9. ETHICAL STANDARDS AND CODE OF CONDUCT 10. GUIDELINES FOR DEALING IN SECURITIES • MANAGEMENT OF EXPLORATION RISK – exploration risk is managed through internal control systems which include: formalised risk assessment procedures at the functional level; corporate review in both prospect and hindsight; Board approval of exploration budgets; and regular reporting on progress to the Board. External reviews are also undertaken as necessary. • INVESTMENT APPRAISAL – the Company has clearly defined procedures for capital expenditure. These include: annual budgets; detailed appraisal and review procedures; levels of authority; and due diligence requirements where assets are being acquired. • FINANCIAL REPORTING –  a comprehensive budgeting system exists with an annual budget approved by the Board. Monthly actual results are reported against budget and, where applicable, revised forecasts for the year are prepared and reported to the Board. Speculative transactions are prohibited. Further details relating to financial instruments and commodity price risk management are included in Note 32 of the Financial Statements. • FUNCTIONAL REPORTING –  all significant areas of Company operations are subject to regular reporting  to the Board. The Board receives regular reports on  the performance of each functional area, including: operations; gas marketing  and commercialisation; liquids marketing; corporate and people; legal and secretariat; geoscience, exploration and new ventures; development and technical services; finance; safety; government; investor relations and environmental matters. • avoid conflicts of interest, and ensure that all business transactions are conducted solely in the best interests of the Company; • are aware of, and comply with laws and regulations relevant to the Company’s operations including environmental and trade laws both in Australia and abroad; • protect any Company assets under their control and not use Company assets for personal purposes, without prior Company approval; • do not disclose or use in any improper manner confidential information about the Company, its customers or affairs; and • respect the privacy of others and comply with the Company’s Privacy Policy. through: a comprehensive Environmental Health and Safety Management System based on Australian Standard 4801 and International Standard 14001; environmental and safety committees at Board and management levels; the retention of specialist environmental and safety staff and advisors; regular internal and external environmental and safety audits; and imposing environmental care and safety accountability as line management responsibilities. The role of the Environmental and Safety Committee is documented in a Charter, approved by the Board. The current members of the Environmental and Safety Committee are: Mr S Gerlach (Chairman), Mr P C Barnett, Mr M A O’Leary and Mr J C Ellice- Flint. To promote high standards of corporate governance and ethical conduct the Company has provided its employees with a clear set of rules, values and guidelines to follow when carrying out their work as a Santos employee and representative. In addition to the Board Guidelines, the Company has adopted a Code of Conduct which prescribes that, in addition to compliance with all applicable legal requirements, The standards of conduct expected of Santos staff, including those directed at the broader stakeholder constituency of shareholders, employees, customers and the community, are also recorded in separate guidelines and policies relating to dealing in securities (refer  to the next section), the Pursuant to these guidelines,  no person may deal in securities while they are in the possession of price sensitive information.  In other circumstances, Directors must inform and receive The Company has developed specific written guidelines that prohibit Directors and executives (and their respective associates) from acquiring, selling or otherwise trading in the Company’s shares if they possess material price-sensitive information which is not in the public domain. Where applicable, the guidelines and policies are incorporated by reference in individual contracts of employment or expressly set out in those contracts, including provisions relating to: conflicts of interest; confidentiality and restrictions against use and dissemination of information; use of Company assets; perquisites, tender processes, benefits and contact with suppliers; employment opportunity practices; privacy; training and further education support; and smoking, alcohol and drugs. the Board expects all Directors, executives and employees of the Company to adopt appropriate standards of professional and business conduct in their dealings on behalf of the Company. In addition, the Board, in conjunction with executive management, has implemented procedures designed to ensure compliance by all employees with those standards. In particular, the Code of Conduct requires that Directors and employees: environment, occupational health and safety and human resources. Further, a Code of Conduct, based on that developed by  the Group of 100 (an association of senior finance executives  from Australia’s business enterprises) applies to the  CFO and all other officers and employees within the finance function of the Company who have the opportunity to influence the integrity, direction and operation of the Company and its financial performance. Annual Report 2004 33