TIDMTOM
RNS Number : 6694V
TomCo Energy PLC
06 April 2023
6 April 2023
TOMCO ENERGY PLC
("TomCo" or the "Company" or, with its subsidiaries, the
"Group")
Audited results for the year ended 30 September 2022
and Lifting of Suspension in Trading
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 2022.
The 2022 Annual Report and Accounts (the "2022 Annual Report")
have now been published and are available on the Company's website
at www.tomcoenergy.com .
As a result of the publication of the Company's 2022 Annual
Report, trading in the Company's ordinary shares on AIM will be
restored with effect from 1.30 p.m. today.
Enquiries :
TomCo Energy plc
Malcolm Groat (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Matthew Chandler +44 (0)20 7409 3494
Novum Securities Limited (Broker)
Jon Belliss / Colin Rowbury +44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Florence Chandler +44 (0)20 3934 6630
For further information, please visit www.tomcoenergy.com .
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended by virtue of the Market Abuse
(Amendment) (EU Exit) Regulations 2019.
CHAIRMAN'S STATEMENT
I am pleased to be delivering my third Chairman's statement to
the shareholders of TomCo Energy plc, together with the Annual
Report and Financial Statements for the year ended 30 September
2022.
Operational Review
Greenfield Energy LLC
The Company's primary focus during the year remained on
Greenfield Energy LLC ("Greenfield") and its plans to pursue the
construction of two oil sands separation plants capable of
processing at least 6,000 tonnes per day of oil sands in Utah, USA,
at the earliest opportunity, as well as potentially exploiting
other opportunities available to it.
During the financial year to 30 September 2022, the Company
sought to support Greenfield in securing funding for delivery of
its abovementioned strategy. This essentially requires: (i) raising
the $16.25m required to exercise an exclusive option to purchase
the remaining 90% of Tar Sands Holdings II ("TSHII"), which owns,
760 acres with a Large Mining Permit in Utah, and (ii) raising the
requisite additional sums to construct up to two commercial scale
oil sands separation/processing plants on such permitted area,
whilst also commencing drilling of wells into the deeper oil sands
that are too deep to mine for the implementation of oil recovery
processes. Simultaneously, the Company has also been strengthening
its relationship with Valkor Oil & Gas LLC ("Valkor") and other
technical parties, working on the specification for the proposed
oil sands processing plants.
Post the financial year end, the Company has continued to work
on securing the requisite funding package for Greenfield's
development, with one scenario involving the potential disposal of
a majority stake in Greenfield to a partner(s) in return for, inter
alia, certain upfront cash consideration, a continuing equity
participation for TomCo in Greenfield without the requirement for
further capital contributions from TomCo and the provision of a
sizeable funding package to Greenfield. Discussions are ongoing and
the Board remains confident that suitable funding arrangements can
be successfully concluded during 2023 despite the current
challenging macroeconomic environment. Following agreement with the
vendor of TSHII, the deadline for Greenfield to exercise its option
over the remaining 90% stake has recently been extended to 30 April
2023.
TurboShale RF Technology
Our focus has been, and remains, on Greenfield. The potential
exploitation of the Company's TurboShale and Oil Mining Company
assets, now fully impaired from an accounting perspective, will be
revisited and reviewed when appropriate in due course.
Corporate
In late January 2022, the Company raised GBP1.25 million gross
via a placing involving the issue of 250 million new ordinary
shares at a price of 0.50 pence per share, with the net proceeds
being utilised to satisfy general working capital requirements, the
costs associated with drilling three exploration wells on the TSHII
site and to progress Greenfield's funding plans.
On 1 September 2022, the Company obtained an unsecured facility
of up to GBP0.75 million via a convertible loan instrument and
associated subscription and put option entered into with certain
subscribers introduced by the Company's broker. Such facility was
subsequently draw down and converted in full and the proceeds
utilised to repay, in aggregate, $0.5 million of the principal
amount of the unsecured $1.5 million loan previously advanced by
Valkor to Greenfield (the "Valkor Loan") in connection with its
purchase of an initial 10% Membership Interest in TSHII, and for
general corporate purposes.
Following the financial year end, on 30 November 2022, the
Company raised a further GBP0.925 million gross through the placing
of 264,285,714 new ordinary shares at a price of 0.35 pence per
share to provide additional funds to cover the Company's
expenditure as it progresses its plans for Greenfield. The terms of
the Valkor Loan were also varied to extend the repayment date for
the remaining $1 million principal amount to the completion date of
a suitable funding transaction for Greenfield that provides
sufficient funds to TomCo to, inter alia, enable it to affect
repayment. As at the date of this statement the principal amount
outstanding in respect of the Valkor Loan was $750k.
On 30 March 2023, the Company secured a new four tranche
committed unsecured convertible loan facility of up to GBP1 million
to provide additional working capital for the group whilst seeking
to finalise funding arrangements for Greenfield.
In late January 2022, the Company was pleased to announce the
appointment of Zac Phillips as a Non-Executive Director following
Richard Horsman stepping down and there have been no further
changes to the Board since that time. The Company's three
Non-Executive Directors (Louis Castro, Zac Phillips and I) visited
Utah in May 2022 in order to deepen our understanding of
Greenfield's development plans project and to meet the key parties,
including a potential sand off-take partner, that John Potter, our
CEO, has assembled to bring the project to fruition. Based on my
personal experience of serving on a number of AIM quoted companies'
boards, I truly believe that the Company's current Board comprises
a particularly knowledgeable and effective team. I am extremely
grateful to all directors for their excellent contributions and
particularly to John Potter for his unstinting efforts to realise
the Company's clear strategic objectives.
Outlook and Summary
The Company acknowledges and greatly appreciates the ongoing
support and patience of our shareholders as we seek to progress the
Greenfield development project as well as exploit TomCo's other
significant potential despite the current global economic
headwinds.
Malcolm Groat
Chairman
6 April 2023
DIRECTORS' REPORT
The Directors submit their report and the financial statements
of the Group for the year ended 30 September 2022.
PRINCIPAL ACTIVITY
The principal activity of the Group is that of seeking to
develop, through its wholly owned subsidiary Greenfield Energy LLC,
the oil sands resources contained in the Tar Sands Holdings II LLC
site via the exploitation of separation technology to achieve
sustained future production.
RISK ASSESSMENT
The Group's oil and gas activities are subject to a range of
financial and operational risks which can significantly impact on
its performance, with the key risks for the year ended 30 September
2022 set out below.
Operational risk
During the financial year, the Group further developed, with its
engineering partners, the oil sands separation process
incorporating an (identified but still to be licenced) reagent
which has served to simplify the separation process. Initial site
preparation has taken place involving a clearance plan in respect
of the historic facility on the site, along with detailed site
surveys to establish plans for a new access road for the first
processing plant to be constructed on the site. Suitable off-take
partners have been identified for both the oil and sand products
intended to be produced by the separation process, with initial
discussions undertaken to confirm likely levels of demand and
pricing terms.
Discussions with potential funding partners for the requisite
plant construction and supporting development costs are now at an
advanced stage, subject to the Group's due diligence being
satisfactorily completed. Executing on the preferred funding
package will likely require the prior approval of the Company's
shareholders, which, if forthcoming, will then enable the purchase
of the 90% balance of Tar Sands Holdings II LLC to take place along
with the instigation of the Detailed Engineering work for the first
separation plant with the capacity to process 6,000 tonnes per day
of oil sands. The Detailed Engineering phase is expected to take
three months with construction of the first plant to take
approximately 12-15 months thereafter before initial operations can
commence. There can be no certainty that such preferred funding
arrangements can be successfully concluded or as to the terms and
structure of any such financing.
The Group continues to operate with a small team, which it is
highly reliant on. Information is openly shared within the team to
ensure that reliance is not placed on individuals.
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 of the Group's other
exploration assets and/or technology and to meet its day-to-day
capital commitments and overheads. Cash forecasts identifying the
liquidity requirements of the Group are produced frequently and are
reviewed regularly by management and the Board. This strategy will
continually be reviewed in light of existing project developments
and new project opportunities as they arise. For further
information regarding the Group's cash resources and future funding
requirements, please refer to the 'Going Concern' section
below.
Currency risk
Due to the limited income and expenses denominated in foreign
currencies, it was not considered cost effective to manage
transactional currency exposure on an active basis. 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
While COVID-19 continued to have an adverse impact on the global
economy to some extent in 2022, oil prices were, absent the effects
of the war in Ukraine, projected to continue to recover during 2022
- 2023 and beyond. The Group's continued activity with respect to
Greenfield is not expected to be significantly affected by COVID-19
going forwards.
Financial instruments
It was not considered an appropriate policy for the Group to
enter into any hedging activities or trade in any financial
instruments in 2022. Further information can be found in Note
23.
RESULTS AND DIVIDS
The statement of comprehensive income is set out on page 23. The
Directors do not propose the payment of a dividend (2021:
GBPnil).
REVIEW OF KEY EVENTS DURING THE YEAR
TurboShale
During the year, the Group purchased the remaining interest it
did not already own, for $15,000, therefore now owns 100% of the
Company. There were no further developments in respect of our
TurboShale technology during the financial year with the TurboShale
and Oil Mining Company assets remaining fully impaired.
Greenfield Energy LLC
In October 2021, AC Oil LLC, a Utah incorporated company, was
established as a vehicle to develop the deeper, non-minable oil
sands on Tar Sands Holdings II's lands. An exploration permit was
secured in February 2022 to drill 3 exploration wells to recover
core and perform in hole surveys to collate detailed data on the
location and quality of the oil sand formation. The results of the
surveys were utilised to produce a potential drilling programme for
a steam injection process to recover the oil in the formations. A
permit application for an initial production well has been
submitted and we are awaiting its acceptance. On receipt of this
first permit, we are planning to submit up to a further 24
applications.
TSHII
On 16 November 2021, the Group announced that Greenfield had
exercised its option to acquire an initial 10% of the membership
rights and interests in TSHII (the "Membership Interests") for a
total cash consideration of $2 million, of which $500,000 was
satisfied by crediting the deposits paid previously. The balance of
the consideration payable was financed by way of an unsecured loan
from Valkor to Greenfield, full details of which are set out in the
Company's announcement of 16 November 2021. Following this
acquisition, Greenfield retains an exclusive option, at its sole
discretion, to acquire the remaining 90% of the Membership
Interests for certain additional cash consideration up to 30 April
2023.
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 Area"), for a nominal consideration and
annual rental of $320, together with a 12% net sales royalty per
barrel of conventional oil and gas produced and removed from the
Lease Area. 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 on and from the Lease Area.
Greenfield is engaged in advanced ongoing discussions regarding
possible funding solutions to potentially achieve the ultimate
acquisition of 100% of the Membership Interests.
TSHII Reserves Report
On 13 January 2022, the Group announced the findings of an
independent report commissioned from Netherland, Sewell &
Associates, Inc. ("NSAI") estimating the proved (1P), proved plus
probable (2P), and proved plus probable plus possible (3P) oil
reserves, associated marketable sand volumes, and future net
revenue, as of 31 December 2021 in respect of a 100 per cent.
interest in a potential commercial scale project situated on the
mining properties comprising the TSHII site.
NSAI estimated 1P oil reserves of 22.8 million barrels of oil
("bbls"), 2P oil reserves of 33.6 million bbls and 3P oil reserves
of 44.3 million bbls. NSAI further estimated associated volumes of
marketable sand at 22.8 million tonnes (1P), 41.2 million tonnes
(2P) and 59.8 million tonnes (3P). Total estimated undiscounted
future net revenues ranged from $942 million based on 1P reserves,
to approximately $2.5 billion based on 3P reserves in respect of a
gross 100% interest in TSHII. Estimated discounted future net
revenues attributable to TomCo's current 10 per cent. interest in
TSHII ranged from approximately $30.5 million based on 1P reserves,
to approximately $57.6 million based on 3P reserves.
Third Party Agreements in relation to the TSHII site
TSHII entered into a 10-year lease with a tenant starting from 1
March 2022, covering an existing refinery on the TSHII site that is
not required for Greenfield's future plans and was previously
scheduled to be demolished should Greenfield eventually acquire
100% of TSHII. The tenant intends to develop a 10,000 barrels of
oil per day refinery on the site and under the terms of the lease
has two years in which to do so without potentially forfeiting the
lease. The lease requires the tenant to pay TSHII $10,000 per month
by way of rent, together with a further payment of $3 for every
barrel of produced hydrocarbons.
Vivakor Inc ("Vivakor") entered into a renewed lease with TSHII
covering approximately three acres of land for a term of five
years, with an option to extend for a further five years, effective
from 9 March 2022, to, inter alia, accommodate Vivakor's storage
needs and planned plant operations at the TSHII site. Under the
lease agreement, TSHII shall supply Vivakor with such quantity of
oil sands as Vivakor determines each month, at a set minimum
saturation quality, with a maximum supply of 2,000 tons per day.
Vivakor will cover the cost of mining the oil sands and will pay
TSHII $3 per ton of oil sands processed by way of rental for the
Lease. Vivakor paid a $30,000 advance against future rental
payments on signing of the Lease.
Additionally, Greenfield entered into a Memorandum of
Understanding ("MoU") with Vivakor covering a proposed professional
services agreement for the potential supply of certain operating
and engineering services, including sand treatment and oil
upscaling to Vivakor. In exchange for its services in respect of
the enhancement of Vivakor's plant, Greenfield would be entitled to
receive 50% of the net revenues received by Vivakor for any
post-processed sand material from the plant sold through offtake
agreements procured by Greenfield. The MoU includes a binding
five-year exclusivity period for agreeing and entering into any
definitive agreements.
Greenfield also entered into an agreement with Heavy Sweet Oil
LLC ("Heavy Sweet Oil"), a US based oil and gas company, to assist
it with permitting and government relations in respect of their
planned drilling programme adjacent to the D Tract of the TSHII
site. Should Heavy Sweet Oil progress to producing oil it is
anticipated that some of the supporting infrastructure for their
operations would be located on the TSHII site. Such assistance is
being provided alongside Greenfield's own work to progress its
plans for the TSHII site. Heavy Sweet Oil are paying TomCo $10,000
per month for its services, with the agreement backdated to start
from 1 January 2022.
Financing
In late January 2022, the Company raised GBP1.25 million gross
via a placing involving the issue of 250 million new ordinary
shares at a price of 0.50 pence per share, with the net proceeds
being utilised to satisfy general working capital requirements, the
costs associated with drilling three exploration wells on the TSHII
site and to progress Greenfield's funding plans.
On 1 September 2022, the Company obtained an unsecured facility
of up to GBP0.75 million via a convertible loan instrument and
associated subscription and put option entered into with certain
subscribers introduced by the Company's broker. Such facility was
subsequently draw down and converted in full and the proceeds
utilised to repay, in aggregate, $0.5 million of the principal
amount of the unsecured $1.5 million loan previously advanced by
Valkor to Greenfield (the "Valkor Loan") in connection with its
abovementioned purchase of an initial 10% Membership Interest in
TSHII, and for general corporate purposes.
Following the financial year end, on 30 November 2022, the
Company raised a further GBP0.925 million gross through the placing
of 264,285,714 new ordinary shares at a price of 0.35 pence per
share to provide additional funds to cover the Company's
expenditure as it progresses its plans for Greenfield. The terms of
the Valkor Loan were also varied to extend the repayment date for
the remaining $1 million principal amount to the completion date of
a suitable funding transaction for Greenfield that provides
sufficient funds to TomCo to, inter alia, enable it to affect
repayment. As at the date of this report the principal amount
outstanding in respect of the Valkor Loan was $750k.
On 30 March 2023, the Company secured a new four tranche
committed unsecured convertible loan facility of up to GBP1 million
to provide additional working capital for the Group whilst seeking
to finalise funding arrangements for Greenfield.
Directors
The Directors who served on the Board during the year to 30
September 2022 and to date were as follows:
Malcolm Groat
John Potter
Louis Castro
Zac Phillips (appointed 24 January 2022)
Richard Horsman (resigned 24 January 2022)
Directors' interests in the ordinary shares of the Company,
including family interests, as at 30 September 2022 were as
follows:
30 September 2022 30 September 2021 (or date of
appointment)
Ordinary Share warrants Share options Ordinary Share warrants Share options
shares of shares
nil par value of nil par
value
-------------- --------------- ---------------- --------------- --------------- ---------------- ---------------
M. Groat 11,887 - 20,380,952 11,887 - 20,380,952
J. Potter 26,500 - 52,714,285 26,500 - 52,714,285
L. Castro - - 15,000,000 - - 15,000,000
Z. Phillips - - - - - -
R. Horsman
(resigned
24 January
2022) - - - - - 7,500,000
38,387 - 88,095,237 38,387 - 95,595,237
Details of the remuneration, share warrants and share options
can be found in the Remuneration Committee Report and Notes 0 ,
20and 22 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 30 March 2023, the Group had cash of approximately
GBP0.15million.
The Directors have prepared a cash flow forecast for the twelve
months to 30 April 2024.
As set out in the Chairman's Statement, discussions with
potential funders to finance the Group's plans including its
working capital requirements are at an advanced stage but have not
yet been concluded. The plans include the acquisition of the
remaining 90% of TSHII; funding for two oil sand processing plants
and associated infrastructure; drilling of wells into the deeper
oil sands that are too deep to mine for the implementation of oil
recovery processes; and repayment of the remainder of the Valkor
Loan. On 30 November 2022, the terms of the Valkor Loan, which is
unsecured, had been varied to extend the repayment date beyond 31
March 2023 for the remaining principal amount of the loan to the
completion date of a suitable funding transaction for Greenfield
that provides sufficient funds to enable the Company to affect such
repayment. Hence, the forecast does not include any funding which
would be received from a successful conclusion to these discussions
with the identified potential financiers, nor does it include
repayment of the Valkor Loan.
The forecast, which includes all commitments at the date of this
report, indicates that the cash currently held by the Group
together with the most recent convertible loan facility of up to
GBP1 million which was secured post the financial year end (as
detailed in Note 28 to the accounts - Subsequent Events), will be
sufficient to fund ongoing costs for at least the next 12 months,
assuming that no revenue is earned by the Group during that period,
beyond which further funding will be required.
Accordingly, given the Group's current cash balance, the
convertible loan facility referred to above, and, based on a
positive history of raising funds, and the fact that the Valkor
loan is only payable on completion of a suitable funding
transaction that provides sufficient funds to complete the
Greenfield purchase and pay off the Valkor Loan, 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.
The Company engaged PKF Littlejohn LLP as its auditor following
the Company's last AGM and they have expressed their willingness to
continue in office and a resolution to re-appoint them will be
proposed at the Company's next annual general meeting.
By order of the Board
John Potter
CEO
6 April 2023
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 2022, 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 an oil sand separation process with the
planned potential future development of two commercial scale 6,000
tonnes of sand per day processing plants.
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 funding for the two planned 6,000
tonnes per day processing plants.
The Directors are in detailed discussions
with a potential funder concerning,
inter alia, securing funding for
the plants, along with the completion
of the purchase of the remaining
90% of the site for the plant and
an in-situ well program. Permitting
for the in-situ well program is still
on going and while the process to
be deployed is proven, its use into
Oil Sands is less common and this
has extended the permitting completion
timing.
------------------------ --------------------------------------------
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 current size of the Group and the
close day to day control exercised by the Executive Director.
However, the Board will continue to monitor the need for an
internal audit function. The Executive Director has established
appropriate reporting and control mechanisms to ensure the
effectiveness of the Group's control systems for the size of the
business and its activities. The Board obtains regular updates on
risks from the Executive Director, which allows it to monitor the
effectiveness of risk management and through its regular engagement
and review of reporting on areas such as the status of the
Company's projects, budgets, results and cash flow position of the
Company, it considers the effectiveness of controls on an ongoing
basis.
Principle Five - A Well-Functioning Board of Directors
The Board currently comprises the Chief Executive, John Potter
and three independent Non-Executive Directors, Malcolm Groat, Louis
Castro and Zac Phillips.
Biographies for each of the current Directors are set out on the
Company's website. Executive and Non-Executive Directors are
subject to re-election usually at the Company's Annual General
Meeting, at intervals of no more than three years.
The Board meets on a regular basis, typically at least once a
month.
The Board is responsible for formulating, reviewing and
approving the Group's strategy, budgets and corporate actions. As
such, the Company has established separate Audit and Remuneration
Committees.
The Audit Committee comprises Louis Castro (Chairman), Malcolm
Groat and Zac Phillips. The Audit Committee meets at least twice a
year to consider the integrity of the financial statements of the
Company, including its annual and interim accounts; the
effectiveness of the Company's internal controls and risk
management systems; auditor reports; and terms of appointment and
remuneration for the auditor.
The Company's Remuneration Committee comprises Louis Castro
(Chairman), Malcolm Groat and Zac Phillips. The Remuneration
Committee meets from time to time, but not less than once a year,
to review and determine, amongst other matters, the remuneration of
Executives on the Board and any share incentive plans of the
Company.
The QCA Code recommends that the Chairman must have adequate
separation from the day-to-day business to be able to make
independent decisions. Malcolm Groat is the Company's Non-Executive
Chairman and the Board believe that he has adequate separation from
the day-to-day business of the Company to be able to make such
independent decisions. As the Board is comprised of only four
members, one of whom is 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 2022 was
as follows:
Main Audit Remuneration
Board Committee Committee
Meetings held 14 2 1
-------- ------------ --------------
Attendance:
-------- ------------ --------------
Malcolm Groat 14 2 1
-------- ------------ --------------
John Potter 14 - -
-------- ------------ --------------
Louis Castro 13 2 1
-------- ------------ --------------
Zac Phillips (appointed 24 January 2022) 14 2 1
-------- ------------ --------------
Richard Horsman (resigned 24 January 2022) 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 size to provide more than adequate experience
and perspective to its decision-making process and, given the size
and nature of the Group, the Board does not consider at this time
that it is appropriate to increase the size of the Board or amend
its composition.
As the Board is not currently anticipating any change to its
size or composition, it has not yet implemented a written policy
regarding the identification and nomination of female directors. In
the event that one of the existing members of the Board stands down
from their current position, the Company will, at that time, give
further consideration to the specific selection of a female member
of the Board and the adoption of a formal policy relating to the
positive appointment of additional female members of the Board for
future opportunities.
The Board is responsible for: (a) ensuring that all new
Directors receive a comprehensive orientation, that they fully
understand the role of the Board and its committees, as well as the
contribution individual directors are expected to make (including
the commitment of time and resources that the Company expects from
its directors) and that they understand the nature and operation of
the Group's business; and (b) providing continuing education
opportunities for all directors, so that individuals may maintain
or enhance their skills and abilities as directors, as well as to
ensure that their knowledge and understanding of the Group's
business remains current.
Given the size of the Company and the in-depth experience of its
Directors, the Board has not deemed it necessary to develop a
formal process of orientation for new Directors but encourages all
its Directors to visit the Group's operations to ensure familiarity
and proper understanding.
Skills & Experience of Board Members
Malcolm Groat
Malcolm is a Chartered Accountant and has extensive corporate
experience, with roles as Chairman, Non-Executive Director,
Chairman of Audit Committees, CEO, COO and CFO for a number of
public companies. He is an adviser on compliance and governance,
strategy and operational improvement, and managing the risks of
rapid change.
John Potter
John is an accomplished Chief Executive and project manager with
many years of experience working within the energy sector. John
brings a wide range of skills, knowledge and industry connections.
His proficiency in understanding and identifying best technologies
in projects and his proven abilities in developing relationships
with stakeholders, including operators, politicians, financiers,
technology providers and regulators, are well proven and have
brought great value to the companies he has previously worked
with.
Louis Castro
Louis is a graduate engineer and PwC Chartered Accountant who
has spent his career in the City in investment banking and capital
markets, advising growth companies on a wide range of matters
including fund-raising and M&A. He served as an AIM Nomad for
many years before becoming CFO of a listed oil company. In recent
years, Louis became Executive Chairman of Orosur Mining Inc. which
is quoted on both the TSXV and on AIM, and he is also a
non-executive director of Tekcapital plc; Veteran Capital Corp. and
Innovative Eyewear, Inc.
Zac Phillips
Zac has over 25 years' experience in oil and gas finance, having
worked for BP, Chevron, Merrill Lynch and ING Barings. He was
previously CFO for Dubai World's oil and gas business (DB
Petroleum) with responsibility for risk management and authoring of
investment proposals. He has a degree in Chemical Engineering and a
PhD in Chemical Engineering from Bath University.
Principle Seven - Evaluation of Board Performance
The Board has determined that it shall be responsible for
assessing the effectiveness and contributions of the Board as a
whole and its committees (which currently comprise the Audit
Committee and the Remuneration Committee). The small size of the
Board allows for open discussion. The Chairman has regular dialogue
with the Chief Executive whereby the Board's role and effectiveness
can be considered.
No formal assessments have been prepared in the year. However,
the Board assesses its effectiveness on an ongoing basis. The Board
will keep this matter under review and especially if either the
size of the Board or the number of committees increases, which in
turn may require a more formalised assessment and evaluation
process to be established to ensure continued effectiveness.
Principle Eight - Corporate Culture
The Board recognises that their decisions regarding strategy and
risk will impact the corporate culture of the Group as a whole and
that this will have an effect on the performance of the Group. The
Board is very aware that the tone and culture set by the Board will
greatly impact all aspects of the Group. The corporate governance
arrangements that the Board has adopted are designed to ensure that
the Group delivers long-term value to its shareholders and that
shareholders have the opportunity to express their views and
expectations for the Company in a manner that encourages open
dialogue with the Board.
A large part of the Group's activities is centred upon what
needs to be an open and respectful dialogue with partners,
suppliers, consultants and other stakeholders. Therefore, the
importance of sound ethical values and behaviour is crucial to the
ability of the Group to successfully achieve its corporate
objectives.
The Directors consider that, at present, the Group has an open
culture facilitating comprehensive dialogue and feedback and
enabling positive and constructive challenge.
Principle Nine - Maintenance of Governance Structures and
Processes
Ultimate authority for all aspects of the Group's activities
rests with the Board, with the responsibilities of the Executive
Director arising as a consequence of delegation by the Board.
The Board has adopted appropriate delegations of authority which
set out matters which are reserved to the Board. The Chairman is
responsible for the effectiveness of the Board and compliance with
the QCA Code, while management of the Group's business and primary
contact with shareholders has been delegated by the Board to the
Chief Executive Officer.
Non-Executive Directors
The Board evaluates its performance and composition on a regular
basis and will make adjustments as and when 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
6 April 2023
AUDIT COMMITTEE REPORT
Overview
The Committee met twice during the year to consider the full
year 2021 accounts and interim 2022 accounts. It has also met after
the year end to consider the full year 2022 accounts.
Louis Castro is Chairman of the Committee. The other Committee
members during the year under review have been Malcolm Groat, Zac
Phillips and Richard Horsman. From February 2022, the Committee
comprised 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, PKF Littlejohn 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 GBP7 4,800 (2021: GBP34,337) were paid to BDO LLP, the
previous auditor.
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
6 April 2023
REMUNERATION COMMITTEE REPORT
This report is on the activities of the remuneration committee
for the financial year ended 30 September 2022.
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. As at 1 October 2021, the
Remuneration Committee comprised Louis Castro (Chairman), Richard
Horsman and Malcolm Groat. From February 2022, the Committee
comprised 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
2022 2022 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------- ----------- ---------- -----------
M. Groat 50 - 38 -
J. Potter 233 - 139 -
L. Castro 42 - 19 -
Z. Phillips (appointed 24 25 - - -
January 2022)
R. Horsman (resigned 24 January
2022) 12 - 30 -
Richard Horsman was also paid GBP30,000 on his resignation in
consideration for the waiver of his share option rights.
As detailed in Note 22, 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 22.
Louis Castro
Chairman, Remuneration Committee
6 April 2023
Independent auditor's report to the members of TomCo Energy
plc
INDEPENT AUDITOR'S REPORT TO THE MEMBERS OF TOMCO ENERGY PLC
Opinion
We have audited the financial statements of TomCo Energy Plc
(the 'parent company') and its subsidiaries (the 'group') for the
year ended 30 September 2022 which comprise the Consolidated
Statement of Comprehensive Income, the Consolidated Statement of
Financial Position, the Consolidated Statement of Changes in
Equity, and the Consolidated Statement of Cash Flows and notes to
the financial statements, including significant accounting
policies.
In our opinion:
* the financial statements give a true and fair view of
the state of the Group's affairs as at 30 September
2022 and of its loss for the year then ended; and
* the financial statements have been properly prepared
in accordance with IFRSs as adopted by the
International Accounting Standards Board;
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the International Accounting Standards Board.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditor's responsibilities for the audit of the financial
statements section of our report. We are independent of the group
and parent company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in the UK,
including the FRC's Ethical Standard as applied to listed entities,
and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
director's use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our
evaluation of the directors' assessment of the group and parent
company's ability to continue to adopt the going concern basis of
accounting included:
-- Reviewing the cash flow forecasts prepared by management for
the period up to 12 months from the approval of financial statements
by challenging the key assumptions and reviewing for their reasonableness;
and
-- Comparing the actual results for the year to past budgets to
assess the forecasting ability/accuracy of management; and
-- Reviewing post-year end regulatory news service announcements
and holding discussions with management on future plans; and
-- We sensitised the cash flow forecasts and performed stress tests,
in order to assess the impact on cash reserves of a shortfall
against budget
-- Assessing the adequacy of going concern disclosures within the
Annual Report and Financial Statements
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
group's or parent company's ability to continue as a going concern
for a period of at least twelve months from when the financial
statements are authorised for issue. Our responsibilities and the
responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
Our application of materiality
The scope of our audit was influenced by our application of
materiality. The quantitative and qualitative thresholds for
materiality determine the scope of our audit and the nature, timing
and extent of our audit procedures. Group materiality was
GBP107,000 (2021: GBP78,000) based upon 1.5% of gross assets. We
consider gross assets to be the main driver of the business as the
group is still in the pre-revenue stage and therefore no revenues
are currently being generated, and that current and potential
investors will be most interested in the recoverability of the
exploration and evaluation assets.
Whilst materiality for the financial statements as a whole was
set at GBP107,000, (2021: GBP78,000) each significant component of
the group was audited to an overall materiality ranging between
GBP73,000 (2021: GBP39,000) to GBP107,000 (2021: GBP78,000) with
performance materiality set at 60%(2021: 70%) for all
components.
We agreed with the audit committee that we would report to the
committee all audit differences identified during the course of our
audit in excess of GBP5,350 (2021: GBP1,500) as well as differences
below these thresholds that, in our view, warranted reporting on
qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed
the risk of material misstatement in the financial statements. In
particular, we looked at areas requiring the directors to make
subjective judgements, for example in respect of significant
accounting estimates including the convertible loan, internally
generated development assets, carrying value of exploration assets,
carrying value of unquoted investments and share based payments the
consideration of future events that are inherently uncertain. We
also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias
by the directors that represented a risk of material misstatement
due to fraud.
An audit was performed on the financial information of the
group's operating entities which for the year ended 30 September
2022 were located in the Isle of Man (in the United Kingdom) and
United States of America. The audit work on each significant
component was performed by us as group auditor based upon
materiality or risk profile, or in response to potential risks of
material misstatement to the group.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) we identified, including those which had the greatest effect
on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters.
Key Audit Matter How our scope addressed this matter
Carrying value and appropriate Development Expenditure (GBP4,794k):
capitalisation of Intangible Assets
The group has significant intangible We reviewed management's assessment
assets, comprising predominantly which concluded that the Greenfield
of expenditure on researching and project is in the development phase,
developing the design and operation and therefore the costs relating
of a pilot plant acquired in the to the development are capitalised
prior year. The carrying value within Greenfield and in doing
of intangible assets at 30 September so our work included
2022 was GBP5,033k of which GBP4,794k * Challenging management on the classification of
relates to the pilot plant. The assets and determining whether these met the
balance of GBP239k relates to exploration definition of development costs under IAS 38
asset expenditure during the year 'intangible assets'.
ended 30 September 2022.
There is the risk that the carrying
value of these assets have not
been correctly recognised / measured We have assessed management's review
in accordance with IFRS and that of whether there are any indicators
they should be impaired. of impairment and our procedures
included the following:
* Making specific enquires of management, reviewing
market announcements and reviewing Board minutes to
establish whether there was any evidence that the
Group did not plan to proceed with the future use of
the intangible assets.
* Reviewing the impairment assessment prepared by
management and making enquiries of management to
understand the impact of current market on the future
of the project and challenging management on whether
these factors are indicators of impairment.
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:
The Group is in the process of
acquiring the 90% balance of Tar
Sands Holdings II LLC which will
allow them to commence detailed
engineering work using the technological
knowhow gained from the development
expenditure, to build the first
separation plant with the capacity
to process 6,000 tonnes per day
of oil sands.
Based on the work performed and
the progress on the acquisition,
we have no matters to communicate
in respect of management's assessment
of the carrying value of the group's
development expenditure included
in the intangible assets.
Exploration Asset (GBP239k)
Our work in this area included:
* Confirmation that the Group has good title to the
applicable exploration licences, including new
licences obtained during the year;
* Review of the additions in the year to ensure
capitalisation criteria IFRS 6 is met;
* Review of management's impairment paper and challenge
of all key assumptions there in, as well as
considerations of the impairment indicators within
IFRS 6; and
* Ensuring disclosures made in the financial statements
in relation to critical accounting judgements are
adequate and in line with our understanding of the
group and its activities.
Key observations:
Based on the work performed and
the progress on the exploration
wells from drilling to date, we
note that the exploration licence,
obtained in 2022, expires in November
2023. The group have submitted
a permit application for an initial
production well and the directors
are awaiting its acceptance. On
receipt of this first permit, the
directors are planning to submit
up to a further 24 applications.
At the same time, the exploration
licence is also likely to be renewed.
We have no matters to communicate
in respect of management's assessment
of the carrying value of the group's
exploration expenditure included
in the intangible assets.
==============================================================
Other information
The other information comprises the information included in the
annual report, other than the financial statements and our
auditor's report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the group and parent company 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
statement, the directors are responsible for the preparation of the
group and parent company 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 group and parent company financial statements,
the directors are responsible for assessing the group and the
parent company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors
either intend to liquidate the group or the parent company or to
cease operations, or have no realistic alternative but to do
so.
Auditor's responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor's report that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
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:
-- We obtained an understanding of the group and the sector in which
they operate to identify laws and regulations that could reasonably
be expected to have a direct effect on the financial statements.
We obtained our understanding in this regard discussions with
management.
-- We determined the principal laws and regulations relevant to
the group in this regard to be those arising from AIM Rules,
relevant local laws and regulations in the where the Group operates
(Isle of Man and United States, UK Bribery Act, QCA Corporate
governance, and Permit and Environmental compliance in the United
States.
-- We designed our audit procedures to ensure the audit team considered
whether there were any indications of non-compliance by the group
and parent company with those laws and regulations. These procedures
included, but were not limited to:
o Enquiries of management regarding potential non-compliance
o Review of legal and professional fees to understand the
nature of the costs and the existence of any non-compliance
with laws and regulations; and
o Review of minutes of meetings of those charged with governance
and regulatory news service announcements.
-- We also identified the risks of material misstatement of the
financial statements due to fraud. We considered, in addition
to the non-rebuttable presumption of a risk of fraud arising
from management override of controls, that the judgements and
estimates made by management in their assessment of the recoverability
of intangible assets represented the most significant risk of
material misstatement. Refer to the key audit matter above.
-- We addressed the risk of fraud arising from management override
of controls by performing audit procedures which included but
were not limited to: the testing of journals; reviewing accounting
estimates for evidence of bias; and evaluating the business rationale
of any significant transactions that are unusual or outside the
normal course of business.
Because of the inherent limitations of an audit, there is a risk
that we will not detect all irregularities, including those leading
to a material misstatement in the financial statements or
non-compliance with regulation. This risk increases the more that
compliance with a law or regulation is removed from the events and
transactions reflected in the financial statements, as we will be
less likely to become aware of instances of non-compliance. The
risk is also greater regarding irregularities occurring due to
fraud rather than error, as fraud involves intentional concealment,
forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council's website at: www.frc.org.uk/auditorsresponsibilities .
This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body,
in accordance with our engagement letter dated 31 October 2022. Our
audit work has been undertaken so that we might state to the
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 company and the company's members as a body,
for our audit work, for this report, or for the opinions we have
formed.
PKF Littlejohn LLP
Chartered Accountants
London, UK
6 April 2023
Consolidated Statement of Comprehensive Income
for the financial year ended 30 September 2022
2022 2021
Note GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------------ --------- --------- ---------- ----------
Revenue 2 - -
Other Income 2 73 -
------------------------------------- ------------ --------- --------- ---------- ----------
Gross profit/(loss) 73 -
Administrative expenses 2 (1,519) (1,873)
Impairment losses 0 - (8,679)
Foreign exchange gains 990 345
Operating loss 5 (456) (10,207)
Finance (costs)/income 4 (234) -
Error!
Reference
source
not
Share of loss of joint venture found. - (84)
------------------------------------- ------------ --------- --------- ---------- ----------
Loss on ordinary activities
before taxation (690) (10,291)
Taxation 6 - -
------------------------------------- ------------ --------- --------- ---------- ----------
Loss for the year attributable
to : (690) (10,291)
Equity shareholders of the
parent (690) (10,017)
Non-controlling interests 21 - (274)
------------------------------------- ------------ --------- --------- ---------- ----------
(690) (10,291)
------------------------------------- ------------ --------- --------- ---------- ----------
Items that may be reclassified
subsequently to profit or
loss
Exchange differences on
translation of foreign operations 15 (503)
Other comprehensive income
for the year attributable
to :
Equity shareholders of the
parent 26 (507)
Non-controlling interests 21 (11) 4
Other comprehensive income 15 (503)
Total comprehensive loss
attributable to :
Equity shareholders of the
parent (664) (10,524)
Non-controlling interests 21 (11) (270)
------------------------------------- ------------ --------- --------- ---------- ----------
Total comprehensive loss (675) (10,794)
------------------------------------- ------------ --------- --------- ---------- ----------
2022 2021
Pence Pence
Loss per share attributable per share per share
to the equity shareholders
of the parent
------------------------------ --- ----------- -----------
Basic & diluted loss per
share 8 (0.04) (0.76)
------------------------------ --- ----------- -----------
The Notes form part of these financial statements.
Consolidated Statement of Financial Position
as at 30 September 2022
Group Group
2022 2021
---------------------------------------------- ------ --------- ---------
Note GBP'000 GBP'000
---------------------------------------------- ------ --------- ---------
Assets
Non-current assets
Intangible assets 9 5,033 3,947
Property, plant and equipment 10 - -
Investments at FVTPL 11 1,830 -
Other receivables 12 23 25
---------------------------------------------- ------ --------- ---------
6,886 3,972
---------------------------------------------- ------ --------- ---------
Current assets
Trade and other receivables 12 101 104
Other financial assets 13 - 371
Cash and cash equivalents 14 206 726
---------------------------------------------- ------ --------- ---------
307 1,201
---------------------------------------------- ------ --------- ---------
TOTAL ASSETS 7,193 5,173
---------------------------------------------- ------ --------- ---------
Liabilities
Current liabilities
Loans 15 (1,144) -
Convertible loan-debt element 15 (148) -
Convertible loan-derivative liability 15 (143) -
Trade and other payables 16 (346) (808)
---------------------------------------------- ------ --------- ---------
(1,781) (808)
---------------------------------------------- ------ --------- ---------
Net current (liabilities)/assets (1,474) 393
---------------------------------------------- ------ --------- ---------
TOTAL LIABILITIES (1,781) (808)
---------------------------------------------- ------ --------- ---------
Total net assets 5,412 4,365
---------------------------------------------- ------ --------- ---------
Shareholders' equity
Share capital 18 - -
Share premium 19 32,527 31,142
Warrant reserve 20 1,374 2,579
Translation reserve (199) (225)
---------------------------------------------- ------ --------- ---------
Retained deficit (28,290) (28,688)
---------------------------------------------- ------ --------- ---------
Equity attributable to owners of the parent 5,412 4,808
Non-controlling interests 21 - (443)
---------------------------------------------- ------ --------- ---------
Total equity 5,412 4,365
---------------------------------------------- ------ --------- ---------
The financial statements were approved and authorised for issue
by the Board of Directors on 6 April 2023.
The Notes form part of these financial statements.
John Potter Malcolm Groat
Chief Executive Officer Non-Executive Chairman
Consolidated Statement of Changes in Equity
for the financial year ended 30 September 2022
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 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) 18, 19 - 1,920 1,306 - - 3,226 - 3,226
Expiry of
warrants 20 - - (15) - 15 - - -
Share-based
payment charge 22 - - - - 1,201 1,201 - 1,201
At 30 September
2021 - 31,142 2,579 (225) (28,688) 4,808 (443) 4,365
------------------ -------- --------- --------- --------- ------------- ---------- ---------- -----------------
Loss for the
year - - - - (690) (690) - (690)
Comprehensive
income for the
year - - - 26 - 26 (11) 15
------------------ -------- --------- --------- --------- ------------- ---------- ---------- ----------------- ----------
Total
comprehensive
loss for the
year - - - 26 (690) (664) (11) (675)
Issue of shares
(net of costs) 18,19 - 1,385 - - - 1,385 - 1,385
Issue of finance - - 165 - - 165 - 165
Exercise of
warrants 20 (140) 140 - - -
Expiry of
warrants 20 - - (1,230) - 1,230 - - -
Purchase of
non-controlling
interest - - - - (466) (466) 454 (12)
Share-based
payment
arrangements 22 - - - - 184 184 - 184
At 30 September
2022 - 32,527 1,374 (199) (28,290) 5,412 - 5,412
------------------ -------- --------- --------- --------- ------------- ---------- ---------- -----------------
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 21.
The Notes form part of these financial statements.
Consolidated Statement of Cash Flows
for the financial year ended 30 September 2022
Note Group Group
-----------------------------------------------------------
2022 2021
-----------------------------------------------------------
GBP'000 GBP'000
----------------------------------------------------------- ------- --------- ----------
Cash flows from operating activities
Loss after tax 0 (690) (10,291)
Adjustments for:
Finance costs 4 234 -
Amortisation - 6
Impairment losses - 8,679
Share based payment charge 194 135
Unrealised foreign exchange (profits)/losses (1,039) 67
Share of loss of joint venture - 84
Decrease in trade and other receivables 24 22
Increase in trade and other payables 5 63
Cash used in operations (1,272) (1,235)
----------------------------------------------------------- ------- --------- ----------
Interest (paid)/received (153) -
Net cash outflow from operating activities (1,425) (1,235)
Cash flows from investing activities
Investment in intangibles 9 (637) (2)
Purchase of investments at FVTPL 11 (1,171) -
Purchase of other financial assets (219)
Purchase of non-controlling interest (11) -
Investment in joint venture - (1,502)
Cash acquired on acquisition of control of joint venture - 124
----------------------------------------------------------- ------- --------- ----------
Net cash used in investing activities (1,819) (1,599)
----------------------------------------------------------- ------- --------- ----------
Cash flows from financing activities
Issue of equity instruments 18,19 1,460 3,500
Costs of share issue (75) (274)
Settlement of options (10) -
Loan finance 15 973 -
Convertible loans 15 375 -
Net cash generated from financing activities 2,723 3,226
----------------------------------------------------------- ------- --------- ----------
Net (decrease)/increase in cash and cash equivalents (521) 392
Cash and cash equivalents at beginning of financial year 726 334
Foreign currency translation differences 1 -
Cash and cash equivalents at end of financial year 206 726
----------------------------------------------------------- ------- --------- ----------
The Notes on form part of these financial statements.
Notes to the financial statements
for the financial year ended 30 September 2022
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
- Convertible loan
The terms of the convertible loan issued during the year included
an option for the loan to be settled in whole or in part by
the issue of a variable number of shares. On this basis, the
loan is classified as a liability, with an embedded written
call option. In accordance with IFRS 9, the embedded option
has been separated from the host contract. Judgement is required
concerning the inputs to the valuation of the conversion option
on issue and subsequently. Judgements include the choice of
model, volatility, and risk-free rates to be used in the valuations.
Judgements on these matters affect finance costs recognised
in the profit and loss account.
- Impairment indicator assessment on intangible assets used
in exploration and evaluation activities
The Directors consider that there were no impairment indicators
as at 30 September 2022 concerning the Group's intangible
assets employed in exploration and evaluation activities in
relation to oil sands which have been impaired in previous
years. In the current year, an exploration permit was secured
in February 2022 to drill 3 exploration wells to recover core
and perform in hole surveys to collate detailed data on the
location and quality of the oil sand formation. The results
of the surveys were positive, and it was utilised to produce
a potential drilling programme for a steam injection process
to recover the oil in the formations. A permit application
for an initial production well has been submitted and we are
awaiting its acceptance. On receipt of this first permit,
we are planning to submit up to a further 24 applications.
Following the results of the exploration wells, the directors
have concluded that no impairment is required.
- 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
is 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 cost of intangible assets.
- Carrying value of unquoted investment
The Group follows the guidance of IFRS 9 to determine when
a financial asset is impaired. This determination requires
significant judgement. In making this judgement, the Group
evaluates, among other factors, the duration and extent to
which the fair value of an investment is less than its cost,
and the financial health of, and short-term business outlook
for, the investee, including factors such as industry and
sector performance, changes in technology and operational,
financing cash flow and proposed fundraising.
The Group purchased a 10% membership interest in Tar Sands
Holdings II LLC ("TSHII") during the year and holds an option to
purchase the remaining 90% for additional cash consideration of
$16.25 million by an extended deadline of 30 April 2023. The
Directors have determined that the asset is an appropriate estimate
of the fair value of the Group's investments in TSHII as at 30
September 2022. To further support the carrying value, the Group
also announced the findings of an independent report commissioned
from Netherland, Sewell & Associates, Inc. ("NSAI") estimating
the on the mining properties comprising the TSHII site. Further
details are disclosed in the Strategic Report. The Directors do not
consider there to be any impairment of the investments as at 30
September 2022.
The Directors also separately assessed the fair value of the
option and concluded that the option was not material due to its
short expiry date and has therefore not been recognised as
intangible asset.
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 the deferred equity consideration
in respect of 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 30 March 2023, the Group had cash of approximately
GBP0.15million.
The Directors have prepared a cash flow forecast for the twelve
months to 30 April 2024.
As set out in the Chairman's Statement, discussions with
potential funders to finance the Group's plans including its
working capital requirements are at an advanced stage but have not
yet been concluded. The plans include the acquisition of the
remaining 90% of TSHII; funding for two oil sand processing plants
and associated infrastructure; drilling of wells into the deeper
oil sands that are too deep to mine for the implementation of oil
recovery processes; and repayment of the remainder of the Valkor
Loan. On 30 November 2022, the terms of the Valkor Loan, which is
unsecured, had been varied to extend the repayment date beyond 31
March 2023 for the remaining principal amount of the loan to the
completion date of a suitable funding transaction for Greenfield
that provides sufficient funds to enable the Company to affect such
repayment. Hence, the forecast does not include any funding which
would be received from a successful conclusion to these discussions
with the identified potential financiers, nor does it include
repayment of the Valkor Loan.
The forecast, which includes all commitments at the date of this
report, indicates that the cash currently held by the Group
together with the most recent convertible loan facility of up to
GBP1 million which was secured post the financial year end (as
detailed in Note 28 to the accounts - Subsequent Events), will be
sufficient to fund ongoing costs for at least the next 12 months,
assuming that no revenue is earned by the Group during that period,
beyond which further funding will be required.
Accordingly, Given the Group's current cash balance, the
convertible loan facility referred to above, and, based on a
positive history of raising funds, and the fact that the Valkor
loan is only payable on completion of a suitable funding
transaction that provides sufficient funds to complete the
Greenfield purchase and pay off the Valkor Loan, the Directors
consider it appropriate to prepare the financial statements on a
going concern basis.
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 2022 and that 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's financial statements consolidate the accounts of the
parent company, TomCo Energy plc, and all of its subsidiary
undertakings drawn up to 30 September 2022. 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.
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
Oil sales
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
such revenue has arisen in the current or prior year.
Other Revenue
Revenue from services provided to other oil and gas exploration
entities is recognised as services are provided in accordance with
the terms of the relevant contract.
These services related to an agreement with Heavy Sweet Oil LLC
("Heavy Sweet Oil"), a US based oil and gas company, to assist it
with permitting and government relations in respect of their
planned drilling programme adjacent to the D Tract of the TSHII
site. Heavy Sweet Oil are paying TomCo $10,000 per month for its
services, which is recorded as other income
1.6 Finance income
Finance income is accounted for on an effective interest
basis.
1.7 Finance costs
Finance costs comprise two elements. Interest on debt
instruments is recognised by reference to the effective interest
rate computed after the deduction of issue costs and the separation
of embedded derivatives. Finance costs also include the change in
fair value of embedded derivatives.
1.8 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 remain impaired in full as at
30 September 2022.
1.9 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 was 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 will be charged on
such assets until future 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.
1.10 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 concluded that the above facts and circumstances
applied in 2021 in respect of the Group's oil shale exploration and
evaluation activities, because at the time, there was no programme
in place or committed budget to continue exploration in such area.
Having conducted a review, the Directors therefore determined to
impair tangible and intangible assets employed in those activities
in full in 2021. Impairment losses are recognised in the income
statement and separately disclosed.
Research and development activities
The directors do not believe that any impairment indicators
exist in relation 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.
1.11 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.
1.12 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 concerned 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).
1.13 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.
1.14 Financial assets 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.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair
value measurements. IFRS 13 does not change when an entity is
required to use fair value, but rather provides guidance on how to
measure fair value under IFRS when fair value is required or
permitted. The resulting calculations under IFRS 13 affected the
principles that the Company uses to assess the fair value, but the
assessment of fair value under IFRS 13 has not materially changed
the fair values recognised or disclosed. IFRS 13 mainly impacts the
disclosures of the Company. It requires specific disclosures about
fair value measurements and disclosures of fair values, some of
which replace existing disclosure requirements in other
standards.
1.15 Financial Instruments
Financial investments
Non-derivative financial assets comprising the Company's
strategic financial investments in entities not qualifying as
subsidiaries, associates or jointly controlled entities. These
assets are classified as investments at fair value through profit
or loss. They are carried at fair value with changes in fair value
recognised through the income statement. Where there is a
significant or prolonged decline in the fair value of a financial
investment (which constitutes objective evidence of impairment),
the full amount of the impairment is recognised in the income
statement.
Due to the nature of these assets being unlisted investments or
held for the longer term, the investment period is likely to be
greater than 12 months and therefore these financial assets are
shown as non-current assets in the Statement of financial
position.
Trade and other receivables
Trade receivables are measured at initial recognition at fair
value and are subsequently measured at amortised cost using the
effective interest rate method. Trade and other receivables are
accounted for at original invoice amount less any provisions for
doubtful debts. Provisions are made where there is evidence of a
risk of non-payment, taking into account the age of the debt,
historical experience and general economic conditions. If a trade
debt is determined to be uncollectable, it is written off, firstly
against any provisions already held and then to the statement of
comprehensive income. Subsequent recoveries of amounts previously
provided for are credited to the statement of comprehensive
income.
Appropriate allowances for estimated irrecoverable amounts are
recognised in profit or loss in accordance with the expected credit
loss model under IFRS 9. For trade and other receivables which do
not contain a significant financing component, the Company applies
the simplified approach. This approach requires the allowance for
expected credit losses to be recognised at an amount equal to
lifetime expected credit losses. For other debt financial assets
the Company applies the general approach to providing for expected
credit losses as prescribed by IFRS 9, which permits for the
recognition of an allowance for the estimated expected loss
resulting from default in the subsequent 12-month period. Exposure
to credit loss is monitored on a continual basis and, where
material, the allowance for expected credit losses is adjusted to
reflect the risk of default during the lifetime of the financial
asset should a significant change in credit risk be identified.
The majority of the Company's financial assets are expected to
have a low risk of default. A review of the historical occurrence
of credit losses indicates that credit losses are insignificant due
to the size of the Company's clients and the nature of its
activities. The outlook for the natural resources industry is not
expected to result in a significant change in the Company's
exposure to credit losses. As lifetime expected credit losses are
not expected to be significant the Company has opted not to adopt
the practical expedient available under IFRS 9 to utilise a
provision matrix for the recognition of lifetime expected credit
losses on trade receivables. Allowances are calculated on a
case-by-case basis based on the credit risk applicable to
individual counterparties.
Fair Value Measurement
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. fair value measurement
is based on the presumption that the transaction to sell the asset
or transfer the liability takes place either:
-- In the principal market for the asset or liability;
or
-- In the absence of a principal market, in the most advantageous
market for the asset or liability principal or the most
advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the
assumptions that market participants would use when pricing the
asset or liability, assuming that market participants act in their
economic best interest.
A fair value measurement of a non-financial asset takes into
account a market participant's ability to generate economic
benefits by using the asset in its highest and best use or by
selling it to another market participant that would use the asset
in its highest and best use.
The Company uses valuation techniques that are appropriate in
the circumstances and for which sufficient data are available to
measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorised within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a
whole:
-- Level 1 - Quoted (unadjusted) market prices in active
markets for identical assets or liabilities
-- Level 2 - Valuation techniques for which the lowest
level input that is significant to the fair value measurement
is directly or indirectly observable
-- Level 3 - Valuation techniques for which the lowest
level input that is significant to the fair value measurement
is unobservable
For assets and liabilities that are recognised in the financial
statements on a recurring basis, the Company determines whether
transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that
is significant to the fair value measurement as a whole) at the end
of each reporting period.
For the purpose of fair value disclosures, the Company has
determined classes of assets and liabilities on the basis of the
nature, characteristics and risks of the asset or liability and the
level of the fair value hierarchy, as explained above.
Impairment of non-current assets
carrying values of all non-current assets are reviewed for
impairment when there is an indication that the assets might be
impaired. Any provision for impairment is charged to the statement
of comprehensive income in the year concerned.
Impairment losses on other non-current assets are only reversed
if there has been a change in estimates used to determine
recoverable amounts and only to the extent that the revised
recoverable amounts do not exceed the carrying values that would
have existed, net of depreciation or amortisation, had no
impairments been recognised.
1.16 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.
1.17 Financial liabilities at amortised cost
Financial liabilities at amortised cost include debt instruments
and the host contract element of hybrid liabilities containing
embedded derivatives. These liabilities are measured initially at
transaction price, less issue costs and the separation of the fair
value of embedded derivatives. They are subsequently measured at
amortised cost using the effective interest method.
1.18 Derivative liabilities
Embedded derivatives are separated from the host contract at
their estimated fair value at the date of the transaction. They are
subsequently measured at fair value through profit and loss.
1.19 Trade payables
Trade payables are recognised at amortised cost. All of the
trade payables are non-interest bearing.
1.20 Share capital
Ordinary shares are classified as equity. Shares issued in the
period are recognised at the fair value of the consideration
received.
1.21 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.
1.22 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
21. The remaining non-controlling interest was purchased during
2022.
1.23 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 22.
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 2022 2022 2022 2022 2021 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
External
revenue - 73 - 73 - - - -
Inter-segment
sales - - - - 88 (88) -
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Cost of sales - - - - - - - -
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Gross
profit/(loss) - 73 - 73 - 88 (88) -
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Impairment - - - - (8,679) - - (8,679)
Administrative
expenses (102) (1,417) - (1,519) (773) (1,188) 88 (1,873)
Foreign
exchange
gains/(losses) 979 11 - 990 359 (14) - 345
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Operating
profit/(loss) 877 (1,333) - (456) (9,093) (1,114) - (10,207)
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Finance
(costs)/income (153) (81) - (234) - - - -
Share of loss
of joint
venture - - - - (84) - - (84)
----------------- ---------- --------- -------------- ---------- --------- --------------
Profit/(loss)
before
taxation 724 (1,414) - (690) (9,177) (1,114) - (10,291)
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Non-Current
assets :
- Exploration
and
development
assets 5,033 - - 5,033 3,947 - - 3,947
- Other 23 - - 23 25 - - 25
2.1.1
Investments
at FVTPL 1,830 - - 1,830 - - - -
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
6,886 - - 6,886 3,972 - - 3,972
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Current assets
:
Trade and other
receivables 47 54 - 101 - 104 - 104
Other financial
assets - - - - 371 - - 371
Cash and cash
equivalents - 206 - 206 15 711 - 726
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Total assets 6,933 260 - 7,193 4,358 815 - 5,173
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Current
liabilities :
Trade and other
payables (29) (317) - (346) (498) (310) - (808)
Financial
liabilities (1,144) (291) (1,435)
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
Total
liabilities (1,173) (608) - (1,781) (498) (310) - (808)
----------------- ---------- --------- -------------- --------- ---------- --------- -------------- ----------
3. Impairment losses
Impairment losses recognised during the year were as
follows:
2022 2021
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 in 2021 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
2022 2021
GBP'000 GBP'000
Interest payable 223 -
Change in fair value of derivatives 11 -
Interest income - (1)
Total finance costs for the financial year 234 (1)
--------------------------------------------- --------- ---------
5. Operating loss
The following items have been charged/(credited)
in arriving at operating loss: 2022 2021
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
Auditors' remuneration: audit services 40 43
Rentals payable in respect of land and buildings 26 10
--------------------------------------------------- --------- ---------
6. Taxation
There is no tax charge in the year due to the loss for the
year.
Factors affecting the tax charge: 2022 2021
GBP'000 GBP'000
-------------------------------------------------- -------- ---------
Loss on ordinary activities before tax (664) (10,291)
-------------------------------------------------- -------- ---------
Loss on ordinary activities at standard rate of
corporation tax
in the Isle of Man of 0% (2021: 0%) - -
Tax charge for the financial year - -
-------------------------------------------------- -------- ---------
No charge to taxation arises due to the losses incurred. TomCo
is not subject to tax in Isle of Man, but is subject to tax in its
subsidiaries operating in USA, however, the Group is loss making
and has no taxable profits to date. No deferred tax asset has been
recognised on accumulated tax losses because of uncertainty over
the timing of future taxable profits against which the losses may
be offset.
Disclosure concerning deferred tax is given in note 17.
7. Employees and Directors
Share-based
Share-based payment
Salaries Severance payment Salaries Severance expense
pay expense pay
2022 2022 2022 2021 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- ------------ ------------- --------------- ------------ ------------- -------------
J. Potter 233 - 96 139 - 74
M. Groat 50 - 39 38 - 28
L. Castro 42 - 32 19 - 20
Z. Phillips
(appointed 24 25 - - - - -
January 2022)
R. Horsman (resigned
24 January 2022) 12 - 16 30 - 10
R. Kirchner
(resigned 4
June 2021) - - - 15 30 -
Total remuneration 362 - 183 241 30 132
----------------------- ------------ ------------- --------------- ------------ ------------- -------------
The Group has one employee (2021: one) other than the Directors,
whose emoluments comprise fees paid for services. The amounts for
their services are detailed below:
In addition, during the year Richard Horsman received GBP30,000
in consideration for the waiver of his rights over 7.5 million
share options. GBP20,000 of this sum has been expensed to profit
and loss. The remaining GBP10,000 has been recognised in
equity.
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 2022 GBP'000 Weighted Pence
average number
of shares
----------------------------------------------------- ---------- ----------------- -----------
Basic and Diluted EPS
Losses attributable to ordinary shareholders
on continuing operations (690) 1,661,402,854 (0.04)
Total losses attributable to ordinary shareholders (690) 1,661,402,854 (0.04)
Financial year ended 30 September 2021
----------------------------------------------------- ---------- ----------------- -----------
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)
----------------------------------------------------- ---------- ----------------- -----------
The warrants, share options and conversion options which were
issued or for which entitlement to warrants was established in the
current and prior years (Notes 18 and 19) 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 evaluation Development Patents and
expenditure expenditure patent applications Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- ----------------- -------------- ------------------------ -----------
Cost
At 1 October 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
----------------- -------------- ------------------------ -----------
Additions 204 433 - 637
Adjustment (see below) - (136) - (136)
Translation differences 35 550 - 585
----------------- -------------- ------------------------ -----------
At 30 September
2022 8,526 6,108 30 14,664
----------------- -------------- ------------------------ -----------
Amortisation/Impairment
----------------- -------------- ------------------------ -----------
At 1 October 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
----------------- -------------- ------------------------ -----------
Amortisation - - - -
Impairment - - - -
----------------- -------------- ------------------------ -----------
At 30 September
2022 8,287 1,314 30 9,631
----------------- -------------- ------------------------ -----------
Net book value
At 30 September
2022 239 4,794 - 5,033
---------------------------- ----------------- -------------- ------------------------ -----------
At 30 September
2021 - 3,947 - 3,947
---------------------------- ----------------- -------------- ------------------------ -----------
At 30 September
2020 8,819 - 15 8,834
---------------------------- ----------------- -------------- ------------------------ -----------
During the year creditors of GBP136,000 in respect of additions
to development expenditure in 2022 were waived.
The assets acquired with Greenfield are described at note 1.9 .
The exploration and development licences comprise nine Utah oil
shale leases covering approximately 15,488 acres. These assets were
impaired in full as at 30 September 2021 for the reasons given in
note 1.10 .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 1 October 2020 411
Translation differences (25)
-------------------------------- --------------------------------------
At 30 September 2021 386
Translation differences -
-------------------------------- --------------------------------------
At 30 September 2022 386
-------------------------------- --------------------------------------
Impairment at 1 October 2020 -
Charge for year 386
-------------------------------- --------------------------------------
At 30 September 2021 and 2022 386
-------------------------------- --------------------------------------
Net book value
At 30 September 2022 -
-------------------------------- --------------------------------------
At 30 September 2021 -
-------------------------------- --------------------------------------
At 30 September 2020 411
-------------------------------- --------------------------------------
These assets were impaired in full as at 30 September 2021 and
remain so for the reasons given in note 1.10 .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. Investments at FVTPL
Financial assets at fair value through profit GBP0 GBP0
or loss
------------------------------------------------ --------- -------
Level 3 Total
------------------------------------------------ --------- -------
Amortised cost at 30 September 2021 - -
------------------------------------------------ --------- -------
Transfer of deposit from current asset 371 371
Additions 1,171 1,171
Foreign Exchange 288 288
Amortised cost at 30 September 2022 1,830 1,830
------------------------------------------------ --------- -------
The financial assets splits are as below:
Non-current assets - listed - -
Non-current assets - unlisted 1,830 -
Total 1,830 -
------------------------------------------------ --------- -------
The Group purchased a 10% membership interest in Tar Sands
Holdings II LLC ("TSHII") during the year and holds an option to
purchase the remaining 90% for additional cash consideration of
$16.25 million by an extended deadline of 30 April 2023. The
Directors have determined that the asset is an appropriate estimate
of the fair value of the Group's investments in TSHII as at 30
September 2022. To further support the carrying value, the Group
also announced the findings of an independent report commissioned
from Netherland, Sewell & Associates, Inc. ("NSAI") estimating
the on the mining properties comprising the TSHII site. Further
details are disclosed in the Strategic Report. The Directors do not
consider there to be any impairment of the investments as at 30
September 2022.
The Directors also separately assessed the fair value of the
option and concluded that the option was not material due to its
short expiry date and has therefore not been recognised as
intangible asset.
12. Trade and other receivables
Group Group
2022 2021
Current GBP'000 GBP'000
--------------------------------- --------- ---------
Other receivables 70 51
Prepayments and accrued income 31 53
--------------------------------- --------- ---------
101 104
--------------------------------- --------- ---------
Non-current
Other receivables 23 25
Total Receivables 124 129
--------------------------------- --------- ---------
As at 30 September 2022, there were no receivables considered
past due (2021: 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
2022 2021
Current GBP'000 GBP'000
---------- ---------- ---------
Deposit - 371
Total - 371
---------- ---------- ---------
As at 30 September 2021, Greenfield had paid a deposit of
US$500,000 against the possible acquisition of a 10% membership
interest in Tar Sands Holdings II LLC, a Utah limited liability
company for US$2 million. In 2022, this amount was used for the
purchase a 10% interest. See note Error! Reference source not
found. .
14. Cash and cash equivalents
Group Group
2022 2021
GBP'000 GBP'000
--------------------------- --------- ---------
Cash at bank and in hand 206 726
--------------------------- --------- ---------
The Group earns 0.05% (2021: 0.05%) interest on its cash
deposits, consequently the Group's exposure to interest rate
volatility is not considered material.
15. Loans
Group Group
2022 2021
Current GBP'000 GBP'000
--------------------------------------- ----------- -----------
Term loan 1,144 -
Convertible loan-debt element 148 -
Convertible loan-derivative liability 143 -
--------------------------------------- ----------- -----------
1,435 -
--------------------------------------- ----------- -----------
The convertible loan was for a principal sum of GBP375,000 and
due for settlement by either conversion or repayment by 30 November
2022. It carried a premium on repayment or settlement, irrespective
of the date of settlement, of 5%. The loan was convertible at any
time prior to 30 November 2022.
The conversion price per new Ordinary Share under the loan
facility was the lower of: (i) 0.75 pence; and (ii) the
volume-weighted average price of an Ordinary Share during any five
of the fifteen business days prior to service or deemed service of
a conversion notice, as selected by the noteholder(s) concerned and
sourced from Bloomberg L.P., discounted by 15%. TomCo could elect
to repay the loan amounts, but noteholders were entitled to
exercise the conversion option prior to receipt of a notice of
intention to repay. Conversion was mandatory for any holders that
had not been repaid or converted prior to 30 November 2022.
Because the loans were capable of being settled by the issue of
a variable number of ordinary shares, the loan was accounted for as
a liability. Further, there was an embedded written call option
that had to be separated out from the host contract and accounted
for at fair value. In addition, warrants with a fair value of
GBP165,000 were issued to the loan note holders, and these were
accounted for as issue costs in connection with the facility. The
debt element, net of the derivative liability and issue costs, was
accounted for at amortised cost using the effective interest
method.
Fair value disclosures
Recurring fair value measurements
Fair value
measurement at 30
September 22 Using
Quoted prices in
active markets Significant other
for identical observable inputs Significant
assets (Level 1) (Level 2) unobservable
inputs
(Level 3)
GBP'000 GBP'000 GBP'000 GBP'000
Derivative
liabilities 143 - - 143
----------------------- ---------------------- --------------------- ---------------------- ----------------------
The derivative has been valued using an option model and Monte
Carlo simulation and the following inputs:
30 September 2022
Share price 0.475p
-------------------
Volatility 88.5%
-------------------
Risk free rate 4.14%
-------------------
The valuation was carried out by external third parties and
reviewed and adopted by the Directors. The Group does not have
formal processes and policies in connection with fair value
measurement, as it is not a routine feature of the Group's business
model.
Reconciliation of fair value measurements using Level 3
inputs
Derivative liabilities
GBP'000
Opening balance -
Issues during year 132
Unrealised loss recognised in profit and loss 11
------------------------------------------------ -----------
Closing balance 143
------------------------------------------------ -----------
The Level 3 inputs used in the fair value measurement were
volatility assumptions. An increase in volatility by itself would
lead to an increase in the value of the liability and vice
versa.
Further disclosure is provided in note 23 on financial
instruments.
In early October 2022, the principal amount of the above
mentioned unsecured convertible loan facility of GBP375,000,
together with associated interest, was settled by way of share
issue. Further details are disclosed in note 28.
16. Trade and other payables
Group Group
2022 2021
Current GBP'000 GBP'000
----------------- ----------- -----------
Trade payables 71 160
Other payables 50 395
Accruals 225 253
----------------- ----------- -----------
346 808
----------------- ----------- -----------
All current amounts are payable within six months and the
Directors consider that the carrying values adequately represent
the fair value of all payables.
17. Deferred tax
Unrecognised losses
The Group has tax losses in respect of excess management
expenses of approximately GBP14.0 million (2021: GBP12.7 million)
available for offset against future Company income. This gives rise
to a potential deferred tax asset at the reporting date of GBP3.5
million (2021: GBP2.9 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 GBP8.5 million for which no deferred tax asset is
recorded given the uncertainty of future profits.
18. Share capital
Number of shares 2022
in issue GBP
----------------------------------------------- --------------------------------- ------
Issued and fully paid at 1 October 2020 - 673,634,235 -
shares of no par value
November 2020-placing of new ordinary shares 777,777,777 -
(note 19 )
----------------------------------------------- --------------------------------- ------
At 30 September 2021 1,451,412,012 -
November 2021-exercise of warrants (note 20 46,666,666 -
)
January 2022-placing (note 19 ) 250,000,000
----------------------------------------------- --------------------------------- ------
At 30 September 2022 1,748,078,678
----------------------------------------------- --------------------------------- ------
In addition to shares for which warrants and options were issued
as consideration for the acquisition of the remaining 50% interest
in Greenfield in August 2021, there are 592.8 million shares
potentially issuable to Valkor LLC. The issue of such 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.
19. Share premium
2022 2021
GBP'000 GBP'000
--------------------------------------------------- --------- ---------
At 1 October 31,142 29,222
November 2020 - subscription of new shares at
0.45 pence per share, net of costs - 3,226
Issue of warrants to placees (note 20 ) - (1,306)
November 2020-Exercise of warrants (note 20 210 -
)
January 2022-subscription of new shares at 0.5p, 1,175 -
net of costs
At 30 September 32,527 31,142
--------------------------------------------------- --------- ---------
20. Warrants
At 30 September 2022, the following share warrants were
outstanding in respect of ordinary shares:
2022 2022 2021 2021
Weighted
Weighted average
average exercise exercise
price price
number Pence number Pence
Outstanding at 1 October 704,575,640 0.88 269,791,515 1.0
Expired during the year (260,481,624) (1.02) (771,429) (3.5)
Granted during the year 55,000,000 0.75 435,555,554 0.85
Exercised during the year (46,666,666) (0.45) - -
Outstanding at 30 September 452,427,350 0.88 704,575,640 0.88
------------------------------ --------------- ------------------- ------------- -----------
Exercisable at 30 September 452,427,350 0.88 704,575,640 0.88
------------------------------ --------------- ------------------- ------------- -----------
The inputs into the Black-Scholes model for calculating the
estimated fair value of warrants granted, at their grant date, were
as follows:
2022 2021
---------------------------------- -------- ----------
Share price (pence) 0.55 0.45
Exercise price (pence) 0.75 0.45-0.9
Expected volatility 109% 148%
Risk-free rate 2.4% 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
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.
55,000,000 warrants were issued in the year ended 30 September
2022 at an exercise price of 0.75p in connection with the issue of
the convertible loan described in note 15 .
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 2022 had a weighted average exercise price of 0.88p
(2021: 0.88p) and a weighted average remaining contractual life of
0.15 years (2021: 0.95 years).
21. 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
2022 2021 2022 2021 2022 2021
% % GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------------- ------------- ----------- ---------- ---------- ----------
TurboShale
Inc. - 20 (11) (270) - (443)
The remaining non-controlling interest in TurboShale was
purchased during the year for $15,000.
22. 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:
2022 2022 2021 2021
Weighted average Weighted average
exercise price exercise price
number Pence number Pence
Outstanding as at
1 October 105,865,078 0.70 17,365,078 1.50
Granted during the
year - - 90,500,000 0.54
Lapsed during the
year - - (2,000,000) 0.60
Settled during the
year (7,500,000) (0.54) - -
Outstanding at 30
September 98,365,078 0.70 105,865,078 0.70
--------------------- ------------- ------------------ ------------- ------------------
Exercisable at 30
September 98,365,078 17,365,078
--------------------- ------------- ------------------ ------------- ------------------
Details of the options held by each Director are provided in the
Directors' Report on page 9.
The inputs into the Black-Scholes model for calculating the
estimated fair value of options granted, at their grant date, were
as follows:
2022 2021
---------------------------------- --------- ----------
Share price (pence) - 0.54
Exercise price (pence) - 0.54
Expected volatility - 127-142%
Risk-free rate - 1%
Expected period before exercise
(years) - 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.
No new options were granted in the year ended 30 September
2022.The fair value of each option granted during 2021 year was
estimated at 0.35 pence at the date of grant. The weighted average
unexpired life of the options at 30 September 2022 was 7.9 years
(2021: 8.95 years).
The charge recognised in profit or loss for 2022 was GBP194,000
(2021: GBP135,000).
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.
23. 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
would, all other variables held constant, result in a gain or loss
reported in profit and loss of approximately GBP545,000 (2021:
GBP422,000).
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 borrows at fixed interest rates and therefore there is no
effect on profit and loss attributable to changes in interest
rates.
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 in interest receivable.
Liquidity risk
At the year end the Group and Company had cash balances
comprising the following:
Group Group
2022 2021
Bank balances GBP'000 GBP'000
------------------ -------------- ----------
British Pounds 198 667
US Dollars 8 59
------------------ -------------- ----------
Total 206 726
------------------ -------------- ----------
All financial liabilities of the Group mature in less than 12
months: details of the analysis of such liabilities is provided in
Notes 15 and 16 .
Liquidity risk arises from the Group's 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.
24. 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
1 October flows transactions 30 September
Group 2022 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------------ ---------------- --------------- --------------
Loans - 1,348 (56) 1,292
Total - 1,348 (56) 1,292
------------- ------------ ---------------- --------------- --------------
Group 2021
--------------------------- ---------------- --------------- --------------
Loans - - - -
Total - - - -
------------- ------------ ---------------- --------------- --------------
25. Related party disclosures
The Directors are Key Management and information in respect of
Key Management is provided in Note 0 .
26. Ultimate controlling party
As at 30 September 2022 and 30 September 2021 there was no
ultimate controlling party.
27. Operating lease commitments
At 30 September 2022, the Group had no operating lease
commitments (2021: GBPnil).
28. Subsequent events
i. In early October 2022, the Group drew down the second GBP375,000
balancing tranche of the committed unsecured convertible loan
facility on similar terms to those described in note 15 . Warrants
over a further 50 million shares, with an exercise price of 0.75p
per share, were issued in connection with this additional drawdown.
ii. During October 2022, the entire GBP750,000 principal amount of
the abovementioned two tranche unsecured convertible loan facility,
together with associated interest, was settled by way of the
issue of, in aggregate, 237,140,577 new ordinary shares.
iii. On 30 November 2022, the Company raised GBP0.925 million gross
through the placing of 264,285,714 new ordinary shares at a price
of 0.35 pence per share to provide additional funds to cover
the Company's expenditure as it progresses its plans for Greenfield.
The Valkor Loan, having previously been extended on 31 May 2022,
28 June 2022, 1 August 2022, 1 September 2022, 14 October 2022
and 1 November 2022, was also further varied to extend the repayment
date for the then remaining $1 million principal amount to the
completion date of a suitable funding transaction for Greenfield
that provides sufficient funds to TomCo to, inter alia, enable
it to affect repayment. The principal amount outstanding in respect
of the Valkor Loan is currently $750k raising GBP925,000 (gross).
iv. On 30 March 2023, the Company obtained a new four tranche unsecured
committed convertible loan note facility of up to GBP1 million
to provide additional working capital for the Group as required,
whilst the Company seeks to finalise funding arrangements for
Greenfield. If and when drawn down, interest equating to a fixed
amount of five per cent. of the principal amount drawn down shall
accrue until repayment, conversion or redemption of the relevant
notes with a scheduled maturity date of 31 March 2024. The conversion
price per new ordinary share under the facility shall be determined
as the lower of: (i) 0.60 pence; and (ii) the volume-weighted
average price of an ordinary share during any five of the fifteen
business days prior to service or deemed service of a conversion
notice, as selected by the noteholder(s) concerned and sourced
from Bloomberg L.P., discounted by 15 %. Greenfield's option
over the remaining 90% Membership Interest in TSHII for $16.25m,
having previously been extended on several occasions, was also
further extended to no later than 30 April 2023.
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END
FR UNAUROVUSRAR
(END) Dow Jones Newswires
April 06, 2023 08:30 ET (12:30 GMT)
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