STATE GAS LIMITED — Governance Information 2021

Sep 28, 2021

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2021 Corporate Governance Statement

We are committed to achieving best practice across the Company in all that we do, which we believe is fundamental to the long-term performance and sustainability of the Company and the delivery of our strategic objectives.

State Gas Limited (the ‘Company’) believes corporate governance is central to its business objectives and a critical element contributing to the preservation of shareholder value.

The Board has adopted a suite of charters and key corporate governance documents which define the policies and procedures followed by the Company. These documents can be found in the Governance section of the Company’s website and are reviewed regularly to address changes in governance practices and the law.

The Company’s Corporate Governance Statement references the ASX Corporate Governance Council Corporate Governance Principles and Recommendations (4th Edition) (the “Principles”).

The Principles are outlined on the following pages, with the corresponding section of this Corporate Governance Statement addressing the Company’s practices.

This statement provides an outline of the main corporate governance policies and practices the Company had in place during FY21 and how the Company’s framework aligns with the Principles (unless otherwise noted).

This statement has been approved by the Board of Directors of the Company and the information contained herein is correct as of 29 September 2021.

You can find further information on the structure of our business, our board and management team along with our policies and practices on our website.

Website Links:

Company information

https://stategas.com/company-profile/

Corporate governance

https://stategas.com/corporate-governance/

Recommendations	Recommendations	Compliance with recommendations
rincip	le 1 – Lay solid foundations for management and oversight
1.1	Role of Board	The Board has established a clear distinction between the functions and	
	and	responsibilities reserved for the Board and those delegated to management, which
	management	are set out in the Company’s Corporate Governance Charter (Charter). The Charter
		also provides an overview of the roles of the Chairman, Directors and Executives.
		A copy of the Charter is available in the Governance section of the Company’s
		website.
1.2	Information	The Company carefully considers the character, experience, education, skill set as	
	regarding	well as interests and associations of potential candidates for appointment to the
	election or re-	Board and conducts appropriate checks with assistance from board members to
	election of	verify the suitability of the candidate prior to their election.
	Director
	candidates	Comprehensive biographical information is provided to shareholders in the notice of
		meetings to enable them to make an informed decision on whether to elect or re-
		elect a Director.
		The Company has appropriate procedures in place to ensure material information
		relevant to a decision to elect or re-elect a Director is disclosed in the Notice of
		Meeting provided to shareholders.

Principle 1 – Lay solid foundations for management and oversight

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Recommendations Compliance with recommendations

Principle 1 – Lay solid foundations for management and oversight (continued)

1.3 Written In addition to being set out in the Charter, all directors and senior executives have a contracts of written agreement which formalises the terms of their appointment. Each Director appointment commits to a letter of appointment which specifies the term of their appointment, the envisaged time commitment, expectations and duties relating to the position, remuneration, disclosure and confidentiality obligations, insurance and indemnity entitlements, details of the Company’s corporate governance policies, and reporting lines.

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The Company has an Employment Agreement with the Executive Chairman, Richard Cottee, the key aspects of which are disclosed in the Remuneration Report contained within the Annual Report.

Each Senior Executive enters into an employment contract which sets out the material terms of employment, including a description of position and duties, reporting lines, remuneration arrangements and termination rights and entitlements. Contract details of senior executives who are Key Management Personnel can be found in the 2021 Annual Report.

1.4 Company The Company has a board-appointed company secretary. You can view their Secretary biographical details and qualifications in the 2021 Annual Report.

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The company secretary has overall responsibility for the company secretariat function and is directly accountable to the board, through the chairman, on all matters to do with the proper functioning of the board. This includes advising the board and its committees on governance matters, coordinating board business and providing a point of reference for dealings between the board and management.

All directors have access to the advice and services of the company secretary.

1.5 Diversity and The Company’s Diversity Policy is disclosed on the Company’s website and sets out  inclusion its objectives and reporting practices regarding diversity.

The Board continues to review and monitor the Company’s diversity profile with a view to setting meaningful targets for the advancement of diversity within the Company.

Gender diversity statistics as at 30 June 2021 are outlined in the table below.

Item	Men	Women
Number of total employees	5	1
Percentage of total employees	83%	17%
Number of total senior executives	4	1
Percentage of total senior executives	80%	20%
Number of total Board members	5	-
Percentage of Board members	100%	0%

*For the purpose of determining the above statistics, the Company considers “Senior Executives” to be those individuals included as Key Management Personnel in the 2021 Annual Report.

FY2021 Measure

Targets	Objective	Progress
Eliminate discrimination in the	Ensure equal opportunity	Achieved
workplace.	training is offered.
Support diversity, including	Ensuring recruitment and	In progress
gender diversity into leadership	development programs aim for
positions.	50% female participation of
	executive positions.

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Recommendations Compliance with recommendations

Principle 1 – Lay solid foundations for management and oversight (continued)

• 1.6 Board reviews The Board undertakes an evaluation process each year to assess its performance.  The assessment is conducted by the Executive Chairman who seeks Board and Management feedback on the performance of the Board and Committees as a whole, as well as feedback on individual directors and the Company’s reporting and governance practices. The next evaluation is scheduled to be completed in H2 2021.

• 1.7 Management The Chair of the Board is responsible for evaluating the performance of Management  reviews and Executive Directors. At least annually, the Board formally evaluates the performance of Management and the Executive Chairman and Executive Director.

• Principle 2 – Structure the board to add value 2.1 Nominations A Nomination Committee has been established with its own charter and its  committee membership consists of the Chairman of the Board and all 3 non-executive Directors, 2 of whom are independent. The Committee is chaired by the Executive Chairman of the Board. The qualifications of the members are set out in the Annual Report. Further details regarding the Nomination Committee’s functions are set out in the Nomination Committee Charter which is available on the Company’s website.

• 2.2 Board skills The skills, knowledge and experience set out in the table below have been identified  matrix as those that are required for the effective management of the Company. The Board possesses broad coverage of these skills and attributes. Further details regarding the skills and experience of each Director are included in the 2021 Annual Report.

Principle 2 – Structure the board to add value

Skills Matrix

The skills were determined by what is considered important for the management of a publicly listed company and specific to the industry in which the Company operates.

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Recommendations Compliance with recommendations

Principle 2 – Structure the board to add value

• 2.2 Board skills The following table sets out the experience and skills deemed by the Board to be  matrix necessary or desirable in the Company’s Directors, and whether they are (continued) represented on the Board.

Competency	Representation of skills held by directors
Strategy Track record of developing and implementing a successful strategy (strategydevelopment & strategyexecution).	5 Directors
Gas industry expertise Experience in the oil andgas industry.	3 Directors
Financial Acumen Senior executive or equivalent experience in financial accounting and reporting, corporate finance, risk management, and internal financial controls, including an abilitytoprobe the adequacies of financial and risk controls.	3 Directors
Corporate Governance Strong corporate governance experience with an understandingofpubliclylisted companyobligations.	4 Directors
Capital Markets and/or Mergers and Acquisitions Experience in capital markets and/or experience in identifying, implementing or executing mergers and acquisitions.	4 Directors
External Communications Experience in using external communications to influence other business leaders, industry peak bodies, government, and financial market and investor stakeholders.	4 Directors
Executive Management Experience in evaluating performance of senior management and oversee strategic human capital planning. Experience in organisational change and management programs.	3 Directors

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Recommendations

Compliance with recommendations

Principle 2 – Structure the board to add value (continued)

• 2.3 Disclose independence and length of service

The Company currently has a five-member Board, of which two are independent Non-executive Directors. Together, the Directors have a broad range of experience, expertise, skills, qualifications and contacts relevant to the Company and its business.

Details of their individual skills and experience are set out in the 2021 Annual Report and on the Company’s website.

Board composition

Board	Audit	Risk	Nomina tion	Remun eration
Richard Cottee1
(Appointed 3 June 2019)	A	M	C	A
Executive Chairman
Anthony Bellas1
(Appointed 16 June 2017)	C	M	M	M
Independent Non-executive Deputy Chairman
Greg Baynton
(Appointed 7 June 2017)	A	A	A	M
Executive director
Robert Towner
(Appointed 10 February 2017)	M	M	M	C
Non-executive
Ian Paton
(Appointed 16 August 2017)	C	M	M	M
Independent Non-executive

C – Chairman, M – Member, A – Attendee

2.4 Majority of Directors independent

In accordance with the Board Charter which is contained within the Charter and available on the Company’s website, a Director is considered independent if the Director is independent of management and free of any business or other relationship that could materially interfere, or be perceived as interfering, with the exercise of an unfettered and independent judgment in relation to matters concerning the Company.

Two of the five Board members are considered to be independent – Anthony Bellas, and Ian Paton. Greg Baynton and Richard Cottee are executive directors and therefore not considered independent. Robert Towner is a director of Triangle Energy Limited, State Gas Limited’s largest member and a substantial shareholder and therefore is not considered independent. The Board considers that the size and scope of State Gas Limited’s activities does not justify the cost of appointing an additional independent director at this stage.

The decision as to whether a Director is independent is a decision made by the Board.

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Recommendations Compliance with recommendations

Principle 2 – Structure the board to add value (continued)

2.5 Chair The Executive Chairman, Richard Cottee, does not meet the ASX Corporate  independent Governance assessment criteria for independence due to his role as an executive. Further details regarding the Executive Chairman are set out in the 2021 Annual Report and also available on the Company’s website. 2.6 Induction and An induction process including appointment letters and ongoing education exists to  professional promote early, active and relevant involvement of new members of the Board. development Directors are encouraged to undertake continuing professional development activities each year and to join appropriate professional associations in order to continually develop and enhance their respective levels of industry knowledge, technical knowledge and other skills required to discharge their role effectively. Principle 3 – Act ethically and responsibly 3.1 Values The Company is committed to conducting all of its business activities fairly, honestly  with a high level of integrity, and in compliance with all applicable laws, rules and regulations. The Board, management and employees are dedicated to high ethical standards and recognise and support the Company’s commitment to compliance with these standards. The Company’s values are set out in its Statement of Values, a copy of which is available on the Company’s website. 3.2 Code of The Company has a Code of Conduct for Directors, senior executives, employees,  conduct consultants and contractors, which sets out the fundamental principles of business conduct expected by the Company. The Code of Conduct, as it relates to Directors, is contained within the Charter and available on the Company’s website. 3.3 Whistleblower The Board has adopted a Whistleblower policy to ensure concerns regarding  policy unacceptable conduct including breaches of the Company’s code of conduct can be raised on a confidential basis, without fear of reprisal, dismissal or discriminatory treatment. The purpose of this policy is to promote responsible whistleblowing about issues where the interests of others, including the public, or of the organisation itself are at risk. Under the Company’s Whistleblower Policy, any material breaches are to be reported to the Chairman and the Company Secretary of the Board. A copy of the Whistleblower Policy is available on the Company’s website. 3.4 Anti-bribery and The Company has a zero-tolerance approach to bribery and corruption and is  corruption committed to acting professionally, fairly and with integrity in all business dealings. policy The Board has adopted an anti-bribery and anti-corruption policy for the purpose of setting out the responsibilities in observing and upholding the Company’s position on bribery and corruption, reinforce the Company’s values and to provide information and guidance to those working for the Company on how to recognise and deal with bribery and corruption issues.

Under the Company’s Anti-Bribery and Anti-Corruption Policy, any material breaches of the Anti-Bribery and Anti-Corruption Policy are to be reported to the Chairman and Company Secretary of the Board. A copy of the Anti-Bribery and Anti-Corruption Policy is available on the Company’s website.

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Recommendations Compliance with recommendations

Principle 4 – Safeguard integrity in corporate reporting

• 4.1 Audit The Company has established an Audit Committee which is comprised of three Non- committee executive Directors and is chaired by Independent Non-executive Director Tony Bellas. Further details about the membership of the Audit Committee, including the names and qualifications of its members, are detailed in the Annual Report.

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The Audit Committee Charter is contained within the Charter and available on the Company’s website, along with information on its members. The number of meetings held by the Committee and the Directors’ attendance at meetings is disclosed each year in the Company’s Annual Report.

• 4.2 Executive The Executive Chairman and Chief Financial Officer provide a statement to the Chairman and Board and Audit Committee in advance of seeking approval of any financial report to CFO the effect that the Company’s risk management and internal compliance and control certification of systems are operating efficiently and effectively in all material respects. In financial accordance with the above, the Board has received a written assurance that the statements declaration provided under section 295A Corporations Act is based on a sound system of internal control and risk management, which is operating effectively in all respects in relation to material business risks and financial reporting.

• 4.3 Integrity of All financial reports released to the market including the quarterly cash flow reports financial reports are prepared by management and reviewed by the Board. Such reports are not released to the market without this review and approval process.

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Principle 5 – Make timely and balanced disclosure

• 5.1 Disclosure The Company has adopted a Continuous Disclosure Policy which sets out the policy processes and practices to ensure compliance with the continuous disclosure requirements under the ASX Listing Rules and the Corporations Act. A copy of the policy and guidelines are available on the Company’s website.

• 5.2 Material market Under the Company’s Continuous Disclosure Policy, all material released to the announcements market is approved by members of the Disclosure Committee, which includes members of the Board, the company secretary, and relevant senior executives. All members of the Board will receive material market announcements prior being released.

• 5.3 Investor Under the Company’s Continuous Disclosure Policy, all substantive investor or presentations analyst presentations are released on the ASX Market Announcements Platform ahead of such presentations.

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Recommendations Compliance with recommendations

Principle 6 – Respect the rights of security holders 6.1 Publicly The Company’s website contains extensive information on the Company, its history  available and business activities and information relevant to investors as set out in the information guidelines. accessible on website Investors may access copies of ASX announcements, notices of meeting, investor presentations and annual reports, as well as general information about the Company, on the Company’s website. 6.2 Investor Through its shareholder communications, the Company aims to provide information  relations that will enable existing and potential shareholders and financial analysts to make programs informed decisions about the Company’s value. The Board recognises the importance of regular and proactive interaction with the market in order to ensure the Company’s investors remain fully informed about its activities. As well as market announcements, this interaction can be in the form of group or one-on-one briefings with investors and analysts, and presentations at industry conferences. 6.3 Facilitate Shareholders are encouraged to attend the Company’s Annual General Meeting and  participation at to ask questions of Directors. The notice of meeting includes a process to enable meetings of shareholders to submit questions to the Board and the Company’s auditor prior to security holders the meeting. 6.4 Resolutions by All resolutions of security holder meetings will be decided by poll rather than a show  poll of hands. 6.5 Facilitate The Company provides its investors the option to receive communications from, and  electronic send communications to, the Company and the share registry electronically. communication Principle 7 - Recognise and manage risk 7.1 Risk committee The Board has established a Risk Committee to oversee the Company’s  management of risk on behalf of the Board. The Risk Committee is constituted by all three non-executive directors and the Executive Chairman. Mr Ian Paton, a non-executive director, is chair. Details of membership of the Remuneration Committee, including the names and qualifications of Committee members, are set out in the 2021 Annual Report. The number of meetings held and attended by each member of the Risk Committee during the financial year is detailed in the 2021 Annual Report. The Charter for the Risk Committee is included on the Company’s website. The Risk Committee is responsible for ensuring that adequate policies in relation to risk management, compliance and internal controls are in place. The Board retains overall responsibility for risk. 7.2 Annual risk The Board is responsible for the oversight and management of risk, including the  review identification of material business risks on an ongoing basis. A review of material business risks has been conducted in the current period, which concluded that controls over risk management processes were adequate and effective. 7.3 Internal audit The Company does not have a formal internal audit function. To ensure compliance  with the Company’s published policies and procedures and its legal and regulatory obligations, the Company continually reviews and refines processes and policies to enhance the effectiveness of the Company’s internal controls. Any identified control and process issues are formally reported to the Audit Committee and formalised action plans are put in place to address the issues.

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Recommendations Compliance with recommendations Principle 7 - Recognise and manage risk (continued)

7.4 Environmental The Company has environmental and social sustainability exposures typical for a  and social risks small-cap petroleum company operating in a regional area. The Board considers sustainable and responsible business practices as an important long-term driver of performance and shareholder value and is committed to transparency, fair dealing, responsible treatment of employees and stakeholders and positive interaction with the community. Principle 8 - Remunerate fairly and responsibly 8.1 Remuneration The Company’s remuneration framework is overseen by the Remuneration  committee Committee comprising three directors, two of whom are independent non-executive directors. The Remuneration Committee is chaired by Robert Towner. The Charter governing the conduct of the Remuneration Committee is available on the Company’s website. Details of membership of the Remuneration Committee, including the names and qualifications of Committee members, are set out in the 2021 Annual Report. The number of meetings held and attended by each member of the Remuneration Committee during the financial year is detailed in the 2021 Annual Report. 8.2 Disclosure of The Company seeks to attract and retain high performing Directors and Executives  Executive and with appropriate skills, qualification’s and experience to add value to the Company Non-Executive and fulfil the roles and responsibilities required. Further details of the Company’s Director remuneration methodologies are set out in the 2021 Annual Report. remuneration policy Executive remuneration is to reflect performance and accordingly, remuneration is structured with a fixed component and performance-based component. NonExecutive Directors are paid fixed fees for their services in accordance with the Company’s Constitution. Fees paid are a composite fee (covering all Board and Committee responsibilities) and any contributions by the Company to a fund for the purposes of superannuation benefits for a Director. No other retirement benefits schemes are in place in respect to Non-Executive Directors.

The Company provides long term incentives to executives via its Employee Share Option Plan. The Plan is designed to focus executives on delivering long-term shareholder returns. Under the Plan, participants will be able to exercise their options subject to market vesting conditions being satisfied. Participation in the Plans are at the Board’s absolute discretion and no individual has a contractual right to participate in the Plans. Further details regarding remuneration and share retention policies and the remuneration of Executive and Non-Executive Directors, are set out in the 2021 Annual Report and detailed in the Securities Trading Policy available from the Company’s website.

8.3 Policy on Details of the Company’s Employee Share Option Plan are set out in the hedging equity Remuneration Report which can be found in the 2021 Annual Report. incentive schemes The Company’s Employee Share Option Plan prohibits transactions which conflict with the Company’s Securities Trading Policy (which prohibits Directors and executives from entering into margin lending arrangements or short-term dealings trading in relation to company securities). A copy of the Securities Trading Policy is available on the Company’s website.

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