REG - TomCo Energy PLC - Results for the year ended 30 September 2022
06/04/2023 13:30
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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
(http://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
(http://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 £1.25 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
£0.75 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 £0.925 million gross through the placing of 264,285,714 new ordinary
shares at a price of 0.35 pence per share to provide additional funds to cover
the Company's expenditure as it progresses its plans for Greenfield. The terms
of the Valkor Loan were also varied to extend the repayment date for the
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 £1 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 DIVIDENDS
The statement of comprehensive income is set out on page 23. The Directors do
not propose the payment of a dividend (2021: £nil).
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 £1.25 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
£0.75 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 £0.925 million gross through the placing of 264,285,714 new ordinary
shares at a price of 0.35 pence per share to provide additional funds to cover
the Company's expenditure as it progresses its plans for Greenfield. The terms
of the Valkor Loan were also varied to extend the repayment date for the
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 £1 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 shares of nil par value Share warrants Share options Ordinary shares of nil par value Share warrants Share options
M. Groat 11,887 - 20,380,952 11,887 - 20,380,952
J. Potter 26,500 - 52,714,285 26,500 - 52,714,285
L. Castro - - 15,000,000 - - 15,000,000
Z. Phillips - - - - - -
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 £0.15million.
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 £1 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, health and safety and other regulatory standards See Directors' Report. The Company has engaged leading advisers to assist it in securing relevant
permits or licences to operate.
The Company maintains ongoing oversight of health and safety and environmental
compliance.
Liquidity risk See Directors' Report including 'Going Concern' section. The Company maintains a detailed cashflow forecast and carefully monitors
expenditure and 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 Board Audit Remuneration
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 £74,800 (2021: £34,337) 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 pay Salaries Severance pay
2022 2022 2021 2021
£'000 £'000 £'000 £'000
M. Groat 50 - 38 -
J. Potter 233 - 139 -
L. Castro 42 - 19 -
Z. Phillips (appointed 24 January 2022) 25 - - -
R. Horsman (resigned 24 January 2022) 12 - 30 -
Richard Horsman was also paid £30,000 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
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TOMCO ENERGY PLC
Opinion
We have audited the financial statements of TomCo Energy Plc (the 'parent
company') and its subsidiaries (the 'group') for the year ended 30 September
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 £107,000 (2021: £78,000) 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
£107,000, (2021: £78,000) each significant component of the group was
audited to an overall materiality ranging between £73,000 (2021: £39,000) to
£107,000 (2021: £78,000) 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
£5,350 (2021: £1,500) 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 capitalisation of Intangible Assets Development Expenditure (£4,794k):
The group has significant intangible assets, comprising predominantly of
expenditure on researching and developing the design and operation of a pilot
plant acquired in the prior year. The carrying value of intangible assets at We reviewed management's assessment which concluded that the Greenfield
30 September 2022 was £5,033k of which £4,794k relates to the pilot plant. project is in the development phase, and therefore the costs relating to the
The balance of £239k relates to exploration asset expenditure during the year development are capitalised within Greenfield and in doing so our work
ended 30 September 2022. included
There is the risk that the carrying value of these assets have not been • Challenging management on the classification of assets and
correctly recognised / measured in accordance with IFRS and that they should determining whether these met the definition of development costs under IAS 38
be impaired. 'intangible assets'.
We have assessed management's review of whether there are any indicators 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 (£239k)
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
(http://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 £'000 £'000 £'000 £'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) -
Share of loss of joint venture Error! Reference source not 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 to the equity shareholders of the parent per share per share
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 £'000 £'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
Non-controlling interest
Note Share capital Share premium Warrant reserve Translation reserve Retained Deficit Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'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
£'000 £'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 £0.15million.
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 £1 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 States United Kingdom Eliminations Total United States United Kingdom Eliminations Total
Year ended 30 September 2022 2022 2022 2022 2021 2021 2021 2021
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'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
£'000 £'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
£'000 £'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 2022 2021
loss:
£'000 £'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
£'000 £'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 payment expense
Share-based payment expense
Salaries Severance pay Salaries Severance pay
2022 2022 2022 2021 2021 2021
£'000 £'000 £'000 £'000 £'000 £'000
J. Potter 233 - 96 139 - 74
M. Groat 50 - 39 38 - 28
L. Castro 42 - 32 19 - 20
Z. Phillips (appointed 24 January 2022)
25 - - - - -
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 £30,000 in
consideration for the waiver of his rights over 7.5 million share options.
£20,000 of this sum has been expensed to profit and loss. The remaining
£10,000 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.
Losses Weighted average number of shares Per share Amount
Financial year ended 30 September 2022 £'000 Pe
nc
e
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 expenditure Development expenditure Patents and patent applications Total
£'000 £'000 £'000 £'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 £136,000 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
£'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 or loss £0 £0
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 £'000 £'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:
£Nil). 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 £'000 £'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
£'000 £'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 £'000 £'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 £375,000 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 £165,000 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 for identical assets (Level 1)
Significant other observable inputs
(Level 2) Significant unobservable inputs
(Level 3)
£'000 £'000 £'000 £'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
£'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 £375,000, 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 £'000 £'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 £14.0 million (2021: £12.7 million) available for offset
against future Company income. This gives rise to a potential deferred tax
asset at the reporting date of £3.5 million (2021: £2.9 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 £8.5 million for
which no deferred tax asset is recorded given the uncertainty of future
profits.
18. Share capital
Number of shares 2022
in issue £
Issued and fully paid at 1 October 2020 - shares of no par value 673,634,235 -
November 2020-placing of new ordinary shares (note 19) 777,777,777 -
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
£'000 £'000
At 1 October 31,142 29,222
November 2020 - subscription of new shares at 0.45 pence per share, net of - 3,226
costs
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, net of costs 1,175 -
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
number Weighted average exercise price number Weighted average exercise price
Pence 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:
2021
2022
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:
Name of subsidiary Proportion of ownership interests and voting rights held by non-controlling Total comprehensive loss allocated to non-controlling interest Accumulated non-controlling interest
interests
2022 2021 2022 2021 2022 2021
% % £'000 £'000 £'000 £'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
number Weighted average number Weighted average
exercise price exercise price
Pence 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:
2021
2022
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 £194,000 (2021:
£135,000).
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 £545,000 (2021: £422,000).
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 £'000 £'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:
1 October Financing cash flows Non-cash transactions 30 September
Group 2022 £'000 £'000 £'000 £'000
- 1,348 1,292
Loans (56)
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:
£nil).
28. Subsequent events
i. In early October 2022, the Group drew down the second £375,000 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 £750,000 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 £0.925 million gross through the
placing of 264,285,714 new ordinary shares at a price of 0.35 pence per share
to provide additional funds to cover the Company's expenditure as it
progresses its plans for Greenfield. The 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 £925,000 (gross).
iv. On 30 March 2023, the Company obtained a new four tranche unsecured committed
convertible loan note facility of up to £1 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 UNAUROVUSRARRecent news on TomCo Energy
See all newsREG - TomCo Energy PLC - Final Results for the year ended 30 September 2024
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Announcement