Risk Identification and Management The Company recognises that the management of risk is a critical component in achieving its purpose of delivering growth in shareholder value. The Company has a framework to identify, understand, manage and report risks. As specified in its Board Charter, the Board has responsibility for overseeing The Company’s risk management framework and monitoring its material business risks. The Board continues to be committed to embedding risk management practices to support the achievement of business objectives. As such the Board has established the Audit and Risk Committee which is responsible for reviewing and overseeing the risk management strategy of the Group and for ensuring it has an appropriate corporate governance structure. The Board discusses with management and the external auditors at least bi-annually: – Internal controls systems; – Policies and procedures to assess, monitor, and manage business, economic, environmental and social sustainability risks; – Insurance program having regard to the insurable risks and the cost of this cover; and – Legal and regulatory compliance programs. As part of the Company’s risk management structure, risk registers are maintained and reported to the Audit and Risk Committee periodically and at least annually, detailing likelihood and severity of risks occurring. Management undertakes a review of its insurable risks each year in order to fully consider potential impacts and how they are financed in terms of limits and scope under the Company’s insurance program. The Board through the Audit and Risk Committee, reviewed the Company’s risk management framework during the financial year and satisfied itself that the framework continues to be sound and that the Company is operating with due regard to the risk appetite set by the Board. The Company does not have a separate internal audit function, Having regard to the size and scale of the Company’s operations and the size of its finance team, the Board does not consider a standalone internal audit function to be warranted. The Board evaluates and continually seeks to improve the effectiveness of the Company’s risk management and internal control processes through direct oversight by the Audit and Risk Committee, review of the risk register, management representation, the annual review of the insurance program, and matters raised by the external auditor in the course of the half-year review and the annual audit. The Company has material exposure to environmental and social sustainability risks. Those exposures, and the manner in which the Company manages them, are described in the Environmental Risk, Climate Change Risk and Health, Safety and Social Sustainability Risk entries in the table below. The Company’s material exposures to risk, and how the Company responds to and manages these risks, are detailed below. The risks described are not exhaustive, are not listed in order of significance, and should be read together with the Directors’ Report and the financial statements, including the going concern disclosures at Note 2. Additional risks not currently known to the Company, or which the Company presently considers immaterial, may also adversely affect its operations, financial position and prospects. Material Risks Risk Management Approach Going Concern and Liquidity Risk The Company is pre-revenue and depends on external funding to meet its corporate overheads, permit commitments and its share of joint operation costs. The Company’s cash resources at the date of this report are not sufficient to fund its planned activities for the twelve months from the date of this report without additional funding, the recovery of amounts owing from its joint operation partner, or the completion of one or more assetlevel transactions. There is no assurance that funding will be available when required or on acceptable terms. If sufficient funding is not obtained, the Company may be required to further curtail or suspend activities, dispose of assets on unfavourable terms, relinquish permits, or may be unable to pay its debts as and when they fall due. These conditions indicate the existence of a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern. The Board receives and reviews rolling cash flow forecasts monthly, modelled across a range of funding scenarios and measured against a minimum liquidity buffer set by the Board. The Company has materially reduced its cost base, placed field operations on care and maintenance and deferred discretionary expenditure. It is pursuing several funding pathways in parallel, with the primary focus being an asset-level farm-down and the introduction of a new participant The Directors’ assessment of the going concern basis of preparation, and the matters taken into account in reaching it, is set out in Note 2 to the financial statements, as well as the subsequent events disclosure in Note 28 to the financial statements. Governance and Risk 36 Melbana Energy Limited Annual Report 2026
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