Hibiscus Petroleum : Corporate Governance Report for the financial year ended 30 June 2023;

CORPORATE GOVERNANCE REPORT

STOCK CODE	:	5199
COMPANY NAME	:	Hibiscus Petroleum Berhad
FINANCIAL YEAR	:	June 30, 2023

OUTLINE:

SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

SECTION B - DISCLOSURES ON CORPORATE GOVERNANCE PRACTICES PERSUANT CORPORATE GOVERNANCE GUIDELINES ISSUED BY BANK NEGARA MALAYSIA

Disclosures in this section are pursuant to Appendix 4 (Corporate Governance Disclosures) of the Corporate Governance Guidelines issued by Bank Negara Malaysia. This section is only applicable for financial institutions or any other institutions that are listed on the Exchange that are required to comply with the above Guidelines.

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SECTION A - DISCLOSURE ON MALAYSIAN CODE ON CORPORATE GOVERNANCE

Disclosures in this section are pursuant to Paragraph 15.25 of Bursa Malaysia Listing Requirements.

Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.1

The board should set the company's strategic aims, ensure that the necessary resources are in place for the company to meet its objectives and review management performance. The board should set the company's values and standards, and ensure that its obligations to its shareholders and other stakeholders are understood and met.

Application	:	Applied
Explanation on	:	At Hibiscus Petroleum Berhad, our Board of Directors (Board) is
application of the		committed to fulfilling its responsibilities with integrity, diligence and
practice		professionalism. Our Board plays a pivotal role in setting the
		Company's strategic objectives, ensuring the efficient allocation of
		resources to achieve such aims and conducting regular reviews of
		Management performance. Moreover, our Board takes great care in
		establishing and upholding the Company's values and standards,
		integrating them into all aspects of our operations.
		Our Board is cognisant of its fiduciary and ethical obligations in
		carrying out its duties to the Company's shareholders and other
		stakeholders and places strong emphasis to establish and foster open
		communication amongst all parties involved. This unwavering
		keenness to cultivate transparency and continued engagement
		reinforces the Company's dedication to long‐term sustainable growth
		for the benefit of its stakeholders. With an efficient and dedicated
		Board at the helm, Hibiscus Petroleum Berhad (Hibiscus Petroleum or
		the Company) is well‐positioned to navigate challenges and seize
		opportunities, ensuring future sustained success and value creation.
		Strategic Objectives and Resource Allocation
		Throughout the financial year ended 30 June 2023 (FY2023), our Board
		of Directors remained committed to shaping and directing the
		strategic course of the Company. They attended 12 regular meetings,
		one of which was dedicated to a comprehensive review of our long‐
		term business strategy. In addition, the Board also convened
		additional meetings to discuss potential asset acquisitions, funding
		proposals and emerging corporate developments, providing invaluable
		guidance to the Leadership Team.

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To enhance the effectiveness of our strategic planning and implementation, our Board conducted a comprehensive review of the matters reserved for its decision‐making. The Board meticulously examined the criteria outlined in the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Securities) and the Malaysian Code on Corporate Governance 2021 (MCCG) to assess whether additional self‐regulation measures should be adopted to complement existing market regulations. This rigorous evaluation ensured that the Company strives to achieve the highest standards of corporate governance (CG), fostering transparency and accountability.

Our Board has established the CG structure which sets out our framework, processes and lines of authority that govern how our Group's businesses are directed, managed and controlled, thereby delivering value to our stakeholders while ensuring compliance with the applicable laws, rules and regulations, our Company's Constitution and adherence to good CG practices. Our CG Overview Statement can be found on pages 98 to 113 of our Annual Report 2022/2023.

In line with effective governance practices, our Board delegated certain responsibilities to our three Board Committees: the Audit and Risk Management Committee (ARMC), the Nominating Committee (NC) and the Remuneration Committee (RC). Our Board Committees play instrumental roles in overseeing critical aspects of the Company's operations, ensuring robust risk management and facilitating transparent and fair processes for appointing Directors and determining remuneration. The Board is confident that these Board Committees have the necessary resources and time to execute their duties with effectiveness and efficiency.

In January 2023, our Board reviewed, debated and approved a challenging business plan for the year, revolving around the strategic themes of "Execute, Enhance, Excel and Explore" This plan, aimed at bolstering growth, achieving operational excellence and creating value, encompassed a variety of critical initiatives. These included intensifying efforts to secure low‐carbon investment opportunities, exploring strategies for consistent and increased dividend payouts, implementing talent identification and retention measures and expanding investor relation activities to foster closer ties with stakeholders.

Guided by our Board's active oversight, the Management Team was able to streamline operations, optimise efficiency and execute development projects for the assets we have interest in.

Our Board placed significant emphasis on identifying opportunities within our existing licences and rigorously assessed potential acquisitions based on their value propositions. In the United Kingdom Continental Shelf (UKCS), strategic guidance from our Board prioritised securing regulatory approvals for the Teal West project, expanding the

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Marigold project and actively assessing opportunities to increase our market presence in jurisdictions with robust legal systems, along with considering farm‐down options, if deemed beneficial for the Group.

Furthermore, our Board supported Management in focusing on potential gas prospects that align with our commitment to transitioning to cleaner energy sources. These proactive strategies effectively position the Group for heightened growth.

Our Board also examined significant sustainability matters for FY2023, reflecting the impact of environmental, social and governance considerations on our business.

Moreover, our Directors and Management engaged with stakeholders at the Hibiscus Investor Day. Meanwhile, at the Hibiscus Strategic Planning Conference 2023, the Directors and Management engaged in strategic dialogue, exchanged perspectives and insights on the industry and contributed towards the long‐term vision of the Company.

The active participation of the Board underscores its deep understanding of our dynamic business environment and guides the Company in making informed decisions which drive the success of the Group.

Performance‐Driven Culture at Hibiscus Petroleum

Our Board conducts regular and thorough evaluations of the Leadership Team's performance to assess their alignment with the Company's strategic aims and objectives. These evaluations involve a meticulous assessment of key performance indicators (KPIs) and milestones set, enabling our Board to measure their progress toward achieving these targets. Our Board takes an active role in providing constructive feedback and guidance to foster continuous improvement in Management's performance, ensuring that the Company remains on track to meet its strategic goals.

To effectively monitor performance and evaluate progress toward strategic objectives, our Board plays a crucial role in approving the Key Performance Indicators (KPIs) at various levels within the organisation, including the Group, Corporate and Business Unit levels. These KPIs serve as essential benchmarks for conducting performance appraisals, allowing our Board to make informed assessments of Management's contributions to the Company's success.

The responsibility for determining remuneration for the Non‐Executive Directors (NEDs), Executive Directors and Senior Management of Hibiscus Petroleum lies with the RC. The RC diligently reviews the Directors' Remuneration Policy and the remuneration policies for Senior Management, ensuring that the rewards align closely with the successful delivery of the Group's Scorecard and KPIs.

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By engaging in comprehensive performance evaluations, setting clear KPIs and aligning remuneration with strategic objectives, our Board demonstrates its commitment to promoting a performance‐driven culture within the organisation. This approach ensures that Management is incentivised to excel and the Company can sustainably achieve its strategic vision and deliver value to its stakeholders. Our Board's proactive involvement in these processes underscores its dedication to effective CG and its role as a guiding force in steering the Company towards continued growth and success.

Setting Values and Standards

At Hibiscus Petroleum, our Board takes an active role in defining and promoting the Company's values and ethical standards. With a strong emphasis on integrity, transparency and accountability, the Board ensures that these values are deeply integrated into the Company's culture and operations, fostering a responsible and ethical corporate environment.

To achieve this, the Board adheres to three key principles and practices outlined by the MCCG:

1. Board leadership and effectiveness
   The Board prioritises its fiduciary duties and leadership functions, ensuring good governance and efficacy. By providing necessary support and relevant training, the Board enables Directors to provide strategic direction to the Group and incorporate sustainability considerations in decision‐making.
2. Effective audit and risk management
   Robust internal controls and risk management practices are implemented to identify, assess and manage risks effectively. These practices protect the Group's assets, safeguarding shareholders' interests.
3. Integrity in corporate reporting and meaningful relationships with stakeholders
   The Group maintains a high level of integrity in its corporate reporting processes, providing accurate and timely information to stakeholders. Meaningful relationships with stakeholders are forged, considering their perspectives and concerns in decision‐ making processes.

These principles demonstrate Hibiscus Petroleum's commitment to upholding strong CG standards.

The Company's dedication to sustainability and good governance has been recognised through its ability to maintain its constituency in the FTSE4Good Bursa Malaysia (F4GBM) Index and the FTSE4Good Bursa Malaysia Shariah Index, reflecting its good Environmental, Social and

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Governance (ESG) practices. In fact, the Company has attained improved scores, particularly for the Environmental pillar.

Hibiscus Petroleum has also retained the highest rating of 4 stars from FTSE Russell, thereby keeping the Company placed in the top 25% by ESG ratings amongst public listed companies in the FBM EMAS Index.

The continued Green Lane Policy (GLP) status granted by Bursa Securities to the Company further evidences its strong governance performance. The GLP status affords certain privileges, enhancing efficiency in stakeholder engagement and communication.

Hibiscus Petroleum's commitment to good governance is embedded in its corporate structure. A vigorous CG framework ensures compliance with laws and regulations and fosters ethical behaviour. The Company's core values-tenaciousness,environmentally responsible, people focused approach, agility and trustworthiness (TEPAT)-guide all actions, promoting ethical decision‐making at every level.

Hibiscus Petroleum's commitment to setting values and standards aligns with its dedication to ethical CG, sustainability and responsible business practices. Our Board's active involvement in promoting these values fosters a culture of integrity, transparency and accountability, ensuring the Company's long‐term success and positive impact on society and the environment.

In addition, the Group's Limits of Authority (LOA) framework plays a crucial role in its governance structure. Regular reviews and updates of the LOAs ensure ongoing relevance and suitability for the Group's operations, enabling effective decision‐making and accountability. Recognising the diverse nature of operations, Hibiscus Petroleum maintains different LOAs tailored according to the requirements of its subsidiaries and project entities, thereby enabling the Company to streamline its operations for effective project management. Such proactive actions taken reflect the Company's agility in adopting adaptive governance and responsible growth.

Sustainability efforts are deeply rooted in the Company's core values and its efforts are aligned with the United Nations' Sustainable Development Goals (SDGs). Hibiscus Petroleum actively contributes to addressing global challenges, including climate change, environmental stewardship, social equality and economic development.

Transparent communication practices enable stakeholders to make informed decisions about the Group. The Sustainability Policy and Climate Change Framework provide a clear roadmap for sustainable practices, demonstrating Hibiscus Petroleum's commitment to transparency and responsible ESG practices.

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Obligations to Shareholders and Stakeholders: Promoting Transparency and Engagement

The Board at Hibiscus Petroleum recognises its obligations to both shareholders and other stakeholders. To foster open communication and build trust, the Board engages with shareholders to understand their expectations and concerns. Moreover, they ensure that the interests of various stakeholders, including employees, customers, suppliers and the community, are taken into account in decision‐ making processes.

Transparency and timely communication with stakeholders are vital aspects of Hibiscus Petroleum's commitment to CG. The Group has established comprehensive Corporate Disclosure Policies and Procedures to maintain consistency and adhere to best practices. The Group's spokespersons strictly follow these policies, ensuring that all communications align with disclosure guidelines.

To provide stakeholders with access to relevant information, the Group leverages information technology and various communication channels. These include the corporate website, investor portals, webcasts and digital communication tools. Stakeholders can access a wealth of information, such as annual reports, quarterly reports, corporate and business updates, notices of general meetings, investor briefing slides, press releases, public announcements and responses to Frequently Asked Questions (FAQs).

To enhance accessibility and transparency, Hibiscus Petroleum has established and maintained a corporate website containing pertinent information on the Company. The website serves as a centralised resource for stakeholders to access key information about the Group's assets/projects, financial performance, governance practices and risk management initiatives. By consolidating this information in a user‐ friendly format, the Group aims to enhance stakeholders' understanding of its operations, strategies and progress.

The Group is committed to ongoing engagement with stakeholders, actively encouraging feedback, questions and constructive dialogue from shareholders, analysts, investors, customers, employees and others. Prompt and transparent responses to enquiries and concerns strengthen relationships and builds trust.

By maintaining clear and consistent communication practices, the Group ensures that stakeholders are provided with the necessary information to make well‐informed decisions. Effective communication fosters a deeper understanding of the Group's business, values and commitment to sustainable growth. As the Group continues to engage with stakeholders, it remains dedicated to transparency, accountability and responsible CG practices.

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Hibiscus Petroleum took significant steps to promote broader shareholder participation by adopting virtual meeting arrangements for both the 12th Annual General Meeting (AGM) and Extraordinary General Meeting (EGM) on 1 December 2022. This virtual format allowed shareholders from different locations to actively participate and engage in decision‐making processes.

During the virtual 12th AGM, over 300 shareholders and proxies, representing 47.63% of the Company's issued share capital, attended the meeting, demonstrating a strong interest in the Company's affairs. Similarly, the virtual EGM saw the participation of over 200 shareholders and proxies, representing 48.23% of the Company's issued share capital. The significant attendance recorded at both meetings signifies the shareholders' interest in the Company's business operations.

Our entire Board, including the Managing Director (MD) and Leadership Team, participated either physically or online, demonstrating their commitment to engaging with shareholders. An independent moderator facilitated the question‐and‐answer session.

The success of the virtual format not only promotes transparency and broader shareholder participation, but also facilitated efficient decision‐making. By embracing this innovative approach, Hibiscus Petroleum further strengthened its commitment to stakeholder engagement and inclusivity.

Hibiscus Petroleum is appreciative of its shareholders' active involvement and valuable contributions during both the 12th AGM and EGM.

Overall, the commitment of Hibiscus Petroleum's Board in setting strategic objectives, allocating resources effectively, conducting thorough performance reviews and establishing and promoting the Company's values and standards, reflects their dedication to the Company's long‐term sustainable growth and prosperity.

Explanation for	:
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Large companies are required to complete the columns below. Non‐large companies are encouraged to complete the columns below.

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Intended Outcome

Every company is headed by a board, which assumes responsibility for the company's leadership and is collectively responsible for meeting the objectives and goals of the company.

Practice 1.2

A Chairman of the board who is responsible for instilling good corporate governance practices, leadership and effectiveness of the board is appointed.

Application	:	Applied
Explanation on	:	The Chairman's Vital Role in CG and Board Composition Enhancements
application of the
practice		The Chair of the Board plays a vital and influential role in ensuring
		good CG practices and effective leadership within an organisation. At
		Hibiscus Petroleum, Encik Zainul Rahim bin Mohd Zain serves as the
		Chair of the Board, bringing with him a wealth of expertise and
		experience. With his extensive background in the oil and gas
		exploration and production industry spanning over 45 years, he
		possesses valuable expertise and provides invaluable counsel and
		leadership to our Board and together with all our Directors, instils a
		high standard of CG practices.
		Under Encik Zainul Rahim bin Mohd Zain's leadership, an environment
		of open discussion and collaboration is fostered. He ensures that all
		Directors have an equal opportunity to highlight important matters
		and express their views on proposed initiatives. This inclusive
		approach promotes transparency and enables the Board to make well‐
		informed decisions that align with the Company's strategic objectives
		and stakeholders' interests.
		The effectiveness of Encik Zainul Rahim bin Mohd Zain 's leadership
		was confirmed through the 2023 Board assessment carried out, which
		highlighted his objectivity, active engagement in discussions and
		principled decision‐making. These qualities contribute to a fair and
		constructive boardroom process, where diverse perspectives are
		considered and the best interests of the Company are upheld. Under
		his guidance, Hibiscus Petroleum continues to thrive and achieve
		significant growth and success.
		In line with the Company's commitment to upholding the highest
		standards of CG, Hibiscus Petroleum made important enhancements
		to the composition of its Board Committees, including the ARMC, NC
		and RC. Effective 1 January 2023, Encik Zainul Rahim bin Mohd Zain
		resigned from these Board Committees, adhering to the MCCG
		recommendations that the Chair of the Board should not hold
		positions on these Board Committees to maintain objectivity and
		independence and removes the possibility of self‐review of his
		contributions in such committees if he remained a member.
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To maintain balanced representation, enhance the effectiveness of the Board Committees, foster a diverse range of perspectives and elevate the overall governance framework of the Company, Hibiscus Petroleum made strategic new appointments on the same date of the Chairman's resignation from the Board Committees. YBhg Dato' Sri Roushan Arumugam was appointed as a member of the ARMC, while Puan Emeliana Dallan Rice‐Oxley and Puan Zaidah binti Ibrahim became members of the NC and RC, in addition to their earlier Board appointments.

These changes highlight Hibiscus Petroleum's commitment to promoting good CG practices and ensuring that the Board and Board Committees consist of individuals with the necessary skills, expertise and independence to effectively fulfil their responsibilities. The Company also acknowledges the importance of diversity, including gender diversity within these Board Committees, which helps advance a balanced and inclusive representation, further enriching the decision‐making process.

Encik Zainul Rahim bin Mohd Zain's crucial role as Chair of the Board, alongside the composition enhancements at the Board and Board Committees, demonstrates Hibiscus Petroleum's commitment to effective CG, sustainable growth and creating long‐term value for its stakeholders.

Explanation for	:
departure

Large companies are required to complete the columns below. Non‐large companies are encouraged to complete the columns below.

Measure:

Timeframe:

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