TIDMTOM
RNS Number : 7935H
TomCo Energy PLC
27 March 2020
27 March 2020
TOMCO ENERGY PLC
("TomCo" or the "Company")
Final Results for the year ended 30 September 2019
TomCo Energy plc (AIM: TOM) announces its full year results for
the year ended 30 September 2019.
The annual report and accounts will shortly be available on the
Company's website at www.tomcoenergy.com .
Enquiries:
TomCo Energy plc
Stephen West (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Richard Tulloch / James Dance +44 (0)20 7409 3494
Turner Pope (Broker)
Andy Thacker / Zoe Alexander +44 (0)20 3657 0050
For further information, please visit www.tomcoenergy.com .
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
CHAIRMAN'S STATEMENT
I am pleased to be delivering my first Chairman's Statement to
the shareholders of TomCo Energy plc ("TomCo" or the "Company" or,
with its subsidiaries, the "Group"), together with the Annual
Report and Financial Statements for the year ended 30 September
2019.
Market Conditions
During the year we saw a marked improvement in market conditions
for global capital markets and the oil and gas industry. However,
at the time of writing this statement we have witnessed the
unforeseen emergence of the COVID-19 virus, which has had a
dramatic effect on the global capital markets and, for the
foreseeable future, this will have an impact on all industries
including the oil and gas industry.
TurboShale RF Technology
With the completion of the field test of TurboShale's RF
technology in September 2019 ("Field Test") on the Group's Holliday
A Block, the Group progressed its assessment of its unconventional
oil shale resources in Utah.
The lessons learnt from the Field Test and the expansion of the
Group's advisory team, including IGES Inc. as the Groups Geological
Services advisor, Matt Himes as the Groups Field Operations
adviser, and the close support of Continental Electronics, meant
the Field Test delivered significant data. Unfortunately, the main
aim of the Field Test to recover enough oil for testing was not
met, though sufficient evidence was generated to show the process
did heat the oil shale. The analysis completed post the Field Test,
with Continental Electronics, has determined the design
improvements needed to the antenna and how these improvements can
be implemented. However, with the global effects of the COVID-19
virus still developing, the Company has taken the decision to
postpone the next test of TurboShale's RF technology. The Company
will continue to explore its potential with laboratory-based
testing until a further field test can, subject to funding, be
planned and undertaken.
Valkor Oil Sands Opportunity
In December 2019, the Company signed a non-binding memorandum of
understanding ("MoU") with Valkor Technology LLC ("Valkor") to
explore the oil sands potential across the Group's oil shale leases
within the Uintah Basin, Utah, USA ("Leases"). Valkor is an
international engineering, procurement, construction and
installation and field operations company, with operations in the
US, South America and Africa both on and offshore and the owner and
operator of gas and oil fields in Trinidad, USA, Turkey and
Ukraine. Through their subsidiary, Valkor Energy Services, they
have assisted with the design improvements of Petroteq Energy Inc's
("Petroteq") closed loop system for use in the recovery of oil from
oil sands (the "Oil Sands Technology") and has a licence from
Petroteq to utilise the Oil Sands Technology in the USA.
Based on the results of the preliminary work undertaken to date
in accordance with the MoU, TomCo entered into a exclusivity
agreement with Valkor on 19 March 2020, pursuant to which the
Company and Valkor have agreed, inter alia, to study the potential
to deploy the Oil Sands Technology at a suitable location and to
jointly fund a Pre-FEED study. The Pre-FEED study will be
undertaken by Valkor and be verified by a third party, to
demonstrate the economic viability of the Oil Sands Technology,
with a gross budget of US$250,000 to be funded equally by the
parties. Should the results of the Pre-FEED study be sufficiently
favourable, the Company anticipates entering into a binding
agreement with Valkor to establish a JV company by the end of June
2020, with TomCo and Valkor each holding a 50% equity interest, to
pursue the development of a plant using the Oil Sands Technology on
land yet to be determined.
Under normal circumstances, it would be expected that the
Pre-FEED study would take approximately four weeks to complete.
However, with the effects of the COVID-19 virus still unfolding and
the resultant travel restrictions, it is likely the study will take
longer.
Corporate
TomCo witnessed a busy year in terms of corporate activity. Four
equity fundraises were completed during the year, raising, in
aggregate, GBP1.7 million (gross), with an additional GBP0.9
million (gross) raised post year end in December 2019.
Following the fundraise in December, as at 26 March 2020, the
Company had cash of approximately GBP745,000 and the Directors
believe that based on its cash flow forecasts, the Company has
sufficient funds for its present requirements through to the end of
March 2021. If the Company seeks to advance the RF technology or
undertake further work in respect of the oil sands over and above
the Pre-FEED study, the Company will need to raise further
funds.
Further, post the year end Andrew Jones stepped down as
Executive Chairman to pursue other opportunities and I was pleased
to step into the role of Non-Executive Chairman. On behalf of the
Board, I would like to thank Andrew for his hard work as Executive
Chairman over the last five years and the integral role he played
in the development of the Company and wish him all the best with
his future endeavours.
Outlook and Summary
As already outlined, the general sector backdrop has entered an
unprecedented challenge due to the impact of the COVID-19 virus on
global capital markets. Where possible, we will seek to reduce
costs in every aspect of the business whilst ensuring we operate as
efficiently and effectively as possible.
We would like to thank all shareholders for their continued
support and look forward to providing positive updates throughout
2020 and into 2021.
Stephen West
Non-Executive Chairman
26 March 2020
DIRECTORS' REPORT
The Directors submit their report and the financial statements
of the Group for the year ended 30 September 2019.
PRINCIPAL ACTIVITY
The principal activity of the Group is that of deploying
technology on its oil shale leases and other unconventional oil
resources for 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
2019 set out below.
Operational risk
SRK Consulting (Australasia) Pty Ltd undertook an independent
resource assessment in relation to the Group's oil shale leases ML
49570 and ML 49571 (the "Leases") in 2019. This assessment showed a
best estimate Contingent Resources (2C) of, in aggregate, 131.3 MM
bbl of oil assessed under Petroleum Resources Management System
("PRMS") guidelines, plus a best estimate Prospective Resource (2U)
of, in aggregate, 442.8 MM bbl oil across the Leases. This estimate
included the Holliday A Block, where the Field Test took place,
with 2C Contingent Resources of 57.3 MM bbl of oil and 2U
Prospective Resources of 84.7 MM bbl of oil using in situ recovery
methods aligned to TurboShale RF technologies which continues to be
under development.
In March 2017, TomCo incorporated a new US company, TurboShale
Inc. ("TurboShale"), and entered into agreements with JR
Technologies LLC ("JRT") to seek to advance the radio frequency
("RF") technology used in the BART Programme. TurboShale acquired
the rights from JRT over patent US7891421B Method and Apparatus for
In-Situ Radiofrequency Heating (US Application 62/017/408), and
patent application US2015/035433A1 Subsurface Multiple Antenna
Radiation Technology (SMART), which are the two key patents
relating to TurboShale's RF technology and process. The patent
application was granted in full in January 2019.
The completion of the Field Test identified a number of changes
required to be made to TurboShale's RF technology to ensure its
safe operation and to successfully complete the objective of
recovery of oil from the Company's Holliday A Block. The Company is
further evaluating the technology during 2020 before starting to
plan the next field test.
The Directors have identified the following main risks in
relation to the Field Test and TurboShale's RF technology:
-- Notwithstanding the successful outcome of the BART Programme,
the Company is seeking to demonstrate that TurboShale's RF
technology can be used to recover oil and gas on an economic basis
with the ultimate goal of moving towards commercial production of
the Company's oil shale assets. The Field Test, completed in 2019,
represents an important step in this process. The primary objective
of the Field Test was the recovery of oil from the Company's
Holliday A Block through the application of TurboShale's RF
technology. Notwithstanding the Board's confidence in TurboShale's
RF technology proving successful, we have yet to prove it on our
asset. Accordingly, there can be no certainty that the technology
will be successful and/or recover any oil. Even if it does recover
oil, it may not recover sufficient volumes to be able to complete
the necessary analysis and/or such analysis may determine that the
process is not commercial or scalable.
-- The Group has been advancing the development of TurboShale's
RF technology and has made a significant investment in acquiring
specialised equipment, including radio frequency transmitters.
Further changes to the system have been identified and before
further funding is deployed, testing these changes together with
further analysis of the system will be carried out. The cost of
this analysis has yet to be determined and may require the Company
to raise further funding to allow the work to be carried out.
-- This RF process does not use surface mining and instead works
in situ, through the use of Radio Frequency Antennas located within
drilled boreholes. The Field Test has been completed using
exploration permits that have a minimal cost and time in securing.
To expand the operations into a commercial operation, a Small
Mining Operating permit ("SMO") will be required.
Risks relating to environmental, health and safety and other
regulatory standards
The Group's future extraction activities are subject to various
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 operations. The Group ensures 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 equity or debt
funding to develop TurboShale or any other recovery technology and
in turn its exploration assets and meet its day to day capital
commitments. 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 the light of developments with existing projects and
new project opportunities as they arise. For further information
regarding the Group's cash resources and future funding
requirements, 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. However, 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.
COVID-19 risk
The full effect and impact of the COVID-19 pandemic will take
time to be understood. At the time of the publication of these
accounts, the full effects are not yet known, though it is clear
that the effects will be significant. Already we have seen a
slowing of the global economy and a material reduction in both the
demand for and the price of oil, which will likely have an impact
on the attractiveness of exploration assets, including the Group's,
which may result in future funding for projects being harder to
secure. In respect of the Group's current operations, being the
Pre-FEED study, this will likely take longer to be completed than
initially anticipated due to the current imposed travel
restrictions. In the event that the pandemic continues into the
second half of 2020, the Board will consider what cost reduction
measures are needed and can be implemented to ensure the Group can
continue to trade.
Financial instruments
It was not considered an appropriate policy for the Group to
enter any hedging activities or trade in any financial instruments.
Further information can be found in Note 19 .
Results and dividends
The statement of comprehensive income is set out on page 19. The
Directors do not propose the payment of a dividend (2018:
GBPnil).
Review of the key events during the year
TurboShale
The Field Test of TurboShale's RF technology was completed on
the Groups Holliday A Block in September 2019. The results of the
Field Test, while they didn't result in the recovery of any oil,
did produce a significant amount of data. The data is continuing to
be used to develop the system and has already identified a number
of improvements that should, in the Directors' opinion, lead to the
successful operation of the technology when, subject to funding, it
is next tested.
Financing
During the financial year, TomCo completed four equity
fundraises of a total of 63,351,796 new ordinary shares, which
raised a total of GBP1.7 million before costs. The proceeds were
used for the advancement of the TurboShale field test and for
general working capital.
In addition, unsecured loans of, in aggregate, GBP250,000,
provided by Chris Brown, were settled in January 2019 by the issue
of 5 million new ordinary shares at 2p per share and GBP150,000 in
cash. In addition, warrants were exercised for a total of 2,839,091
which raised GBP66,600. In addition, TomCo sold its entire interest
in Red Leaf Resources Inc. in October 2018 for a total
consideration of US$133,333.
Since the end of the financial year there has been a further
placing of 142,307,692 new ordinary shares, raising GBP925,000
(gross). These funds have been deployed to working capital and the
Pre-FEED study to be undertaken by Valkor.
As at 26 March 2020, the Company had cash of approximately
GBP745,000 and cash flow forecasts indicate that the Company has
sufficient funds through to the end of March 2021 as detailed below
under Going Concern and in Note 1.1 to the financial
statements.
Directors
Directors who served on the Board during the year to 30
September 2019 and to date were as follows:
Andrew Jones (resigned 16 March 2020)
John Potter
Alexander Benger
Malcolm Groat
Laurence Read (appointed 1 January 2019; resigned 28 June
2019)
Post the period end, Stephen West was appointed as a
Non-Executive Director on 17 February 2020
Directors' interests in the ordinary shares of the Company,
including family interests, as at 30 September 2019 were as
follows:
30 September 2019 30 September 2018 (or date of
appointment)
Ordinary Share Share Ordinary Share Share
shares warrants options shares warrants options
of nil of nil
par par
value value
------------------ ------------------- ------------------- -------------------- ------------------- ------------------- --------------------
A
Jones* 380,838 - 2,666,666 38,146 - 2,666,666
J
Potter 26,500 - 1,714,285 26,500 - 1,714,285
A
Benger 18,293 - 380,952 18,293 - 380,952
M.
Groat 11,887 - 380,952 11,887 - 380,952
L. Read - - - - - -
------------------- ------------------- -------------------- ------------------- ------------------- --------------------
437,518 - 5,142,855 94,826 - 5,142,855
Details of remuneration, share warrants and share options can be
found in the Remuneration Committee Report,
Notes 6 ,17 and 18 to the financial statements.
* The number for Mr. Jones includes 342,692 Ordinary shares held
in his Self-Invested Personal Pension Scheme ("SIPP").
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
The Directors have prepared cash flow forecasts for the next 15
months from the date of signing of these financial statements.
Under the forecasts, the Group plans to engage Valkor to evaluate
the commercial viability of a commercial scale plant based on the
Petroteq oil recovery system. The forecasts indicate the Group has
sufficient funds to complete the engagement and has sufficient
funds to meet its liabilities as they fall due until March 2021.
Further funding will be required if the Directors decide to explore
the opportunity to develop a commercial scale oil sands plant or to
further advance the RF technology and to ensure the Company can
continue to meet its liabilities and commitments through to March
2021.
The Director's note that COVID-19 has had a significant negative
impact on the global economy and oil prices have fallen
significantly, which may mean it is harder to secure additional
funding than it has historically been. Notwithstanding this, the
Directors have a reasonable expectation that they can secure
additional funding, based on recent fundraisings, which would
provide sufficient funds to meet operating expenditure beyond March
2021 or in the event that the Company sought further funds to
explore the opportunity to develop a commercial scale oil sands
plant or to further advance the RF technology. However, these
conditions are necessarily considered to represent a material
uncertainty which may cast significant doubt over the Group's
ability to continue as a going concern. Whilst acknowledging this
material uncertainty, the Directors remain confident of raising any
additional funds required and therefore the Directors consider it
appropriate to prepare the financial statements on a going concern
basis. The financial statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern.
Directors' responsibilities
The Directors are responsible for keeping proper accounting
records, that are sufficient to show and explain the Group's
transactions and disclose, with reasonable accuracy at any time,
the financial position of the Group and enable them to ensure that
financial statements may be prepared, in accordance with the Isle
of Man Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and for taking steps for the
prevention and detection of fraud and other irregularities.
The Directors are required to prepare financial statements in
accordance with the rules of the London Stock Exchange for
companies trading securities on the AIM market. In accordance with
those rules, the Directors have elected to prepare the Group
financial statements in accordance with International Financial
Reporting Standards (IFRSs), as issued by the International
Accounting Standards Board. The Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Group and of the
profit or loss of the Group for that year. 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 IFRSs 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 IFRS, 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 adequate resources to continue in operational existence for the
foreseeable future and continue to adopt the going concern basis in
preparing the financial statements.
Auditors
All 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.
BDO LLP have expressed their willingness to continue in office
and a resolution to re-appoint them will be proposed at the annual
general meeting.
By order of the Board
John Potter
CEO
26 March 2020
CORPORATE GOVERNANCE STATEMENT
As Chairman, I am pleased to present the Company's Governance
Statement under the QCA Corporate Governance Code ("the QCA Code"
or the "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 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 success. Further information on the
application of the 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 committees of the Board remains
with the Board, subject to the powers of the 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 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 2019, the Company has
been in compliance with the provisions set out in the QCA Code.
Statement about applying the principles of the Code
The Company has applied the principles set out in the Code, by
complying with the Code 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 unconventional oil exploration and development
company focused on using innovative technology to unlock
hydrocarbon resources, initially in Utah, USA.
Its objective is to become the leading development company in
the use of RF technology in the extraction of oil & gas from
oil shale and to commercialise its current oil shale assets.
The Company believes that the RF technology, held through
TurboShale in which the Company has an 80% interest, will benefit
from being economically attractive, carrying significant lower
costs than other methods of retorting and will be environmentally
benign. The Company believes this will prove to be a disruptive
technology and one with the potential to unlock TomCo's oil shale
assets. Details of key operational and strategic risks that impact
the delivery of the future strategy are set out in the Directors'
Report together with mitigating actions.
Post the year end the Company has expanded its strategy to
include the potential of oil sands resources and the recovery of
oil from them.
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 its website,
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 of its Oil &
Gas operations in Utah. Additionally, given the nature of the
Group's business, there are other parties who, whilst not having
regulatory power, nonetheless have 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 appropriate regulation, standards and specific
licensing obligations, including environmental, social and safety,
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 these are set out below.
The Board reviews the principal risks facing the business as part
of its meetings through the year and changes to those risks as the
Company develops. Where risks change or new risks are identified
the Board implements risk management strategies as applicable.
Risk Comment Mitigation
Operational risks See Directors Report. The Company is reducing its reliance
on one recovery method with the development
of TurboShale and its RF technology.
The Company has engaged with established
contractors to carry out the various
elements of the project. The Board
carefully monitors performance and
the results of work being carried
out on an ongoing basis.
----------------------- ----------------------------------------------
Risks related See Directors Report. The Company has employed leading
to Environmental, advisors to assist it in securing
health and safety any relevant permits or licences
and other regulatory to operate.
standards
The Company maintains ongoing oversight
of health & safety and environmental
compliance.
----------------------- ----------------------------------------------
Liquidity risk See Directors' Report The Company maintains a detailed
including 'Going cashflow forecast and carefully monitors
Concern section. expenditure and may seek to raise
additional funding 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 consider that an internal audit function is not
necessary or practical due to the 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 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, Stephen West,
Alexander Benger and Malcolm Groat.
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 Malcolm Groat (Chairman) and
Alexander Benger. 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 Alexander Benger
(Chairman) and Malcolm Groat. 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 Chair must have adequate
separation from the day-to-day business to be able to make
independent decisions. Stephen West 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
independent decisions. As the Board is comprised of only four
members, one of whom is Executive and three of whom are independent
Non-Executive Directors, one of whom is 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 2019 was as
follows:
Main Audit Remuneration
Board Committee Committee
Meetings held
-------- ------------ --------------
Attendance:
-------- ------------ --------------
Andrew Jones 12
-------- ------------ --------------
John Potter 12
-------- ------------ --------------
Alex Benger 11 2 2
-------- ------------ --------------
Malcom Groat 11 2 2
-------- ------------ --------------
Laurence Read (appointed 1 January 2019; resigned
28 June 2019) 2
-------- ------------ --------------
Principle Six - Appropriate Skills and Experience of the
Directors
The Company believes that the current balance of skills in 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 in 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 sufficient number 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 Company 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
Stephen West (appointed 17 February 2020)
Stephen is a Chartered Accountant Fellow (CA ANZ) and Chartered
Accountant (ICAEW) with over 26 years of financial and corporate
experience gained in public practice, oil and gas, mining and
investment banking. Before joining TomCo, Stephen was instrumental
in establishing and growing a number of resource companies in the
UK, Australia and Norway. Stephen was appointed to the Board in
February 2020 and assumed the role of Non-Executive Chairman on 16
March 2020.
John Potter
Accomplished Chief Executive and project manager with many
years' experience working within the energy sector. John brings a
wide range of skills, knowledge and industry connections. John's
proficiencies in understanding and identifying best technologies in
projects and his proven abilities in developing relationships with
stakeholders, including operators, politicians, financiers,
technology providers, regulators and so on, are well proven and
have brought great value to the companies he has previously worked
with.
Alexander Benger
Small-cap sector focused Corporate Financier. Initially having
focused on Operational Management within financial services
companies, Alex moved into corporate finance in 2003 and has been
involved in numerous fundraising, stock market flotations and
corporate actions for both private and public companies. For 12
years he has concentrated predominately on London small-cap
businesses, including four and a half years working for SME Stock
Exchanges.
Malcolm Groat
Malcolm is a Chartered Accountant and has a wide range of
experience in corporate life, with roles as Chairman, Non-
Executive Director, Chair of Audit, CEO, COO and CFO for a number
of companies. He is an adviser on compliance and governance,
strategy and operational improvement, and managing the risks of
rapid change.
Andrew Jones (resigned 16 March 2020)
Andrew has over 13 years' experience in capital markets and
corporate finance. He is a member of the UK's Chartered Institute
of Securities and Investment (CISI). Before joining TomCo, Andrew
was instrumental in growing a number of companies in a variety of
sectors including technology, media and energy.
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, 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 impact 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 as a whole. 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 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 indicated. 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
the shareholders and equally that the 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 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,
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 the 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.
Stephen West
Non-Executive Chairman
26 March 2020
AUDIT COMMITTEE REPORT
Overview
The Committee met twice during the year. The external auditor
also attended the meetings at the invitation of the Committee
Chairman.
Malcolm Groat was appointed chairman of the Committee by the
Board, with the other Committee member being Alex Benger.
Financial Reporting
The Committee monitored the integrity of the interim and annual
financial statements and reviewed the significant financial
reporting issues and accounting policies and disclosures in the
financial reports. The external auditor attended the Committee
meetings as part of the full year and interim accounts approval
process. The process included the consideration of reports from the
external auditor identifying the primary areas of accounting
judgements and key audit risks identified as being significant to
the 2019 accounts.
Audit Committee Effectiveness
The Board considers the effectiveness of the Committee on a
regular basis but not as formal process.
External Audit
The Committee is responsible for managing the relationship with
the Company's external auditor, BDO LLP.
The objectivity and independence of the external auditors is
safeguarded by reviewing the auditors' formal declarations,
monitoring relationships between key audit staff and the Group and
reviewing the non-audit fees payable to the auditor. Non-audit
services are not performed by the auditor. During the year, audit
fees were paid to BDO LLP of GBP31,000 (2018: GBP31,000).
Internal Audit
The Committee considered the requirement for an internal audit
function. The Committee considered the size of the Group, its
current activities and the close involvement of senior management.
Following the Committee's review, it did not deem it necessary to
operate an internal audit function during the year.
Malcolm Groat
Chairman, Audit Committee
26 March 2020
REMUNERATION COMMITTEE REPORT
This report is on the activities of the remuneration committee
for the ended 30 September 2019.
The Remuneration Committee comprises Alexander Benger (Chairman)
and Malcolm Groat. 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 Group has no employees other than the Directors, whose
emoluments comprise fees paid for services. The amounts for their
services are detailed below:
Salaries Salaries
2019 2018
GBP'000 GBP'000
---------- ----------
A Jones (resigned 16 March
2020) 98 73
J Potter 74 38
A Benger 18 16
M Groat 18 16
L Read (appointed 1 January 12 -
2019; resigned 28 June 2019)
As detailed in Note 18 , the Company has in place a share option
scheme for its Directors.
The Committee met twice during the year.
Alex Benger
Chairman, Remuneration Committee
26 March 2020
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF TOMCO ENERGY PLC
Independent auditor's report to the members of TomCo Energy
plc
Opinion
We have audited the financial statements of TomCo Energy plc
(the 'Parent Company') and its subsidiaries (the 'Group') for the
year ended 30 September 2019 which comprise the consolidated
statement of comprehensive income, the consolidated statement of
financial position, the consolidated statement of changes in equity
and the consolidated statements of cash flows and notes to the
financial statements including a summary of significant accounting
policies. The financial reporting framework that has been applied
in the preparation of the financial statements is applicable law
and International Financial Reporting Standards (IFRSs) as adopted
by the International Accounting Standards Board.
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 30 September 2019 and of its loss for the year then ended;
and
-- have been properly prepared in accordance with IFRSs as
adopted by the International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the Group
and the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the
UK, including the FRC's Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Material uncertainty in relation to going concern
We draw attention to the disclosures made in Note 1.1 to the
financial statements concerning the Group's ability to continue as
a going concern. The Group's cash flow forecasts indicate that the
group will need further funding in order to meet its liabilities as
they fall due until March 2021 and to continue as a going concern.
In addition to this, the Group have noted further uncertainty
created by the COVID-19 pandemic which could impact the ability the
raise further funds and cause delays to the project. These
conditions indicate the existence of a material uncertainty which
may cast significant doubt about the Group's ability to continue as
a going concern. Our opinion is not modified in respect of this
matter.
We identified going concern as a key audit matter based on our
assessment of the significance of the risk and the effect on our
audit strategy.
Our audit procedures in response to this key audit matter
included the following:
-- We reviewed the latest cash flow forecasts for the Group,
which covered 15 months from the date of approval of these
financial statements. Our work included assessment of the cash
outflows against historical data and publicly stated plans for
further development of the exploration assets.
-- We verified receipt of the proceeds of equity placing post
the year end as supporting evidence.
-- We discussed with the Directors how they intend to raise the
funds necessary for the Group to continue as a going concern in the
required timeframe and considered their judgment in light of the
Group's previous successful fundraisings and strategic
financing.
-- In respect of the COVID-19, we have reviewed management's
assessment of the likely impact of the pandemic on the cash flows,
as well as the ability of the Group to raise further finance.
-- We reviewed the disclosures in Note 1.1 to the financial
statements against the requirements of the accounting standards to
check that the disclosures accurately reflect the going concern
position of the Group.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In addition to
the going concern, key audit matter described in the Material
uncertainty related to going concern section above, the following
matter was identified:
Key Audit Carrying value of intangible assets:
Matter
As detailed in Note 8 to the financial statements, the
Group holds significant intangible assets, primarily the
exploration and development licence costs, which the Directors
are required to assess for indicators of impairment at
each reporting date. There are a large number of estimates
and judgments used by management in assessing these assets
for impairment under the accounting standards. These are
set out in Note 1.9 to the financial statements, and the
subjectivity of these estimates along with the material
carrying value of the assets make this a key area of focus
for our audit.
How we addressed We have assessed management's impairment review and our
the Key Audit procedures included the following:
Matter in * We reviewed the licence documentation to check that
the Audit the licences remain valid and to confirm the expiry
and licence obligations.
* We noted that the competent persons report on
reserves and resources does not suggest there are any
indicators of impairment for the project.
* We performed procedures to assess the independence
and competence of the competent person as
management's expert.
* We made specific enquires of management and reviewed
market announcements, budgets and plans which
demonstrated that the Group plans to invest in its
TurboShale RF technologies and subsequently develop
the Holliday A Block subject to sufficient funding
being available.
We also evaluated the adequacy of the disclosures provided
within the financial statements in relation to the impairment
assessment against the requirements of the accounting
standards.
------------------------------------------------------------------
Key observations We found management's conclusion that no impairment was
required to be acceptable and the disclosures included
in the financial statements to be appropriate.
------------------------------------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial, as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Group materiality was set at GBP150,000 (2018: GBP135,000) being
1.5% of total assets. We considered total assets to be the most
significant determinant of the Group's financial performance by
users of the financial statements.
Performance materiality is the application of materiality at the
individual account or balance level set at an amount to reduce to
an appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality for
the financial statements as a whole. Performance materiality was
set at GBP112,500 (2018: GBP100,000), which represents 75% of the
above materiality level. The level of performance materiality was
set after considering a number of factors, including the expected
value of known and likely misstatements and management's attitude
towards proposed adjustments.
Component materiality ranged from GBP75,000 to GBP130,000 (2018:
GBP75,000 to GBP120,000).
We agreed with the Audit Committee that we would report to them
individual audit differences identified during the course of our
audit in excess of GBP3,000 (2018: GBP2,700). We also agreed to
report differences below this threshold which warranted reporting
on qualitative grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including Group-wide controls, and
assessing the risks of material misstatement at the Group level. We
also addressed the risk of management override of internal
controls, including assessing whether there was evidence of bias by
the Directors that may have represented a risk of material
misstatement due to fraud. Our Group audit focused on the Group's
principle operating locations, being the United Kingdom and USA.
The Group is comprised of two significant components, TomCo Energy
plc and TurboShale Inc.
The Group audit team carried out a full scope audit on both of
the significant components and performed all the work necessary to
issue the Group audit opinion including undertaking all of the
audit work on the key audit matters and other risk areas.
Other information
The Directors are responsible for the other information and
financial statements. The other information comprises the
information included in the annual report and financial statements,
other than the financial statements and our auditor's report
thereon. Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If we
identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a
material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement
of this other information, we are required to report that fact. We
have nothing to report in this regard.
Responsibilities of Directors
As explained more fully in the Directors' Responsibilities
Statement, within the Directors' report, the Directors are
responsible for the preparation of the financial statements and for
being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Parent Company's ability to continue
as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Parent Company
or to cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users
taken on the basis of these financial statements.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Use of our report
This report is made solely to the Parent Company's members, as a
body, in accordance with our engagement letter dated 29 January
2020. Our audit work has been undertaken so that we might state to
the Parent Company's Members those matters we are required to state
to them in an auditor's report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Parent Company and the
Parent Company's members as a body, for our audit work, for this
report, or for the opinions we have formed.
BDO LLP
Chartered Accountants
London, UK
26 March 2020
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Consolidated Statement of Comprehensive Income
for the financial year ended 30 September 2019
2019 2018
Note GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------ --------- --------- --------- ---------
Revenue 2 - -
Cost of sales 2 - -
-------------------------------------- ------ --------- --------- --------- ---------
Gross loss - -
Administrative expenses 2 (778) (857)
Operating loss 4 (778) (857)
Finance costs 3 (4) (12)
-------------------------------------- ------ --------- --------- --------- ---------
Loss on ordinary activities
before taxation (782) (869)
Taxation 5 - -
-------------------------------------- ------ --------- --------- --------- ---------
Loss for the year attributable
to: (782) (869)
Equity shareholders of the
parent (749) (770)
Non-controlling interests 1.19 (33) (99)
-------------------------------------- ------ --------- --------- --------- ---------
(782) (869)
-------------------------------------- ------ --------- --------- --------- ---------
Items that may be reclassified
subsequently to profit or
loss
Exchange differences on
translation of foreign operations 408 227
Items that will not be reclassified
subsequently to profit or
loss
Fair value gain on non-derivative
equity investment 10 2 102
Other comprehensive income
for the year attributable
to:
Equity shareholders of the
parent 417 333
Non-controlling interests 1.19 (7) (4)
Other comprehensive income 410 329
Total comprehensive loss
attributable to:
Equity shareholders of the
parent (332) (437)
Non-controlling interests 1.19 (40) (103)
-------------------------------------- ------ --------- --------- --------- ---------
Total comprehensive loss (372) (540)
-------------------------------------- ------ --------- --------- --------- ---------
2019 2018
Pence Pence
Loss per share attributable per share per share
to the equity shareholders
of the parent
------------------------------ --- ----------- -----------
Basic & diluted loss per
share 7 (0.73) (1.84)
------------------------------ --- ----------- -----------
The Notes on pages 23 to 37 form part of these financial
statements.
Consolidated Statement of Financial Position
as at 30 September 2019
Group Group
2019 2018
---------------------------------------------- ------ --------- ---------
Note GBP'000 GBP'000
---------------------------------------------- ------ --------- ---------
Assets
Non-current assets
Intangible assets 8 9,222 8,075
Property, plant and equipment 9 431 313
Other receivables 11 27 23
---------------------------------------------- ------ --------- ---------
9,680 8,411
---------------------------------------------- ------ --------- ---------
Current assets
Trade and other receivables 11 97 47
Investment in unquoted equity securities 10 - 102
Cash and cash equivalents 12 639 262
---------------------------------------------- ------ --------- ---------
736 411
---------------------------------------------- ------ --------- ---------
TOTAL ASSETS 10,416 8,822
---------------------------------------------- ------ --------- ---------
Liabilities
Current liabilities
Trade and other payables 13 (615) (504)
---------------------------------------------- ------ --------- ---------
(615) (504)
---------------------------------------------- ------ --------- ---------
Net current assets/(liabilities) 121 (93)
---------------------------------------------- ------ --------- ---------
TOTAL LIABILITIES (615) (504)
---------------------------------------------- ------ --------- ---------
Total net assets 9,801 8,318
---------------------------------------------- ------ --------- ---------
Shareholders' equity
Share capital 15 - -
Share premium 16 28,247 26,542
Warrant reserve 17 65 43
Translation reserve 638 223
---------------------------------------------- ------ --------- ---------
Retained deficit (19,012) (18,393)
---------------------------------------------- ------ --------- ---------
Equity attributable to owners of the parent 9,938 8,415
Non-controlling interests 1.19 (137) (97)
---------------------------------------------- ------ --------- ---------
Total equity 9,801 8,318
---------------------------------------------- ------ --------- ---------
The financial statements were approved and authorised for issue
by the Board of Directors on 26 March 2020.
The Notes on pages 23 to 37 form part of the financial
statements.
John Potter Malcolm Groat
Director Director
Consolidated Statement of Changes in Equity
for the financial year ended 30 September 2019
Group
Equity attributable to equity holders of the parent Total
Equity
-----------------
Note Share Share Warrant Translation Retained Total Non-controlling
capital premium reserve reserve Deficit interest
------------------ -------- --------- --------- --------- ------------- ---------- --------- -----------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------- --------- --------- --------- ------------- ---------- --------- ----------------- ---------
Balance at 1
October 2017 - 25,354 57 - (17,748) 7,663 (31) 7,632
Loss for the
year - - - - (770) (770) (99) (869)
Comprehensive
income for the
year - - - 223 110 333 (4) 329
------------------ -------- --------- --------- --------- ------------- ---------- --------- ----------------- ---------
Total
comprehensive
loss for the
year - - - 223 (660) (437) (103) (540)
Issue of shares
(net of costs) 15, 16 - 1,188 - - - 1,188 - 1,188
Change in
non-controlling
interest 1.19 - - 1 - (37) (36) 37 1
Expiry of
warrants 17 - - (15) - 15 - - -
Share-based
payment charge 18 - - - - 37 37 - 37
At 30 September
2018 - 26,542 43 223 (18,393) 8,415 (97) 8,318
------------------ -------- --------- --------- --------- ------------- ---------- --------- -----------------
Loss for the
year - - - - (749) (749) (33) (782)
Comprehensive
income for the
year - - - 415 2 417 (7) 410
------------------ -------- --------- --------- --------- ------------- ---------- --------- ----------------- ---------
Total
comprehensive
loss for the
year - - - 415 (747) (332) (40) (372)
Issue of shares
(net of costs) 15, 16 - 1,638 59 - - 1,697 - 1,697
Exercise of
warrants 17 - 67 (37) - 35 65 - 65
Share-based
payment charge 18 - - - - 93 93 - 93
At 30 September
2019 - 28,247 65 638 (19,012) 9,938 (137) 9,801
------------------ -------- --------- --------- --------- ------------- ---------- --------- -----------------
The following describes the nature and purpose of each reserve
within owners' equity:
Reserve Descriptions and purpose
Share capital Amount subscribed for share capital at nominal
value, together with transfers to share premium upon redenomination
of the shares to nil par value.
Share premium Amount subscribed for share capital in excess of
nominal value, together with transfers from share capital upon
redenomination of the shares to nil par value.
Warrant reserve Amounts credited to equity in respect of
warrants to acquire ordinary shares in the Group.
Translation reserve Gains and losses on the translation of foreign operations.
Retained deficit Cumulative net gains and losses recognised in
the consolidated statement of comprehensive income less transfers
to retained deficit on expiry.
Non-controlling interest Non-controlling interest share of
losses of TurboShale Inc., together with adjustments associated
with the initial recognition of, and changes in, the
non-controlling interest. Refer Note 1.19.
The Notes on pages 23 to 37 form part of these financial
statements.
Consolidated Statement of Cash Flows
for the financial year ended 30 September 2019
Note Group Group
-----------------------------------------------------------
2019 2018
-----------------------------------------------------------
GBP'000 GBP'000
----------------------------------------------------------- -------- --------- ---------
Cash flows from operating activities
Loss after tax 2 (782) (869)
Adjustments for:
Finance costs 3 4 12
Amortisation 6 6
Share based payment charge 93 37
Costs settled by the issue of shares 5 -
Increase in trade and other receivables (55) (48)
Increase in trade and other payables 232 71
Cash used in operations (497) (791)
----------------------------------------------------------- -------- --------- ---------
Interest paid (4) (12)
Net cash outflow from operating activities (501) (803)
Cash flows from investing activities
Investment in intangibles 8 (642) (204)
Sale of investments 104 -
Purchase of property, plant and equipment 9 (95) (303)
----------------------------------------------------------- -------- --------- ---------
Net cash used in investing activities (633) (507)
----------------------------------------------------------- -------- --------- ---------
Cash flows from financing activities
Issue of shares 15, 16 1,767 1,250
Costs of share issue (109) (62)
(Repayment)/receipt of loan finance (150) 250
----------------------------------------------------------- -------- --------- ---------
Net cash generated from financing activities 1,508 1,438
----------------------------------------------------------- -------- --------- ---------
Net increase in cash and cash equivalents 374 128
Cash and cash equivalents at beginning of financial year 262 128
Foreign currency translation differences 3 6
Cash and cash equivalents at end of financial year 639 262
----------------------------------------------------------- -------- --------- ---------
The Notes on pages 23 to 37 form part of these financial
statements.
Notes to the financial statements
for the financial year ended 30 September 2019
1. Accounting policies
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all years presented, unless otherwise
stated.
1.1 Basis of preparation and going concern
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
and International Financial Reporting Interpretations Committee
("IFRIC") interpretations and with those parts of the Isle of Man
Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historic cost
convention.
The preparation of financial statements in conformity with IFRS
requires the use of estimates and assumptions. Although these
estimates are based on management's best knowledge of the amount,
event or actions, actual results ultimately may differ from those
estimates. Details of the Group's significant accounting judgments
are set out in these financial statements and include:
Judgements
- Impairment indicator assessment on intangible assets
In determining whether indicators of impairment on intangible
assets existed judgment was required. The directors have considered
the remaining licence term and standing, future plans for
exploration, the measured resources within the mineral leases owned
by the Company; and the likelihood of commercially viable
extraction technology being developed and sufficient funding being
available to the Company to develop and exploit such technology.
The Board concluded that no impairment indicator existed at 30
September 2019. Refer to Note 8.
Estimates
- Share based payments
Estimates were required in determining the fair value of share
options granted in the year including future share price volatility
and the instrument life. Refer to Note 18.
The Group has consistently applied all applicable accounting
standards.
Going concern
Since the end of the financial year, the Company raised a
further GBP925,000 gross of expenses though the placing of, in
aggregate, 142,307,692 ordinary shares. As a result, as at 26 March
2020, the Group had cash of approximately GBP745,000.
The Directors have prepared cash flow forecasts for the next 15
months from the date of signing of these financial statements.
Under the forecasts, the Group plans to engage Valkor to evaluate
the commercial viability of a commercial scale plant based on the
Petroteq oil recovery system. The forecasts indicate the Group has
sufficient funds to complete the engagement and has sufficient
funds to meet its liabilities as they fall due until March 2021.
Further funding will be required if the Directors decide to explore
the opportunity to develop a commercial scale oil sands plant or to
further advance the RF technology and to ensure the Company can
continue to meet its liabilities and commitments through to March
2021.
The Director's note that COVID-19 has had a significant negative
impact on the global economy and oil prices have fallen
significantly, which may mean it is harder to secure additional
funding than it has historically been. Notwithstanding this, the
Directors have a reasonable expectation that they can secure
additional funding, based on recent fundraisings, which would
provide sufficient funds to meet operating expenditure beyond March
2021 or in the event that the Company sought further funds to
explore the opportunity to develop a commercial scale oil sands
plant or to further advance the RF technology. However, these
conditions are necessarily considered to represent a material
uncertainty which may cast significant doubt over the Group's
ability to continue as a going concern. Whilst acknowledging this
material uncertainty, the Directors remain confident of raising any
additional funds required and therefore the Directors consider it
appropriate to prepare the financial statements on a going concern
basis. The financial statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern.
1.2 Future changes in accounting standards
The IFRS financial information has been drawn up on the basis of
accounting standards, interpretations and amendments effective at
the beginning of the accounting period.
IFRS 15 "Revenue from contracts with customers" was effective
for the first time in the year ended 30 September 2019. The group
currently has no external revenues and therefore this standard
currently has no impact on the Group.
IFRS 9 "Financial instruments" was also effective for the first
time in the year ended 30 September 2019. In applying IFRS 9 for
the first time, the directors have classified the group's equity
investment in Red Leaf, which was not held for trading, as held at
fair value through other comprehensive income. The investment was
sold during the year.
Prior periods' results have not been restated for the
implementation of IFRS 9. Disclosures concerning the implementation
of IFRS 9 are given in note 19 .
The International Accounting Standards Board (IASB) has issued
the following new and revised standards, amendments and
interpretations to existing standards that are not effective for
the financial year ended 30 September 2019 and have not been
adopted early, which, when effective, might have an impact upon the
group's financial statements.
Effective date
(periods beginning
on or after)
Leases 1 Jan 2019
* IFRS 16
Uncertainty over Income Tax Treatments 1 Jan 2019
* IFRIC 23
IFRS 16 introduces a single lease accounting model. This
standard requires lessees to account for all leases under a single
on- balance sheet model. Under the new standard, a lessee is
required to recognise all lease assets and liabilities on the
balance sheet; recognise amortisation of leased assets and interest
on lease liabilities over the lease term; and separately present
the principal amount of cash paid and interest in the cash flow
statement. Management is currently reviewing the impact of the
standard but do not anticipate it having a material effect given
the very limited exposure of the group to leases within the scope
of IFRS16. Leases to explore for or use minerals, oil and gas are
outside the scope of IFRS 16.
The Group is currently assessing the impact of these
standards.
1.3 Basis of consolidation
The Group accounts consolidate the accounts of the parent
company, TomCo Energy plc, and all its subsidiary undertakings
drawn up to 30 September 2019. All intra-group transactions,
balances, income and expenses are eliminated on consolidation.
The acquisition of subsidiaries is accounted for on the purchase
basis. A subsidiary is consolidated where the Company has the
control over an investee. The Group controls an investee if all
three of the following elements are present: power over the
investee, exposure to variable returns from the investee, and the
ability of the investor to use its power to affect those variable
returns. Control is reassessed whenever facts and circumstances
indicate that there may be a change in any of these elements of
control. On acquisition all the subsidiary's assets and liabilities
which existed at the date of acquisition are recorded at their fair
values reflecting their condition at the time. If, after
re-assessment, the Group's interest in the net fair value of the
identifiable assets liabilities and contingent liabilities exceeds
the cost of the business combination, the excess is recognised
immediately in the statement of comprehensive income.
1.4 Segmental reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the Board
of Directors.
Based on an analysis of risks and returns, the Directors
consider that the Group has two principal business segments based
on geographical location. The loss before taxation arises
principally within the UK and US. Net assets are principally in the
UK and the US.
1.5 Revenue
Revenue represents the Group's share of sales of oil during the
year, excluding sales tax and royalties. Income arises from the US
and is recognised when the oil is delivered to the customer. No
revenue has arisen in the current or prior year.
1.6 Finance income
Finance income is accounted for on an effective interest
basis.
1.7 Property, plant and equipment
Property, plant and equipment employed in exploration and
evaluation activities are carried at cost. No depreciation has been
provided on these assets as they had not been brought into use by
the end of the financial year. Subsequent depreciation will be
capitalised to exploration and development costs.
1.8 Intangible assets
Exploration and development licences
The Group applies the full cost method of accounting for oil and
gas operations. For evaluation properties, all mineral leases,
permits, acquisition costs, geological and geophysical costs and
other direct costs of exploration appraisal, renewals and
development are capitalised as intangible fixed assets in
appropriate cost pools, with the exception of tangible assets,
which are classed as property, plant and equipment. Costs relating
to unevaluated properties are held outside the relevant cost pool,
and are not amortised until such time as the related property has
been fully appraised. When a cost pool reaches an evaluated and
bankable feasibility stage, the assets are transferred from
intangible to oil properties within property, plant and
equipment.
Technology licences
Amortisation is not charged on technology licences associated
with oil and gas assets until they are available for use.
Patents and patent applications
Patents and patent applications acquired in consideration for
combination of cash and the issue of shares in subsidiary
undertakings are recognised at fair value, and amortised over their
expected useful lives, which is 12 years being the patent term.
1.9 Impairment
Exploration and development licences
Exploration and development assets are assessed for impairment
when facts and circumstances suggest that the carrying amount may
exceed the recoverable amount. In accordance with IFRS 6 the Group
firstly considers the following facts and circumstances in their
assessment of whether the Group's exploration and evaluation assets
may be impaired, whether:
-- the period for which the Group has the right to explore in a
specific area has expired during the period or will expire in the
near future, and is not expected to be renewed;
-- substantive expenditure on further exploration for and
evaluation of mineral resources in a specific area is neither
budgeted nor planned;
-- exploration for and evaluation of hydrocarbons in a specific
area have not led to the discovery of commercially viable
quantities of hydrocarbons and the Group has decided to discontinue
such activities in the specific area; and
-- sufficient data exists to indicate that although a
development in a specific area is likely to proceed, the carrying
amount of the exploration and evaluation assets is unlikely to be
recovered in full from successful development or by sale.
If any such facts or circumstances are noted, the Group perform
an impairment test in accordance with the provisions of IAS 36. The
aggregate carrying value is compared against the expected
recoverable amount of the cash generating unit, which is generally
the field, except that a number of field interests may be grouped
as a single cash generating unit where the cash flows are
interdependent. The recoverable amount is the higher of value in
use and the fair value less costs to sell.
Any impairment loss would be recognised in the income statement
and separately disclosed.
Technology licence
The carrying amount of the Group's other intangible asset, its
patents and technology licence, is reviewed at each reporting date
to determine whether there is any indication of impairment. If such
indication exists, the asset's recoverable amount is estimated. An
impairment loss is recognised whenever the carrying amount of an
asset exceeds its recoverable amount. Impairment losses are
recognised in the income statement.
1.10 Taxation
Taxation expense represents the sum of current tax and deferred
tax.
Current tax is based on taxable profits for the financial period
using tax rates that have been enacted or substantively enacted by
the reporting date. Taxable profit differs from net profit as
reported in the statement of comprehensive income because it
excludes items of income or expenses that are taxable or deductible
in other years and it further excludes items that are never taxable
or deductible.
Deferred tax is provided in full, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts for financial reporting
purposes. If deferred tax arises from initial recognition of an
asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither
accounting nor taxable profit nor loss, it is not accounted for.
Deferred tax is determined using tax rates that have been enacted
or substantively enacted at the reporting date and are expected to
apply when the related deferred income tax asset is realised, or
the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is
probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries, except where the timing of the
reversals of the temporary differences is controlled by the Group
and it is probable that the temporary differences will not reverse
in the foreseeable future.
Deferred tax is charged or credited in the statement of
comprehensive income, except when it relates to items charged or
credited directly to equity, in which case the deferred tax is also
dealt with in equity.
1.11 Foreign currencies
The accounts have been prepared in pounds sterling being the
presentational currency of the Group. The functional currency of
the holding company is also pounds sterling. The functional
currency of the US subsidiaries is US dollars. Assets and
liabilities held in the Group or overseas subsidiaries in
currencies other than the functional currency are translated into
the functional currency at the rate of exchange ruling at the
reporting date.
Transactions entered into by Group entities in a currency other
than the functional currency of the entity are recorded at the
rates ruling when the transactions occur. Exchange differences
arising from the settlement of monetary items are included in the
statement of comprehensive income for that period.
The assets and liabilities of subsidiaries with functional
currencies other than sterling are translated at balance sheet date
rates of exchange. Income and expense items are translated at the
average rates of exchange for the period. Exchange differences
arising are recognised in other comprehensive income (attributed to
the parent equity holder and non-controlling interests as
appropriate).
1.12 Operating leases
Rentals payable under operating leases, net of lease incentives,
are charged to the statement of comprehensive income on a
straight-line basis over the period of the lease.
1.13 Non-derivative equity instruments
The Group classifies its non-derivative equity instruments as at
fair value through other comprehensive income. Gains or losses on
disposals of these items are recognised in other comprehensive
income.
1.14 Debt instruments at amortised cost
These assets are non-derivative financial assets which are held
in a business model whose objective is to collect contractual
cashflows and whose contractual terms give rise on specified dates
to cash flows that are solely payments of principal and interest on
the principal outstanding. They arise principally through types of
contractual monetary asset such as receivables. They are initially
recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently
carried at amortised cost using the effective interest rate method,
less provision for impairment. Impairment provisions are recognised
based on expected credit losses over the asset's life.
The Group's assets held at amortised cost comprise trade and
other receivables and cash and cash equivalents in the consolidated
statement of financial position.
1.15 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at
the bank and other short-term liquid investments with original
maturities of three months or less.
1.16 Trade payables
Trade payables are recognised at amortised cost. All of the
trade payables are non-interest bearing.
1.17 Share capital
Ordinary shares are classified as equity. Shares issued in the
period are recognised at the fair value of the consideration
received.
1.18 Warrants
Warrants issued as part of financing transactions in which the
holder receives a fixed number of shares on exercise of the warrant
are fair valued at the date of grant and recorded within the
warrant reserve. Fair value is measured by the use of the Black
Scholes model.
On expiry or exercise, the fair value of warrants is credited to
reserves as a change in equity.
1.19 Non-controlling interests
Non-controlling interests in subsidiaries are identified
separately from the Group's equity therein. Those interests of
non-controlling shareholders that are present ownership interests
entitling their holders to a proportionate share of net assets upon
liquidation may initially be measured at fair value or at the
non-controlling interests' proportionate share of the fair value of
the acquiree's identifiable net assets. The choice of measurement
is made on an acquisition-by-acquisition basis. Other
non-controlling interests are initially measured at fair value.
Subsequent to acquisition, the carrying amount of non-controlling
interests is the amount of those interests at initial recognition
plus the non-controlling interests' share of subsequent changes in
equity. Total comprehensive income is attributed to non-controlling
interests even if this results in the non-controlling interests
having a deficit balance.
Changes in the Group's interests in subsidiaries that do not
result in a loss of control are accounted for as equity
transactions. The carrying amount of the Group's interests and the
non-controlling interests are adjusted to reflect the changes in
their relative interests in the subsidiaries. Any difference
between the amount by which the non-controlling interests are
adjusted and the fair value of the consideration paid or received
is recognised directly in equity and attributed to the owners of
the Group.
Details concerning non-wholly owned subsidiaries of the Group
that have material non-controlling interests are as follows:
Proportion
of ownership
interests and
voting rights Total comprehensive
held by loss allocated Change in
Name of non-controlling to non-controlling non-controlling Accumulated non-controlling
subsidiary interests interest interest interest
2019 2018 2019 2018 2019 2018 2019 2018
% % GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------ ------------- ---------- ---------- ---------- ------------- ---------- -----------------
TurboShale
Inc. 20 20 (40) (103) - 37 (137) (97)
During the year ended 30 September 2018, certain shares in
TurboShale Inc issued to non-controlling interests were cancelled,
resulting in an increase in the Company's effective interest from
66.7% to 80%. Given the net deficit of the subsidiary this resulted
in a reduced share of the Group's losses attributable to the
non-controlling interest in accordance with the Group's accounting
policy. The effects of the change in the non-controlling interest
are recognised in reserves. Included in total comprehensive loss is
GBPnil (2018: GBP99,000) of losses with the remainder reflecting
other comprehensive expense.
1.20 Share-based payments
Equity-settled share-based payments to directors are measured at
the fair value of the equity instruments at the grant date. Details
regarding the determination of the fair value of equity-settled
share-based transactions is set out in Note 18 .
The fair value determined at the grant date is expensed on a
straight-line basis over the vesting period or periods, based on
the Group's estimate of equity instruments that will eventually
vest. At each balance sheet date, the Group revises its estimate of
the number of equity instruments expected to vest. The impact of
the revision of the original estimates, if any, is recognised in
profit or loss such that the cumulative expenses reflects the
revised estimate, with a corresponding adjustment to equity
reserves.
2. Segmental reporting - Analysis by geographical segment
The loss before taxation arises within principally the UK and
US. Net assets are principally in the UK and US. Based on an
analysis of risks and returns, the Directors consider that the
Group has two principal business segments based on geography, with
the UK primarily representing head office costs of the Group.
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the Board
of Directors. The Directors therefore consider that no further
segmentation is appropriate.
United United Eliminations United United Eliminations
States Kingdom Total States Kingdom Total
Year ended 30 2018
September 2019 2019 2019 2019 2018 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
External - - - - - -
revenue
Inter-segment
sales 94 (94) - 92 (92) -
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Cost of sales - - - - - -
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Gross
profit/(loss) - 94 (94) - - 92 (92) -
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Impairment - - - - - -
Administrative
expenses (177) (695) 94 (778) (387) (562) 92 (857)
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Operating loss (177) (601) - (778) (387) (470) - (857)
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Financial
income - 1 1 - - -
Finance costs - (5) (5) - (12) (12)
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Total loss (177) (605) (782) (387) (482) (869)
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Non-Current
assets:
- Exploration
and
development
assets 9,200 - 9,200 8,047 - 8,047
- Other 27 - 27 23 - 23
- Property,
plant and
equipment 431 - 431 313 - 313
- Patents 22 - 22 28 - 28
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
9,680 - 9,680 8,411 - 8,411
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Current assets:
Trade and other
receivables - 97 97 - 47 47
Investment in
unquoted
securities - - - - 102 102
Cash and cash
equivalents 21 618 639 128 134 262
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Total assets 9,701 715 10,416 8,539 283 8,822
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Current
liabilities:
Trade and other
payables (389) (226) (615) (17) (487) (504)
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
Total
liabilities (389) (226) (615) (17) (487) (504)
----------------- ---------- --------- -------------- --------- ---------- ---------- -------------- ---------
3. Finance costs
2019 2018
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Interest income (1) -
Loan note interest (Note 20 ) 5 12
--------- ---------
Total finance costs for the financial year 4 12
--------------------------------------------- --------- ---------
4. Operating loss
The following items have been charged in arriving
at operating loss: 2019 2018
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Auditors' remuneration: audit services 31 31
Rentals payable in respect of land and buildings 37 6
5. Taxation
There is no tax charge in the year due to the loss for the
year.
Factors affecting the tax charge: 2019 2018
GBP'000 GBP'000
-------------------------------------------------- -------- ---------
Loss on ordinary activities before tax (782) (869)
-------------------------------------------------- -------- ---------
Loss on ordinary activities at standard rate of
corporation tax
in the UK of 19% (2018: 19%) (149) (165)
Effects of:
Losses carried forward 149 165
-------------------------------------------------- -------- ---------
Tax charge for the financial year - -
-------------------------------------------------- -------- ---------
A reduction in the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) and to 18% (effective 1 April 2020)
were substantively enacted on 26 October 2015, and an additional
reduction to 17% (effective 1 April 2020) was substantially enacted
on 6 September 2016. This will reduce the Group's future current
tax charge accordingly in the event of profits.
6. Employees and Directors
The Group has no employees other than the Directors, whose
emoluments comprise fees paid for services. The amounts for their
services are detailed below:
Share-based
Share-based payment
Salaries payment expense Salaries expense
2019 2019 2018 2018
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------------- ------------ -------------
A Jones (resigned 16 March
2020) 98 48 73 19
J Potter 74 31 38 12
A Benger 18 7 16 3
M Groat 18 7 16 3
L Read (appointed 1 January 12 - - -
2019; resigned 28 June 2019)
Total remuneration 220 93 143 37
-------------------------------- ------------ ------------------- ------------ -------------
7. Loss per share
Basic loss per share is calculated by dividing the losses
attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year.
Reconciliations of the losses and weighted average number of shares
used in the calculations are set out below.
Per share
Losses Amount
-----------------
Financial year ended 30 September 2019 GBP'000 Weighted Pence
average number
of shares
----------------------------------------------------- --------- ----------------- -----------
Basic and Diluted EPS
Losses attributable to ordinary shareholders
on continuing operations (749) 102,524,614 (0.73)
Total losses attributable to ordinary shareholders (749) 102,524,614 (0.73)
Financial year ended 30 September 2018
----------------------------------------------------- --------- ----------------- -----------
Basic and Diluted EPS
Losses attributable to ordinary shareholders
on continuing operations (770) 41,719,121 (1.84)
----------------------------------------------------- --------- ----------------- -----------
Total losses attributable to ordinary shareholders (770) 41,719,121 (1.84)
----------------------------------------------------- --------- ----------------- -----------
The warrants and share options which were issued or for which
entitlement to warrants was established in the current and prior
years (Notes 17 and 18) are anti-dilutive. As these instruments
would be anti-dilutive a separate diluted loss per share is not
presented.
8. Intangible assets
Oil & Gas Oil & Gas Oil & Gas Oil & Gas
Exploration and Patents and
development licences Technology licence patent applications Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ----------------------- -------------------- ------------------------ -----------
Cost
At 1 October 2017 7,627 1,314 23 8,964
Additions 193 - 11 204
Translation differences 227 - - 227
----------------------- -------------------- ------------------------ -----------
At 30 September 2018 8,047 1,314 34 9,395
----------------------- -------------------- ------------------------ -----------
Additions 643 (1) 642
Translation differences 510 1 511
----------------------- -------------------- ------------------------ -----------
At 30 September 2019 9,200 1,314 34 10,548
----------------------- -------------------- ------------------------ -----------
Amortisation/Impairment
At 1 October 2017 - 1,314 - 1,314
Amortisation - - 6 6
----------------------- -------------------- ------------------------ -----------
At 30 September 2018 - 1,314 6 1,320
----------------------- -------------------- ------------------------ -----------
Amortisation - - 6 6
----------------------- -------------------- ------------------------ -----------
At 30 September 2019 - 1,314 12 1,326
----------------------- -------------------- ------------------------ -----------
Net book value
At 30 September 2019 9,200 - 22 9,222
-------------------------- ----------------------- -------------------- ------------------------ -----------
At 30 September 2018 8,047 - 28 8,075
-------------------------- ----------------------- -------------------- ------------------------ -----------
At 30 September 2017 7,627 - 23 7,650
-------------------------- ----------------------- -------------------- ------------------------ -----------
The exploration and development licences comprise nine Utah oil
shale leases covering approximately 15,488 acres. In respect of
leases ML 49570 and ML 49571, independent natural resources
consultants SRK Consulting (Australasia) Pty Ltd, part of the
internationally recognised SRK Group, reported in March 2019 best
estimate Contingent Resources (2C) of, in aggregate, 131.3 million
barrels ("MM bbl") of oil assessed under Petroleum Resources
Management System ("PRMS") guidelines, plus a best estimate
Prospective Resource (2U) of, in aggregate, 442.8 MM bbl oil across
the Leases. This included the Holliday A Block, where the Field
Test has been undertaken, with 2C Contingent Resources of 57.3 MM
bbl of oil and 2U Prospective Resources of 84.7 MM bbl of oil. The
Directors continue to consider the Holliday A Block to be
prospective and are seeking methods of extracting the shale oil
through development of TurboShale's RF technologies.
The claim areas and the Group's interest in them is:
Per cent Licence Licence
Asset Interest Status Expiry Date Area (Acres)
ML 49570 100 Prospect 31/12/2024 1,638.84
ML 49571 100 Prospect 31/12/2024 1,280.00
ML 48801 100 Prospect 01/10/2021 1,918.50
ML 48802 100 Prospect 01/10/2021 1,920.00
ML 48803 100 Prospect 01/10/2021 1,920.00
ML 48806 100 Prospect 01/12/2023 1,880.00
ML 49236 100 Prospect 01/12/2023 2,624.21
ML 49237 100 Prospect 01/12/2023 1,666.67
ML 50151* 100 Prospect 22/06/2020 640.00
In performing an assessment of the carrying value of the
exploration licences at the reporting date, the Directors concluded
that it was not appropriate to book an impairment given the
measured resource, the licence term and the continued plans to
explore and develop the block, including the new technologies which
TurboShale is seeking to develop.
The outcome of ongoing exploration, and therefore whether the
carrying value of the exploration licences will ultimately be
recovered, is inherently uncertain and is dependent upon successful
development of commercially viable extraction technology. If the
required additional funding was not to be made available to the
Group or commercially viable extraction technologies cannot be
developed, the carrying value of the asset might need to be
impaired.
During the 2018/2019 financial year, the Field Test was carried
out.
* Lease ML 50151 is expected to be extended.
9. Property, plant and equipment
Exploration and evaluation equipment
Total
GBP'000
---------------------------- --------------------------------------
Cost at 30 September 2017 -
---------------------------- --------------------------------------
Additions 303
Translation differences 10
---------------------------- --------------------------------------
At 30 September 2018 313
---------------------------- --------------------------------------
Additions 95
Translation differences 23
---------------------------- --------------------------------------
At 30 September 2019 431
---------------------------- --------------------------------------
At 30 September 2018 313
---------------------------- --------------------------------------
At 30 September 2017 -
---------------------------- --------------------------------------
10. Investment in unquoted equity securities
Unlisted
Investments
Fair value GBP'000
----------------------- --------------
At 1 October 2017 -
Fair value gain 102
------------------------- --------------
At 30 September 2018 102
Fair value gain 2
Disposals (104)
------------------------- --------------
At 30 September 2019 -
Net book value
At 30 September 2019 -
----------------------- --------------
At 30 September 2018 102
At 30 September 2017 -
------------------------- --------------
During the year to 30 September 2012, the Group invested US$5.0
million (GBP3.1 million) in Red Leaf (Equity securities US - Red
Leaf) at US$1,500 per share as part of a US$100 million raising by
Red Leaf in conjunction with the closing of a joint venture with
Total E&P USA Oil Shale, LLC, an affiliate of Total SA.
In previous years the Directors considered that the fair value
of the investment could not be reliably measured and so, as
permitted by IFRS, the asset was stated at original cost less any
provision for impairment and has been fully impaired for a number
of years. The investment was eventually realised in October 2018
for a price of US$133,333 (GBP104,000). Changes in fair value at 30
September 2018 and to the date of disposal have been recognised in
other comprehensive income.
11. Trade and other receivables
Group Group
2019 2018
Current GBP'000 GBP'000
--------------------------------- --------- ---------
Other receivables 50 37
Prepayments and accrued income 47 10
--------------------------------- --------- ---------
97 47
--------------------------------- --------- ---------
Non- current
Other receivables 27 23
Total Receivables 124 70
--------------------------------- --------- ---------
As at 30 September 2019 there were no receivables considered
past due (2018: GBPNil). The maximum exposure to credit risk at the
reporting date is the fair value of each class of receivable and
cash and cash equivalents as disclosed in Note 19.
All current receivable amounts are due within six months.
12. Cash and cash equivalents
Group Group
2019 2018
GBP'000 GBP'000
--------------------------- --------- ---------
Cash at bank and in hand 639 262
--------------------------- --------- ---------
The Group earns 0.05% (2018: 0.05%) interest on their cash
deposits, consequently the Group's exposure to interest rate
volatility is not considered material.
13. Trade and other payables
Group Group
2019 2018
Current GBP'000 GBP'000
----------------------- ----------- -----------
Trade payables 408 58
Other payables 17 10
Loans (Note 20 & 21) - 250
Accruals 190 186
----------------------- ----------- -----------
615 504
----------------------- ----------- -----------
All current amounts are payable within six months and the
Directors considers that the carrying values adequately represent
the fair value of all payables. Refer to Note 20 and 21 for terms
of the loans.
14. Deferred tax
Unrecognised losses
The Group has tax losses in respect of excess management
expenses of approximately GBP9.8 million (2018: GBP9.8 million)
available for offset against future Company income. Trading losses
of GBP1.3 million (2018-GBP0.9 million) are also available. This
gives rise to a potential deferred tax asset at the reporting date
of GBP 1 .9 million (2018: GBP1.8 million). No deferred tax asset
has been recognised in respect of the tax losses carried forward as
the recoverability of this benefit is dependent on the future
profitability of the Company, the timing of which cannot reasonably
be foreseen but the excess management expenses have no expiry date.
Subsidiary entities have accumulated losses of approximately
GBP660,000 for which no deferred tax asset is recorded given
uncertainty of future profits.
15. Share capital
Number of shares 2018
in issue GBP
--------------------------------------------------- --------------------------------- ------
Issued and fully paid at 1 October 2017-shares 28,917,800 -
of no par value
April 2018 - placing of new ordinary shares 20,000,000 -
(note 16)
April 2018 - issue of shares in settlement 199,999 -
of professional fees
June 2018 - placing of new ordinary shares 13,000,000 -
(note 16)
--------------------------------------------------- --------------------------------- ------
At 30 September 2018 62,117,799 -
--------------------------------------------------- --------------------------------- ------
Number of shares 2019
in issue GBP
--------------------------------------------------- --------------------------------- ------
Issued and fully paid at 1 October 2018-shares 62,117,799 -
of no par value
October 2018 - subscription of new ordinary 1,176,471 -
shares (note16)
December 2018 - placing of new ordinary shares 27,500,000 -
(note 16)
January 2019 - issue of shares in part settlement 5,000,000 -
of loan (note 16)
March 2019 - placing of new ordinary shares 21,818,182 -
(note 16)
May 2019-exercise of warrants (notes 16 and 1,530,000 -
17)
July 2019-exercise of warrants (notes 16 and 1,309,091 -
17)
August 2019 - placing of new ordinary shares 12,857,143 -
(note 16)
August 2019 - issue of shares in settlement 142,857 -
of professional fees (note 16)
--------------------------------------------------- --------------------------------- ------
At 30 September 2019 133,451,543 -
--------------------------------------------------- --------------------------------- ------
16. Share premium
2019 2018
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
At 1 October 26,542 25,354
October 2018 - subscription of new shares at 100 -
8.5 pence per share
December 2018 - placing of new ordinary shares 514 -
at 2 pence per share net of costs
January 2019 - issue of shares in part settlement 100 -
of loan at 2 pence per share
March 2019 - placing of new ordinary shares 559 -
at 2.75 pence per share net of costs
May 2019-exercise of warrants (note 17) 31 -
July 2019-exercise of warrants (note 17) 36 -
August 2019 - placing of new ordinary shares 419 -
at 3.5 pence net of costs
August 2019 - issue of shares in settlement 5 -
of professional fees at 3.5 pence
Issue of warrants as part of placing fees (note (59) -
17)
April 2018 - placing at 3 pence per share, amount
raised net of costs - 567
April 2018 -issue of shares at 3 pence per share - 6
June 2018-placing at 5 pence per share, amount
raised net of costs - 615
At 30 September 28,247 26,542
---------------------------------------------------- --------- ---------
17. Warrants
At 30 September 2019 the following share warrants were
outstanding in respect of ordinary shares:
2019 2019 2018 2018
Weighted
average
Weighted average exercise
exercise price price
number Pence number Pence
Outstanding at 1 October 356,000 14.0 1,113,200 24.8
Expired during the year (160,000) (21.2) (857,200) (21.2)
Granted during the year 3,610,520 2.6 100,000 10.0
Exercised during the year (2,839,091) (2.3) - -
Outstanding at 30 September 967,429 4.4 356,000 14.0
------------------------------- ------------- ------------------ ----------- -----------
Exercisable at 30 September 967,429 4.4 356,000 14.0
------------------------------- ------------- ------------------ ----------- -----------
Issue of Warrants
On completion of a placing on 2 October 2014, the Company issued
12,000,000 warrants with an exercise price of 0.5p and a
contractual life of 5 years. The exercise price of the warrants
adjusted to 6.25p and the number of warrants adjusted to 96,000
post a share consolidation in 2017. These warrants expired shortly
after 30 September 2019.
On 7 October 2016 the Company entered an agreement in which the
counterparty was entitled to subscribe for 20,000,000 ordinary
shares at 0.17p per share (subsequently consolidated to 160,000
warrants exercisable at 21.25p per share following the share
consolidation) for services. These warrants expired during the
year.
In April 2018 the Company issued 100,000 warrants with a life of
two years and an exercise price of 10p as part consideration for
settlement of its contract with Venture Development Partners
Limited concerning a framework agreement relating to TurboShale
concluded in 2017. The fair value of these warranted was assessed
to be immaterial at approximately GBP1,000.
3,610,520 new warrants were issued during 2019 in connection
with the placing of new shares. The fair value of these warrants
was assessed at GBP59,000. Of the new warrants issued during 2019,
warrants over 2,839,091 ordinary shares were exercised during the
year.
Each warrant in issue is governed by the provisions of warrant
instruments representing the warrants which have been adopted by
the Company. The rights conferred by the warrants are transferable
in whole or in part subject to and in accordance with the transfer
provisions set out in the Articles. The warrants outstanding at 30
September 2019 had a weighted average exercise price of 4.4p (2018:
14p) and a weighted average remaining contractual life of 1.55
years (2018: 0.71 years).
The Company intends, following publication of these accounts, to
issue 425,000 warrants to an adviser which were intended to be
issued following the publication of last year's account, giving
them the right to acquire such number of new ordinary shares at an
exercise price of 2.75 pence for a period of two years.
18. Share-based payments
The Company implemented a share option scheme for its Directors
during the year ended 30 September 2018. Options are exercisable at
a price equal to the quoted market price of the Company's shares at
the date of grant. The vesting period is between four months and
2.3 years. If the options remain unexercised after a period of ten
years from the date of grant the options expire. Options are
forfeited if the director leaves the Company before the options
vest.
Details of the share options issued during the year and
outstanding at the year end are as follows:
2019 2019 2018 2018
Weighted average Weighted average
exercise price exercise price
number Pence number Pence
Outstanding at 1 October 5,142,855 5.25 - -
Granted during the
year - - 5,142,855 5.25
Outstanding at 30
September 5,142,855 5.25 5,142,855 5.25
--------------------------- ----------- ------------------ ----------- ------------------
Exercisable at 30
September 1,714,286 5.25 - -
--------------------------- ----------- ------------------ ----------- ------------------
Details of the options held by each Director are given in the
Directors' Report on page 5.
The inputs into the Black-Scholes model for calculating the
estimated fair value of options granted, at their grant date, were
as follows:
2019
---------------------------------- -------
Share price (pence) 5.25
Exercise price (pence) 5.25
Expected volatility 98.8%
Risk-free rate 0.82%
Expected period before exercise
(years) 3
---------------------------------- -------
Expected volatility was determined by calculating the historical
volatility of the Company's share price. The expected life used in
the model has been adjusted, based on management's best estimate,
for the effects of non-transferability, exercise restrictions and
behavioural considerations.
The fair value of each option granted during the year was
estimated at 3.2 pence at the date of grant. The weighted average
unexpired life of the options at 30 September 2019 was 8.83 years
(2018-9.83 years).
The charge recognised in profit or loss for 2019 was GBP93,000
(2018: GBP37,000).
19. Financial instruments
Implementation of IFRS 9
Upon implementation of IFRS 9, there were no reclassifications
of financial assets or liabilities, save for the transfer from
"available for sale" assets to "fair value through other
comprehensive income" of the Group's investment in unquoted equity
investments, with a value of GBP102,000 at implementation. No
remeasurement of this or other financial assets or liabilities was
required.
Other disclosures
The Group's financial instruments, other than its investments,
comprise cash and items arising directly from its operation such as
other receivables, and trade payables.
Management review the Group's exposure to currency risk,
interest rate risk, liquidity risk and credit risk on a regular
basis and consider that through this review they manage the
exposure of the Group. No formal policies have been put in place in
order to hedge the Group's activities to the exposure to currency
risk or interest risk, however, this is constantly under
review.
There is no material difference between the book value and fair
value of the Group and Company's cash and other financial
assets.
Currency risk
The Group has overseas subsidiaries which operate in the United
States and include expenses, assets and liabilities denominated in
US$. Foreign exchange risk is inherent in the Group's activities
and is accepted as such. The effect of a 10% strengthening or
weakening of the US dollar against sterling at the reporting date
on the dollar denominated balances would, all other variables held
constant, would result in a gain or loss of approximately GBP10,000
(2018: GBP20,000).
Interest rate risk
The Group and Company manage the interest rate risk associated
with the Group cash assets by ensuring that interest rates are as
favourable as possible, whether this is through investment in
floating or fixed interest rate deposits, whilst managing the
access the Group requires to the funds for working capital
purposes.
The Group's cash and cash equivalents are subject to interest
rate exposure due to changes in interest rates. Short-term
receivables and payables are not exposed to interest rate risk. The
Group has no borrowings as at 30 September 2019.
A 1% increase or decrease in the floating rate attributable to
the cash balances held at the year end would not result in a
significant difference on interest receivable.
Liquidity risk
At the year end the Group and Company had cash balances
comprising the following:
Group Group
2019 2018
Bank balances GBP'000 GBP'000
------------------ -------------- ----------
British Pounds 326 134
US Dollars 313 128
------------------ -------------- ----------
Total 639 262
------------------ -------------- ----------
All financial liabilities of the group mature in less than 12
months: details of the analysis of such liabilities is given in
Note 13.
Liquidity risk arises from the Group management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. Refer to Note
1.1 for details of going concern.
The Group policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash balances
(or agreed facilities) to meet expected requirements for a period
of at least 90 days.
Credit Risk
Credit risk is the risk of financial loss to the Group if a
customer or a counter party to a financial instrument fails to meet
its contractual obligations. The Group is principally exposed to
credit risk on cash and cash equivalents with banks and financial
institutions. For banks and financial institutions, only
independently rated parties with an acceptable rating are
utilised.
Capital management policies
In managing its capital, the Group's primary objective is to
maintain a sufficient funding base to enable the Group to meet its
working capital and strategic investment needs. In making decisions
to adjust its capital structure to achieve these aims, through new
share issues or debt, the Group considers not only its short-term
position but also its long-term operational and strategic
objectives.
20. Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities
arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those
for which cash flows were, or future cash flows will be, classified
in the cash flow statement as cash flows from financing
activities:
Financing cash Non-cash transactions
1 October flows 30 September
Group 2019 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ----------- ---------------- ----------------------- --------------
Loans from related
parties (Note 21) 250 (150) (100) -
Total 250 (150) (100) -
--------------------- ----------- ---------------- ----------------------- --------------
Group 2018
--------------------- ----------- ---------------- ----------------------- --------------
Loans from related
parties (Note 21) - 250 - 250
Total - 250 - 250
--------------------- ----------- ---------------- ----------------------- --------------
Repayment of loans during the year ended 30 September 2019 was
partly financed by the issue of new equity with a fair value of
GBP100,000. Interest accrued of GBP5,000 (2018: GBP12,000) which
was paid in the year.
21. Related party disclosures
The Directors are Key Management and information in respect of
key management is given in Note 6.
Mr Chris Brown, who is directly and indirectly beneficially
interested in, in aggregate, 3.86% of the issued share capital of
the Company, and was a former director of the Company, provided
unsecured loans of, in aggregate, GBP250,000, applied to general
working capital purposes. The loans incurred interest of 8% per
annum, payable monthly in arrears. The loans were repaid during the
year by GBP150,000 in cash and GBP100,000 by conversion into
5,000,000 new ordinary shares at 2p per share.
22. Ultimate controlling party
As at 30 September 2019 and 30 September 2018 there is no
ultimate controlling party.
23. Operating lease commitments
At 30 September 2019, the Group was committed to operating lease
payments due within one year of GBP39,000 (2018-nil). The charge
for the year ended 30 September 2019 was GBP39,000.
24. Subsequent events
In December 2019, the Company raised GBP925,000 gross of
expenses by a placing of 142,307,692 new ordinary shares at 0.65p
per share. 71,153,846 warrants were issued with the placing,
entitling the holder to purchase a further ordinary share at a
subscription price of 1.5p per share. A further 8,538,462 warrants
were issued to Turner Pope Investments, giving them the right to
acquire the same number of ordinary shares at an exercise price of
0.65p for two years.
The placing was intended in part to fund a resources report and
engineering study into a new oil sands opportunity in the Uintah
Basin, Utah, USA as well as to complete the necessary design
revisions of the TurboShale system and to provide general working
capital.
On 19 March 2020, the Company entered into an agreement with
Valkor for a Pre-FEED study for which the Company's contribution is
$125,000.
The full effect and impact of the COVID-19 pandemic will take
time to be understood. At the time of the publication of these
accounts, the full effects are not yet known, though it is clear
that the effects will be significant. Already we have seen a
slowing of the global economy and a material reduction in both the
demand for and the price of oil, which will likely have an impact
on the attractiveness of exploration assets, including the Group's,
which may result in future funding for projects being harder to
secure. In respect of the Group's current operations, being the
Pre-FEED study, this will likely take longer to be completed than
initially anticipated due to the current imposed travel
restrictions. In the event that the pandemic continues into the
second half of 2020, the Board will consider what cost reduction
measures are needed and can be implemented to ensure the Group can
continue to trade.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR JFMMTMTATTAM
(END) Dow Jones Newswires
March 27, 2020 03:00 ET (07:00 GMT)
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