TIDMTOM
RNS Number : 8669G
TomCo Energy PLC
01 April 2022
1 April 2022
TOMCO ENERGY PLC
("TomCo" or the "Company" or, with its subsidiaries, the
"Group")
Final Results for the year ended 30 September 2021
TomCo Energy plc (AIM: TOM), the US operating oil development
group focused on using innovative technology to unlock
unconventional hydrocarbon resources, announces its audited results
for the year ended 30 September 2021.
The 2021 Annual Report and Financial Statements have been
published and made available on the Company's website at
www.tomcoenergy.com .
Enquiries :
TomCo Energy plc
Malcolm Groat (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Matthew Chandler +44 (0)20 7409 3494
Novum Securities Limited (Broker)
Jon Belliss / Colin Rowbury +44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Florence Chandler +44 (0)20 3934 6630
For further information, please visit www.tomcoenergy.com .
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended.
CHAIRMAN'S STATEMENT
I am pleased to be delivering my second Chairman's statement to
the shareholders of TomCo Energy plc, together with the Annual
Report and Financial Statements for the year ended 30 September
2021.
Operational Review
Greenfield Energy LLC
The primary focus for the Company during the year was on
Greenfield Energy LLC ("Greenfield") and its plans to pursue the
construction of an initial 5,000 barrels of oil per day ("bopd")
production facility at the earliest opportunity, as well as
exploiting other opportunities available to it.
Whilst the shadow of Covid-19 still darkens the global economic
picture, though much less so than this time last year, we have
managed to make considerable progress during the financial year
under review.
During the first half of the year, the focus of Greenfield was
on the third-party oil sands plant at Asphalt Ridge. This was
enhanced and brought into trial production, extracting oil from
sands in a manner that we believe could be scaled up to be
commercially viable in large, purpose-built plants. Importantly,
the work undertaken by Greenfield in modifying, upgrading and
operating the test plant for a temporary lease period provided
sufficient information for a FEED (Front-End Engineering and
Design) study to be completed, together with a third-party
verification exercise.
The completed FEED study and third-party report was received at
the end of July 2021. The FEED study outlined better economics for
the proposed plant than we had initially envisaged, and together
with the third-party report provided verification that the proposed
technical approach is appropriate.
Further to an agreement reached with our former 50% joint
venture partner, Valkor LLC ("Valkor"), as announced on 26 August
2021, TomCo now owns 100% of Greenfield, with full control, thereby
affording TomCo's shareholders the opportunity to fully benefit
from Greenfield's significant potential, whilst retaining Valkor as
a valued stakeholder and future substantial shareholder in the
Company. The consideration for the acquisition only becomes payable
upon Greenfield receiving funds from, or drawing upon, a loan or
credit facility in connection with the construction of an oil sands
processing facility as specified in the FEED study, which I
personally believe serves to demonstrate Valkor's confidence in our
plans and ability to deliver.
Prior to this, on 9 June 2021, we announced Greenfield's
potential acquisition of up to 100% of the ownership and membership
rights and interests in Tar Sands Holdings II LLC ("TSHII") (the
"Membership Interests"). The successful completion of the
acquisition of an initial 10% of the Membership Interests was
announced post year end on 16 November 2021. Greenfield retains an
exclusive option, at its sole discretion, to acquire the remaining
90% of the Membership Interests for additional cash consideration
up to 31 December 2022, as detailed in the 9 June 2021
announcement.
TSHII owns approximately 760 acres of land and certain
non-producing assets (the "Site") in Uintah County, Utah, USA.
Subject to securing the requisite funding, Greenfield plans to use
the Site for the potential future mining of oil sands and
construction of a commercial scale processing plant. The Site has
existing infrastructure, plant and equipment, together with an
existing Large Mine Permit No. M0470032, that could facilitate any
future development by Greenfield.
Alongside the acquisition of the initial 10% of the Membership
Interests, a newly incorporated subsidiary of Greenfield was
granted a lease over approximately 320 acres of the 760-acre site
owned by TSHII. The lease provides Greenfield's subsidiary with the
exclusive right to explore, drill, and mine for, and extract,
store, and remove oil, gas, hydrocarbons, and other associated
substances, together, inter alia, with the right to erect,
construct and use such plant and equipment and infrastructure as
required.
Greenfield is in advanced discussions with potential off-takers
of both oil and sand from the TSHII site and it appears ideally
suited for the future construction, subject to funding, of
Greenfield's first commercial scale plant. Whilst there can be no
certainty that Greenfield can secure the required funding to
complete the acquisition of 100% of the Membership Interests, I
remain optimistic, based on discussions with potential funders to
date, that acquisition of the remaining 90% can be completed at a
cost of $16.25 million and the required funding secured. If the
funding is not secured, our current business plan would be
curtailed, but a viable project, albeit a fraction of the size,
would remain.
To assist Greenfield in progressing its plans for the TSHII site
and obtaining further funding to: (i) acquire the remaining 90%
Membership Interest in TSHII, (ii) drill a number of production
wells on the Site and (iii) pursue the future construction of an
initial 5,000 bopd facility at the earliest opportunity, the
Company has engaged specialist oil and gas industry advisers
experienced in the structuring and securing of such financings.
They are currently exploring a number of potential funding
options.
Additionally, Greenfield has commenced detailed engineering and
design work in connection with its future plans including engaging
Stantec Inc, a global design and delivery firm with extensive
experience in the oil and gas and mining sectors, on mine planning,
and is working with Netherland Sewell & Associates, global
petroleum consultants, on a reserves report, together with other
preparatory work. This is in addition to the continuing detailed
engineering design and planning work being undertaken by
Valkor.
TurboShale RF Technology
During the previous financial year, at the onset of the Covid-19
pandemic, we took the decision to put the activities in relation to
our TurboShale radio frequency technology on hold in order to focus
our resources on Greenfield. This has remained the case throughout
2021 and, post the year end, we have purchased the remaining 20% of
our subsidiary holding the technology and are considering how best
to proceed with it during 2022.
Pending that decision, we have recognised an impairment
provision against all of the Turboshale and Oil Mining Company
assets in these 2021 financial statements.
Corporate
As expected, the year under review was a busy one for TomCo and
one of significant progress. During the year, we raised GBP3.5
million (gross) via a placing in November 2020, through the issue
of 777,777,777 new ordinary shares at a price of 0.45 pence per
share, with the net proceeds being used to provide general working
capital and to fund Greenfield's development. Following the
financial year-end, the Company raised a further GBP1.25 million
(gross) in a placing of 250,000,000 new ordinary shares, at a price
of 0.50 pence per share in January 2022.
In early November 2020, Stephen West and Alexander Benger
stepped down from the Board to focus on their other commitments
elsewhere, I assumed the role of Chairman, and we appointed two new
non-executive directors, Richard Horsman and Robert Kirchner.
Robert subsequently resigned in June 2021 to focus on his other
commitments, but we were very fortunate in securing Louis Castro's
services as a non-executive director in April 2021. Louis has
brought to TomCo significant sector experience and governance
expertise, including as a former AIM Nominated Adviser.
Towards the end of January 2022, Richard Horsman left the
Company to pursue his other interests and we recruited as his
successor an oil industry expert, Zac Phillips, who had a good
pre-existing knowledge of our business already via his work as a
consultant to Greenfield.
I am grateful to my colleagues for their excellent contribution
and particularly to John Potter for his outstanding work as our
Chief Executive. The Company's activities are continuing to evolve
and we will look to add further relevant expertise as appropriate
going forward.
Outlook and Summary
The Board appreciates the strong continuing support of our
shareholders as we continue to progress our plans for
Greenfield.
Greenfield is engaged in ongoing discussions regarding funding
options to potentially achieve the ultimate acquisition of 100% of
the TSHII Membership Interests, together with the proposed drilling
of a number of production oil wells and further construction of the
planned first 5,000 barrels of oil per day production plant, whilst
progressing other preparatory work. Whilst there can be no
certainty that Greenfield can secure the requisite funding or the
further permitting required, I am optimistic, based on discussions
with potential funders to date, that the required funding to
implement our plans can ultimately be secured.
These are very exciting times for TomCo as we look to realise
Greenfield's significant potential.
Malcolm Groat
Chairman
31 March 2022
DIRECTORS' REPORT
The Directors submit their report and the financial statements
of the Group for the year ended 30 September 2021.
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
2021 set out below.
Operational risk
During the financial year, the Company completed all the
engineering due diligence on the oil sands separation process and
completed the third-party verification and design for a 5,000
barrels of oil per day plant. Efforts have now moved towards
securing the requisite funding for plant design and potential
future construction. While some of the project risk has been
reduced by way of securing a suitable site that has an appropriate
pre-existing large mining permit, the site itself contains the
remnants of a third-party facility that has not been in operation
for more than 10 years. As a result, a detailed review of the
historic plant has been arranged to make sure that there are no
potential liabilities.
Risks relating to environmental, health and safety and other
regulatory standards
The Group's future extraction activities are subject to various
US federal and state laws and regulations relating to the
protection of the environment including the obtaining of
appropriate permits and approvals by relevant environmental
authorities. Such regulations typically cover a wide variety of
matters including, without limitation, prevention of waste,
pollution and protection of the environment, labour regulations and
worker safety. Furthermore, the future introduction or enactment of
new laws, guidelines and regulations could serve to limit or
curtail the growth and development of the Group's business or have
an otherwise negative impact on its operations. The Group ensures
that it complies with the relevant laws and regulations in force in
the jurisdictions in which it operates.
Liquidity and interest rate risks
The Group is ultimately dependent on sources of equity and/or
debt funding to develop Greenfield and any other recovery
technology and in turn the Group's exploration assets and to meet
its day-to-day capital commitments and overheads. Cash forecasts
identifying the liquidity requirements of the Group are produced
frequently and are reviewed regularly by management and the Board.
This strategy will continually be reviewed in light of 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
In 2021 while COVID-19 continues to have an adverse impact on
the global economy, oil prices were, absent the effects of the war
in Ukraine, projected to continue to recover during 2022 and
beyond. The Group's continued activity with respect to Greenfield
is not currently expected to be significantly affected by COVID-19
.
Financial instruments
It was not considered an appropriate policy for the Group to
enter into any hedging activities or trade in any financial
instruments. Further information can be found in Note 22 .
RESULTS AND DIVIDS
The statement of comprehensive income is set out on page 20. The
Directors do not propose the payment of a dividend (2020:
GBPnil).
REVIEW OF THE KEY EVENTS DURING THE YEAR
TurboShale
There were no further developments in respect of our TurboShale
technology during the financial year. In the period since the end
of the financial year, the remaining 20% of TurboShale not owned by
TomCo has been acquired and the Board will review the next steps
for TurboShale during H1 2022. In the meantime, an impairment
provision has been recognised against its assets.
Greenfield Energy LLC
Our joint venture company took over all operations at the
Petroteq Oil Sands Plant (POSP) in July 2020 and through January
2021 made the modifications identified by Valkor to help improve
the separation process. The start-up of the plant occurred in
January 2021 during which further additions were identified as
being required, with such upgrades being completed in March 2021.
Between March and the end of June 2021 the process was assessed,
and a testing schedule completed. A third-party engineering
company, Kahuna Ventures LLC observed the plant operations and
completed an assessment with their report being submitted in July
2021. As a result of the testing programme and Kahuna's independent
report, Crosstrails Engineering LLC (a Valkor subsidiary) was able
to complete a Front-End Engineering and Design (FEED) study for a
5,000 barrels of oil per day production plant in August 2021.
During the financial year, Netherland, Sewell & Associates,
Inc (NSAI) were engaged to produce a reserves report on the oil
sands resource contained within the Tar Sands Holdings II LLC
acreage . Further to an agreement reached with Valkor LLC
("Valkor"), as announced on 26 August 2021, TomCo now owns 100% of
Greenfield, with full control, thereby affording TomCo's
shareholders the opportunity to fully benefit from Greenfield's
significant potential, whilst retaining Valkor as a valued
stakeholder and future substantial shareholder in the Company.
Financing
During the financial year, TomCo completed one equity fund raise
involving the issue of 777,777,777 new ordinary shares and
388,888,888 new warrants, raising GBP3,500,000 (gross). The funds
were deployed as a loan to Greenfield to assist it in securing the
Tar Sands Holdings II LLC entity that holds 760 acres of land, with
a pre-existing Large Mining Permit, Greenfield holds a multi-site
licence for deployment of the Oil Sands Technology, as well as for
general working capital purposes.
Following the end of the financial year, the Company undertook a
further placing of 250,000,000 new ordinary shares, raising
GBP1,250,000 (gross). These funds are to be used to cover the costs
of drilling 3 exploration wells on the TSHII site and the
anticipated costs of the due diligence process in seeking the
requisite funding for a 5,000 barrel per day oil sand separation
plant. Additionally, the funds were used to complete the purchase
of the remaining 20% of TurboShale, not previously owned by TomCo
and to provide additional working capital reserves for the
group.
TomCo also secured a loan from Valkor Oil and Gas LLC of
US$1,500,000 in order to complete the purchase of 10% of Tar Sands
Holdings II LLC. Such loan is repayable by Greenfield through a
number of potential options, or combination of such options, at its
sole election, such combination adding up to the US$1.5 million
principal amount of the loan, plus any applicable interest or fees
incurred. The repayment options include granting a share of
potential net production revenues to offset initially the principal
amount and for a period of five years thereafter from any oil
well(s) planned to be drilled on a defined lease area, but for
which the requisite further funding and permits have not yet been
secured; and/or straight repayment of the principal amount plus
interest and fees amounting to 15% of the principal amount of the
loan, payable on the maturity date. In any event, unless a
production share is granted, or both parties agree an extension to
the repayment date, a minimum of US$1.5 million must be repaid on
or before 30 May 2022. To the extent that any part of the principal
amount has not been paid by the scheduled maturity date (which may
be extended by mutual agreement of the parties) then interest of 2%
per month shall be applied to such unpaid amount from time to time
until it has been repaid in full.
Directors
The Directors who served on the Board during the year to 30
September 2021 and to date were as follows:
Malcolm Groat
John Potter
Richard Horsman (appointed 1 November 2020; resigned 24 January
2022)
Robert Kirchner (appointed 1 November 2020; resigned 4 June
2021)
Louis Castro (appointed 19 April 2021)
Zac Phillips (appointed 24 January 2022)
Directors' interests in the ordinary shares of the Company,
including family interests, as at 30 September 2021 were as
follows:
30 September 2021 30 September 2020 (or date of
appointment)
Ordinary Share Share Ordinary Share Share
shares warrants options shares warrants options
of nil of nil
par par
value value
--------------------- ------------------- ------------------- --------------------- ------------------- ------------------- ---------------------
M. Groat 11,887 - 20,380,952 11,887 - 2,380,952
J. Potter 26,500 - 52,714,285 26,500 - 7,714,285
R. Horsman -
(resigned
24 January
2022) - - 7,500,000 - -
R.
Kirchner
(resigned -
4 June
2021) - - - - -
L. Castro - - 15,000,000 - - -
38,387 - 95,595,237 38,387 - 10,095,237
Details of the remuneration, share warrants and share options
can be found in the Remuneration Committee Report and Notes 7 , 19
and 21 to the financial statements.
Payments of payables
The Group's policy is to negotiate payment terms with its
suppliers in all sectors to ensure that they know the terms on
which payment will take place when the business is agreed and to
abide by those terms of payment.
Going Concern
At 28 March 2022, the Group had cash of approximately GBP1.12
million, and a loan due to Valkor of approximately GBP1.14 million
($1.5 million)
The Directors have prepared a cash flow forecast for the period
to 30 June 2023. The forecast, which includes capital expenditure
committed at the date of this report, indicate that the Group needs
to raise additional finance in April 2023 in order to continue as a
going concern. The cash flow forecast assumes, amongst other
things, the following:
-- that either the Valkor loan of $1.5 million, which is due for
repayment by 30 May 2022, is extended by mutual agreement, which
would lead to an increase in financing costs, or is settled by the
grant of a production share over wells on land now occupied by the
group under arrangements concluded after the year-end;
-- the payment which is due in respect of the TSHII option by 31
December 2022 of $16,250,000 requires sufficient additional funding
to be raised prior to December 2022 otherwise the option lapses.
Should the option lapse because funding cannot be secured then the
Group's current business plan would be curtailed but, in the
Board's view, the Group would remain a going concern subject to the
occurrence of other currently unforeseen events.
The cash currently held by the Group is sufficient to fund
ongoing overhead costs for approximately 12 months, beyond which
further funding will be required.
The Group has a reasonable expectation that it can raise the
required additional funds based on a history of raising funds.
However, there are currently no binding agreements in place.
It is possible that rather than extend the term or grant a
production share, the Group would wish to refinance the Valkor loan
by May 2022 and that additional capital expenditure beyond that
committed at the date of this report will be necessary prior to
April 2023 to maximise the opportunities presented by, in
particular, Greenfield. Any such refinance or additional
expenditure would be subject to funding, in whole or in part, via
additional debt or equity or a combination of both.
The Directors note that because of both the lingering effects of
COVID-19 and the war in Ukraine there remains considerable
uncertainty concerning the global economy and oil prices continue
to be volatile, albeit reaching higher levels of late, which may
have implications in respect of securing additional funding, either
for the Group's day-to-day operations or additional capital
expenditure. These conditions 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.
Going concern is also discussed at note 1.1 of the financial
statements
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 with securities trading on the AIM market. In accordance
with those rules, the Directors have elected to prepare the Group's
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, have continued 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
31 March 2022
CORPORATE GOVERNANCE STATEMENT
As Chairman, I am pleased to present the Company's Governance
Statement under the QCA Corporate Governance Code (the "QCA Code").
Establishing effective corporate governance structures that evolve
with the business and protect shareholder value is a key element of
my role, together with the Board as a whole. Set out below are
details of the Company's governance framework benchmarked against
the QCA Code principles.
The Board of Directors of TomCo (the "Board") monitors the
business affairs of the Company and its subsidiaries on behalf of
its shareholders. The Board currently consists of the Chief
Executive Officer and three Non-Executive Directors. None of the
Non-Executive Directors have previously held an executive position
with the Company. The Directors have responsibility for the overall
corporate governance of the Company and recognise the need for the
highest standards of behaviour and accountability. The Directors
are committed to the principles underlying best practice in
corporate governance and have adopted the QCA Code.
This statement explains, at a high level, how the QCA Code is
applied by the Company and how its application supports the
Company's medium to long-term success. Further information on the
application of the QCA Code can be found on the Company's website
at https://tomcoenergy.com/investors/governance/.
The Board is responsible for the stewardship of the Company
through consultation with the management of the Company. Management
represents the Executive Director. Any responsibility that is not
delegated to management or to the committees of the Board remains
with the Board, subject to the powers of shareholder meetings. The
frequency of Board meetings, as well as the nature of agenda items,
varies depending on the state of the Company's affairs and in light
of 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 2021, the Company has
been in compliance with the provisions set out in the QCA Code.
Application of the QCA Code principles
The Company has applied the principles set out in the QCA Code,
by complying with it as reported above. Further explanations of how
the principles have been applied is set out below.
Principle One - Business Model and Strategy
TomCo is an oil exploration and development company focused on
using innovative technology to unlock unconventional hydrocarbon
resources, initially in Utah, USA.
The Company, as a result of the success of the opportunity
developed within Greenfield Energy LLC, has shifted its primary
focus onto developing the oil sand separation process with the
planned potential future development of a 5,000 barrels of oil per
day plant.
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 at:
www.tomcoenergy.com.
Principle Three - Considering wider stakeholder and social
responsibilities
The Board recognises that the long-term success of the Group is
reliant upon the efforts of the employees of the Group, its
partners, consultants, contractors, suppliers, regulators and other
stakeholders. The Board have put in place a range of processes and
systems to ensure that there is close oversight and contact with
its key stakeholders.
The Group is subject to oversight by a number of different U.S.
State and other regulatory bodies, who directly or indirectly are
involved with the permitting and approval process of its oil and
gas operations in Utah, including those conducted by Greenfield.
Additionally, given the nature of the Group's business, including
the activities of Greenfield there are other parties who, whilst
not having regulatory power, nonetheless have an interest in seeing
that the Group conducts its operations in a safe, environmentally
responsible, ethical and conscientious manner.
The Group makes all reasonable efforts, directly or through its
advisers, to engage in and maintain active dialogue with each of
these governmental and non-governmental bodies, to ensure that any
issues faced by the Group, including but not limited to regulations
or proposed changes to regulations, are well understood and
ensuring to the fullest extent possible that the Group is in
compliance with all appropriate regulations, standards and specific
licensing obligations, including environmental, social and safety
aspects, at all times.
Principle Four - Risk Management
In addition to its other roles and responsibilities, the Board
is responsible for ensuring that procedures are in place and are
being implemented effectively to identify, evaluate and manage the
significant risks faced by the Group.
As a result of the process described above, a number of risks
have been identified. The principal risks and the manner in which
the Company and its Board seek to mitigate them are set out below.
The Board reviews the principal risks facing the business as part
of its meetings 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 group's operations are limited
currently, pending completion of
the detailed review of the potential
site for the 5,000 barrels of oil
per day plant. The directors are
in discussions with a number of potential
funders concerning securing funding
for the potential plant.
As is common with projects of this
nature the Company has mitigated
the potential risk around a new design
by utilising existing technology
and by commissioning a detailed FEED
study which has been successfully
reviewed by a reputable third party.
------------------------ --------------------------------------------
Environmental, See Directors' Report. The Company has engaged leading advisers
health and safety to assist it in securing relevant
and other regulatory permits or licences to operate.
standards
The Company maintains ongoing oversight
of health and 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 required and
as referred to in Note 1.1.
------------------------ --------------------------------------------
Currency risk See Directors' Report. The Company aims to manage currency
exposures by holding funds in the
applicable currency to match anticipated
expenditure.
------------------------ --------------------------------------------
The Board considers that an internal audit function is not
necessary or practical due to the size of the Group and the close
day to day control exercised by the Executive Director. However,
the Board will continue to monitor the need for an internal audit
function. The Executive Director has established appropriate
reporting and control mechanisms to ensure the effectiveness of the
Group's control systems for the size of the business and its
activities. The Board obtains regular updates on risks from the
Executive Director, which allows it to monitor the effectiveness of
risk management and through its regular engagement and review of
reporting on areas such as the status of the Company's projects,
budgets, results and cash flow position of the Company it considers
the effectiveness of controls on an ongoing basis.
Principle Five - A Well-Functioning Board of Directors
The Board currently comprises the Chief Executive, John Potter,
and three independent Non-Executive Directors, Malcolm Groat, Louis
Castro and Zac Phillips.
Biographies for each of the current Directors are set out on the
Company's website. Executive and Non-Executive Directors are
subject to re-election usually at the Company's Annual General
Meeting, at intervals of no more than three years.
The Board meets on a regular basis, typically at least once a
month.
The Board is responsible for formulating, reviewing and
approving the Group's strategy, budgets and corporate actions. As
such, the Company has established separate Audit and Remuneration
Committees.
The Audit Committee comprises Louis Castro (Chairman,), Malcolm
Groat and Zac Phillips. The Audit Committee meets at least twice a
year to consider the integrity of the financial statements of the
Company, including its annual and interim accounts; the
effectiveness of the Company's internal controls and risk
management systems; auditor reports; and terms of appointment and
remuneration for the auditor.
The Company's Remuneration Committee comprises Louis Castro
(Chairman,), Malcolm Groat and Zac Phillips. The Remuneration
Committee meets from time to time, but not less than once a year,
to review and determine, amongst other matters, the remuneration of
Executives on the Board and any share incentive plans of the
Company.
The QCA Code recommends that the Chairman must have adequate
separation from the day-to-day business to be able to make
independent decisions. Malcolm Groat is the Company's Non-Executive
Chairman and the Board believe 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, including the Chairman, the Board does not
believe it is currently necessary to appoint a senior independent
director.
The Chief Executive is a full-time employee of the Company.
Whilst each of the Non-Executive Directors are considered to be
part time, they are expected to provide as much time to the Company
as is required. The attendance record of the Directors at Board and
committee meetings held during the year ended 30 September 2021 was
as follows:
Main Audit Remuneration
Board Committee Committee
Meetings held
-------- ------------ --------------
Attendance:
-------- ------------ --------------
Malcolm Groat 14 2 2
-------- ------------ --------------
John Potter 14 - -
-------- ------------ --------------
Richard Horsman (appointed 1 November 2020;
resigned 24 January 2022) 14 2 1
-------- ------------ --------------
Robert Kirchner (appointed 1 November 2020;
resigned 4 June 2021) 4 1 1
-------- ------------ --------------
Louis Castro (appointed 19 April 2021) 10 1 2
-------- ------------ --------------
Principle Six - Appropriate Skills and Experience of the
Directors
The Board believes that the current balance of skills held by
the Board as a whole, reflects a very broad range of commercial and
professional skills across geographies and industries and each of
the Directors has previous experience of public markets.
The Board believes that the Directors are well suited to the
Company's fundamental objective of enhancing and preserving
long-term shareholder value and ensuring that the Group conducts
its business in an ethical and safe manner. The Board is considered
to be of a sufficient 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 Board has not deemed it necessary to develop a
formal process of orientation for new Directors but encourages all
its Directors to visit the Group's operations to ensure familiarity
and proper understanding.
Skills & Experience of Board Members
Malcolm Groat
Malcolm is a Chartered Accountant and has a wide range of
experience in corporate life, with roles as Chairman, Non-Executive
Director, Chairman of Audit Committees, CEO, COO and CFO for a
number of public companies. He is an adviser on compliance and
governance, strategy and operational improvement, and managing the
risks of rapid change.
John Potter
John is an accomplished Chief Executive and project manager with
many years' experience working within the energy sector. John
brings a wide range of skills, knowledge and industry connections.
His proficiencies in understanding and identifying best
technologies in projects and his proven abilities in developing
relationships with stakeholders, including operators, politicians,
financiers, technology providers and regulators, are well proven
and have brought great value to the companies he has previously
worked with.
Louis Castro
Louis is a graduate engineer and PwC Chartered Accountant who
has spent his career in the City in investment banking and capital
markets, advising growth companies on a wide range of matters
including fund-raising and M&A. He served as an AIM Nomad for
many years before becoming CFO of a listed oil company. In recent
years, Louis has become Executive Chairman of Orosur Mining Inc.
which is quoted on both the TSXV and on AIM, and he is also a
non-executive director on Tekcapital plc; Predator Oil & Gas
plc; and Stanley Gibbons plc.
Zac Phillips
Zac has over 25 years' experience in oil and gas finance, having
worked for BP, Chevron, Merrill Lynch and ING Barings. He was
previously CFO for Dubai World's oil and gas business (DB
Petroleum) with responsibility for risk management and authoring of
investment proposals. He has a degree in Chemical Engineering and a
PhD in Chemical Engineering from Bath University.
Principle Seven - Evaluation of Board Performance
The Board has determined that it shall be responsible for
assessing the effectiveness and contributions of the Board as a
whole and its committees (which currently comprise the Audit
Committee and the Remuneration Committee). The small size of the
Board allows for open discussion. The Chairman has regular dialogue
with the Chief Executive whereby the Board's role and effectiveness
can be considered.
No formal assessments have been prepared in the year. However,
the Board assesses its effectiveness on an ongoing basis. The Board
will keep this matter under review and especially if either the
size of the Board or the number of committees increases, which in
turn may require a more formalised assessment and evaluation
process to be established to ensure continued effectiveness.
Principle Eight - Corporate Culture
The Board recognises that their decisions regarding strategy and
risk will impact the corporate culture of the Group as a whole and
that this will 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. The corporate governance
arrangements that the Board has adopted are designed to ensure that
the Group delivers long-term value to its shareholders and that
shareholders have the opportunity to express their views and
expectations for the Company in a manner that encourages open
dialogue with the Board.
A large part of the Group's activities is centred upon what
needs to be an open and respectful dialogue with partners,
suppliers, consultants and other stakeholders. Therefore, the
importance of sound ethical values and behaviour is crucial to the
ability of the Group to successfully achieve its corporate
objectives.
The Directors consider that, at present, the Group has an open
culture facilitating comprehensive dialogue and feedback and
enabling positive and constructive challenge.
Principle Nine - Maintenance of Governance Structures and
Processes
Ultimate authority for all aspects of the Group's activities
rests with the Board, with the responsibilities of the Executive
Director arising as a consequence of delegation by the Board.
The Board has adopted appropriate delegations of authority which
set out matters which are reserved to the Board. The Chairman is
responsible for the effectiveness of the Board and compliance with
the QCA Code, while management of the Group's business and primary
contact with shareholders has been delegated by the Board to the
Chief Executive Officer.
Non-Executive Directors
The Board evaluates its performance and composition on a regular
basis and will make adjustments as and when 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 Company's shareholders on its
stewardship of the Group through the publication of interim and
final financial results. The Company announces significant
developments which are disseminated via various outlets including,
before anywhere else, RNS. In addition, the Company maintains a
website (www.tomcoenergy.com) on which RNS announcements, press
releases, corporate presentations and the Report and Financial
Statements are available to view.
Enquiries from individual shareholders on matters relating to
the business of the Group are welcomed. Shareholders and other
interested parties can subscribe to receive notification of news
updates and other documents from the Company via email.
The Annual General Meeting, and other meetings of shareholders
that may be called by the Company from time to time, provide an
opportunity for communication with all shareholders and the Board
encourages shareholders to attend and welcomes their participation.
The Board is committed to maintaining good communication and having
constructive dialogue with its shareholders. The Company has close
ongoing relationships with its private shareholders.
Malcolm Groat
Non-Executive Chairman
31 March 2022
AUDIT COMMITTEE REPORT
Overview
The Committee met twice during the year to consider the full
year 2020 accounts and interim 2021 accounts. It has also met after
the year end to consider the full year 2021 accounts.
In April 2021, Louis Castro was appointed Chairman of the
Committee by the Board. Following the departure of Robert Kirchner
in June 2021, the other Committee members during the year under
review have been Malcolm Groat and Richard Horsman. From February
2022, the Committee comprises Louis Castro, Zac Phillips and
Malcolm Groat.
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
meeting as part of the full year 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 full year
audited accounts.
Audit Committee Effectiveness
The Board considers the effectiveness of the Committee on a
regular basis but not as part of a 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 auditor is
safeguarded by reviewing the auditor's 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 of GBP 34,337 (2020: GBP33,500) were paid to BDO LLP.
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.
Louis Castro
Chairman, Audit Committee
31 March 2022
REMUNERATION COMMITTEE REPORT
This report is on the activities of the remuneration committee
for the financial year ended 30 September 2021.
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 the Executive(s) on the Board and any share
incentive plans of the Company. At the end of the year, the
Remuneration Committee comprised Louis Castro (Chairman), Richard
Horsman and Malcolm Groat. From February 2022, the Committee
comprises Louis Castro, Zac Phillips and Malcolm Groat.
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 Severance Salaries Severance
pay pay
2021 2021 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000
---------- ----------- ---------- -----------
M Groat 38 - 20 -
J Potter 139 - 91 -
R Horsman (appointed 1 November 30 - - -
2020; resigned 24 January
2022)
R Kirchner (appointed 1 November
2020; resigned 4 June 2021) 15 30 - --
L Castro (appointed 19 April 19 - -
2021)
S West (resigned 30 September - 27 -
2020)
A Benger (resigned 30 September - 20 -
2020)
A Jones (resigned 16 March
2020) - 100 150
As detailed in Note 21 , the Company has in place a share option
scheme for its Directors.
The Committee met twice during the year in conjunction with
Board meetings to review salaries and to issue share options as set
out in Note 21 .
Louis Castro
Chairman, Remuneration Committee
31 March 2022
Independent auditor's report to the members of TomCo Energy
plc
Opinion on the financial statements
In our opinion the financial statements:
-- give a true and fair view of the state of the Group's affairs
as at 30 September 2021 and of its loss for the year then ended;
and
-- have been properly prepared in accordance with IFRSs as issued by the IASB.
--
We have audited the financial statements of TomCo Energy Plc
(the 'Parent Company') and its subsidiaries (the 'Group') for the
year ended 30 September 2021 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 issued by
the International Accounting Standards Board (IASB).
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 believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Independence
We remain 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.
Material uncertainty related to going concern
We draw attention to note 1.1 to the financial statements
concerning the Group's ability to continue as a going concern. As
stated in note 1.1 the Group has forecasted that it will need to
repay or extend the existing debt by May 2022 and raise additional
finance by March 2023. In respect of this there are currently no
binding agreements in place.
As stated in note 1,1 these events or conditions, along with the
other matters set out in note 1.1 indicate that a material
uncertainty exists that may cast significant doubt on the Group's
ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
In auditing the financial statements, we have concluded that the
Directors' use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
Because of the judgements made by the Directors, and the
significance of this area, we have determined going concern to be a
key audit matter. As described in note 1.1 the Directors expect to
be able to either repay or extend the existing debt and raise
additional financing. However, the ability of the Group to achieve
this is not fully within the Directors' control.
Our evaluation of the Directors' assessment of the Group's
ability to continue to adopt the going concern basis of accounting
and in response to the key audit matter included:
-- Reviewing the latest cash flow forecasts for the group, which
covered the period to June 2023. Our work included assessing the
forecast cash outflows again historical data and publicly stated
plans for the future development of business.
-- Testing the mathematical accuracy of the model.
-- Verifying the receipt of the proceeds of the equity placing post the year end.
-- Sensitising the scenario by inflating the overheads.
-- Challenging directors on their ability to raise further
financing with the references to the previous fund raises and
considering the future impact this could have on further
fundraises.
-- Reviewing the terms of the $1.5m loan agreement.
-- Reviewing the disclosures in note 1.1 to ensure they provide
appropriate and sufficient information related to the going concern
position of the Group.
Our responsibilities and the responsibilities of the Directors
with respect to going concern are described in the relevant
sections of this report.
Overview
Coverage All areas were subject to full scope audit
2021 2020
Carrying value of a a
Intangible assets
Accounting treatment a a
Key audit matters of the investment
in Greenfield Energy
LLC
Going Concern a a
----------------------------------------------
Materiality Group financial statements as a whole
GBP78,000 (2020: GBP160,000) based on 1.5%
(2020: 1.5%) of total assets
----------------------------------------------
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group's system of internal
control, and assessing the risks of material misstatement in the
financial statements. 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.
Our group audit scope focused on the group's principle operating
locations, being the United Kingdom and USA. We determined there to
be three significant components, TomCo Energy Plc, Greenfield
Energy LLC and Turboshale Inc. There were no insignificant
components.
The group audit team carried out a full scope audit on all
entities 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.
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) that 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 matter described in the material uncertainty
related to going concern section of our report, we have determined
the matters below to be the key audit matters to be communicated in
our report.
Key audit matter How the scope of our audit
addressed the key audit matter
Carrying The Group has recognised We reviewed Directors' assessment
value of significant intangible which concluded that the
Intangible assets, related to Greenfield project is in
assets (note expenditure on researching the development phase, and
9) and relevant and developing the therefore the costs relating
notes within design and operation to the development are capitalised
Group's of a pilot plant acquired within Greenfield, and in
accounting in the year and through doing so our work included:
policies the acquisition of
(note 1.9) the remaining 50% * Corroborating the basis for Directors' conclusions to
and estimates of Greenfield Energy supporting evidence such as the FEED study which
and judgements LLC. The Directors supported Directors' conclusion that the project is
(note 1.1) are required to assess commercially viable.
these intangible assets
for indicators of
impairment at each
reporting date. We have assessed Directors'
review of whether there are
The assessment of any indicators of impairment
whether or not there and our procedures included
are any indicators the following:
of impairment is described * Making specific enquires of Directors, reviewing
in the Group's accounting market announcements and reviewing Board minutes to
policies and includes establish whether there was any evidence that the
making estimates and Group did not plan to proceed with the future use of
judgments. the intangible assets.
The subjectivity of
these estimates and * Reviewing the impairment assessment prepared by
judgements along with Directors and making enquiries of Directors to
the material carrying understand the impact of current market on the future
value of the assets of the project and challenging Directors on whether
and disclosure thereof these factors are indicators of impairment.
in the financial statements
make this a key audit
matter.
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:
Based on the work performed
we have no matters to communicate
in respect of Directors'
assessment of the carrying
value of the group's intangible
assets
-------------------------------- --------------------------------------------------------------
Accounting The Group acquired We have assessed Directors'
treatment the remaining 50% judgements regarding the
of the investment shareholding in Greenfield determination whether the
in Greenfield during the year. As acquisition of remaining
Energy LLC disclosed in this 50% of Greenfield represented
(note 11) note this did not an asset acquisition.
and related satisfy the criteria Our audit procedures included
estimates for a business combination reviewing the acquisition
and judgements under IFRS 3 and therefore Agreement and Directors'
(note 1.1) was accounted as an representations against the
asset acquisition. requirements of IFRS3 "Business
Combinations" and challenging
The determination Directors' on the key terms
of whether or not to determine whether these
this acquisition represents are indicative of asset acquisition
a business or asset or a business combination.
acquisition requires
judgement. We also evaluated the adequacy
of Directors' estimation
Further judgement of the fair value of the
is required on identification net assets acquired by auditing
of assets purchased the assets and liabilities
and the valuation as at the acquisition date.
of the cost of the
purchase. We have assessed the appropriateness
of using the equity method
The consideration for valuation of the existing
for the acquisition 50% holding in Greenfield
is the issue of 592.8 prior to acquisition made
million shares. The in the year.
issue of the shares
is contingent upon We have reviewed Directors'
the Company receiving methodology of estimation
funds from, or drawing of the contingent consideration
down on, a loan or and challenged the Directors
credit facility granted on the appropriateness of
for construction of valuation of the consideration
an oil sands processing based on historic cost of
facility by August assets or probability of
2024. the contingent shares to
be issued.
The judgments involved
in making these assessments We also evaluated the adequacy
and the disclosures of the disclosures provided
within the financial within the financial statements
statements made this in relation to the transaction
a key audit matter. against the requirements
of the accounting standards.
Key observations:
Based on the work performed
we have no matters to communicate
in respect of Director's
assessment of investment
or the share of the loss
recognised in the group financial
statements.
-------------------------------- --------------------------------------------------------------
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.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent
of testing needed. 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.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
Group financial statements
2021 2020
GBPm GBPm
---------------------- -----------------------
Materiality GBP78,000 GBP160,000
---------------------- -----------------------
Basis for determining 1.5% of total assets 1.5% of total assets
materiality
---------------------- -----------------------
Rationale for We considered total assets to be
the benchmark the most significant determinant
applied of the Group's financial performance
by users of the financial statements.
-----------------------------------------------
Performance GBP54,000 GBP120,000
materiality
---------------------- -----------------------
Basis for determining 70% of the above 75% of the above
performance materiality level materiality level
materiality given the slightly given the historical
increased volume low volume of errors
of errors in prior
year audit
---------------------- -----------------------
Component materiality
We set materiality for each component of the Group based on a
percentage of between 50% and 95% of Group materiality dependent on
the size and our assessment of the risk of material misstatement of
that component. Component materiality ranged from GBP39,000 to
GBP74,000 (2020: GBP80,000 to GBP144,000). In the audit of each
component, we further applied performance materiality levels of 70%
of the component materiality to our testing to ensure that the risk
of errors exceeding component materiality was appropriately
mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them
all individual audit differences in excess of GBP1,500 (2020:
GBP3,200). We also agreed to report differences below this
threshold that, in our view, warranted reporting on qualitative
grounds.
Other information
The directors are responsible for the other information. 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. 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 course of 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 this gives rise to a material
misstatement in the financial statements themselves. 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, 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 Group'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 Group 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.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including
fraud is detailed below:
Based on our understanding of the Group and industry, we
considered those laws and regulations that have a direct impact on
the preparation of the financial statements such as Companies Act
2006 and income tax. The Group are also subject to many other laws
and regulations where the consequences of non-compliance could have
a material effect on amounts or disclosures in the financial
statements, for instance through the imposition of fines or
litigation. We identified the following areas as those most likely
to have such an effect: anti-bribery, employment law and certain
aspects of relevant applicable legislation.
We evaluated management's incentives and opportunities for
fraudulent manipulation of the financial statements (including the
risk of override of controls), and determined that the principal
risks were related to posting inappropriate journal entries to
revenue, management bias in accounting estimates and the adoption
of inappropriate accounting policies.
Audit procedures performed by the Group engagement team
included:
o inspecting correspondence with regulators, tax authorities and
lawyers;
o discussions with management including consideration of known
or suspected instances of non-compliance with laws and regulation
and fraud;
o Communicating risks of fraud and non-compliance with the
engagement team
o inspecting legal and professional fees for indications of
non-compliance with laws and regulations;
o considering management's controls designed to prevent and
detect irregularities;
o identifying and testing journals, in particular journal
entries posted with unusual account combinations, postings by
unusual users or with unusual descriptions; and
o challenging assumptions and judgements made by management in
their critical accounting estimates as mentioned in Key audit
matters.
Our audit procedures were designed to respond to risks of
material misstatement in the financial statements, recognising that
the risk of not detecting a material misstatement due to fraud is
higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent
limitations in the audit procedures performed and the further
removed non-compliance with laws and regulations is from the events
and transactions reflected in the financial statements, the less
likely we are to become aware of it.
A further description of our responsibilities is available 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 31 March 2022.
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
31 March 2022
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 2021
2021 2020
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------ ---------- ---------- --------- ---------
Revenue 2 - -
Cost of sales 2 - -
------------------------------------- ------ ---------- ---------- --------- ---------
Gross loss - -
Administrative expenses 2 (1,528) (1,031)
Impairment losses 3 (8,679) -
Operating loss 5 (10,207) (1,031)
Finance income/(costs) 4 - 1
Share of loss of joint venture 11 (84) (40)
------------------------------------- ------ ---------- ---------- --------- ---------
Loss on ordinary activities
before taxation (10,291) (1,070)
Taxation 6 - -
------------------------------------- ------ ---------- ---------- --------- ---------
Loss for the year attributable
to: (10,291) (1,070)
Equity shareholders of the
parent (10,017) (1,028)
Non-controlling interests 20 (274) (42)
------------------------------------- ------ ---------- ---------- --------- ---------
(10,291) (1,070)
------------------------------------- ------ ---------- ---------- --------- ---------
Items that may be reclassified
subsequently to profit or
loss
Exchange differences on
translation of foreign operations (503) (350)
Other comprehensive income
for the year attributable
to:
Equity shareholders of the
parent (507) (356)
Non-controlling interests 20 4 6
Other comprehensive income (503) (350)
Total comprehensive loss
attributable to:
Equity shareholders of the
parent (10,524) (1,384)
Non-controlling interests 20 (270) (36)
------------------------------------- ------ ---------- ---------- --------- ---------
Total comprehensive loss (10,794) (1,420)
------------------------------------- ------ ---------- ---------- --------- ---------
2021 2020
Pence Pence
Loss per share attributable per share per share
to the equity shareholders
of the parent
------------------------------ --- ----------- -----------
Basic & diluted loss per
share 8 (0.76) (0.30)
------------------------------ --- ----------- -----------
The Notes form part of these financial statements.
Consolidated Statement of Financial Position
as at 30 September 2021
Group Group
2021 2020
---------------------------------------------- ------ --------- ---------
Note GBP'000 GBP'000
---------------------------------------------- ------ --------- ---------
Assets
Non-current assets
Intangible assets 9 3,947 8,834
Property, plant and equipment 10 - 411
Investment in joint venture 11 - 1,224
Other receivables 12 25 26
---------------------------------------------- ------ --------- ---------
3,972 10,495
---------------------------------------------- ------ --------- ---------
Current assets
Trade and other receivables 12 104 118
Other financial assets 13 371 -
Cash and cash equivalents 14 726 334
---------------------------------------------- ------ --------- ---------
1,201 452
---------------------------------------------- ------ --------- ---------
TOTAL ASSETS 5,173 10,947
---------------------------------------------- ------ --------- ---------
Liabilities
Current liabilities
Trade and other payables 15 (808) (215)
---------------------------------------------- ------ --------- ---------
(808) (215)
---------------------------------------------- ------ --------- ---------
Net current assets 393 237
---------------------------------------------- ------ --------- ---------
TOTAL LIABILITIES (808) (215)
---------------------------------------------- ------ --------- ---------
Total net assets 4,365 10,732
---------------------------------------------- ------ --------- ---------
Shareholders' equity
Share capital 17 - -
Share premium 18 31,142 29,222
Warrant reserve 19 2,579 1,288
Translation reserve (225) 282
---------------------------------------------- ------ --------- ---------
Retained deficit (28,688) (19,887)
---------------------------------------------- ------ --------- ---------
Equity attributable to owners of the parent 4,808 10,905
Non-controlling interests 20 (443) (173)
---------------------------------------------- ------ --------- ---------
Total equity 4,365 10,732
---------------------------------------------- ------ --------- ---------
The financial statements were approved and authorised for issue
by the Board of Directors on 31 March 2022.
The Notes form part of these financial statements.
John Potter Malcolm Groat
Director Director
Consolidated Statement of Changes in Equity
for the financial year ended 30 September 2021
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 2019 - 28,247 65 638 (19,012) 9,938 (137) 9,801
----------------- -------- --------- --------- --------- ------------- ---------- ---------- ----------------- ----------
Loss for the
year - - - - (1,028) (1,028) (42) (1,070)
Comprehensive
income for the
year - - - (356) - (356) 6 (350)
----------------- -------- --------- --------- --------- ------------- ---------- ---------- ----------------- ----------
Total
comprehensive
loss for the
year - - - (356) (1,028) (1,384) (36) (1,420)
Issue of shares
(net of costs) 17, 18 - 866 1,377 - - 2,243 - 2,243
Exercise of
warrants 19 - 109 (114) - 114 109 - 109
Expiry of
warrants 19 - - (43) - 43 - - -
Share-based
payment charge 21 - - 3 - (4) (1) - (1)
At 30 September
2020 - 29,222 1,288 282 (19,887) 10,905 (173) 10,732
----------------- -------- --------- --------- --------- ------------- ---------- ---------- -----------------
Loss for the
year - - - - (10,017) (10,017) (274) (10,291)
Comprehensive
income for the
year - - - (507) - (507) 4 (503)
----------------- -------- --------- --------- --------- ------------- ---------- ---------- ----------------- ----------
Total
comprehensive
loss for the
year - - - (225) (10,017) (10,524) (270) (10,794)
Issue of shares
(net of costs) 17,18 - 1,920 1,306 - - 3,226 - 3,226
Expiry of
warrants 19 - - (15) - 15 - - -
Share-based
payment
arrangements 21 - - - - 1,201 1,201 - 1,201
At 30 September
2021 - 31,142 2,579 (225) (28,688) 4,808 (443) 4,365
----------------- -------- --------- --------- --------- ------------- ---------- ---------- -----------------
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 to Note 20.
The Notes form part of these financial statements.
Consolidated Statement of Cash Flows
for the financial year ended 30 September 2021
Note Group Group
-----------------------------------------------------------
2021 2020
-----------------------------------------------------------
GBP'000 GBP'000
----------------------------------------------------------- --------- ---------- ---------
Cash flows from operating activities
Loss after tax 2 (10,291) (1,070)
Adjustments for:
Finance costs 4 - (1)
Amortisation 6 6
Impairment losses 8,679 -
Share based payment charge/(credit) 135 (1)
Unrealised foreign exchange losses 67 81
Share of loss of joint venture 84 40
Decrease/(Increase) in trade and other receivables 22 (21)
Increase/(decrease) in trade and other payables 63 (384)
Cash used in operations (1,235) (1,350)
----------------------------------------------------------- --------- ---------- ---------
Interest received/(paid) - 1
Net cash outflow from operating activities (1,235) (1,349)
Cash flows from investing activities
Investment in intangibles 9 (2) (29)
Purchase of financial assets 11 (219) -
Investment in joint venture (1,502) (1,279)
Cash acquired on acquisition of control of joint venture 11 124 -
----------------------------------------------------------- --------- ---------- ---------
Net cash used in investing activities (1,599) (1,308)
----------------------------------------------------------- --------- ---------- ---------
Cash flows from financing activities
Issue of equity instruments 17 , 18 3,500 2,535
Costs of share issue (274) (182)
Net cash generated from financing activities 3,226 2,353
----------------------------------------------------------- --------- ---------- ---------
Net increase/(decrease) in cash and cash equivalents 392 (304)
Cash and cash equivalents at beginning of financial year 334 639
Foreign currency translation differences - (1)
Cash and cash equivalents at end of financial year 726 334
----------------------------------------------------------- --------- ---------- ---------
The Notes form part of these financial statements.
Notes to the financial statements
for the financial year ended 30 September 2021
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
- Purchase of remaining interest in Greenfield Energy LLC ("Greenfield")
On acquisition of the remaining 50% of Greenfield not already
owned by the Group, the Directors were required to assess whether
the acquisition was of a business, as defined by IFRS 3, or a group
of assets. They determined that, as Greenfield had, at the date of
acquisition, neither outputs, namely goods or services to
customers, nor an organised workforce, or access to such a
workforce, the IFRS 3 definition of a business combination was not
met. Therefore, the Directors concluded that the acquisition
represented an asset purchase to be accounted for at cost.
Further judgement was then required concerning:
i. the identification of assets purchased; and
ii. measurement of accumulated cost of the purchase, including
the accumulated cost of the Group's initial holding in Greenfield
up to the date of acquisition of the remaining 50% interest; and
the cost of the remaining 50%, which is principally determined by
reference to the directors' estimate of the probability of those
events occurring that would trigger the issue of equity
consideration under the agreement to purchase the remaining
interest.
- Impairment indicator assessment on intangible assets and
property, plant and equipment used in exploration and evaluation
activities
The Directors consider that impairment indicators existed at 30
September 2021 concerning its tangible and intangible assets
employed in exploration and evaluation activities in relation to
oil shale. Having carried out a subsequent impairment review the
directors have decided to impair these assets in full at 30
September 2021.
- Internally generated development assets
Greenfield has incurred expenditure on researching and
developing the design and operation of a pilot plant and processes
that is not of a scale economically feasible for commercial
production. Judgement is required In determining what constitutes
research expenditure, to be expensed in profit and loss, and what
constitutes development expenditure that meets the criteria set out
in IAS 38, which must be capitalised. Qualifying expenditure is
capitalised from the point at which Greenfield's board are
satisfied as to the technical feasibility of the production
processes. The board have deemed that this was achieved when the
preliminary results of the Pre-Feed study were released, which
indicated the use of the Oil Sands Technology was likely to be
economically viable. Judgements on these matters affect the Group's
share of Greenfield's net assets and profits that are recognised
under the equity method up to the point that the remaining 50% of
Greenfield was acquired and the cost of intangible assets
thereafter.
- Joint arrangements
Prior to the acquisition of the remaining 50% of Greenfield,
judgement was required In assessing whether the Group was party to
a joint arrangement under IFRS 11. The Group considered whether
decisions about relevant activities of the investee entity required
the unanimous consent of the investors ("joint control"). Having
established the existence of joint control, judgement was required
to establish whether the structure of the arrangement, the
contractual terms or other facts and circumstances give the parties
to the arrangement rights to the assets and obligations for the
liabilities of the investee entity. In those circumstances, the
entity is a joint operation. Having evaluated the matter, the Group
determined that the parties to the arrangement did not have rights
to the assets and obligations of the investee entity and therefore
the joint arrangement was a joint venture prior to the acquisition
of control of Greenfield.
Estimates
- Share based payments
Estimates were required in determining the fair value of share
options and warrants granted in the year including future share
price volatility and the instrument life. Volatility is estimated
using TomCo's historic share prices for a period of time that
matches the exercise period of the warrant or option. This assumes
that historic share price volatility is the best estimate of future
volatility. The Black-Scholes model is used for valuing both
options and warrants. Estimates are also made of the likely time of
exercise of the options or warrants.
In measuring the value of equity consideration for the purchase
of the remaining 50% of Greenfield, the Directors have applied IFRS
2. Where goods or services are provided by persons other than
employees, the value of the share-based payment is determined by
reference to the fair value of the assets acquired. Because of the
unique nature of the principal asset acquired, namely the pilot
plant processes developed by Greenfield, the directors have
determined that cost is the best estimate of fair value at
acquisition.
The Group has consistently applied all applicable accounting
standards.
Going concern
At 28 March 2022, the Group had cash of approximately GBP1.12
million, and a loan due to Valkor of approximately GBP1.14 million
($1.5 million).
The Directors have prepared a cash flow forecast for the period
to 30 June 2023. The forecast, which includes capital expenditure
committed at the date of this report, indicates that the Group
needs to raise additional finance in order to continue as a going
concern. The cash flow forecast assumes, amongst other things, the
following:
-- that either the Valkor loan of $1.5 million, which is due for
repayment by 30 May 2022, is extended by mutual agreement, which
would lead to an increase in financing costs, or is settled by the
grant of a production share over wells on land now occupied by the
group under arrangements concluded after the year-end.
-- the payment which is due in respect of the TSHII option by 31
December 2022 of $16,250,000 requires sufficient additional funding
to be raised prior to December 2022 otherwise the option lapses.
Should the option lapse because funding cannot be secured then the
Group's current business plan would be curtailed but, in the
Board's view, the Group would remain a going concern subject to the
occurrence of other currently unforeseen events.
The cash currently held by the Group is sufficient to fund
ongoing overhead costs for approximately 12 months, beyond which
further funding will be required.
The Group has a reasonable expectation that it can raise the
required additional funds based on a history of raising funds.
However, there are currently no binding agreements in place.
It is possible that rather than extend the term or grant a
production share, the Group would wish to refinance the Valkor loan
by May 2022 and that additional capital expenditure beyond that
committed at the date of this report will be necessary prior to
April 2023 to maximise the opportunities presented by, in
particular, Greenfield. Any such refinance or additional
expenditure would be subject to funding, in whole or in part, via
additional debt or equity or a combination of both.
The Directors note that because of both the lingering effects of
COVID-19 and the war in Ukraine there remains considerable
uncertainty concerning the global economy and oil prices continue
to be volatile, albeit reaching higher levels of late, which may
have implications in respect of additional funding, either for the
Group's day-to-day operations or additional capital expenditure.
These conditions 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.
There are currently no new or revised standards, amendments and
interpretations to existing standards that are not effective for
the financial year ended 30 September 2021 and have not been
adopted early, which, when effective, might have an impact upon the
Group's financial statements.
1.3 Basis of consolidation
The Group accounts consolidate the accounts of the parent
company, TomCo Energy plc, and all of its subsidiary undertakings
drawn up to 30 September 2021. All intra-group transactions,
balances, income and expenses are eliminated on consolidation.
The acquisition of subsidiaries where the acquisition represents
the purchase of a business is accounted for on the purchase basis.
A subsidiary is consolidated where the Company has 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 of 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.
Acquisitions of subsidiaries where the IFRS 3 definition of a
business combination are not met are accounted for as the purchase
of relevant assets less liabilities at cost. Where the acquisition
is a stepped acquisition, cost represents the accumulated cost,
under the equity method, of the Group's initial interest in the
subsidiary plus cost of equity consideration measured in accordance
with IFRS 2. Identifiable assets acquired are stated at their
respective relative fair values.
Entities over which the Group had joint control were classified
as joint ventures and were accounted for using the equity method of
accounting. On initial recognition the investment in the joint
venture was recognised at cost. The carrying amount was increased
or decreased to recognise the Group's share of the profit or loss
of the joint venture after the date of acquisition. During the
year, the Group acquired control of the remaining unowned interest
in it's joint venture. The accumulated cost on the equity basis to
the date of acquisition forms part of the total acquisition cost
referred to in the preceding paragraph.
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. Following a review of
the Group's activities, these assets have been impaired in full as
at 30 September 2021.
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.
Development assets
Greenfield has incurred expenditure on researching and
developing the design and operation of a pilot plant and processes
for oil sands extraction that is not of a scale economically
feasible for commercial production. Development expenditure at
acquisition is measured at cost. Development expenditure incurred
following the acquisition of Greenfield that meets the requirements
of IAS 38 for recognition as intangible assets are capitalised. All
other expenditure is expensed. No amortisation is charged on such
assets until commercial exploitation of the processes
commences.
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 a
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, namely 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, either from successful development or by
sale.
The Directors have concluded that the above facts and
circumstances applied in respect of its oil shale exploration and
evaluation activities, because at present there is no programme in
place or committed budget to continue exploration in this area.
Having conducted a review, they have therefore determined to impair
tangible and intangible assets employed in those activities in
full. Impairment losses are recognised in the income statement and
separately disclosed.
Research and development activities
The directors do not consider any impairment indicators exist
with regard to the Group's research and development activities with
regard to oil sands extraction. If any such facts or circumstances
were noted, the Group would perform an impairment test in
accordance with the provisions of IAS 36.
Technology licences
The carrying amount of the Group's other intangible asset, its
patents and technology licences, 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 that 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 and joint ventures
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 Leases
The Group is party as lessee only to low value or short-term
leases. Rentals payable under such 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 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.
1.14 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.
1.15 Trade payables
Trade payables are recognised at amortised cost. All of the
trade payables are non-interest bearing.
1.16 Share capital
Ordinary shares are classified as equity. Shares issued in the
period are recognised at the fair value of the consideration
received.
1.17 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.
1.18 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 set out in note 18
.
1.19 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.
In respect of equity-settled arrangements within the scope of
IFRS 2 representing contingent consideration for the acquisition of
assets, the value of the equity instruments is presumed to be
equivalent to the fair value of the assets acquired. In the case of
assets acquired on the acquisition of Greenfield, cost is deemed to
be the best estimate of fair value.
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 September 2021 2021 2021 2021 2020 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
External revenue - - - - - -
Inter-segment sales 88 (88) - 94 (94) -
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Cost of sales - - - - - - - -
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Gross profit/(loss) - 88 (88) - - 94 (94) -
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Impairment (8,679) - - (8,679) - - -
Administrative expenses (414) (1,202) 88 (1,528) (241) (884) 94 (1,031)
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Operating loss (9,093) (1,114) - (10,207) (241) (790) - (1,031)
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Financial income - - - - - 1 - 1
Share of loss of joint
venture (84) - - (84) (40) - - (40)
-------------------------------------- --------- --------- -------------- --------- --------- --------------
Loss before taxation (9,177) (1,114) - (10,291) (281) (789) - (1,070)
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Non-Current assets:
- Exploration and development
assets 3,947 - - 3,947 8,819 - - 8,819
- Other 25 - - 25 26 - - 26
- Property, plant and
equipment - - - - 411 - - 411
- Patents - - - - 15 - - 15
* Investments in joint venture - - - - 1,224 - - 1,224
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
3,972 - - 3,972 10,495 - - 10,495
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Current assets:
Trade and other receivables - 104 - 104 - 398 (280) 118
Other financial assets 371 - - 371
Cash and cash equivalents 15 711 - 726 4 330 334
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Total assets 4,358 815 - 5,173 10,499 728 (280) 10,947
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Current liabilities:
Trade and other payables (498) (310) - (808) (309) (186) 280 (215)
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
Total liabilities (498) (310) - (808) (309) (186) 280 (215)
-------------------------------------- --------- --------- -------------- ---------- --------- --------- -------------- ---------
3. Impairment losses
Impairment losses recognised during the year were as
follows:
2021 2020
GBP'000 GBP'000
Oil shale exploration property, plant and equipment 386 -
Oil shale exploration intangible assets 8,293
------------------------------------------------------ --------- ---------
Total impairment losses for the financial year 8,679 -
------------------------------------------------------ --------- ---------
The impairments arose as a result of the reassessment by the
Directors of the Group's future strategy and intentions for the
commitment of future resources towards oil shale exploration and
extraction activities and the absence of a committed budget or
programme for such work.
4. Finance costs
2021 2020
GBP'000 GBP'000
--------------------------------------------- ---------- ---------
Interest income - (1)
Total finance costs for the financial year - (1)
--------------------------------------------- ---------- ---------
5. Operating loss
The following items have been charged in arriving
at operating loss: 2021 2020
GBP'000 GBP'000
---------------------------------------------------- --------- ---------
Auditors' remuneration: audit services 43 33
Rentals payable in respect of land and buildings 10 52
6. Taxation
There is no tax charge in the year due to the loss for the
year.
Factors affecting the tax charge: 2021 2020
GBP'000 GBP'000
-------------------------------------------------- --------- ---------
Loss on ordinary activities before tax (10,291) (1,070)
-------------------------------------------------- --------- ---------
Loss on ordinary activities at standard rate of
corporation tax
in the UK of 19% (2020: 19%) (1,955) (203)
Effects of:
Group share of joint venture losses 16 7
Losses carried forward 1,939 196
-------------------------------------------------- --------- ---------
Tax charge for the financial year - -
-------------------------------------------------- --------- ---------
7. Employees and Directors
The Group has one employee (2020-none) 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 Severance payment Salaries Severance expense
pay expense pay
2021 2021 2021 2020 2020 2020
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------------ ------------- --------------- ------------ ------------- -------------
J Potter 139 - 74 91 - 20
M Groat 38 - 28 20 - 5
R Horsman (appointed
1 November 2020;
resigned 24 January
2022) 30 - 10 - - --
L Castro (appointed
19 April 2021) 19 - 20 -- -
R Kirchner (appointed
1 November 2020;
resigned 4 June
2021) 15 30 - - -
S West - - - 27 - 4
A Benger - - - 20 - 5
A Jones - - - 100 150 (35)
Total remuneration 241 30 132 258 150 (1)
------------------------ ------------ ------------- --------------- ------------ ------------- -------------
Unvested share options granted to Mr Jones were outstanding on
his resignation, and this has resulted in a credit to profit and
loss in 2020 in respect of charges for share-based payment
previously recognised in respect of those options that have been
forfeited.
8. 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 2021 GBP'000 Weighted Pence
average number
of shares
----------------------------------------------------- ---------- ----------------- -----------
Basic and Diluted EPS
Losses attributable to ordinary shareholders
on continuing operations (10,017) 1,323,206,884 (0.76)
Total losses attributable to ordinary shareholders (10,017) 1,323,206,884 (0.76)
Financial year ended 30 September 2020
----------------------------------------------------- ---------- ----------------- -----------
Basic and Diluted EPS
Losses attributable to ordinary shareholders
on continuing operations (1,028) 339,346,801 (0.30)
----------------------------------------------------- ---------- ----------------- -----------
Total losses attributable to ordinary shareholders (1,028) 339,346,801 (0.30)
----------------------------------------------------- ---------- ----------------- -----------
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.
9. Intangible assets
Oil & Gas Oil & Gas Oil & Gas Oil & Gas
Exploration and Development Patents and
evaluation expenditure expenditure patent applications Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ------------------------- -------------- ------------------------ -----------
Cost
At 1 October 2019 9,200 1,314 34 10,548
------------------------- -------------- ------------------------ -----------
Additions 29 - 29
Translation differences (410) - (1) (411)
------------------------- -------------- ------------------------ -----------
At 30 September 2020 8,819 1,314 33 10,166
------------------------- -------------- ------------------------ -----------
Additions 2 - - 2
Acquisition of subsidiary - 3,875 - 3,875
Translation differences (534) 72 (3) (465)
------------------------- -------------- ------------------------ -----------
At 30 September 2021 8,287 5,261 30 13,578
------------------------- -------------- ------------------------ -----------
Amortisation/Impairment
------------------------- -------------- ------------------------ -----------
At 1 October 2019 - 1,314 12 1,326
Amortisation - - 6 6
------------------------- -------------- ------------------------ -----------
At 30 September 2020 - 1,314 18 1,332
------------------------- -------------- ------------------------ -----------
Amortisation - - 6 6
Impairment 8,287 - 6 8,293
------------------------- -------------- ------------------------ -----------
At 30 September 2021 8,287 1,314 30 9,631
------------------------- -------------- ------------------------ -----------
Net book value
At 30 September 2021 - 3,947 - 3,947
---------------------------- ------------------------- -------------- ------------------------ -----------
At 30 September 2020 8,819 - 15 8,834
---------------------------- ------------------------- -------------- ------------------------ -----------
At 30 September 2019 9,200 - 22 9,222
---------------------------- ------------------------- -------------- ------------------------ -----------
The assets acquired with Greenfield are described at note 1.8 .
The exploration and development licences comprise nine Utah oil
shale leases covering approximately 15,488 acres. These assets have
been impaired in full on 30 September 2021 for the reasons given in
note 1.9 .The impairment value represents the estimated value in
use of the assets concerned, which is estimated at nil. The
discount rate is not relevant for the purposes of computing the
quantum of the impairment loss. The impairment relates to assets in
the US geographical reporting segment.
10. Property, plant and equipment
Exploration and evaluation equipment
Total
GBP'000
---------------------------- --------------------------------------
Cost at 30 September 2019 431
---------------------------- --------------------------------------
Translation differences (20)
---------------------------- --------------------------------------
At 30 September 2020 411
---------------------------- --------------------------------------
Translation differences (25)
---------------------------- --------------------------------------
At 30 September 2021 386
---------------------------- --------------------------------------
Impairment
---------------------------- --------------------------------------
Charge for year 386
---------------------------- --------------------------------------
At 30 September 2021 386
---------------------------- --------------------------------------
Net book value
At 30 September 2021 -
---------------------------- --------------------------------------
At 30 September 2020 411
---------------------------- --------------------------------------
At 30 September 2019 431
---------------------------- --------------------------------------
These assets have been impaired in full at 30 September 2021 for
the reasons given in note 1.9 .The impairment value represents the
estimated value in use of the assets concerned, which is estimated
at nil. The discount rate is not relevant for the purposes of
computing the quantum of the impairment loss. The impairment
relates to assets in the US geographical reporting segment.
11. Investment in joint venture
Carrying value under equity method GBP'000
----------------------------------------- ---------
At 1 October 2019 -
Cost 1,279
Share of loss of joint venture (40)
Other comprehensive income-translation
differences (15)
------------------------------------------- ---------
At 30 September 2020 1,224
------------------------------------------- ---------
Share of loss of joint venture (84)
Other comprehensive income-translation
differences (77)
------------------------------------------- ---------
1,063
Acquisition of controlling interest (1,063)
------------------------------------------- ---------
At 30 September 2021 -
----------------------------------------- ---------
At 30 September 2020 1,224
------------------------------------------- ---------
At 30 September 2019 -
------------------------------------------- ---------
During the year, the Group acquired the remaining 50% interest
in Greenfield not previously owned by it. The acquisition did not
satisfy the criteria for a business combination under IFRS 3, such
that the acquisition has been accounted for as an asset purchase.
The consideration for the acquisition is the issue to Valkor LLC,
the Group's former joint venture partner, of 592.8 million new
ordinary shares in TomCo. The issue of the shares is contingent
upon the Company receiving funds from, or drawing down on, a loan
or credit facility granted in connection with the proposed
construction of an oil sands processing facility by August
2024.
Details of the assets and liabilities acquired by the Group on
the acquisition of control of Greenfield are as follows:
Non-current assets GBP'000
Development asset 3,875
Intangible assets 3,875
---------------------------------------- ---------
Current assets
Receivables at amortised cost 6
Other financial assets 146
Bank balances and cash 124
---------------------------------------- ---------
276
Total assets 4,151
---------------------------------------- ---------
Trade and other payables (523)
Loans (1,502)
---------------------------------------- ---------
Net assets 2,126
---------------------------------------- ---------
Cost under equity method at date
of acquisition 1,063
Consideration for acquisition of
remaining interest-contingent equity
consideration 1,063
---------------------------------------- ---------
There is no quoted market price for the Group's investment in
Greenfield. The fair value of the net assets acquired was deemed to
be their cost. The value of the contingent consideration is deemed
to be the fair value of the net assets acquired, in accordance with
IFRS 2.
Summarised financial information for Greenfield at and for the
period from 1 October 2020 to 25 August 2021 (comparative
information is given for the period from May 2020 (its
incorporation) to 30 September 2020), when it ceased to be a joint
venture and became a subsidiary, is as follows:
2021 2020
GBP'000 GBP'000
Revenue - -
Loss from continuing operations (168) (80)
------------------------------------- --------- ---------
Other comprehensive income (154) (30)
------------------------------------- --------- ---------
Total comprehensive loss (322) (110)
------------------------------------- --------- ---------
Group share of total comprehensive
loss (50%) (161) (55)
------------------------------------- --------- ---------
Non-current assets 3,875 2,091
Current assets 276 507
------------------------------------- --------- ---------
Total assets 4,151 2,598
------------------------------------- --------- ---------
Trade and other payables (523) (150)
Loans (1502) -
------------------------------------- --------- ---------
Net assets 2,126 2,448
------------------------------------- --------- ---------
Group share of net assets (50%) 1,063 1,224
12. Trade and other receivables
Group Group
2021 2020
Current GBP'000 GBP'000
--------------------------------- --------- ---------
Other receivables 51 64
Prepayments and accrued income 53 54
--------------------------------- --------- ---------
104 118
--------------------------------- --------- ---------
Non-current
Other receivables 25 26
Total Receivables 129 144
--------------------------------- --------- ---------
As at 30 September 2021, there were no receivables considered
past due (2020: 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 14.
All current receivable amounts are due within six months.
13. Other financial assets
Group Group
2021 2020
Current GBP'000 GBP'000
--------- --------- ---------
Deposit 371 -
Total 371 -
--------- --------- ---------
As at 30 September 2021, Greenfield had paid a deposit of
US$500,000 against a possible acquisition of a 10% interest in Tar
Sands Holdings II LLC, a Utah limited liability company for US$2
million, The sum paid is deductible against the final
consideration, which was paid after the end of the financial year.
In the Directors' opinion, the fair value of the deposit was
equivalent to its cost.
14. Cash and cash equivalents
Group Group
2021 2020
GBP'000 GBP'000
--------------------------- --------- ---------
Cash at bank and in hand 726 334
--------------------------- --------- ---------
The Group earns 0.05% (2020: 0.05%) interest on its cash
deposits, consequently the Group's exposure to interest rate
volatility is not considered material.
15. Trade and other payables
Group Group
2021 2020
Current GBP'000 GBP'000
----------------- ----------- -----------
Trade payables 160 28
Other payables 395 30
Accruals 253 157
----------------- ----------- -----------
808 215
----------------- ----------- -----------
All current amounts are payable within six months and the
Directors consider that the carrying values adequately represent
the fair value of all payables.
16. Deferred tax
Unrecognised losses
The Group has tax losses in respect of excess management
expenses of approximately GBP12.7 million (2020: GBP10.8 million)
available for offset against future Company income. This gives rise
to a potential deferred tax asset at the reporting date of GBP2.9
million (2020: GBP2.0 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.
In addition, subsidiary entities have accumulated losses of
approximately GBP9 million for which no deferred tax asset is
recorded given the uncertainty of future profits.
17. Share capital
Number of shares 2020
in issue GBP
------------------------------------------------- --------------------------------- ------
Issued and fully paid at 1 October 2019 - 133,451,543 -
shares of no par value
December 2019 - placing of new ordinary shares 142,307,692 -
(note18)
July 2020 - placing of new ordinary shares 375,000,000 -
(note 18)
July 2020 - exercise of warrants (notes 18 22,875,000 -
and 19)
------------------------------------------------- --------------------------------- ------
At 30 September 2020 673,634,235 -
November 2020-placing of new ordinary shares 777,777,777 -
(note 18)
------------------------------------------------- --------------------------------- ------
At 30 September 2021 1,451,412,012
------------------------------------------------- --------------------------------- ------
In July 2020 the Company issued 375 million shares and 187.5
million warrants at a price of 0.4pence per share
There are 592.8 million contingent shares issuable (note
11).
18. Share premium
2021 2020
GBP'000 GBP'000
-------------------------------------------------- --------- ---------
At 1 October 29,222 28,247
December 2019 - placing of new shares at 0.65
pence per share, net of costs - 864
July 2020 - placing of new shares at 0.4 pence,
net of costs - 1,379
July 2020 - exercise of warrants (note 19) - 110
November 2020 - subscription of new shares at 3,226 -
0.45 pence per share, net of costs
Issue of warrants to placees (note 19) (1,306) (1,223)
Issue of warrants as part of placing fees (note
19) - (155)
At 30 September 31,142 29,222
-------------------------------------------------- --------- ---------
19. Warrants
At 30 September 2021, the following share warrants were
outstanding in respect of ordinary shares:
2021 2021 2020 2020
Weighted
average
Weighted average exercise
exercise price price
number Pence number Pence
Outstanding at 1 October 269,791,515 1.0 967,429 4.4
Expired during the year (771,429) (3.5) (196,000) (8.2)
Granted during the year 435,555,554 0.85 291,895,086 1.0
Exercised during the year - - (22,875,000) 0.5
Outstanding at 30 September 704,575,640 0.88 269,791,515 1.0
------------------------------ ------------- ------------------ -------------- -----------
Exercisable at 30 September 704,575,640 0.88 269,791,515 1.0
------------------------------ ------------- ------------------ -------------- -----------
The inputs into the Black-Scholes model for calculating the
estimated fair value of warrants granted, at their grant date, were
as follows:
2021 2020
---------------------------------- ---------- -----------
Share price (pence) 0.45 0.64-0.65
Exercise price (pence) 0.45-0.9 0.4-1.5
Expected volatility 148% 171%
Risk-free rate 1% 1%
Expected period before exercise
(years) 2 2
---------------------------------- ---------- -----------
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.
Issue of Warrants
3,610,520 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 warrants issued during 2019, warrants
over 2,839,091 ordinary shares were exercised in 2019 and the
remaining 771,429 expired in 2021.
291,895,086 warrants were issued during the year ended 30
September 2020 at exercise prices ranging from 0.4p per share to
5.25p per share. 22,875,000 of those warrants were exercised during
that year at exercise prices ranging from 0.4p per share to 0.8p
per share.
435,555,554 warrants were issued during the year ended 30
September 2021 at exercise prices of between 0.45p and 0.9p per
share.
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 2021 had a weighted average exercise price of 0.88p
(2020: 1p) and a weighted average remaining contractual life of
0.95 years (2020: 1.59 years).
20. Non-controlling interests
Details of non-controlling interests are as follows:
Proportion
of ownership
interests and Total comprehensive
voting rights loss allocated Accumulated
held by non-controlling to non-controlling non-controlling
Name of subsidiary interests interest interest
2021 2020 2021 2020 2021 2020
% % GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ------------- ------------- ----------- ---------- ---------- ----------
TurboShale
Inc. 20 20 (270) (36) (443) (173)
Summarised financial information for TurboShale Inc is as
follows:
2021 2020
GBP'000 GBP'000
Revenue - -
Loss from continuing operations (185) (209)
Impairment losses (1,185) -
------------------------------------- --------- ---------
Other comprehensive income 17 31
------------------------------------- --------- ---------
Total comprehensive loss (1,353) (178)
------------------------------------- --------- ---------
Group share of total comprehensive
loss (80%) (1,083) (142)
------------------------------------- --------- ---------
Non-current assets - 1,266
Current assets-bank balances
and cash 2 4
------------------------------------- --------- ---------
Total assets 2 1,270
------------------------------------- --------- ---------
Trade and other payables (2,215) (2,130)
------------------------------------- --------- ---------
Net liabilities (2,213) (860)
21. Share-based payments
The Company implemented a share option scheme for its Directors
during the year ended 30 September 2018. Further issues of options
took place in June 2020 and June 2021. 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 six months and 1
year. If the options remain unexercised after a period of ten years
from the date of grant (5 years in the case of options granted in
June 2020) 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:
2021 2021 2020 2020
Weighted average Weighted average
exercise price exercise price
number Pence number Pence
Outstanding at 1 October 17,365,078 1.50 5,142,855 5.25
Granted during the
year 90,500,000 0.54 14,000,000 0.60
Lapsed during the
year (2,000,000) 0.60 (1,777,777) 5.25
Outstanding at 30
September 105,865,078 0.70 17,365,078 1.50
--------------------------- ------------- ------------------ ------------- ------------------
Exercisable at 30
September 15,365,078 2,539,682
--------------------------- ------------- ------------------ ------------- ------------------
Details of the options held by each Director are provided in the
Directors' Report.
The inputs into the Black-Scholes model for calculating the
estimated fair value of options granted, at their grant date, were
as follows:
2021 2020
---------------------------------- ---------- ------
Share price (pence) 0.54 0.6
Exercise price (pence) 0.54 0.6
Expected volatility 127-142% 150%
Risk-free rate 1% 1%
Expected period before exercise
(years) 1.5 1.5
---------------------------------- ---------- ------
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 0.35 pence (2020: 0.35 pence) at the date of grant.
The weighted average unexpired life of the options at 30 September
2021 was 8.95 years (2020: 5.97 years).
The charge (2020: credit) recognised in profit or loss for 2021
was GBP135,000 (2020: GBP1,000).
Where equity instruments to be issued as consideration for the
purchase of a group of assets that does not constitute a business
are within the scope of IFRS 2, the value of the equity instruments
is determined by reference to the fair value of the net assets
acquired. This is deemed to be cost at the date of acquisition.
22. Financial instruments
The Group's financial instruments, other than its investments,
comprise cash and items arising directly from its operations 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, result in a gain or loss of approximately GBP6,000 (2020:
GBP1,000).
Interest rate risk
The Group and Company manage the interest rate risk associated
with the Group's 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 2021.
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
2021 2020
Bank balances GBP'000 GBP'000
------------------ -------------- ----------
British Pounds 667 319
US Dollars 59 15
------------------ -------------- ----------
Total 726 334
------------------ -------------- ----------
All financial liabilities of the Group mature in less than 12
months: details of the analysis of such liabilities is provided in
Note 14.
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's 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.
There has been no significant change in credit risk since the
recognition of applicable assets and therefore no credit losses
have been recognised on financial assets.
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.
23. 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 2021 GBP'000 GBP'000 GBP'000 GBP'000
------------ ----------- ---------------- ----------------------- --------------
Loans - - - -
Total - - - -
------------ ----------- ---------------- ----------------------- --------------
Group 2020
------------ ----------- ---------------- ----------------------- --------------
Loans - - - -
Total - - - -
------------ ----------- ---------------- ----------------------- --------------
24. Related party disclosures
The Directors are Key Management and information in respect of
key management is provided in Note 6.
25. Ultimate controlling party
As at 30 September 2021 and 30 September 2020 there was no
ultimate controlling party.
26. Operating lease commitments
At 30 September 2021, the Group had no operating lease
commitments (2020: GBPnil).
27. Subsequent events
i. In November 2021, the Group completed the acquisition of a
10% interest in Tar Sands Holdings II LLC at a cost of US$2
million, less amounts paid to 30 September 2021 of US$500,000. The
completion of the purchase was financed by a loan of US$1.5 million
from Valkor Oil & Gas LLC, its former joint venture partner in
Greenfield. The terms of this loan are summarised in the directors'
report.
ii. A newly formed subsidiary of Greenfield entered into an oil
and mineral lease with Tar Sands II Holdings LLC over approximately
320 acres of land in Uintah County Utah USA for a period of 10
years from 15 November 2021. The lease gives the Group exclusive
rights to explore, drill and mine for, and extract, store and
remove oil, gas, hydrocarbons and associated substances on the
site. A royalty is payable equal to 12% of the net return per
barrel of product.
iii. In November 2021, warrants in respect of 46.6 million new
ordinary shares were exercised for a total consideration of
GBP210,000.
iv. In January 2022, the Group raised GBP1.25 million before
costs in a placing of 250 million new ordinary shares at 0.5p per
share.
v. In January 2022, on retirement from the Board, Richard
Horsman waived 7.5 million options on receipt of a payment of
GBP30,000 from the Company.
vi. In January 2022, the Group entered into a services agreement
with Heavy Sweet Oil LLC to assist it with permitting and
government relations in respect of their planned drilling programme
adjacent to the D Tract of the Tar Sands Holdings II LLC ("TSHII")
site in the Uinta Basin, Utah, United States. Heavy Sweet Oil
agreed to pay TomCo US$10,000 per month for its services, with the
agreement backdated to start from 1 January 2022.
vii. In March 2022, Greenfield entered into a Memorandum of
Understanding ("MoU") with Vivakor Inc. ("Vivakor") covering, inter
alia, the proposed development by Vivakor of an enhanced oil sands
processing plant on the Tar Sands Holdings II LLC ("TSHII") site
located in the Uinta Basin, Utah, United States and the provision
of professional services by Greenfield. In addition, Vivakor
entered into a lease with TSHII covering approximately three acres
of the TSHII site to accommodate its planned operations, which
includes the future supply of oil sands by TSHII.
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END
FR UAAARUNUOOUR
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April 01, 2022 02:01 ET (06:01 GMT)
Tomco Energy (LSE:TOM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Tomco Energy (LSE:TOM)
Historical Stock Chart
From Apr 2023 to Apr 2024
