Please help me with this accounting assignment! Requirement and Data will be provided! The word limited is 1000 . I'm in a hurry so please be quick! Thanks so much!

SACGASCO LIMITED ABN 83 114 061 433 ANNUAL FINANCIAL REPORT For the year ended 31 December 2016 SACGASCO LIMITED CONTENTS CONTENTS Page Corporate Directory .....................................................................................................................................1 Chairman's Report ......................................................................................................................................2 Review of Operations ..................................................................................................................................4 Directors' Report .......................................................................................................................................13 Auditor's Independence Declaration .........................................................................................................27 Corporate Governance Statement ............................................................................................................28 Consolidated Statement of Financial Position ...........................................................................................36 Consolidated Statement of Profit or Loss ..................................................................................................37 Consolidated Statement of Comprehensive Income .................................................................................38 Consolidated Statement of Changes in Equity ..........................................................................................39 Consolidated Statement of Cash Flows ....................................................................................................41 Notes to the Consolidated Financial Statements ......................................................................................42 Directors' Declaration ................................................................................................................................74 Independent Auditor's Report ...................................................................................................................75 Stock Exchange Information .....................................................................................................................80 SACGASCO LIMITED CORPORATE DIRECTORY CORPORATE DIRECTORY Directors Mr Andrew Childs Mr Gary Jeffery Mr Philip Haydn-Slater Secretary Mr David McArthur Registered Office Level 2, 55 Carrington Street Nedlands WA 6009 Telephone: +61 8 9423 3200 Facsimile: +61 8 6444 8407 Principal Office Level 2, 210 Bagot Road Subiaco WA 6008 Telephone: +61 8 9388 2654 Postal Address PO Box 584 Fremantle WA 6959 Auditors HLB Mann Judd (WA Partnership) Level 4, 130 Stirling Street Perth WA 6000 Bankers ANZ Banking Group Limited Level 6, 77 St Georges Terrace Perth WA 6000 Share Registry Advanced Share Registry Services Limited 110 Stirling Highway Nedlands WA 6009 ASX Code Shares: SGC Country of Incorporation and Domicile Australia Website and Email Website: www.sacgasco.com Email: info@sacgasco.com Twitter: @SacGasCo 1 SACGASCO LIMITED CHAIRMAN'S REPORT CHAIRMAN'S REPORT Dear Shareholder The past twelve months has been a highly productive period for your Company, Sacgasco Limited, and I am pleased to be writing to you following the execution of a number of key corporate and operational objectives. First and foremost, the Board has remained steadfast in its approach throughout the year towards consolidating the Company's position as one of the leading onshore natural gas development plays in the Sacramento Basin. Through our strategic acquisition of private company Peregrine Limited in January 2017, Sacgasco increased its working interest in the Dempsey Prospect from 55% to 90%, and our working interest in the Alvares Prospect was increased from 40% to 75%. Significantly, the transaction provided Sacgasco with operatorship at both of these compelling assets. Importantly, we also retained the experienced Sacramento based operating capability provided by Dero Parker's Integrity Management Solutions, Inc. The Peregrine acquisition, along with a number of other positive initiatives undertaken by your Board, has added significant tangible value to Sacgasco and provided majority working interest and operatorship of two very compelling, drill ready natural gas assets. The Board believes the next 12 months will be a transformational period for the business as we fast-track the development of our world-class natural gas assets in the Sacramento Basin. Throughout the past year, the Company has consolidated its development strategy in the Sacramento Basin, targeting near-term gas supply to a Top-10 World Economy with a commensurate high-demand gas market with a significant energy supply deficit. This approach delivers to Sacgasco additional critical and hard-to-replace infrastructure and access to further exploration prospects. Further highlighting this deficit is the fact that California's average gas demand is approximately 7 billion cubic feet per day (2.5 Tcf per year), with local Californian gas production amounting to less than 10% of that demand. \"California imports about 90 percent of its natural gas demand, and Californian utilities expect natural gas imports to be about 98 percent in 2025.\" Natural Gas Outlook for California Sacgasco is operating in a region that has produced over 11 Tcf of gas to date and has immediate access to critical infrastructure which provides the foundation for the company's 'discovery thinking' approach to unlocking shareholder value. A high percentage of operators in the Sacramento Basin are focussed on production from shallower Petroleum Systems which has created significant opportunities for Sacgasco that has the foresight and flexibility to pursue previously under-explored parts of the Basin with under-recognised and unexploited, but proven petroleum systems. Importantly, operatorship, access to existing infrastructure and the capacity to supply directly into a growing local market has Sacgasco positioned well ahead of the curve in terms of making the transition from explorer to significant producer in the near-term. \"After recent strategic acquisitions the Sacgasco Joint Venture's production in 2017 is poised to rank in the Top 5 in the Sacramento Basin, but it would only take a flow rate of just 2.5 million cubic feet of gas per day from a combination of existing wells and a well on the Dempsey Prospect to move the JV ranking to 2nd.\" 2 SACGASCO LIMITED CHAIRMAN'S REPORT Despite trying industry conditions at times during the past 12 months Sacgasco has remained proactive in its approach to growing the business by executing acquisitions and attracting capital. The Board continues to advance positive discussions with respected industry participants regarding the development of our Sacramento Basin assets with a view to delivering significant value to our shareholders in the coming 12 months. Post year end, the Company was also very pleased to welcome Mr. Philip Haydn-Slater to the Sacgasco Board as a Non-Executive Director. Philip brings to the Company a wealth of corporate experience and provides access to a number of strategic contacts both in London and globally that will potentially generate significant value for shareholders. The near-term focus for the Board is firmly on the commencement of drilling at our Dempsey natural gas prospect in the first half of 2017 using a low-cost vertical well development program. We are also committed to expanding our production operations and expect to progress evaluation of the overlooked Alvares gas discovery in the coming months. Positive Future Outlook for Natural Gas Markets To further validate Sacgasco's near -term development strategy in the Sacramento Basin, ASX-listed Magnum Gas and Power recently announced its intention to drill an appraisal well at the on-trend Tulainyo gas discovery by September 2017. The proposed drilling will be undertaken on a high-multiple promoted basis, which independently demonstrates the highly-regarded potential of the natural gas plays in the Sacramento Basin. We continue to be buoyed by the positive market outlook for natural gas, with many experts continuing to predict that global energy demand will grow significantly over the next two decades. According to the BP Energy Outlook published in February 2017, \"the gradual transition in the fuel mix is set to continue with renewables, together with nuclear and hydroelectric power, expected to account for half of the growth in energy supplies over the next 20 years. Even so, oil, gas and coal remain the dominant sources of energy powering the world economy, accounting for more than three-quarters of total energy supplies in 2035 (down from 85% in 2015). Natural gas is projected to grow at more than twice the rate of either oil or coal, with its share within primary energy increasing throughout the period from 2016 to 2035. Out of these, gas is the fastest growing fuel (1.6% p.a.), with its share in primary energy increasing as it overtakes coal to be the second-largest fuel source by 2035.\" These views testify to a positive future for natural gas producers, and further reinforces Sacgasco's view that our natural gas assets located onshore California have a high level of intrinsic value ready to be realised by smart production acquisitions and the drill bit. Finally, the Company is very encouraged by increased capital market and investor interest in the interpreted leverage demonstrated by Sacgasco's natural gas assets and we look forward to a successful 2017. Concurrently with the publishing of our 2016 Annual Report Sacgasco has adopted a new logo, a stylised Peregrine. We will also be launching our new website at www.sacgasco.com and we will follow with an updated corporate presentation. Yours faithfully, Andrew Childs Chairman 3 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 REVIEW OF OPERATIONS Overview Sacgasco Limited is listed on the Australian Securities Exchange (ASX: SGC). Sacgasco has one operational segment, being the exploration and development of oil and gas interests, onshore California. HIGHLIGHTS Sacgasco's growth strategy is aimed at increasing Natural Gas production to underpin its revenue profile as a means to accelerate company growth through the drilling of its world-class exploration and appraisal propects. Targeting gas supply to 2.5 Tcf per year Californian domestic gas market and growing North American export LNG markets. Sacgasco increased equity in Dempsey Prospect from 55% to 90% and Alvares Appraisal Prospect from 40% to 75% through the acquisition of Peregrine for issue of 32 million fully paid SGC shares and $3 million of future revenue from gas sales from Dempsey. Importantly, Sacgasco became operator of all its Sacramento Basin Assets. Sacgasco has signed a farmout agreement for 20% Working Interest with Bombora Natural Energy Pty Ltd (\"BNE\") for its large, natural Dempsey Gas Prospect to provide funding for 32.5% of Dempsey well costs. Discussions are also progressing with additional potential funding partners for the drilling of the Dempsey Prospect by mid-2017. Farmout of 6% working interest in Alvares prospect for funding of 8% in initial Alvares well. Farmout of up to 14% WI in prospects within Area of Mutual Interest (\"AMI\") for up to $280,000, AMI covers some 250,000 acres in the Sacramento Basin - potentially holding multiple world class natural gas fields. In the first quarter of 2017, the Company significantly strengthened its asset base in the Sacramento Basin, California, through Purchase and Sales Agreements ('PSA') to acquire 18 additional operated natural gas wells in the Sacramento Basin of California. Acquisition of new leases and producing assets in Sacramento Basin are well advanced. Sacgasco's development plans for large-scale natural gas projects in Sacramento Basin are supported by: o Geological and Geophysical information that reinforces interpreted multi-Tcf natural gas production potential under SGC Sacramento Basin leases; o An industry switch to areas with lower cost of operations that are close to infrastructure which enables earlier monetisation of discoveries. 4 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 SGC's Sacramento gas assets, onshore California Sacgasco's Strategy for Delivering Growth: Californian-focused Natural Gas developer Sacgasco Limited (ASX: SGC) (\"SGC or the Company\") has established a robust portfolio of large-scale natural gas prospects in the Sacramento Basin, located in a community that understands and welcomes the benefits of the Natural Gas industry, close to under-filled gas trunklines connecting to the attractive Californian gas market. California's tech industry dominated economy is expected to continue to grow along with commensurate increased energy consumption. SGC's development strategy based on funding drilling though a farmout process, represents an opportunity to achieve massively increased near-term gas supply to a domestic market with a major energy supply deficit. California's average gas demand is approximately 7 billion cubic feet per day or 2.5 Trillion cubic feet of gas per year, with Californian gas production only amounting to less than 10% and declining. SGC's management team remains firmly committed to progressing a number of corporate and operational objectives in order to expand the company's gas business in California, and to commence drilling of the Company's flagship Dempsey natural gas prospect in the first half of 2017. 5 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 Revisiting mature areas and applying a truly investigative approach to geology has resulted in huge discoveries of oil and gas over time. Strategy: SGC is targeting substantial gas production to initially supply the 2.5 Tcf per year demand of the local Californian gas market, and subsequent supply to the growing LNG export market in North America. The Company has an extensive portfolio of appraisal and exploration stage gas prospects, including a number of multi-Tcf opportunities in the proven Sacramento Basin. Buzzard Oil (North Sea), Zohr Gas (Egypt), Gunslinger Oil (California) Edvard Grieg and Johan Sverdrup Oil (Norway) and Alaska are but a few examples of Major to SuperGiant discoveries in industry-labelled \"mature\" areas since 2000. The Sacramento Basin has significant development upside because underlying gas potential has been overlooked by operating companies which produce from the widely recognised existing shallow petroleum systems that have produced over 11 Trillion cubic feet (11 Tcf) gas. Foundation: \"The history of oil and gas exploration demonstrates that some of the best places to explore are in and around existing production areas.\" The Company's key assets are the Dempsey and Alvares natural gas prospects, which have gross unrisked best estimate recoverable prospective resources of 1+TCF* and 2.4 TCF*. * Further details were included in the Company's ASX release dated 4 September 2014: \"The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially movable hydrocarbons.\" On 3 January 2017, Sacgasco concluded the acquisition of an additional 35% equity in, and operatorship of its flagship Dempsey and Alvares Prospects through the acquisition of private company Peregrine Limited ('Peregrine'). Following this key milestone, the Company plans to undertake a 3,200 metre (~10,500 feet) combined appraisal and exploration well in AprilMay 2017. Subsequent to the end of the year, Sacgasco issued 32 million fully paid shares to Peregrine owners. Upon success at Dempsey, Sacgasco will pay the same owners a bonus payment of $3 million derived from future revenue from gas sales from reservoirs beneath the producing Forbes Formation. Such cash flow will be net of royalties and lease level costs attributable to 17.5% working interest (50% of acquired WI) in the first Dempsey Prospect well. Furthermore, Sacgasco has farmed out a working interest in its operated onshore California Area of Mutual Interest (the \"AMI\") to private company Bombora Natural Energy Pty Ltd (\"BNE\"). BNE will fund additional oil and gas leases over highly prospective structures in the Northern Sacramento Basin. 6 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 Funding will be provided in two stages to reflect acreage acquisition. Initial funding of $200,000 will focus on 3 Prospects in which Bombora will earn 20%. Bombora will have the options to fund a further $200,000 of leasing to earn a 20% interest in an additional 6 prospects. SACRAMENTO BASIN - Onshore Northern California Exploraton, apprasal and new ventures Exploration leases have continued to be maintained within the Sacramento Basin during the year. SGC has a working interest (WI) of between 56% and 90% in these leased lands which cover natural Natural Gas prospects. During 2016 interpretation of reprocessed seismic and additional geologic information reinforced SGC's belief that both Dempsey and Alvares are world-class, multi-Tcf prospects. Improved technical data and \"Discovery Thinking\" processes have also been used to identify additional prospects for exploration drilling. Mapping completed to date has resulted in the identification of a portfolio of additional gas prospects and leads, with best estimate recoverable Prospective Resources of gas ranging from 500 Bcf to over 2 Tcf. Dempsey Natural Gas Prospect - Appraisal / Exploration stage (SGC 90% WI) The Dempsey natural gas prospect is SGC's flagship prospect and remains the focus of the Company's near-term development plans. The Dempsey prospect has the potential for near-term, natural gas production because it is located below existing SGC production facilities. Dempsey Prospect Schematic Cross-section The Dempsey prospect has a Proposed Total Depth ('PTD') of 3,200 metres and is anticipated to take around 45 days to drill with costs estimated to be between US$3 and US$5.3 million. This range of costs covers the costs of just drilling an exploration well, up to the costs of also completing the well ready for productiion through Company owned existing pipeline access facilities. The total (100%) unrisked recoverable Prospective Resource, from seven interpreted reservoir zones, on a best estimate deterministic basis in the Dempsey prospect is over 1 Tcf (i.e. over 167 million barrels of oil equivalent (boe) - using an industry standard energy based conversion factor of 6 mcf per boe). 7 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 The Dempsey #1 well will be located within a proven gas field area with existing joint venture owned pipeline and meter station infrastructure easily accessible. Should commercial quantities of gas be found, these existing production facilities with capacity of up to 20 mmcfgpd, and which are connected to the interstate pipeline networks, would be used to sell the gas with minimum delay. Such potential flows, if achieved could result in up to US$60,000 per day of gross well production revenue if gas prices were similar to today's prices. Alvares Natural Gas Prospect - Appraisal stage (SGC 69% WI) The Alvares natural gas prospect is located close to large Natural Gas pipelines and on trend 35 miles from the similarly structured multi-Tcf Tulainyo Project (based on the Shell James 1 well drilled in 1947), mapped by Cirque Resources and involving California Resources Corporation (NYSE: CRC). The Tulainyo Prospect contains Boxer / Ladoga (Dempsey Target) and Stoney Creek (Alvares Gas Sands) targets. Reportedly the well was terminated before 1,800 metres for mechanical reasons, but nevertheless found multiple stacked gas bearing natural reservoirs on a 50 square mile four-way closure on 2D sesimic. n February 2017 Bombora Natural Energy announced (via ASX-listed Magnum Gas and Power) it was negotiating an excluive farm-in to redrill the Tulainyo well on a pay 100% of well costs to earn 10% working interest (10 for 1) basis. The Alvares prospect contains a total (100%) unrisked recoverable prospective natural gas resource on a best estimate deterministic basis of approximately 2.4 Tcf (400 million boe). Alternative methods of evaluating the gas flow potential using the existing Alvares well bore are being investigated further. Alvares Appraisal Project Summary Additional prospects and leads have been mapped and leasing activity is underway as part of the Company's growth strategy. 8 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 PRODUCTION UPDATE Rancho - Capay Gas Field (SGC 90% WI in 4 wells) & Los Medanos Gas Field (SGC 90% WI in 3 wells) SGC acquired a 40% working interest in gas production rights in the above fields in the Sacramento Basin onshore California in late 2012 primarily as a means to acquire leases for further exploration and access an extensive 3D seismic database to generate new exploration opportunities. SGC acquired an additional 15% WI in these wells effective 1 January 2014. Following the end of the reporting year SGC acquired additional production in four fields in order to have access to additional production and exploration prospects. No production is attributable to 2016 from the acquisitions. SGC continues to evaluate production acquisition opportunities that could provide short term cash flow and strategic longer term access to exploration leases, and production facilities and pipelines connected to the premium California gas market. Production Full Year 2016 Full Year 2015 Gross mcf * (100%) 57,143 155,483 SGC WI mcf 31,429 85,515 *mcf - Thousand Cubic feet gas Production was reduced during 2016 due to reduced availability of pipelines while maintenance was performed and also natural production decline. PROSPECT PORTFOLIO As outlined above, SGC's current focus is unlocking the underlying value from its natural gas prospects in the Sacramento Basin. At this point, the Company believes shareholders' interests are best suited to a singular focus on the largest value adding projects in the Sacramento Basin, in particular the early monetisation of the Dempsey prospect. SACGASCO LIMITED - Tenement / Project List ( at 30 March 2017) Project name Location Working Interest (WI) WI after Farmout Dempsey Prospect Sacramento Basin Onshore Northern California 90% 70% Alvares Prospect Sacramento Basin Onshore Northern California 75% 69% Sacramento Basin Onshore Northern California 70% 56% Sacramento Basin Onshore Northern California 90% 70% Sacramento Basin Onshore Northern California 90% 70% California AMI Prospects Rancho-Capay Gas Field Los Medanos Gas Field Tenements acquired after the period Malton Field Sacramento Basin Onshore Northern California 70%* NA Dutch Slough Field Sacramento Basin Onshore Northern California 70%* NA Denverton Field Sacramento Basin Onshore Northern California 70%* NA Rancho-Capay & East Rice Creek Fields Sacramento Basin Onshore Northern California 90%* NA 9 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 PROSPECT PORTFOLIO (continued) Notes to Tenement / Project List: NA: Not applicable- not affected by farmout; * Preliminary-represents Sacgasco working interest in the related acquisition transactions-detailed working interests are under review for these post-reporting period transactions. Projects are continuously reviewed for their strategic fit and are expected to be modified over time to reflect industry conditions: The company also acquired 100% of the Arnaudo Prospect as part of the Peregrine acquisition. It is currently not considered material relative to the other company prospects. Working interest may vary across individual Prospects and WI above reflects the WI in the majority of leased lands. Leases: US exploration is conducted on leases grant by Mineral Right owners, in SGC's case primarily private individuals or groups. Leases can vary in size from very small parcels (part of an acre) to large landholdings (covering a few square miles). Leases generally are for 5 years and rentals are paid annually. There are no work commitments associated with the leases. Some leases are 'Held By Production' and royalties are paid to mineral right owners in lieu of rentals. SGC has not listed all it leases as it is impractical and not meaningful for potential project value assessment in a natural gas play. A detailed listing of leases may also lead to a loss of competitive advantage and consequent reduced value to SGC shareholders. Competent Persons Statement This document contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by many variables which could cause actual results or trends to differ materially. The technical information provided has been reviewed by Mr Gary Jeffery, Managing Director of Sacgasco Limited. He is a qualified geophysicist with over 43 years technical, commercial and management experience in exploration for, appraisal and development, and transportation of oil and gas. Mr Jeffery consents to the inclusion of the information in the form and context in which it appears. 10 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 The Financial Year On 5 January 2016, an unsecured loan totalling $100,000 was advanced to the Company by a director. The initial term of the loan was for six months with interest payable at 10% per annum. On 5 July 2016, the loan was extended for a further six months. On 22 January 2016, Alamo Creek Oil LLC, and on 30 September 2016, Excelaron LLC, associated companies based in California, USA were dissolved. Placement of Shares On 13 January 2016, the Company issued 1,503,871 fully paid shares (1) - 1,084,246 shares at 6 cents each with a value of $65,055 in satisfaction of directors' fees as approved by shareholders on 27 May 2015; and 419,625 shares at 4 cents each with a value of $16,785 in satisfaction of services provided by a vendor. On 7 April 2016, the Company issued 1,481,251 fully paid shares (1) - 1,171,876 shares at 6 cents each with a value of $70,313 in satisfaction of directors' fees as approved by shareholders on 27 May 2015; and 309,375 shares at 3.2 cents each with a value of $9,900 in satisfaction of services provided by a vendor. On 5 July 2016, the Company issued 1,481,251 fully paid shares (1) - 1,171,876 shares at 3.6 cents each with a value of $37,500 in satisfaction of directors' fees as approved by shareholders on 20 May 2016; and 309,375 shares at 3.2 cents each with a value of $9,900 in satisfaction of services provided by a vendor. On 20 September 2016, the Company completed the placement of 17,397,547 fully paid ordinary shares at 2.5 cents each to raise $434,938 (before costs) in working capital. The Company also issued 8,698,772 free-attaching options, exercisable at 3 cents each, on or before 30 September 2017. On 10 October 2016, the Company issued 1,151,422 fully paid shares (1) - 897,436 shares at 3.6 cents each with a value of $35,005 in satisfaction of directors' fees as approved by shareholders on 20 May 2016, and 253,846 shares at 3.9 cents each with a value of $9,900 in satisfaction of services provided by a vendor. On 10 January 2017, the Company issued 720,259 fully paid shares (1) - 549,569 shares at 3.6 cents each with a value of $19,784 in satisfaction of directors' fees as approved by shareholders on 20 May 2016, and 170,690 shares at 5.8 cents each with a value of $9,900 in satisfaction of services provided by a vendor. On 31 January 2017, the Company issued 7,598,773 fully paid shares on conversion of options exercisable at 3 cents each. On 31 January 2017, the Company issued 32,000,000 fully paid shares pursuant to the acquisition of Peregrine Limited, as approved by shareholders on 9 January 2017. On 31 January 2017, the Company issued 22,000,000 options to directors, employees and consultants for nil value. Options are exercisable at 15 cents each on or before 31 December 2019. On 28 March 2017, the Company announced that it had placed 26,453,846 fully paid ordinary shares at 6.5 cents each to raise $1,719,500 (before costs). (1) The issue price of the shares is the mathematical average of the VWAP for the first and the last 5 trading days in the calendar quarter. However, the fair value of the shares issued to directors is the share price at the date the share plan was approved by shareholders (6 cents each at AGM held on 27 May 2015 and 3.6 cents each at AGM held on 27 May 2016). 11 SACGASCO LIMITED REVIEW OF OPERATIONS For the year ended 31 December 2016 Board Changes Effective 31 July 2016, Mr Aqeel Virk resigned as a Director of the Company due to an increased work load associated with his appointment to a Business Development role with a North American Listed E&P company. In line with the Company's strategy to minimise ongoing operating costs, the Company did not fill the vacancy created by this resignation. On 15 November 2016, Mr Keith Martens resigned as a Director of the Company and Mr David McArthur was appointed as a non-executive Director. Mr McArthur is currently the Company's Company Secretary and has significant corporate experience as a director and company secretary of a number of listed entities. On 1 February 2017, Mr Philip Haydn-Slater was appointed a non-executive Director and David McArthur resigned as non-executive Director of the Company. Corporate Activity SGC Managing Director Gary Jeffery presented to shareholders and investors at the annual Good Oil Conference held in Perth, Western Australia (Refer ASX release dated 14 September 2016). Financial results and condition The loss for the year ended 31 December 2016 attributable to members of Sacgasco Limited after income tax was $1,137,120 (2015 restated: $1,193,888). This was following the board's decision to change its accounting policy for exploration to be expensed as incurred. The Group has a working capital deficit of $692,188 (2015: deficit $128,570) and net cash inflows of $58,344 (2015: outflow of $53,911). The Company remains acutely aware of the current economic climate and continues to implement cost reduction measures across the business. Summary of results 2016 $ 2015 (Restated) $ 185,089 372,137 (1,134,923) (1,192,671) (2,197) (1,217) (1,137,120) (1,193,888) (9,351) (34,965) Underlying loss per share (cents) (0.98) (1.19) Shares in issue at reporting date 130,110,984 107,095,783 Weighted average number of shares 115,477,089 100,080,631 Other income Loss before income tax Income tax expense Loss attributable to owners of Sacgasco Other comprehensive loss Planned Activity - 2017 The Company will seek to implement the growth strategies as outlined in the review of operations above. 12 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 DIRECTORS' REPORT The Directors present their report together with the financial statements of Sacgasco Limited (the Company) and of the Group, being the Company and its subsidiaries, for the financial year ended 31 December 2016 and the auditor's report thereon. 1. DIRECTORS The directors of the Company at any time during or since the end of the financial year are: Name and status Andrew Childs Non-executive Chairman Appointed: 25 November 2008 Interest in shares and options: Shares: 5,195,764 Options: 8,000,000 Experience, qualifications, special responsibilities and other directorships Mr Childs graduated from the University of Otago, New Zealand in 1980 with a Bachelor of Science in Geology and Zoology. Having started his professional career as an Exploration Geologist in the Eastern Goldfields of Western Australia, Mr Childs moved to petroleum geology and geophysics with Perthbased Ranger Oil Australia (later renamed Petroz NL). He gained technical experience with Petroz as a Geoscientist and later commercial experience as the Commercial Assistant to the Managing Director. Mr Childs is also Principal of Resource Recruitment and Managing Director of International Recruitment Services Pty Ltd. Appointed: 24 October 2013 Mr Jeffery has over forty years of project development, operations and exploration experience in the oil, gas and mining and energy utilities industries, having worked for both large and small organisations in over thirty countries worldwide. Interest in shares and options: Shares: 6,551,444 Options: 8,000,000 He is an experienced director of public companies in Australia, Uganda and Canada, and has broad international experience in resources, and provides consulting services on energy and resource related matters. Gary Jeffery Managing Director Mr Jeffery graduated with a BSc in Geology and Geophysics from the University of New England. He is a member of the Australian Institute of Energy, Fellow of Australian Institute of Company Directors, and a WA Energy Research Alliance (WAERA) Industry Advisory Group participant. Philip Haydn-Slater Non-executive Director Appointed: 1 February 2017 Interest in shares and options: Shares: 2,320,000 Mr Haydn-Slater has worked throughout his 36 years career within institutional sales in both London and Sydney for a number of well-known financial institutions, including ABN Amro, Bankers Trust, James Capel & Co and Bain Securities (Deutsche Bank) Sydney. Mr Haydn-Slater was co-founder and director of HD Capital in London prior to which he spent eight years as Head of Corporate Broking at WH Ireland Ltd in their London office where he was responsible for originating and managing the sales process for a significant number of transactions, including flotations and secondary placings for corporate clients on AIM and other international exchanges. Mr Aqeel Virk was a Non-executive Director of the Company from 8 July 2015 until 29 July 2016. Mr Keith Martens was a Non-executive Director of the Company from 14 June 2011 until 15 November 2016. Mr David McArthur was a Non-executive Director of the Company from 15 November 2016 until 1 February 2017. 13 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 2. COMPANY SECRETARY Mr David McArthur was appointed to the position of Company Secretary on 24 October 2013. Mr McArthur is a Chartered Accountant with a Bachelor of Commerce Degree from the University of Western Australia, and has over 30 years' experience in the accounting profession. Mr McArthur has been actively involved in the financial and corporate management of a number of public listed companies over the past 28 years. Mr McArthur has substantial experience in capital raisings, company re-organisations and restructuring, mergers and takeovers, and asset acquisitions by public companies. 3. DIRECTORS' MEETINGS The number of meetings of the Company's Board of Directors held during the year ended 31 December 2016, and the number of meetings attended by each director was: Director Full meetings of directors Meetings of audit and risk Management committee Number of Number of meetings meetings attended held whilst a director Number of meetings attended Number of meetings held whilst a director Andrew Childs 1 1 2 2 Gary Jeffery 1 1 - - Philip Haydn-Slater - - - - David McArthur - - - - Keith Martens - - 2 2 Aqeel Virk - - - 1 The audit, finance, remuneration and nomination, risk management and environmental functions are handled by the full board of the Company. The small size of the Board means that Members of the Board meet informally on a very regular basis to discuss company operations, risks and strategies, and as required, formalise key actions through circular resolutions. 4. PRINCIPAL ACTIVITIES The principal activity of the Group during the financial year was oil and gas exploration. 5. OPERATING AND FINANCIAL REVIEW Information on the operations and financial position of the Group and its strategies and prospects is set out in the Review of Operations at the beginning of this Annual Report. Significant changes in the state of affairs In the opinion of the directors there were no matters that significantly affected the state of affairs of the Group during the financial year, other than those matters referred to in the overview above. 6. DIVIDENDS The directors recommend that no dividend be provided for the year ended 31 December 2016 (2015: Nil). 14 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 7. LIKELY DEVELOPMENTS The Group will continue to pursue its strategy to further develop its exploration and development portfolio in California. 8. EVENTS SUBSEQUENT TO REPORTING DATE Other than the matters disclosed in note 6.7 of the notes to the consolidated financial statements, there have been no matters or circumstances that have arisen since the end of the financial year that have significantly affected, or may significantly affect, the operations of the Group, the results of these operations, or the state of affairs of the Group in future financial years. 9. ENVIRONMENTAL REGULATION The Group is subject to significant environmental regulation in relation to its exploration activities. It aims to ensure that the highest standard of environmental care is achieved, and that it complies with all relevant environmental legislation. The Directors are not aware of any breaches during the period covered by this report. 10. SHARE OPTIONS Options granted to directors of the Group During, or since the end of the reporting period, the Company granted options for no consideration over unissued ordinary shares in the Company to the following directors and senior executives as part of their remuneration: Number of options granted Exercise price per option cents Expiry date Executive director Gary Jeffery 5,000,000 15 31 December 2019 Non-executive directors Andrew Childs David McArthur 5,000,000 3,000,000 15 15 31 December 2019 31 December 2019 Issue of these options was approved by shareholders at a General Meeting on 11 January 2017. Unissued shares under options At the date of this report unissued ordinary shares of the Company under option are: Exercise price cents Number of shares 30-Sep-17 3 1,100,000 30-Sep-19 10 11,000,000 31-Dec-19 15 22,000,000 Expiry date 34,100,000 15 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 10. SHARE OPTIONS (continued) Unissued shares under options (continued) All unissued shares are ordinary shares of the Company. These options do not entitle the holder to participate in any share issue of the Company. Further details in relation to the share-based payments to directors are included in the Remuneration Report. Shares issued on exercise of options During or since the end of the financial year, 7,598,773 shares were issued as a result of the exercise of 3 cent options. Options expired 500,000 options expired during the reporting period (2015: 11,500,000 options expired). 11. INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS During the financial year, the Company paid an insurance premium of $17,594 (2015: $16,309) to insure the directors and key management of the Group. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Group, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Group. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. To the extent permitted by law, the Company has agreed to indemnify its auditors, HLB Mann Judd, as part of the terms of its engagement agreement against claims by third parties arising from the audit (for an unspecified amount). 12. NON-AUDIT SERVICES The Group may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor's expertise and experience with the Group are important. No non-audit services were provided during the year by the auditor. 13. PROCEEEDINGS ON BEHALF OF THE GROUP No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking responsibility on behalf of the Group for all or part of those proceedings. 16 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED The Directors present the Company's 2016 Remuneration Report prepared in accordance with the Corporations Act 2001. The Report sets out the detailed remuneration information for Non-executive Directors, Executive directors and other Key Management Personnel (KMP) of the Group. The report contains the following sections: (a) (b) (c) (d) (e) (f) (g) (h) Remuneration governance Executive remuneration strategy and framework Board and management changes Service contracts Executive and non-executive director remuneration Key management personnel remuneration Other KMP disclosures Voting and comments made at the Company's 2016 Annual General Meeting (a) Remuneration governance The remuneration of directors and key management is the responsibility of the Remuneration and Nomination Committee. (b) Executive remuneration strategy and framework Remuneration is referred to as compensation throughout this report. Compensation levels for key management personnel of the Group are set to attract, retain and motivate appropriately qualified and experienced Directors and Executives. As the Group's principal activities during the year involved identifying new potential ventures and exploration / evaluation of existing leases, measurement of remuneration policies against financial performance is not considered relevant. The measurement of remuneration policies considered a range of factors including budget performance, delivery of results and timely completion of development programmes. The objective of the Group's reward framework is to ensure that remuneration policies and structures are fair and competitive. The Board ensures that remuneration satisfies the following criteria for reward: competitiveness and reasonableness; transparency; attracts and retains high calibre executives; and rewards capability and experience. Executive remuneration mix The remuneration of the Managing Director and other KMP can be structured as a mix of fixed remuneration and variable \"at risk\" remuneration through short-term and long-term incentive components. Fixed compensation Fixed compensation consists of base compensation plus employer contributions to superannuation funds (unless otherwise stated). Compensation levels are reviewed annually by the Board through a process that considers individual and overall performance of the Group, and compares compensation to ensure it is comparable and competitive within the market in which the Group operates. Fixed compensation is not \"at risk\" but is appropriately benchmarked and set with reference to roles, responsibilities, skills and experience. 17 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED (continued) (b) Executive remuneration strategy and framework (continued) Performance-linked compensation Performance-linked compensation can consist of both short-term and long-term remuneration. Performance-linked remuneration is not based on specific financial indicators such as earnings or dividends as the Group is at the exploration and development stage. Vesting of long term incentives is based on the share price performance of the Group, which is considered an appropriate measure of the outcome of overall performance. There is no separate profit-share plan. Currently, the Company does not award performance-linked compensation. Short-term incentive Short term incentives (STI) reward employees for their individual achievements and contributions to business success and organisation outcomes during the financial year. STIs are a variable reward and are not guaranteed. If STIs are to be awarded in any year, the Board considers the appropriate targets and Key Performance Indicators (KPIs) to link the STI and the level of payout if targets are met. This includes capping the maximum payout under the STI scheme and determining the minimum levels of performance to trigger payment of the STIs. Depending upon the level of management, KPIs include the following: satisfactory completion of development programs, on time and on budget; securing funding to support planned work programs; investor relations; and consideration of safety performance, corporate governance, external relations and general management. At this stage, the Company does not award any STIs. Long-term incentive Long-term incentives (LTI) can comprise share options and/or performance rights (PR), which are granted from time to time to encourage sustained performance in the realisation of strategic outcomes and growth in shareholder value. Options and rights are granted for no consideration and do not carry voting rights or dividend entitlements. The Company adopted an Employee Incentive Option Plan (EIOP) effective 11 January 2017. Under the EIOP, the Company may grant options to Company eligible employees and consultants to motivate and reward their performance in their respective roles up to a maximum of 10% of the Company's total issued ordinary shares at the date of the grant. The fair value of share options granted is estimated using the Black-Scholes simulation model. Options with an exercise price well above the current market price, and with vesting conditions dependent on a market capitalisation significantly higher than the market capitalisation at the time of issue, are chosen as they provide an incentive to grow the overall value of the Company. Options over equity instruments granted as compensation No options over unissued shares in the Company were granted as compensation to key management personnel under the EIOP during the reporting period. 18 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED (continued) (b) Executive remuneration strategy and framework (continued) Consequences of performance on shareholder wealth The overall level of key management personnel compensation takes into account the performance of the Company over a number of years, although no remuneration is directly linked with financial performance. Financial performance in respect of the current financial year and the previous four financial years is detailed below: Shareholder returns Net (loss) / profit attributable to equity holders ($) Basic (loss) / earnings per share EPS (cents) Share price at year end (cents) Market capitalisation ($) Net tangible (liabilities) / assets (NTA) ($) NTA Backing (cents) 2016 2015 Restated (1,146,471) (1,228,853) (0.98) (1.19) 6.50 3.90 8,457,214 1,821,292 (1,007,577) (471,472) (0.77) (0.44) During the financial years noted above, there were no dividends paid or other returns of capital made by the Company to shareholders. (c) Board and management changes On 29 July 2016 Mr Aqeel Virk resigned as a Non-executive Director of the Company. On 15 November 2016 Mr Keith Martens resigned as a Non-executive Director of the Company and Mr David McArthur was appointed Non-executive Director. (d) Service contracts On appointment to the Board, all non-executive directors enter into a letter of appointment with the Company specifying their functions and duties as a Director. Executive and Key Management Personnel (KMP) remuneration and other terms of employment are formalised in service agreements. The service agreements outline the components of compensation paid to the Executives and key management personnel (KMPs) but do not prescribe how compensation levels are modified year by year. Compensation levels are reviewed each year to take into account any change in the scope of the role performed by KMP and any changes required to meet the principles of the compensation policy. The major provisions of the agreement relating to remuneration are set out below. Remuneration packages are inclusive of superannuation. 19 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED (continued) (d) Service contracts (continued) Name Gary Jeffery * Term of agreement Ongoing from 1 November 2013 Employee notice period Employer notice period Base salary ** three months six months $200,000 Termination Benefit *** six months base salary * On 6 November 2013, a Deed of Executive Services Agreement was entered into with Dungay Resources Pty Ltd, a company associated with Gary Jeffery (effective 1 November 2013); ** Base salary is inclusive of superannuation and comprises $100,000 cash and $100,000 in shares for 50% of Mr Jeffery's time. Shares are issued on a calendar quarterly basis with shareholder approval. The issue price of the shares is the mathematical average of the VWAP for the first and the last 5 trading days in the calendar quarter; *** Termination benefits are payable upon early termination by the Company, other than for gross misconduct. They are equal to base salary for the notice period. (e) Executive and non-executive director remuneration Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities of, the directors. Non-executive directors' fees and payments are reviewed by the Remuneration and Nomination Committee. The current base fees were last reviewed with effect from 25 July 2014. The fees approved by the Board are inclusive of the statutory superannuation amount. Non-executive directors' fees are determined within an aggregate directors' fee pool limit, which is periodically recommended for approval by shareholders. The maximum currently stands at $150,000 per annum and was approved by shareholders at a General Meeting in 2005. Non-executive directors' base fees are currently $30,000 (including superannuation) per annum and they do not receive cash performance related compensation. Directors' fees cover all main board activities and memberships of sub-committees. The Non-executive Chairman's fees are determined independently to the fees paid to the non-executive directors, based on comparative roles in the external market. Having regard to the current economic climate, non-executive Chairman's fees are $40,000 (including superannuation) per annum. Pursuant to a share plan approved by shareholders at a general meeting on 20 May 2016, 50% of non-executive director fees are satisfied through the issue of shares on a quarterly basis on the same basis as the Executive Director, and were issued as follows: 20 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED (continued) (e) Executive and non-executive director remuneration (continued) Value of services rendered (A) $ Fair value of shares on grant date (B) $ No. of Plan Shares issued Date of Issue 1 2 3 25,000 25,000 25,000 46,875 28,125 23,077 781,250 781,250 641,026 7-Apr-16 4-Jul-16 10-Oct-16 1 2 3 1 2 3 1 2 3 5,000 5,000 5,000 3,750 3,750 3,750 3,750 3,750 1,250 9,375 5,625 4,615 7,031 4,219 3,461 7,031 4,219 1,154 156,250 156,250 128,205 117,188 117,188 96,224 117,188 117,188 32,121 7-Apr-16 4-Jul-16 10-Oct-16 7-Apr-16 4-Jul-16 10-Oct-16 7-Apr-16 4-Jul-16 10-Oct-16 Tranche Executive directors Gary Jeffery Non-executive directors Andrew Childs Keith Martens* Aqeel Virk** * ** (A) (B) Keith Martens resigned as a Director on 15 November 2016 Aqeel Virk resigned as a Director on 29 July 2016 Reflects the contractual salary amounts that have been settled by the company in shares; and Reflects the fair value of shares at the date the share plan was approved by shareholders on 27 May 2015 (6 cents each) and 20 May 2016 (3.6 cents each). Shares to be issued in lieu of accrued director fees as at 31 December 2016 Executive directors Gary Jeffery Non-executive directors Andrew Childs Keith Martens (A) (B) (C) Value of services rendered (A) $ Fair value of shares on grant date (B) $ No. of plan shares to be issued (C) 25,000 15,517 431,034 5,000 1,875 3,104 1,164 86,207 32,328 Reflects the contractual salary amounts that have been settled by the company in shares; Reflects the fair value of shares at the date the share plan was approved by shareholders on 20 May 2016 (3.6 cents each); and Shares were issued on 10 January 2017. In addition to their base fees, non-executive directors may also receive payment for consultancy services at the lesser of $200 per hour or $1,500 per day plus any reimbursable expenses. 21 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED (continued) (f) Key management personnel remuneration Short-term employee benefits Salary and fees (A) $ Nonmonetary benefits (B) $ 2016 100,000 2015 Name Share based payments Total Shares Options Total $ $ (C) $ $ 4,919 104,919 113,594 - 218,513 100,000 4,683 104,683 154,279 47,700 306,662 2016 20,000 4,919 24,919 22,719 - 47,638 2015 25,000 4,684 29,684 19,891 47,700 97,275 2016 3,750 619 4,369 - - 4,369 2015 - - - - - - Sub-total non-executive 2016 23,750 5,538 29,288 22,719 - 52,007 directors' remuneration 2015 25,000 4,684 29,684 19,891 47,700 97,275 Total current directors' 2016 123,750 10,457 134,207 136,313 - 270,520 remuneration 2015 125,000 9,367 134,367 174,170 95,400 403,937 Executive directors Gary Jeffery Non-executive directors Andrew Childs David McArthur 22 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED (continued) (f) Key management personnel remuneration Short-term employee benefits Salary and fees (A) $ Nonmonetary benefits (B) $ 2016 13,125 2015 Name Share based payments Total Shares Options Total $ $ (C) $ $ 4,301 17,426 15,875 - 33,301 15,000 4,684 19,684 23,142 47,700 90,526 2016 8,750 2,836 11,586 12,404 - 23,990 2015 7,216 2,258 9,474 10,325 15,900 35,699 Sub-total former directors' 2016 21,875 7,137 29,012 28,279 - 57,291 remuneration 2015 22,216 6,942 29,158 33,467 63,600 126,225 Total key management 2016 145,625 17,594 163,219 164,592 - 327,811 personnel remuneration 2015 147,216 16,309 163,525 207,637 159,000 530,162 Former directors Keith Martens (2) Aqeel Virk (1) (1) (2) Appointed 8 July 2015. Resigned 29 July 2016. Appointed 14 June 2011. Resigned 15 November 2016. 23 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED (continued) (f) Key management personnel remuneration (continued) Notes in relation to the table of directors' remuneration (A) During the reporting period certain key management persons were paid for commercial, arms-length consulting services. The total quantum of these transactions as disclosed in note 6.3 of the notes to the consolidated financial statements was: (g) Andrew Childs Keith Martens Aqeel Virk David McArthur $22,000 (2015: $22,775) $10,418 (2015: $15,750) $nil (2015: $5,012) $9,000 (2015: $nil) (B) Comprises Directors and Officers insurance premiums; (C) The fair value of options granted was determined using the Black-Scholes simulation pricing model Other KMP disclosures KMP option holdings During the reporting period, no shares were issued on the exercise of options previously granted as compensation. Executive directors Gary Jeffery Non-executive directors Andrew Childs David McArthur Keith Martens Aqeel Virk Expired Held on appointment or resignation Held at 31 December 2016 Vested during the year Vested and exercisable at 31 December 2016 - - - 3,000,000 - 3,000,000 - (500,000) - 1,000,000 (3,000,000) (1,000,000) 3,000,000 1,000,000 - - 3,000,000 1,000,000 - Held at 1 January 2016 Granted as compensation 3,000,000 3,000,000 3,500,000 1,000,000 24 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 14. REMUNERATION REPORT - AUDITED (continued) (g) Other KMP disclosures (continued) KMP shareholdings Held at 1 January 2016 Issued in lieu of Director fees Purchases Held on appointment or (resignation) Held at 31 December 2016 3,241,208 2,879,202 - - 6,120,410 Andrew Childs 4,453,717 575,840 80,000 - 5,109,557 Keith Martens 2,628,390 431,881 - (3,060,271) - Aqeel Virk - 406,460 - (406,460) - David McArthur - - - Executive directors Gary Jeffery Non-executive directors (h) Voting and comments at the Company's 2016 Annual General Meeting The Company received 98.18% of \"yes\" votes on its remuneration report for the 31 December 2015 financial year. The Company did not receive any specific feedback at the annual general meeting or throughout the year on its remuneration practices. THIS IS THE END OF THE REMUNERATION REPORT - AUDITED. 25 SACGASCO LIMITED DIRECTORS' REPORT For the year ended 31 December 2016 15. LEAD AUDITOR'S INDEPENDENCE DECLARATION A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is included in the Directors' Report for the financial year ended 31 December 2016. This report is made in accordance with a resolution of the Directors. GARY JEFFERY Director Dated at Perth, Western Australia this 31st day of March 2017. 26 AUDITOR'S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Sacgasco Limited for the year ended 31 December 2016, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) any applicable code of professional conduct in relation to the audit. Perth, Western Australia 31 March 2017 N G Neill Partner HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of International, a worldwide organisation of accounting firms and business advisers. 27 SACGASCO LIMITED CORPORATE GOVERNANCE STATEMENT CORPORATE GOVERNANCE STATEMENT The 2016 Corporate Governance Statement is dated as at 31 December 2016 and reflects the corporate governance practices in place throughout the 2016 financial year. The Board is committed to achieving and demonstrating the highest standards of Corporate Governance. The Board continues to review the framework and practices to ensure that they meet the best interests of shareholders. The Company and its controlled entities together are referred to as the Group in this statement. A description of the Group's main corporate governance practices is set out below. All these practices, unless otherwise stated, were in place for the entire year and they comply with the 3rd edition of the ASX Corporate Governance Principles and Recommendations. Board of Directors Role of the Board The primary responsibilities of the Board of Directors are set out in a written policy and include: Establishment of long-term goals of the Group and strategic plans to achieve these goals; Monitoring the achievement of these goals; Review of the management accounts and reports to monitor the progress of the Group; Review and adoption of budgets for the financial performance of the Group and monitoring the results on a regular basis to assess performance; Review and approval of the annual and interim financial reports; Nominating and monitoring the external auditor; Approving all significant business transactions; Appointing and monitoring senior management; All remuneration, development and succession issues; Ensuring the Group has implemented adequate systems of risk management and internal control together with appropriate monitoring of compliance activities; Overseeing the process for making timely and balanced disclosure of all material information that a reasonable person would expect to have a material effect on the price or value of the Company's securities; Ensuring that the Company has a suitably qualified Company Secretary who shall be accountable directly to the Board, through the chair, on all matters to do with the proper functioning of the Board; and Ensuring that the Company reports on its measurable objectives in relation to gender diversity and assesses annually both the objectives and progress in achieving gender diversity. The Board delegates day to day operational matters to the management of the Company. The Board evaluates this policy on an ongoing basis. Board composition The Directors' Report contains details of the Directors' skills, experience and education. The Board seeks to establish a Board that consists of Directors with an appropriate range of experience, skill, knowledge and vision to enable it to operate the Group's business with excellence. To maintain this, the Group's policy is that Directors should serve at least 3 years. At the completion of the first 3 years, the position of the Director is reviewed to ascertain if circumstances warrant a further term. 28 SACGASCO LIMITED CORPORATE GOVERNANCE STATEMENT Board composition (continued) The specific skills that the Board collectively bring to the Company include: Industry experience / technical qualification Commercial experience Public company experience Analytical expertise Financial expertise Risk management experience Strategic planning experience Strategic leadership experience Corporate Governance expertise Communications experience Inter personal experience The Board comprises a Non-Executive Chairman, one Executive Director, and one Non-Executive Director. A written agreement is entered into with each Director and Senior Executive of the Company setting out the terms of their employment. The chair of each of the sub committees formed by the Board has specific skills in the area for which they are responsible. The Board does not have a Director with legal experience, as any legal work required is out sourced to external lawyers. Details of the Directors are set out in the Directors' Report. The Board is primarily responsible for identifying potential new Directors and has the option to use an external consulting firm to identify and approach possible new candidates for Directorship. When a vacancy exists, or where it is considered that the Board would benefit from the services of a new director with particular skills, candidates with the appropriate experience, expertise and diversity are considered. Each incumbent Director is given the opportunity to meet with each candidate on a one to one basis. The full Board then appoints the most suitable candidate who must stand for election at the next annual general meeting of shareholders. The Board undertakes appropriate checks before appointing a person as a Director or putting forward to shareholders a candidate for election as a Director. The Board ensures that shareholders are provided with all material information in the Board's possession relevant to a decision on whether or not to elect or re-elect a Director. The appointment of the Directors must be approved by the majority of the Shareholders at the first Annual General Meeting after the appointment. Retirement and re-election of directors The Constitution of the Company requires one third of Directors (or the number nearest one third, rounded up), other than the Managing Director, to retire from office at each Annual General Meeting. Directors who have been appointed by the Board are required to retire from office at the next Annual General Meeting and are not taken into account in determining the number of Directors to retire at that Annual General Meeting. Retiring Directors are eligible for reelection by Shareholders. No Director shall hold office for a period of three years without seeking re-election. 29 SACGASCO LIMITED CORPORATE GOVERNANCE STATEMENT Independence of directors The Board has reviewed the position and association of each of the Directors in the office at the date of this report and considers that two Directors are independen

Answer rating: 100% (QA)

There wa... View the full answer