrated by the results that the group

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delivers the quality business and achievements that can be made through quality business
partners, excellence workforce and capable team of management (Mitchell, 2019).
Summary of the corporate governance:
It is outlined in the financial report of the company that the practice of corporate
governance complies with the 3rd edition of the principles and recommendation of the ASX
corporate governance council.
Composition of the board of directors- In order to ensure that the board represents
the relevant expertise with regard to the material risk, the composition of the board of
directors has been done specifically. In relation to the diversity policy of the company and the
objective of achieving such board having people from diversified background, the existing
composition is done accordingly. As per the constitution of the company, it is provided that
the board would have a maximum of twelve directors and a minimum of three directors. In
the current financial year 2018, the board of Seven group holding limited has nine directors
of which there are five non-executive directors. The recommendation of the ASX that the
majority of the board should be represented by independent directors is also acknowledged
by the board. Hence, there is a majority of independent directors, with five independent
directors and four non independent directors (Thijssens et al., 2015). The chairman of the
board is Mr. Kerry Stokes who is the non-independent director in office. In addition to this,
regular assessment is conducted by the board for determining the independence of the
directors.
Reports from Chairman and the CEO- The report from CEO and chairman
provides the information on review of the financial and operational performance of the
organization so that informed assessment can be made by the shareholders about the

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prospects and the business strategies. It is opined by the CEO and the chairman of the
company that there is no changes in the state of affairs that occurred during the financial year
2018. During this financial year, the principal activities of the group included diversified
investment and operating along with the interest in equipment hire, heavy equipment services
and sales, energy assets and broadcasting. In addition to this, the report also outlined the
description on the movement in the share price, refinancing of corporate syndicated liability,
prospects, business strategies, likely development and environmental disclosure
(sevengroup.com.au 2019).
Summarizing the remuneration report- The remuneration report is presented by the
nomination and remuneration committee and it outlines the key aspects of the framework,
remuneration policy and remuneration that is awarded to the key personnel’s of management,
financial performance. The movement in the share price along with the outcomes of
remuneration for the financial year 2018 has also been outline din the report. Any changes in
the framework of remuneration has also been discussed. Furthermore some other facts that
has been disclosed in the report includes summary of the incentive and performance outcome,
principles of executive remuneration, governance principles of remuneration, outcomes and
linking strategy of the principles of executive remuneration, summary of contracts of
executive, remuneration framework of non-executive director and executive chairman,
related party transactions and equity holdings of KMP and link between the performance of
group and remuneration. The competitiveness of remuneration framework is evaluated by the
board by reviewing the proposal and making refinement (sevengroup.com.au 2019).
Furthermore, the incentive opportunities to the key management personnel’s has been
proposed to change for aligning with the remuneration principles of the group.

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Board orientation:
The contribution of the board of directors has been critical to every transactions as
this helps in ensuring the fact that the risks was managed and understood by the board along
with supporting the management to capture the opportunity and achieve the outcomes. The
responsibilities and the function of the board of directors differs with the composition of the
board and the relationship of the board with the company’s management. Board orientation is
the process that enables the directors to the governance of the board by incorporating some
elements which are agreed upon (Arora & Lodhia, 2017). The board orientation of Seven
Holding group limited can be summarized in the table below:
Orientation Composition of
board
Focus of board Key
communication
Stakeholder-
Managerial branch
The majority of the
directors in the
board are
independent with the
special obligations.
This will help in
ensuring that fair
returns are received
by all the
stakeholders of the
company receives a
fair return.
Stakeholders of the
company do not
They intend to set
the objectives for
ensuring that there is
consistency of the
organizational
behavior with the
workplace that is
inclusive and
diversity is
embraced.
Structuring of the
board is done in a
way that helps in
adding value to the
The disclosures are
voluntary and the
board communicates
through the
director’s report,
corporate
governance
statements and the
duties and
responsibilities in
driving the value for
the stakeholders.
The disclosures
about the efforts

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receives equal
responds and
organization and the
board value them as
per their degree of
control over
resources.
business. Moreover,
the value of
shareholders are
driven by engaging
with all the
stakeholders in a
constructive manner.
Moreover, the risks
associated with the
business is managed
and identified by the
implementation and
adoption of
appropriate systems
that helps in
addressing such
risks and
contributing to the
development of
corporate objective
(Ransome &
Sampford, 2016). It
has been observed
by reviewing the
information from the
taken by the
management of the
organization is
mentioned in the
financial report
produced by the
company.

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financial report of
Seven group holding
limited that the
shareholders are the
most valued
stakeholders and
their requirement
and wants are placed
first compared to
other stakeholders.
Shareholder- agency The composition of
the board of
directors of Seven
holding group is that
it has appointed
majority of
independent director
as per the
recommendations of
ASC corporate
governance and
principles (Khan,
2017).
The focus of the
board of Seven
group holdings
limited is outlining
the matters related to
the annual budget,
payment of
dividends, approval
of capital,
monitoring capital
management. In
addition to this, the
board is also
empowered to
manage the
The performance
about the company
is communicated by
the board using the
financial statements
and directors report
that summarizes the
operational and
financial
performance review.
Financial statements
such as statement of
changes in equity,
statement of
financial position

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company’s business
according to the
requirements of the
Corporation Act,
2001. They serve
and represent the
interest of the
shareholders by
reviewing,
overseeing and
appraising the
strategies of the
company.
Furthermore, the
charter of the board
is also responsible
for identifying and
investing in the
investment
opportunities. This is
done by leveraging
the expertise of the
company and taking
advantage of
situations that are
and profit and loss
statement along with
the remuneration
report serves as the
basis of
communication to
the shareholders.

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considered as
opportunistic (Odera
et al., 2016).
Since the focus of
the board is to
satisfy the needs of
the shareholders,
some strategic
objectives are
identified by the
board that helps in
underpinning the
economic
sustainability and
driving the value of
shareholders. This
involve operating
and investing in a
diversified market
portfolio with the
objective of
maximizing return
on capital and profit
(Wulansari &
Sholihin, 2017).