28 March 2024

TOMCO ENERGY PLC

 

("TomCo" or the "Company" or, with its subsidiaries, the "Group")

 

Audited results for the year ended 30 September 2023

 

TomCo Energy plc (AIM: TOM), the US operating oil development group focused on using innovative technology to unlock unconventional hydrocarbon resources, announces its audited results for the year ended 30 September 2023.

 

The 2023 Annual Report and Accounts (the "2023 Annual Report") have now been published and are available on the Company's website at www.tomcoenergy.com.

 

 

 Enquiries:

 

TomCo Energy plc
Malcolm Groat (Chairman) / John Potter (CEO)	+44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Matthew Chandler	+44 (0)20 7409 3494
Novum Securities Limited (Broker)
Jon Belliss / Colin Rowbury	+44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Florence Chandler	+44 (0)20 3934 6630

For further information, please visit www.tomcoenergy.com.

 

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended by virtue of the Market Abuse (Amendment) (EU Exit) Regulations 2019.

 

 

CHAIRMAN'S STATEMENT

 

I am delighted to be delivering my fourth statement to the shareholders of TomCo Energy plc ("TomCo" or the "Company" or, together with its subsidiaries, the "Group"), as part of the Annual Report and Financial Statements for the year ended 30 September 2023.

 

Operational Review

 

The Company's primary focus during the year under review has remained on its wholly owned subsidiary, Greenfield Energy LLC ("Greenfield"), and securing sufficient financing to progress its plans to, inter alia, pursue the construction of up to two oil sands separation/processing plants capable of processing at least 6,000 tonnes per day of oil sands at a suitable permitted site in Utah, USA.

 

Funding for ambitious projects like ours has frustratingly seldom been harder to come by. Interest rates have been higher than at any time in the last 15 years and UK equity markets, particularly for junior natural resource focused companies, have been particularly challenging.

 

With your continued patience and support, we have been endeavouring to secure funding to: (i) enable Greenfield to exercise an option to purchase the remaining 90% of Tar Sands Holdings II ("TSHII") that it does not already own; and (ii) construct up to two commercial scale processing plants alongside the potential drilling of a number of wells into the deeper sands that are too deep to mine for the implementation of oil recovery processes. TSHII owns a 760 acre site with a Large Mining Permit in Utah which we have identified as being an ideal site for the project. Alongside our search for project finance, we have continued to refine the proposed processing technology/methodology and specification for the planned plants working closely with our main contractor/service provider and   former joint venture partner, Valkor LLC ("Valkor"), and other technical partners and potential off-takers, aswell engendering support and fostering good relations with local authorities, regulators and other stakeholders. Accordingly, we are well placed to start  implementing our development plans for Greenfield as soon as sufficient funding is in place.

 

As I write, we believe we are edging closer to securing the requisite funding after many months of effort and patient negotiation.  As announced previously, the most likely and favoured scenario will involve the Group potentially farming-out or disposing of a majority stake in Greenfield to a partner(s) in return for, inter alia, certain upfront cash consideration, a carried interest or continuing minority equity participation for TomCo in Greenfield without the need for it to make further capital contributions and the provision of a sizeable funding package for Greenfield's development. The Board remains confident that a suitable financing transaction can ultimately be consummated and is in ongoing discussions with the vendor of TSHII to seek a further extension of Greenfield's option over the remaining 90% membership interest in TSHII.

 

Although we are not yet over the line with our preferred funder, I would like to take this opportunity to thank my fellow directors for their unwavering commitment to delivering a successful outcome, most particularly John Potter, our CEO.

 

TurboShale RF Technology

 

The potential future exploitation of the Company's legacy TurboShale and Oil Mining Company assets, which are fully impaired from an accounting perspective, will be revisited and reviewed when appropriate in due course. 

 

Corporate Review

 

Whilst seeking to carefully manage our cash reserves and working capital position, the Company has undertaken a number of financing transactions throughout the year and post the financial year end to satisfy expenditure on progressing our preparations and development plans for Greenfield and general overheads and to repay certain indebtedness.

 

In summary, such transactions have comprised:

 

-	September 2022: unsecured convertible loan facility of £0.75m - subsequently drawn down and converted in full. Part of the proceeds were utilised to repay $0.5m of the principal amount of the unsecured $1.5m loan previously advanced by Valkor to Greenfield in connection with its purchase of an initial 10% Membership Interest in TSHII.
-	November 2022: equity placing to raise £0.925m gross at a price of 0.35p per share. The terms of the Valkor Loan were also varied to extend the repayment date for the then remaining principal amount to the completion date of a suitable funding package being secured for Greenfield's development.
-	March 2023: four tranche unsecured convertible loan facility of up to £1m - initial tranche subsequently drawn down and converted in full.
-	June 2023: equity placing and subscription to raise, in aggregate, £0.5m gross at a price of 0.08p per share. The remaining £0.75m of the abovementioned March 2023 convertible loan facility was cancelled.
-	October 2023: equity subscription to raise £0.1m gross at a price of 0.08p per share.
-	January 2024: equity subscription to raise £0.05m gross at a price of 0.1p per share.
-	February 2024: equity placing and subscription to raise, in aggregate, £0.3m gross at a price of 0.045p per share.

-                      

2024 appears set to be a defining year for TomCo and we look forward to updating shareholders on our future progress.

 

Malcolm Groat

Non-Executive Chairman

28 March 2024

DIRECTORS' REPORT

 

The Directors submit their report and the financial statements of the Group for the year ended 30 September 2023.

 

PRINCIPAL ACTIVITY

The principal activity of the Group is that of seeking to develop, through its wholly owned subsidiary Greenfield Energy LLC, the oil sands resources contained in the TSHII site via the exploitation of separation technology to achieve sustained future production.

 

RISK ASSESSMENT

The Group's oil and gas activities are subject to a range of financial and operational risks which can significantly impact on its performance, with the key risks for the year ended 30 September 2023 set out below.

 

Operational risk

 

During the financial year and to date, further discussions with a preferred funding partner for, inter alia, the requisite plant construction and supporting development costs have reached an advanced stage but remain subject to the Group's due diligence and proof of funds being satisfactorily completed. Executing on the preferred funding package scenario will likely involve the disposal of a majority stake in Greenfield by TomCo constituting a fundamental disposal pursuant to the AIM Rules for Companies and thereby require the prior approval of the Company's shareholders. If ultimately successfully secured and approved by shareholders, the envisaged funding package would enable Greenfield to purchase the balancing 90% Membership Interest in TSHII and instigate the detailed engineering work for the initial planned separation plant with nameplate capacity to process 6,000 tonnes per day of oil sands. The detailed engineering phase is now expected to take approximately six months before construction of the first plant approximately 12-15 months thereafter leading to commencement of initial processing operations. There can be no certainty that such preferred funding arrangements can be successfully concluded nor as to the precise terms and structure of any such funding package.

 

The Group continues to operate with a small team, on which it is highly reliant. Information is openly shared within the team to ensure that reliance is not placed on specific individuals.

 

Risks relating to environmental, health and safety and other regulatory standards

 

The Group's proposed future extraction activities are subject to various US federal and state laws and regulations relating to the protection of the environment including the obtaining of appropriate permits and approvals by relevant environmental authorities. Such regulations typically cover a wide variety of matters including, without limitation, prevention of waste, pollution and protection of the environment, labour regulations and worker safety. Furthermore, the future introduction or enactment of new laws, guidelines and regulations could serve to limit or curtail the growth and development of the Group's business or have an otherwise negative impact on its planned operations. The Group ensures that it complies with the relevant laws and regulations in force in the jurisdictions in which it operates.

 

Liquidity and interest rate risks

 

The Group is ultimately dependent on sources of additional equity and/or debt funding to develop Greenfield and any of the Group's other exploration assets and/or technology and to meet its day-to-day capital commitments and overheads. Cash forecasts identifying the liquidity requirements of the Group are produced frequently and are reviewed regularly by management and the Board. This strategy will continually be reviewed in light of existing project developments and new project opportunities as they arise. For further information regarding the Group's cash reserves and future funding requirements, please refer to the 'Going Concern' section below.

 

Currency risk

 

Due to the limited income and expenses denominated in foreign currencies, it was not considered cost effective to manage transactional currency exposure on an active basis. Consequently, as the financial statements are reported in sterling, any movements in the exchange rate of foreign currencies against sterling may affect the Group's statements of comprehensive income and financial position. The Group holds some cash in US dollars to mitigate the foreign exchange risk and keeps its currency profile under review.

 

 

Financial instruments

 

It was not considered appropriate for the Group to enter into any hedging activities or trade in any financial instruments in 2023. Further information is set out in Note 20.

 

RESULTS AND DIVIDENDS

 

The statement of comprehensive income is set out on page 18 with the Group reporting a loss before taxation for the year of £2.35m (2022: £0.69m). The Directors do not propose the payment of a dividend (2022: £nil).

 

REVIEW OF KEY EVENTS DURING THE YEAR

 

TurboShale

 

There were no significant developments in respect of the Group's TurboShale technology during the financial year with the TurboShale and Oil Mining Company assets remaining fully impaired.

 

Greenfield Energy LLC

 

In light of the significant delay encountered in receiving a permit for an initial production well, with a response to our application from the relevant authorities still outstanding, the Board has refrained from incurring any further significant expenditure on the potential in-situ 25 well production programme until a suitable wider project funding package for Greenfield has been obtained.

 

Alongside our exercise to secure project finance, throughout the period the Company has worked closely with Valkor and other technical partners to further refine and develop the design for the initial separation plant with significant improvements to the potential efficiency and operating costs of the plant. 

 

While the likely loss of the proposed Uintah Railroad could well have restricted the future sale of the sand to be produced by the proposed initial plant, an alternative transport solution has been identified and will be developed further once the project funding is secured. The projected sales values of the future oil and sand end products have continued to increase during the year, with the anticipated cost of constructing and operating the separation plant reducing as a result of the improved plant design led by Valkor.

 

TSHII

 

Greenfield successfully extended the exercise period of the option, at its sole discretion, to acquire the remaining 90% of the Membership Interests from the vendor of TSHII for additional cash consideration of $17.25m from 30 April 2023 to 31 December 2023. The Company currently remains in discussions with the counterparty with a view to seeking a further extension to the exercise period or agreeing a suitable alternative arrangement. There can be no certainty that the option will be extended or an alternative arrangement agreed or that the required funding can be secured to ultimately exercise the option if renewed.

 

Updated TSHII Reserves Report

 

An updated independent reserves report commissioned from Netherland, Sewell & Associates, Inc. as of 30 June 2023, increased the total estimated undiscounted future net revenues in respect of a gross 100% interest in a potential commercial scale project on the mining properties comprising the TSHII site from their previously disclosed figure of $942m (based on 1P reserves) in January 2022 to $1.32bn. Estimated discounted future net revenues attributable to TomCo's current 10 per cent. interest in TSHII via Greenfield ranged from approximately $47.3m based on 1P reserves (Jan 22: $30.5m) to approximately $77.6m (Jan 22: $57.6m) based on 3P reserves.

 

Financing

 

On 1 September 2022, the Company obtained an unsecured facility of up to £0.75 million via a convertible loan instrument and an associated subscription and put option which was entered into with certain subscribers introduced by the Company's broker. Such facility was subsequently drawn down and converted in full and the proceeds utilised to repay, in aggregate, $0.5 million of the principal amount of the unsecured $1.5 million loan previously advanced by Valkor to Greenfield (the "Valkor Loan") in connection with Greenfield's purchase of an initial 10% Membership Interest in TSHII in November 2021, and for general corporate purposes.

 

 

On 30 November 2022, the Company raised a further £0.925 million gross through the placing of 264,285,714 new ordinary shares at a price of 0.35 pence per share to provide additional funds to cover the Company's expenditure as it progresses its plans for Greenfield. The terms of the Valkor Loan were also varied to extend the repayment date for the then remaining $1 million principal amount to the completion date of a suitable funding transaction for Greenfield that provides sufficient funds to TomCo to, inter alia, enable it to affect repayment. As at the date of this report the principal amount outstanding in respect of the Valkor Loan was $350k. 

 

On 30 March 2023, the Company secured a new four tranche committed unsecured convertible loan facility of up to £1 million to provide additional working capital for the Group whilst seeking to finalise funding arrangements for Greenfield. On 14 June 2023, the Company cancelled £750,000 of this facility and replaced it with a £500,000 gross placing and subscription involving the issue of 625,000,000 new ordinary shares at a price of 0.08 pence per share, with the funds used to support the Company's working capital requirements.

 

On 13 October 2023, the Company raised £100,000 gross from an existing shareholder via a subscription for 125,000,000 new ordinary shares at a price of 0.08 pence per share.

 

Following the financial year end, on 2 January 2024 the Company secured a further £50,000 from an existing shareholder via a subscription for 50,000,000 new ordinary shares at a price of 0.1 pence per share and on 21 February 2024 the Company raised an additional £300,000 gross via a placing and subscription of, in aggregate, 666,666,667 new ordinary shares at a price of 0.045 pence per share.

 

Directors

 

The Directors who served on the Board during the year to 30 September 2023 and to date were as follows:

Malcolm Groat

John Potter

Louis Castro

Zac Phillips

 

Directors' interests in the ordinary shares of the Company, including family interests, as at 30 September 2023 were as follows:

 

	30 September 2023			30 September 2022
	Ordinary shares of nil par value	Share warrants	Share options	Ordinary shares of nil par value	Share warrants	Share options
M. Groat	11,887	-	20,380,952	11,887	-	20,380,952
J. Potter	26,500	-	52,714,285	26,500	-	52,714,285
L. Castro	-	-	15,000,000	-	-	15,000,000
Z. Phillips	-	-	-	-	-	-
	38,387	-	88,095,237	38,387	-	88,095,237

 

Details of the Directors' remuneration, share warrants and share options can be found in the Remuneration Committee Report and Notes 6, 18 and 19 to the financial statements.

 

Payments of payables

 

The Group's policy is to negotiate payment terms with its suppliers in all sectors to ensure that they know the terms on which payment will take place when the business is agreed and to abide by those terms of payment.

 

Going Concern

 

At 25 March 2024, the Group had cash reserves of approximately £0.1 million.

 

The Group's financial statements have been prepared on a going concern basis, which presumes that the Group will be able to meet its obligations as they fall due for the foreseeable future.

 

The Directors have prepared a cash flow forecast for the thirteen months to 30 April 2025. As set out in the Chairman's Statement, discussions with potential funders to secure sufficient finance for the Group's plans including its working capital requirements are at an advanced stage but have not yet been concluded. These plans include the acquisition of the remaining 90% of TSHII by Greenfield; funding for up to two oil sand processing plants and associated infrastructure; the potential drilling of wells into the deeper oil sands that are too deep to mine for the implementation of oil recovery processes; and repayment of the remainder of the historic loan from Valkor LLC (the "Valkor Loan").

 

On 30 November 2022, the terms of the Valkor Loan, which is unsecured, were varied such that the loan is only repayable on completion of a suitable funding transaction for Greenfield that provides sufficient funds to enable the Company to affect such repayment. Hence, the abovementioned cash flow forecast does not include any funding which would arise from a successful conclusion to the ongoing discussions with the identified potential financiers, nor does it include repayment of the Valkor Loan.

 

The forecast, which includes all commitments at the date of this report and reflects receipt of the net proceeds of the £0.3m equity fundraising announced on 21 February, indicates that the Group will need to secure approximately an additional £0.5m in Q2 2024 to meet its currently envisaged working capital requirements for the twelve months to 30 April 2025, beyond which further funding will be required. Based on historical and recent support from new and existing investors and debt providers, the Board reasonably believes that additional funding can be obtained when required, via further debt or equity issuances, and in the meantime is carefully preserving its existing cash and taking measures to reduce costs and defer expenditure (including director salaries) such that it continues to consider it appropriate to prepare the financial statements on a going concern basis. However, the Board's ability to raise such funds cannot be guaranteed. As a consequence, there is a material uncertainty as to the going concern status of the Group.  The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

 

The Directors' consideration of the Group's going concern status is also set out in note 1.3 to the financial statements. The auditors refer to going concern by way of a material uncertainty within their audit report.

 

Directors' responsibilities

 

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

The directors have resolved to prepare financial statements for each financial year end and have elected to prepare financial statements in accordance with UK-adopted International Accounting Standards. The financial statements are required to give a true and fair view of the state of the affairs of the Company and of the profit or loss of the Company for that period.

 

In preparing these financial statements, the directors are required to:

·	consistently select and apply appropriate accounting policies;
·	present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
·	provide additional disclosures when compliance with the specific requirements in International Financial Reporting Standards is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
·	state that the Group has complied with International Financial Reporting Standards, subject to any material departures disclosed and explained in the financial statements.

 

The Directors confirm that they have complied with these requirements, and, having a reasonable expectation that the Group has and will have adequate resources to continue in operational existence for the foreseeable future, have continued to adopt the going concern basis in preparing the financial statements.

 

Website publication

 

The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on the company's website in accordance with legislation in the Isle of Man governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the company's website is the responsibility of the directors. The directors' responsibility also extends to the on-going integrity of the financial statements contained therein.

 

Auditors

 

All of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Company's auditors for the purposes of their audit and to establish that the auditors are aware of that information. The Directors are not aware of any relevant audit information of which the auditors are unaware.

 

PKF Littlejohn LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the Company's next annual general meeting.

 

By order of the Board

 

 

 

John Potter

CEO

 

28 March 2024

 

CORPORATE GOVERNANCE STATEMENT

 

As Chairman, I am pleased to present the Company's Governance Statement under the QCA Corporate Governance Code (the "QCA Code"). Establishing effective corporate governance structures that evolve with the business and protect shareholder value is a key element of my role, together with the Board as a whole. Set out below are details of the Company's governance framework benchmarked against the QCA Code principles.

 

The Board of Directors of TomCo (the "Board") monitors the business affairs of the Company and its subsidiaries on behalf of its shareholders. The Board currently consists of the Chief Executive Officer and three Non-Executive Directors. None of the Non-Executive Directors have previously held an executive position with the Company. The Directors have responsibility for the overall corporate governance of the Company and recognise the need for the highest standards of behaviour and accountability. The Directors are committed to the principles underlying best practice in corporate governance and have adopted the QCA Code.

 

This statement explains, at a high level, how the QCA Code is applied by the Company and how its application supports the Company's medium to long-term development. Further information on the application of the QCA Code can be found on the Company's website at https://tomcoenergy.com/investors/governance/.

 

The Board is responsible for the stewardship of the Company through consultation with the management of the Company. Management represents the Executive Director. Any responsibility that is not delegated to management or to the specific committees of the Board remains with the Board, subject to the powers of shareholder meetings. The frequency of Board meetings, as well as the nature of agenda items, varies depending on the state of the Company's affairs and in light of the opportunities or risks which the Company faces. Members of the Board are in frequent contact with one another, and meetings of the Board are held as deemed necessary.

 

Statement of compliance with the QCA Code

 

Throughout the year ended 30 September 2023, the Company has been in compliance with the provisions set out in the QCA Code.

 

Application of the QCA Code principles

 

The Company has applied the principles set out in the QCA Code, by complying with it as reported above. Further explanations of how the principles have been applied is set out below.

 

Principle One - Business Model and Strategy

 

TomCo is an oil exploration and development company focused on applying innovative technology to unlock unconventional hydrocarbon resources, initially in Utah, USA.

 

The Company, as a result of the initial success of the opportunity developed within Greenfield Energy LLC, has maintained its primary focus on developing an oil sands separation process with the planned potential future development of up to two commercial scale processing plants with the ability to achieve 6,000 tonnes of sand per day.

 

Principle Two - Understanding Shareholder Needs and Expectations

 

The Board is committed to maintaining good communications and having constructive dialogue with its shareholders. Shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company and management.

 

All shareholders are encouraged to attend and participate in all shareholder meetings called by the Company, in particular its Annual General Meeting (AGM). Investors also have access to current information on the Company and the Group through the Company's website at: www.tomcoenergy.com.

 

Principle Three - Considering Wider Stakeholder and Social Responsibilities.

 

The Board recognises that the long-term success of the Group is reliant upon the efforts of the employees of the Group, its partners, consultants, contractors, suppliers, regulators and other stakeholders. The Board have put in place a range of processes and systems to ensure that there is close oversight and contact with its key stakeholders.

The Group is subject to oversight by a number of different U.S. State and other regulatory bodies, who directly or indirectly are involved with the permitting and approval process for its oil and gas operations in Utah, including those conducted by Greenfield. Additionally, given the nature of the Group's business, including the activities of Greenfield there are other parties who, whilst not having regulatory power, nonetheless have an interest in seeing that the Group conducts its operations in a safe, environmentally responsible, ethical and conscientious manner.

 

The Group makes all reasonable efforts, directly or through its advisers, to engage in and maintain active dialogue with each of these governmental and non-governmental bodies, to ensure that any issues faced by the Group, including but not limited to regulations or proposed changes to regulations, are well understood and ensuring to the fullest extent possible that the Group is in compliance with all relevant regulations, standards and specific licensing obligations, including environmental, social and safety aspects, at all times.

 

Principle Four - Risk Management

 

In addition to its other roles and responsibilities, the Board is responsible for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Group.

 

As a result of the process described above, a number of risks have been identified. The principal risks and the manner in which the Company and its Board seek to mitigate them are set out below. The Board reviews the principal risks facing the business as part of its meetings throughout the year and changes to those risks as the Company develops. Where risks change or new risks are identified the Board amends existing or implements new risk management strategies as applicable.

 

Risk	Comment	Mitigation
Operational risks	See Directors' Report.	The Group's operations are limited currently, pending obtaining funding for the two planned 6,000 tonnes per day processing plants. The Directors remain in detailed discussions with a potential funder concerning, inter alia, securing funding for such plants, along with the completion of Greenfield's purchase of the remaining 90% of TSHII which holds the site for the proposed plants and the potential in-situ well programme. The requisite permitting process for the in-situ well programme is still ongoing and while the process intended to be deployed is proven, its use on oil sands is less common which has extended the consultation process in respect of such permitting.
Environmental, health and safety and other regulatory standards	See Directors' Report.	The Company has engaged leading advisers to assist it in securing relevant permits or licences to operate.   The Company maintains ongoing oversight of health and safety and environmental compliance.
Liquidity risk	See Directors' Report including 'Going Concern' section.	The Company maintains a detailed cashflow forecast and carefully monitors expenditure and seeks to raise additional funding as required and as referred to in Note 1.1.
Currency risk	See Directors' Report.	The Company aims to manage currency exposures by holding funds in the applicable currency to match anticipated expenditure.

 

The Board considers that an internal audit function is not necessary or practical due to the current size of the Group and the close day to day control exercised by the Executive Director. However, the Board will continue to monitor the need for an internal audit function. The Executive Director has established appropriate reporting and control mechanisms to ensure the effectiveness of the Group's control systems for the size of the business and its activities. The Board obtains regular updates on risks from the Executive Director, which allows it to monitor the effectiveness of risk management and through its regular engagement and review of reporting on areas such as the status of the Company's projects, budgets, results and cash flow position of the Company, it considers the effectiveness of controls on an ongoing basis.

 

 

Principle Five - A Well-Functioning Board of Directors

 

The Board currently comprises the Chief Executive, John Potter, and three independent Non-Executive Directors, Malcolm Groat, Louis Castro and Zac Phillips.

 

Biographies for each of the current Directors are set out on the Company's website. Executive and Non-Executive Directors are subject to re-election usually at the Company's Annual General Meeting, at intervals of no more than three years.

 

The Board meets on a regular basis, typically at least once a month.

 

The Board is responsible for formulating, reviewing and approving the Group's strategy, budgets and corporate actions. As such, the Company has established separate Audit and Remuneration Committees.

 

The Audit Committee comprises Louis Castro (Chairman), Malcolm Groat and Zac Phillips. The Audit Committee meets at least twice a year to consider the integrity of the financial statements of the Company, including its annual and interim accounts; the effectiveness of the Company's internal controls and risk management systems; auditor reports; and terms of appointment and remuneration for the auditor.

 

The Company's Remuneration Committee comprises Louis Castro (Chairman), Malcolm Groat and Zac Phillips. The Remuneration Committee meets from time to time, but not less than once a year, to review and determine, amongst other matters, the remuneration of Executives on the Board and any share incentive plans of the Company.

 

The QCA Code recommends that the Chairman must have adequate separation from the day-to-day business to be able to make independent decisions. Malcolm Groat is the Company's Non-Executive Chairman and the Board believes that he has adequate separation from the day-to-day business of the Company to be able to make such independent decisions. As the Board is comprised of only four members, one of whom is an Executive and three of whom are independent Non-Executive Directors, including the Chairman, the Board does not believe it is currently necessary to appoint a senior independent director.

 

The Chief Executive is a full-time employee of the Company. Whilst each of the Non-Executive Directors are considered to be part time, they are expected to provide as much time to the Company as is required. The attendance record of the Directors at Board and committee meetings held during the year ended 30 September 2023 was as follows:

 

	Main Board	Audit Committee	Remuneration Committee
Meetings held	10	2	1
Attendance:
Malcolm Groat	10	2	1
John Potter	10	-	-
Louis Castro	10	2	1
Zac Phillips	10	2	1

 

Principle Six - Appropriate Skills and Experience of the Directors

 

The Board believes that the current balance of skills held by the Board as a whole, reflects a very broad range of commercial and professional skills across geographies and industries and each of the Directors has previous experience of public markets.

 

The Board believes that the Directors are well suited to the Company's fundamental objective of enhancing and preserving long-term shareholder value and ensuring that the Group conducts its business in an ethical and safe manner. The Board is considered to be of a sufficient size to provide more than adequate experience and perspective to its decision-making process and, given the size and nature of the Group, the Board does not consider at this time that it is appropriate to increase the size of the Board or amend its composition.

 

As the Board is not currently anticipating any change to its size or composition, it has not yet implemented a written policy regarding the identification and nomination of female directors. In the event that one of the existing members of the Board stands down from their current position, the Company will, at that time, give further consideration to the specific selection of a female member of the Board and the adoption of a formal policy relating to the positive appointment of additional female members of the Board for future opportunities.

 

The Board is responsible for: (a) ensuring that all new Directors receive a comprehensive orientation, that they fully understand the role of the Board and its committees, as well as the contribution individual directors are expected to make (including the commitment of time and resources that the Company expects from its directors) and that they understand the nature and operation of the Group's business; and (b) providing continuing education opportunities for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure that their knowledge and understanding of the Group's business remains current.

 

Given the size of the Company and the in-depth experience of its Directors, the Board has not deemed it necessary to develop a formal process of orientation for new Directors but encourages all its Directors to visit the Group's operations to ensure familiarity and proper understanding.

 

Skills & Experience of Board Members

 

Malcolm Groat

Malcolm is a Chartered Accountant and has extensive corporate experience, with roles as Chairman, Non-Executive Director, Chairman of Audit Committees, CEO, COO and CFO for a number of public companies. He is an adviser on compliance and governance, strategy and operational improvement, and managing the risks of rapid change.

 

John Potter

John is an accomplished Chief Executive and project manager with many years of experience working within the energy sector. John brings a wide range of skills, knowledge and industry connections. His proficiency in understanding and identifying best technologies in projects and his proven abilities in developing relationships with stakeholders, including operators, politicians, financiers, technology providers and regulators, are well proven and have brought great value to the companies he has previously worked with.

 

Louis Castro

Louis is a graduate engineer and PwC trained Chartered Accountant who has spent his career in the City in investment banking and capital markets, advising growth companies on a wide range of matters including fund-raising and M&A. He served as an AIM Nomad for many years before becoming CFO of a listed oil company. In recent years, Louis became Executive Chairman of Orosur Mining Inc. which is quoted on both the TSX-V and on AIM, and he is also a non-executive director of Tekcapital plc and Innovative Eyewear, Inc.

 

Zac Phillips

Zac has over 25 years' experience in oil and gas finance, having worked for BP, Chevron, Merrill Lynch and ING Barings. He was previously CFO for Dubai World's oil and gas business (DB Petroleum) with responsibility for risk management and authoring of investment proposals. He has a degree in Chemical Engineering and a PhD in Chemical Engineering from Bath University.

 

Principle Seven - Evaluation of Board Performance

The Board has determined that it shall be responsible for assessing the effectiveness and contributions of the Board as a whole and its committees (which currently comprise the Audit Committee and the Remuneration Committee). The small size of the Board allows for open discussion. The Chairman has regular dialogue with the Chief Executive whereby the Board's role and effectiveness can be considered.

 

No formal assessments have been prepared in the year. However, the Board assesses its effectiveness on an ongoing basis. The Board will keep this matter under review and especially if either the size of the Board or the number of committees increases, which in turn may require a more formalised assessment and evaluation process to be established to ensure continued effectiveness.

 

Principle Eight - Corporate Culture

The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Group as a whole and that this will have an effect on the performance of the Group. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Group. The corporate governance arrangements that the Board has adopted are designed to ensure that the Group delivers long-term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board.

 

A large part of the Group's activities is centred upon what needs to be an open and respectful dialogue with partners, suppliers, consultants and other stakeholders. Therefore, the importance of sound ethical values and behaviour is crucial to the ability of the Group to successfully achieve its corporate objectives.

 

The Directors consider that, at present, the Group has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge.

 

Principle Nine - Maintenance of Governance Structures and Processes

 

Ultimate authority for all aspects of the Group's activities rests with the Board, with the responsibilities of the Executive Director arising as a consequence of delegation by the Board.

 

The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board. The Chairman is responsible for the effectiveness of the Board and compliance with the QCA Code, while management of the Group's business and primary contact with shareholders has been delegated by the Board to the Chief Executive Officer.

 

Non-Executive Directors

The Board evaluates its performance and composition on a regular basis and will make adjustments as and when required. When assessing the independence of each Non-Executive Director, length of service is one of the considerations. The Board will, when assessing new appointments in the future, consider the need to balance the experience and knowledge that each independent director has of the Group and its operations, with the need to ensure that independent directors can also bring new perspectives to the business.

 

In accordance with the Isle of Man Companies Act 2006, the Board complies with: a duty to act within their powers; a duty to promote the success of the Company; a duty to exercise independent judgement; a duty to exercise reasonable care, skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties and a duty to declare any interest in a proposed transaction or arrangement.

 

Principle Ten - Shareholder Communication

 

The Board is accountable to the Company's shareholders and, as such, it is important for the Board to appreciate the aspirations of shareholders and equally that shareholders understand how the actions of the Board and short-term financial performance relate to the achievement of the Group's longer-term goals.

 

The Board reports to the Company's shareholders on its stewardship of the Group through the publication of interim and final financial results. The Company announces significant developments which are disseminated via various outlets including, before anywhere else, the London Stock Exchange's regulatory news service (RNS). In addition, the Company maintains a website (www.tomcoenergy.com) on which RNS announcements, press releases, corporate presentations and the Report and Financial Statements are available to view.

 

Enquiries from individual shareholders on matters relating to the business of the Group are welcomed. Shareholders and other interested parties can subscribe to receive notification of news updates and other documents from the Company via email.

 

The Annual General Meeting, and other meetings of shareholders that may be called by the Company from time to time, provide an opportunity for communication with all shareholders and the Board encourages shareholders to attend and welcomes their participation. The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with its private shareholders.

 

Malcolm Groat

Non-Executive Chairman

 

28 March 2024