REG - TomCo Energy PLC - Results for the year ended 30 September 2023
28/03/2024 15:00
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RNS Number : 7771I TomCo Energy PLC 28 March 2024
28 March 2024
TOMCO ENERGY PLC
("TomCo" or the "Company" or, with its subsidiaries, the "Group")
Audited results for the year ended 30 September 2023
TomCo Energy plc (AIM: TOM), the US operating oil development group focused on
using innovative technology to unlock unconventional hydrocarbon resources,
announces its audited results for the year ended 30 September 2023.
The 2023 Annual Report and Accounts (the "2023 Annual Report") have now been
published and are available on the Company's website at www.tomcoenergy.com
(http://www.tomcoenergy.com) .
Enquiries:
TomCo Energy plc
Malcolm Groat (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Matthew Chandler +44 (0)20 7409 3494
Novum Securities Limited (Broker)
Jon Belliss / Colin Rowbury +44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Florence Chandler +44 (0)20 3934 6630
For further information, please visit www.tomcoenergy.com
(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 delighted to be delivering my fourth statement to the shareholders of
TomCo Energy plc ("TomCo" or the "Company" or, together with its subsidiaries,
the "Group"), as part of the Annual Report and Financial Statements for the
year ended 30 September 2023.
Operational Review
The Company's primary focus during the year under review has remained on its
wholly owned subsidiary, Greenfield Energy LLC ("Greenfield"), and securing
sufficient financing to progress its plans to, inter alia, pursue the
construction of up to two oil sands separation/processing plants capable of
processing at least 6,000 tonnes per day of oil sands at a suitable permitted
site in Utah, USA.
Funding for ambitious projects like ours has frustratingly seldom been harder
to come by. Interest rates have been higher than at any time in the last 15
years and UK equity markets, particularly for junior natural resource focused
companies, have been particularly challenging.
With your continued patience and support, we have been endeavouring to secure
funding to: (i) enable Greenfield to exercise an option to purchase the
remaining 90% of Tar Sands Holdings II ("TSHII") that it does not already own;
and (ii) construct up to two commercial scale processing plants alongside the
potential drilling of a number of wells into the deeper sands that are too
deep to mine for the implementation of oil recovery processes. TSHII owns a
760 acre site with a Large Mining Permit in Utah which we have identified as
being an ideal site for the project. Alongside our search for project finance,
we have continued to refine the proposed processing technology/methodology and
specification for the planned plants working closely with our main
contractor/service provider and former joint venture partner, Valkor LLC
("Valkor"), and other technical partners and potential off-takers, aswell
engendering support and fostering good relations with local authorities,
regulators and other stakeholders. Accordingly, we are well placed to start
implementing our development plans for Greenfield as soon as sufficient
funding is in place.
As I write, we believe we are edging closer to securing the requisite funding
after many months of effort and patient negotiation. As announced
previously, the most likely and favoured scenario will involve the Group
potentially farming-out or disposing of a majority stake in Greenfield to a
partner(s) in return for, inter alia, certain upfront cash consideration, a
carried interest or continuing minority equity participation for TomCo in
Greenfield without the need for it to make further capital contributions and
the provision of a sizeable funding package for Greenfield's development. The
Board remains confident that a suitable financing transaction can ultimately
be consummated and is in ongoing discussions with the vendor of TSHII to seek
a further extension of Greenfield's option over the remaining 90% membership
interest in TSHII.
Although we are not yet over the line with our preferred funder, I would like
to take this opportunity to thank my fellow directors for their unwavering
commitment to delivering a successful outcome, most particularly John Potter,
our CEO.
TurboShale RF Technology
The potential future exploitation of the Company's legacy TurboShale and Oil
Mining Company assets, which are fully impaired from an accounting
perspective, will be revisited and reviewed when appropriate in due course.
Corporate Review
Whilst seeking to carefully manage our cash reserves and working capital
position, the Company has undertaken a number of financing transactions
throughout the year and post the financial year end to satisfy expenditure on
progressing our preparations and development plans for Greenfield and general
overheads and to repay certain indebtedness.
In summary, such transactions have comprised:
- September 2022: unsecured convertible loan facility of £0.75m - subsequently
drawn down and converted in full. Part of the proceeds were utilised to repay
$0.5m of the principal amount of the unsecured $1.5m loan previously advanced
by Valkor to Greenfield in connection with its purchase of an initial 10%
Membership Interest in TSHII.
- November 2022: equity placing to raise £0.925m gross at a price of 0.35p per
share. The terms of the Valkor Loan were also varied to extend the repayment
date for the then remaining principal amount to the completion date of a
suitable funding package being secured for Greenfield's development.
- March 2023: four tranche unsecured convertible loan facility of up to £1m -
initial tranche subsequently drawn down and converted in full.
- June 2023: equity placing and subscription to raise, in aggregate, £0.5m
gross at a price of 0.08p per share. The remaining £0.75m of the
abovementioned March 2023 convertible loan facility was cancelled.
- October 2023: equity subscription to raise £0.1m gross at a price of 0.08p
per share.
- January 2024: equity subscription to raise £0.05m gross at a price of 0.1p
per share.
- February 2024: equity placing and subscription to raise, in aggregate, £0.3m
gross at a price of 0.045p per share.
-
2024 appears set to be a defining year for TomCo and we look forward to
updating shareholders on our future progress.
Malcolm Groat
Non-Executive Chairman
28 March 2024
DIRECTORS' REPORT
The Directors submit their report and the financial statements of the Group
for the year ended 30 September 2023.
PRINCIPAL ACTIVITY
The principal activity of the Group is that of seeking to develop, through its
wholly owned subsidiary Greenfield Energy LLC, the oil sands resources
contained in the TSHII site via the exploitation of separation technology to
achieve sustained future production.
RISK ASSESSMENT
The Group's oil and gas activities are subject to a range of financial and
operational risks which can significantly impact on its performance, with the
key risks for the year ended 30 September 2023 set out below.
Operational risk
During the financial year and to date, further discussions with a preferred
funding partner for, inter alia, the requisite plant construction and
supporting development costs have reached an advanced stage but remain subject
to the Group's due diligence and proof of funds being satisfactorily
completed. Executing on the preferred funding package scenario will likely
involve the disposal of a majority stake in Greenfield by TomCo constituting a
fundamental disposal pursuant to the AIM Rules for Companies and thereby
require the prior approval of the Company's shareholders. If ultimately
successfully secured and approved by shareholders, the envisaged funding
package would enable Greenfield to purchase the balancing 90% Membership
Interest in TSHII and instigate the detailed engineering work for the initial
planned separation plant with nameplate capacity to process 6,000 tonnes per
day of oil sands. The detailed engineering phase is now expected to take
approximately six months before construction of the first plant approximately
12-15 months thereafter leading to commencement of initial processing
operations. There can be no certainty that such preferred funding arrangements
can be successfully concluded nor as to the precise terms and structure of any
such funding package.
The Group continues to operate with a small team, on which it is highly
reliant. Information is openly shared within the team to ensure that reliance
is not placed on specific individuals.
Risks relating to environmental, health and safety and other regulatory
standards
The Group's proposed future extraction activities are subject to various US
federal and state laws and regulations relating to the protection of the
environment including the obtaining of appropriate permits and approvals by
relevant environmental authorities. Such regulations typically cover a wide
variety of matters including, without limitation, prevention of waste,
pollution and protection of the environment, labour regulations and worker
safety. Furthermore, the future introduction or enactment of new laws,
guidelines and regulations could serve to limit or curtail the growth and
development of the Group's business or have an otherwise negative impact on
its planned operations. The Group ensures that it complies with the relevant
laws and regulations in force in the jurisdictions in which it operates.
Liquidity and interest rate risks
The Group is ultimately dependent on sources of additional equity and/or debt
funding to develop Greenfield and any of the Group's other exploration assets
and/or technology and to meet its day-to-day capital commitments and
overheads. Cash forecasts identifying the liquidity requirements of the Group
are produced frequently and are reviewed regularly by management and the
Board. This strategy will continually be reviewed in light of existing project
developments and new project opportunities as they arise. For further
information regarding the Group's cash reserves and future funding
requirements, please refer to the 'Going Concern' section below.
Currency risk
Due to the limited income and expenses denominated in foreign currencies, it
was not considered cost effective to manage transactional currency exposure on
an active basis. Consequently, as the financial statements are reported in
sterling, any movements in the exchange rate of foreign currencies against
sterling may affect the Group's statements of comprehensive income and
financial position. The Group holds some cash in US dollars to mitigate the
foreign exchange risk and keeps its currency profile under review.
Financial instruments
It was not considered appropriate for the Group to enter into any hedging
activities or trade in any financial instruments in 2023. Further information
is set out in Note 20.
RESULTS AND DIVIDENDS
The statement of comprehensive income is set out on page 18 with the Group
reporting a loss before taxation for the year of £2.35m (2022: £0.69m). The
Directors do not propose the payment of a dividend (2022: £nil).
REVIEW OF KEY EVENTS DURING THE YEAR
TurboShale
There were no significant developments in respect of the Group's TurboShale
technology during the financial year with the TurboShale and Oil Mining
Company assets remaining fully impaired.
Greenfield Energy LLC
In light of the significant delay encountered in receiving a permit for an
initial production well, with a response to our application from the relevant
authorities still outstanding, the Board has refrained from incurring any
further significant expenditure on the potential in-situ 25 well production
programme until a suitable wider project funding package for Greenfield has
been obtained.
Alongside our exercise to secure project finance, throughout the period the
Company has worked closely with Valkor and other technical partners to further
refine and develop the design for the initial separation plant with
significant improvements to the potential efficiency and operating costs of
the plant.
While the likely loss of the proposed Uintah Railroad could well have
restricted the future sale of the sand to be produced by the proposed initial
plant, an alternative transport solution has been identified and will be
developed further once the project funding is secured. The projected sales
values of the future oil and sand end products have continued to increase
during the year, with the anticipated cost of constructing and operating the
separation plant reducing as a result of the improved plant design led by
Valkor.
TSHII
Greenfield successfully extended the exercise period of the option, at its
sole discretion, to acquire the remaining 90% of the Membership Interests from
the vendor of TSHII for additional cash consideration of $17.25m from 30 April
2023 to 31 December 2023. The Company currently remains in discussions with
the counterparty with a view to seeking a further extension to the exercise
period or agreeing a suitable alternative arrangement. There can be no
certainty that the option will be extended or an alternative arrangement
agreed or that the required funding can be secured to ultimately exercise the
option if renewed.
Updated TSHII Reserves Report
An updated independent reserves report commissioned from Netherland, Sewell
& Associates, Inc. as of 30 June 2023, increased the total estimated
undiscounted future net revenues in respect of a gross 100% interest in a
potential commercial scale project on the mining properties comprising the
TSHII site from their previously disclosed figure of $942m (based on 1P
reserves) in January 2022 to $1.32bn. Estimated discounted future net revenues
attributable to TomCo's current 10 per cent. interest in TSHII via Greenfield
ranged from approximately $47.3m based on 1P reserves (Jan 22: $30.5m) to
approximately $77.6m (Jan 22: $57.6m) based on 3P reserves.
Financing
On 1 September 2022, the Company obtained an unsecured facility of up to
£0.75 million via a convertible loan instrument and an associated
subscription and put option which was entered into with certain subscribers
introduced by the Company's broker. Such facility was subsequently drawn down
and converted in full and the proceeds utilised to repay, in aggregate, $0.5
million of the principal amount of the unsecured $1.5 million loan previously
advanced by Valkor to Greenfield (the "Valkor Loan") in connection with
Greenfield's purchase of an initial 10% Membership Interest in TSHII in
November 2021, and for general corporate purposes.
On 30 November 2022, the Company raised a further £0.925 million gross
through the placing of 264,285,714 new ordinary shares at a price of 0.35
pence per share to provide additional funds to cover the Company's expenditure
as it progresses its plans for Greenfield. The terms of the Valkor Loan were
also varied to extend the repayment date for the then remaining $1 million
principal amount to the completion date of a suitable funding transaction for
Greenfield that provides sufficient funds to TomCo to, inter alia, enable it
to affect repayment. As at the date of this report the principal amount
outstanding in respect of the Valkor Loan was $350k.
On 30 March 2023, the Company secured a new four tranche committed unsecured
convertible loan facility of up to £1 million to provide additional working
capital for the Group whilst seeking to finalise funding arrangements for
Greenfield. On 14 June 2023, the Company cancelled £750,000 of this facility
and replaced it with a £500,000 gross placing and subscription involving the
issue of 625,000,000 new ordinary shares at a price of 0.08 pence per share,
with the funds used to support the Company's working capital requirements.
On 13 October 2023, the Company raised £100,000 gross from an existing
shareholder via a subscription for 125,000,000 new ordinary shares at a price
of 0.08 pence per share.
Following the financial year end, on 2 January 2024 the Company secured a
further £50,000 from an existing shareholder via a subscription for
50,000,000 new ordinary shares at a price of 0.1 pence per share and on 21
February 2024 the Company raised an additional £300,000 gross via a placing
and subscription of, in aggregate, 666,666,667 new ordinary shares at a price
of 0.045 pence per share.
Directors
The Directors who served on the Board during the year to 30 September 2023 and
to date were as follows:
Malcolm Groat
John Potter
Louis Castro
Zac Phillips
Directors' interests in the ordinary shares of the Company, including family
interests, as at 30 September 2023 were as follows:
30 September 2023 30 September 2022
Ordinary shares of nil par value Share warrants Share options Ordinary shares of nil par value Share warrants Share options
M. Groat 11,887 - 20,380,952 11,887 - 20,380,952
J. Potter 26,500 - 52,714,285 26,500 - 52,714,285
L. Castro - - 15,000,000 - - 15,000,000
Z. Phillips - - - - - -
38,387 - 88,095,237 38,387 - 88,095,237
Details of the Directors' remuneration, share warrants and share options can
be found in the Remuneration Committee Report and Notes 6, 18 and 19 to the
financial statements.
Payments of payables
The Group's policy is to negotiate payment terms with its suppliers in all
sectors to ensure that they know the terms on which payment will take place
when the business is agreed and to abide by those terms of payment.
Going Concern
At 25 March 2024, the Group had cash reserves of approximately £0.1 million.
The Group's financial statements have been prepared on a going concern basis,
which presumes that the Group will be able to meet its obligations as they
fall due for the foreseeable future.
The Directors have prepared a cash flow forecast for the thirteen months to 30
April 2025. As set out in the Chairman's Statement, discussions with potential
funders to secure sufficient finance for the Group's plans including its
working capital requirements are at an advanced stage but have not yet been
concluded. These plans include the acquisition of the remaining 90% of TSHII
by Greenfield; funding for up to two oil sand processing plants and associated
infrastructure; the potential drilling of wells into the deeper oil sands that
are too deep to mine for the implementation of oil recovery processes; and
repayment of the remainder of the historic loan from Valkor LLC (the "Valkor
Loan").
On 30 November 2022, the terms of the Valkor Loan, which is unsecured, were
varied such that the loan is only repayable on completion of a suitable
funding transaction for Greenfield that provides sufficient funds to enable
the Company to affect such repayment. Hence, the abovementioned cash flow
forecast does not include any funding which would arise from a successful
conclusion to the ongoing discussions with the identified potential
financiers, nor does it include repayment of the Valkor Loan.
The forecast, which includes all commitments at the date of this report and
reflects receipt of the net proceeds of the £0.3m equity fundraising
announced on 21 February, indicates that the Group will need to secure
approximately an additional £0.5m in Q2 2024 to meet its currently envisaged
working capital requirements for the twelve months to 30 April 2025, beyond
which further funding will be required. Based on historical and recent support
from new and existing investors and debt providers, the Board reasonably
believes that additional funding can be obtained when required, via further
debt or equity issuances, and in the meantime is carefully preserving its
existing cash and taking measures to reduce costs and defer expenditure
(including director salaries) such that it continues to consider it
appropriate to prepare the financial statements on a going concern basis.
However, the Board's ability to raise such funds cannot be guaranteed. As a
consequence, there is a material uncertainty as to the going concern status of
the Group. The financial statements do not include the adjustments that
would result if the Group was unable to continue as a going concern.
The Directors' consideration of the Group's going concern status is also set
out in note 1.3 to the financial statements. The auditors refer to going
concern by way of a material uncertainty within their audit report.
Directors' responsibilities
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulations.
The directors have resolved to prepare financial statements for each financial
year end and have elected to prepare financial statements in accordance with
UK-adopted International Accounting Standards. The financial statements are
required to give a true and fair view of the state of the affairs of the
Company and of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
· consistently select and apply appropriate accounting policies;
· present information, including accounting policies, in a manner that provides
relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with the specific requirements
in International Financial Reporting Standards is insufficient to enable users
to understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial performance; and
· state that the Group has complied with International Financial Reporting
Standards, subject to any material departures disclosed and explained in the
financial statements.
The Directors confirm that they have complied with these requirements, and,
having a reasonable expectation that the Group has and will have adequate
resources to continue in operational existence for the foreseeable future,
have continued to adopt the going concern basis in preparing the financial
statements.
Website publication
The directors are responsible for ensuring the annual report and the financial
statements are made available on a website. Financial statements are published
on the company's website in accordance with legislation in the Isle of Man
governing the preparation and dissemination of financial statements, which may
vary from legislation in other jurisdictions. The maintenance and integrity of
the company's website is the responsibility of the directors. The directors'
responsibility also extends to the on-going integrity of the financial
statements contained therein.
Auditors
All of the current Directors have taken all the steps that they ought to have
taken to make themselves aware of any information needed by the Company's
auditors for the purposes of their audit and to establish that the auditors
are aware of that information. The Directors are not aware of any relevant
audit information of which the auditors are unaware.
PKF Littlejohn LLP have expressed their willingness to continue in office and
a resolution to re-appoint them will be proposed at the Company's next annual
general meeting.
By order of the Board
John Potter
CEO
28 March 2024
CORPORATE GOVERNANCE STATEMENT
As Chairman, I am pleased to present the Company's Governance Statement under
the QCA Corporate Governance Code (the "QCA Code"). Establishing effective
corporate governance structures that evolve with the business and protect
shareholder value is a key element of my role, together with the Board as a
whole. Set out below are details of the Company's governance framework
benchmarked against the QCA Code principles.
The Board of Directors of TomCo (the "Board") monitors the business affairs of
the Company and its subsidiaries on behalf of its shareholders. The Board
currently consists of the Chief Executive Officer and three Non-Executive
Directors. None of the Non-Executive Directors have previously held an
executive position with the Company. The Directors have responsibility for the
overall corporate governance of the Company and recognise the need for the
highest standards of behaviour and accountability. The Directors are committed
to the principles underlying best practice in corporate governance and have
adopted the QCA Code.
This statement explains, at a high level, how the QCA Code is applied by the
Company and how its application supports the Company's medium to long-term
development. Further information on the application of the QCA Code can be
found on the Company's website at
https://tomcoenergy.com/investors/governance/.
The Board is responsible for the stewardship of the Company through
consultation with the management of the Company. Management represents the
Executive Director. Any responsibility that is not delegated to management or
to the specific committees of the Board remains with the Board, subject to the
powers of shareholder meetings. The frequency of Board meetings, as well as
the nature of agenda items, varies depending on the state of the Company's
affairs and in light of the opportunities or risks which the Company faces.
Members of the Board are in frequent contact with one another, and meetings of
the Board are held as deemed necessary.
Statement of compliance with the QCA Code
Throughout the year ended 30 September 2023, the Company has been in
compliance with the provisions set out in the QCA Code.
Application of the QCA Code principles
The Company has applied the principles set out in the QCA Code, by complying
with it as reported above. Further explanations of how the principles have
been applied is set out below.
Principle One - Business Model and Strategy
TomCo is an oil exploration and development company focused on applying
innovative technology to unlock unconventional hydrocarbon resources,
initially in Utah, USA.
The Company, as a result of the initial success of the opportunity developed
within Greenfield Energy LLC, has maintained its primary focus on developing
an oil sands separation process with the planned potential future development
of up to two commercial scale processing plants with the ability to achieve
6,000 tonnes of sand per day.
Principle Two - Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communications and having
constructive dialogue with its shareholders. Shareholders and analysts have
the opportunity to discuss issues and provide feedback at meetings with the
Company and management.
All shareholders are encouraged to attend and participate in all shareholder
meetings called by the Company, in particular its Annual General Meeting
(AGM). Investors also have access to current information on the Company and
the Group through the Company's website at: www.tomcoenergy.com.
Principle Three - Considering Wider Stakeholder and Social Responsibilities.
The Board recognises that the long-term success of the Group is reliant upon
the efforts of the employees of the Group, its partners, consultants,
contractors, suppliers, regulators and other stakeholders. The Board have put
in place a range of processes and systems to ensure that there is close
oversight and contact with its key stakeholders.
The Group is subject to oversight by a number of different U.S. State and
other regulatory bodies, who directly or indirectly are involved with the
permitting and approval process for its oil and gas operations in Utah,
including those conducted by Greenfield. Additionally, given the nature of the
Group's business, including the activities of Greenfield there are other
parties who, whilst not having regulatory power, nonetheless have an interest
in seeing that the Group conducts its operations in a safe, environmentally
responsible, ethical and conscientious manner.
The Group makes all reasonable efforts, directly or through its advisers, to
engage in and maintain active dialogue with each of these governmental and
non-governmental bodies, to ensure that any issues faced by the Group,
including but not limited to regulations or proposed changes to regulations,
are well understood and ensuring to the fullest extent possible that the Group
is in compliance with all relevant regulations, standards and specific
licensing obligations, including environmental, social and safety aspects, at
all times.
Principle Four - Risk Management
In addition to its other roles and responsibilities, the Board is responsible
for ensuring that procedures are in place and are being implemented
effectively to identify, evaluate and manage the significant risks faced by
the Group.
As a result of the process described above, a number of risks have been
identified. The principal risks and the manner in which the Company and its
Board seek to mitigate them are set out below. The Board reviews the principal
risks facing the business as part of its meetings throughout the year and
changes to those risks as the Company develops. Where risks change or new
risks are identified the Board amends existing or implements new risk
management strategies as applicable.
Risk Comment Mitigation
Operational risks See Directors' Report. The Group's operations are limited currently, pending obtaining funding for
the two planned 6,000 tonnes per day processing plants. The Directors remain
in detailed discussions with a potential funder concerning, inter alia,
securing funding for such plants, along with the completion of Greenfield's
purchase of the remaining 90% of TSHII which holds the site for the proposed
plants and the potential in-situ well programme. The requisite permitting
process for the in-situ well programme is still ongoing and while the process
intended to be deployed is proven, its use on oil sands is less common which
has extended the consultation process in respect of such permitting.
Environmental, health and safety and other regulatory standards See Directors' Report. The Company has engaged leading advisers to assist it in securing relevant
permits or licences to operate.
The Company maintains ongoing oversight of health and safety and environmental
compliance.
Liquidity risk See Directors' Report including 'Going Concern' section. The Company maintains a detailed cashflow forecast and carefully monitors
expenditure and seeks to raise additional funding as required and as referred
to in Note 1.1.
Currency risk See Directors' Report. The Company aims to manage currency exposures by holding funds in the
applicable currency to match anticipated expenditure.
The Board considers that an internal audit function is not necessary or
practical due to the current size of the Group and the close day to day
control exercised by the Executive Director. However, the Board will continue
to monitor the need for an internal audit function. The Executive Director has
established appropriate reporting and control mechanisms to ensure the
effectiveness of the Group's control systems for the size of the business and
its activities. The Board obtains regular updates on risks from the Executive
Director, which allows it to monitor the effectiveness of risk management and
through its regular engagement and review of reporting on areas such as the
status of the Company's projects, budgets, results and cash flow position of
the Company, it considers the effectiveness of controls on an ongoing basis.
Principle Five - A Well-Functioning Board of Directors
The Board currently comprises the Chief Executive, John Potter, and three
independent Non-Executive Directors, Malcolm Groat, Louis Castro and Zac
Phillips.
Biographies for each of the current Directors are set out on the Company's
website. Executive and Non-Executive Directors are subject to re-election
usually at the Company's Annual General Meeting, at intervals of no more than
three years.
The Board meets on a regular basis, typically at least once a month.
The Board is responsible for formulating, reviewing and approving the Group's
strategy, budgets and corporate actions. As such, the Company has established
separate Audit and Remuneration Committees.
The Audit Committee comprises Louis Castro (Chairman), Malcolm Groat and Zac
Phillips. The Audit Committee meets at least twice a year to consider the
integrity of the financial statements of the Company, including its annual and
interim accounts; the effectiveness of the Company's internal controls and
risk management systems; auditor reports; and terms of appointment and
remuneration for the auditor.
The Company's Remuneration Committee comprises Louis Castro (Chairman),
Malcolm Groat and Zac Phillips. The Remuneration Committee meets from time to
time, but not less than once a year, to review and determine, amongst other
matters, the remuneration of Executives on the Board and any share incentive
plans of the Company.
The QCA Code recommends that the Chairman must have adequate separation from
the day-to-day business to be able to make independent decisions. Malcolm
Groat is the Company's Non-Executive Chairman and the Board believes that he
has adequate separation from the day-to-day business of the Company to be able
to make such independent decisions. As the Board is comprised of only four
members, one of whom is an Executive and three of whom are independent
Non-Executive Directors, including the Chairman, the Board does not believe it
is currently necessary to appoint a senior independent director.
The Chief Executive is a full-time employee of the Company. Whilst each of the
Non-Executive Directors are considered to be part time, they are expected to
provide as much time to the Company as is required. The attendance record of
the Directors at Board and committee meetings held during the year ended 30
September 2023 was as follows:
Main Board Audit Remuneration
Committee Committee
Meetings held 10 2 1
Attendance:
Malcolm Groat 10 2 1
John Potter 10 - -
Louis Castro 10 2 1
Zac Phillips 10 2 1
Principle Six - Appropriate Skills and Experience of the Directors
The Board believes that the current balance of skills held by the Board as a
whole, reflects a very broad range of commercial and professional skills
across geographies and industries and each of the Directors has previous
experience of public markets.
The Board believes that the Directors are well suited to the Company's
fundamental objective of enhancing and preserving long-term shareholder value
and ensuring that the Group conducts its business in an ethical and safe
manner. The Board is considered to be of a sufficient size to provide more
than adequate experience and perspective to its decision-making process and,
given the size and nature of the Group, the Board does not consider at this
time that it is appropriate to increase the size of the Board or amend its
composition.
As the Board is not currently anticipating any change to its size or
composition, it has not yet implemented a written policy regarding the
identification and nomination of female directors. In the event that one of
the existing members of the Board stands down from their current position, the
Company will, at that time, give further consideration to the specific
selection of a female member of the Board and the adoption of a formal policy
relating to the positive appointment of additional female members of the Board
for future opportunities.
The Board is responsible for: (a) ensuring that all new Directors receive a
comprehensive orientation, that they fully understand the role of the Board
and its committees, as well as the contribution individual directors are
expected to make (including the commitment of time and resources that the
Company expects from its directors) and that they understand the nature and
operation of the Group's business; and (b) providing continuing education
opportunities for all directors, so that individuals may maintain or enhance
their skills and abilities as directors, as well as to ensure that their
knowledge and understanding of the Group's business remains current.
Given the size of the Company and the in-depth experience of its Directors,
the Board has not deemed it necessary to develop a formal process of
orientation for new Directors but encourages all its Directors to visit the
Group's operations to ensure familiarity and proper understanding.
Skills & Experience of Board Members
Malcolm Groat
Malcolm is a Chartered Accountant and has extensive corporate experience, with
roles as Chairman, Non-Executive Director, Chairman of Audit Committees, CEO,
COO and CFO for a number of public companies. He is an adviser on compliance
and governance, strategy and operational improvement, and managing the risks
of rapid change.
John Potter
John is an accomplished Chief Executive and project manager with many years of
experience working within the energy sector. John brings a wide range of
skills, knowledge and industry connections. His proficiency in understanding
and identifying best technologies in projects and his proven abilities in
developing relationships with stakeholders, including operators, politicians,
financiers, technology providers and regulators, are well proven and have
brought great value to the companies he has previously worked with.
Louis Castro
Louis is a graduate engineer and PwC trained Chartered Accountant who has
spent his career in the City in investment banking and capital markets,
advising growth companies on a wide range of matters including fund-raising
and M&A. He served as an AIM Nomad for many years before becoming CFO of a
listed oil company. In recent years, Louis became Executive Chairman of Orosur
Mining Inc. which is quoted on both the TSX-V and on AIM, and he is also a
non-executive director of Tekcapital plc and Innovative Eyewear, Inc.
Zac Phillips
Zac has over 25 years' experience in oil and gas finance, having worked for
BP, Chevron, Merrill Lynch and ING Barings. He was previously CFO for Dubai
World's oil and gas business (DB Petroleum) with responsibility for risk
management and authoring of investment proposals. He has a degree in Chemical
Engineering and a PhD in Chemical Engineering from Bath University.
Principle Seven - Evaluation of Board Performance
The Board has determined that it shall be responsible for assessing the
effectiveness and contributions of the Board as a whole and its committees
(which currently comprise the Audit Committee and the Remuneration Committee).
The small size of the Board allows for open discussion. The Chairman has
regular dialogue with the Chief Executive whereby the Board's role and
effectiveness can be considered.
No formal assessments have been prepared in the year. However, the Board
assesses its effectiveness on an ongoing basis. The Board will keep this
matter under review and especially if either the size of the Board or the
number of committees increases, which in turn may require a more formalised
assessment and evaluation process to be established to ensure continued
effectiveness.
Principle Eight - Corporate Culture
The Board recognises that their decisions regarding strategy and risk will
impact the corporate culture of the Group as a whole and that this will have
an effect on the performance of the Group. The Board is very aware that the
tone and culture set by the Board will greatly impact all aspects of the
Group. The corporate governance arrangements that the Board has adopted are
designed to ensure that the Group delivers long-term value to its shareholders
and that shareholders have the opportunity to express their views and
expectations for the Company in a manner that encourages open dialogue with
the Board.
A large part of the Group's activities is centred upon what needs to be an
open and respectful dialogue with partners, suppliers, consultants and other
stakeholders. Therefore, the importance of sound ethical values and behaviour
is crucial to the ability of the Group to successfully achieve its corporate
objectives.
The Directors consider that, at present, the Group has an open culture
facilitating comprehensive dialogue and feedback and enabling positive and
constructive challenge.
Principle Nine - Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Group's activities rests with the
Board, with the responsibilities of the Executive Director arising as a
consequence of delegation by the Board.
The Board has adopted appropriate delegations of authority which set out
matters which are reserved to the Board. The Chairman is responsible for the
effectiveness of the Board and compliance with the QCA Code, while management
of the Group's business and primary contact with shareholders has been
delegated by the Board to the Chief Executive Officer.
Non-Executive Directors
The Board evaluates its performance and composition on a regular basis and
will make adjustments as and when required. When assessing the independence of
each Non-Executive Director, length of service is one of the considerations.
The Board will, when assessing new appointments in the future, consider the
need to balance the experience and knowledge that each independent director
has of the Group and its operations, with the need to ensure that independent
directors can also bring new perspectives to the business.
In accordance with the Isle of Man Companies Act 2006, the Board complies
with: a duty to act within their powers; a duty to promote the success of the
Company; a duty to exercise independent judgement; a duty to exercise
reasonable care, skill and diligence; a duty to avoid conflicts of interest; a
duty not to accept benefits from third parties and a duty to declare any
interest in a proposed transaction or arrangement.
Principle Ten - Shareholder Communication
The Board is accountable to the Company's shareholders and, as such, it is
important for the Board to appreciate the aspirations of shareholders and
equally that shareholders understand how the actions of the Board and
short-term financial performance relate to the achievement of the Group's
longer-term goals.
The Board reports to the Company's shareholders on its stewardship of the
Group through the publication of interim and final financial results. The
Company announces significant developments which are disseminated via various
outlets including, before anywhere else, the London Stock Exchange's
regulatory news service (RNS). In addition, the Company maintains a website
(www.tomcoenergy.com) on which RNS announcements, press releases, corporate
presentations and the Report and Financial Statements are available to view.
Enquiries from individual shareholders on matters relating to the business of
the Group are welcomed. Shareholders and other interested parties can
subscribe to receive notification of news updates and other documents from the
Company via email.
The Annual General Meeting, and other meetings of shareholders that may be
called by the Company from time to time, provide an opportunity for
communication with all shareholders and the Board encourages shareholders to
attend and welcomes their participation. The Board is committed to maintaining
good communication and having constructive dialogue with its shareholders. The
Company has close ongoing relationships with its private shareholders.
Malcolm Groat
Non-Executive Chairman
28 March 2024
AUDIT COMMITTEE REPORT
Overview
The Committee met twice during the year to consider the full year 2022
accounts and interim 2023 accounts. It has also met after the year end to
consider the full year 2023 accounts.
Louis Castro is Chairman of the Committee. The other Committee members during
the year under review were Malcolm Groat and Zac Phillips.
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 £48,858 (2022: £74,800) were paid. The amounts paid in 2022
were to BDO LLP, the Company's 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
28 March 2024
REMUNERATION COMMITTEE REPORT
This report is on the activities of the remuneration committee for the
financial year ended 30 September 2023.
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 2022 and throughout the full year, the Remuneration Committee
comprised Louis Castro (Chairman), Zac Phillips and Malcolm Groat.
The Directors' emoluments comprise fees paid for services. The amounts paid
for their services are detailed below:
Salaries Severance pay Salaries Severance pay
2023 2023 2022 2022
£'000 £'000 £'000 £'000
M. Groat 50 - 50 -
J. Potter 253 - 233 -
L. Castro 42 - 42 -
Z. Phillips 36 - 25 -
R. Horsman (resigned 24 January 2022) - - 12 -
Richard Horsman was also paid £30,000 on his resignation in consideration for
the waiver of his share option rights.
As detailed in Note 19, the Company has in place a share option scheme for its
Directors.
The Committee met once during the year in conjunction with a Board meeting to
review salaries.
Louis Castro
Chairman, Remuneration Committee
28 March 2024
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF TOMCO ENERGY PLC
Opinion
We have audited the group financial statements of TomCo Energy Plc (the
'group') for the year ended 30 September 2023 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. The financial reporting framework
that has been applied in their preparation is UK-adopted international
accounting standards.
In our opinion, the group financial statements:
· give a true and fair view of the state of the group's affairs as at 30
September 2023 and of its loss for the year then ended; and
· have been properly prepared in accordance with UK-adopted international
accounting standards.
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 in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC's Ethical
Standard as applied to listed entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements. We believe
that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1.3 in the financial statements, which indicates
that the Group incurred a net loss of £2,346k and has a cash balance of £62k
as at 31 December 2023. As stated in Note 2.3, these events or conditions,
indicate that a material uncertainty exists that may cast significant doubt on
the Group's ability to continue as a going concern. The Group is placing
reliance on successful fundraising for which the outcome is not certain and
the Group may not be able to meet its obligations due to not having the
necessary means to support itself. Our opinion is not modified in respect of
this matter.
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 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 £97,000 (2022: £107,000) 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 the current and potential investors will be
most interested in the costs incurred and capitalised in relation to gaining
'know how' in preparation for commencing production of the plant at the Tar
Sands Holdings II ("TSHII") site in Utah, USA.
Whilst materiality for the financial statements as a whole was set at £97,000
(2022: £107,000) each significant component of the Group was audited to an
overall materiality ranging between £71,000 and £74,000 (2022: £73,000 -
£107,000) with performance materiality set at 70% (2022: 60%) 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
£4,000 (2021: £5,350) 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
and carrying value of unquoted investments. 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 2023 were located in the Isle
of Man 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 the scope of our audit responded to the key audit matter
Carrying value and appropriate capitalisation of Intangible Assets.
The group has significant intangible assets, comprising predominantly of Development Expenditure (£4,703k):
expenditure developing know how in relation to the design and operation of an
oil sand separation plant. The carrying value of intangible assets at 30
September 2023 was £4,703k.
We reviewed management's assessment which concluded that the costs capitalised
There is the risk that the carrying value of these assets have not been in relation to the Greenfield project meet the definition of an intangible
correctly valued and additions to the intangible asset have not been asset under IAS 36 and is in the development phase. Therefore the costs
recognised / measured in accordance with IFRS and that they should be relating to the development are capitalised within Greenfield and in doing so
impaired. The audit team has assessed the area as a Key Audit Matter as the our work included
balance is considered the most significant area that the users of the
financial statements would be interested in. • Challenging management on the classification of the capitalised
costs and whether they met the definition of an intangible assets
• Subsequently determining whether these met the definition of
development costs under IAS 38
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 third party reports on the estimated resources and the
possible value attributable to TomCo's 10% holding.
• 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:
Our work indicated that the value of mining assets are fairly stated in the
financial statements, but that the future carrying value is dependent on:
• Obtaining additional funding of $17.25m to acquire the remaining
90% in TSHII.
We draw attention to note 11 of the financial statements, which discloses the
fact that the Group's option to acquire the remaining 90% ownership of the 760
acre site with a Large Mining Permit in Utah, expired on 31 December 2023 and
has not yet been renewed. Management have confirmed they are in discussion
with the vendor but proof of funding is required prior to a new option
extension agreement being signed. This links to the material uncertainty above
as the renewal of the option and subsequent site development, oil-sand
separation and extraction are reliant on additional funding.
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 financial statements does not cover
the other information and 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 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 financial statements, the directors are responsible for
assessing the group's ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor's report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
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;
o Review of RNS announcement made to the market throughout the year; 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:
http://www.frc.org.uk/auditorsresponsibilities
(http://www.frc.org.uk/auditorsresponsibilities)
(http://www.frc.org.uk/auditors/audit-assurance/auditor-s-responsibilities-for-the-audit-of-the-fi/description-of-the-auditor%E2%80%99s-responsibilities-for)
(https://www.frc.org.uk/auditors/audit-assurance/standards-and-guidance/2010-ethical-standards-for-auditors-(1))
. 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. 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.
Zahir Khaki (Senior Statutory
Auditor)
15 Westferry Circus
For and on behalf of PKF Littlejohn
LLP
Canary Wharf
Statutory Auditor
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
2023 2022
Note £'000 £'000
Revenue 2 - -
Other Income 2 109 73
Gross profit/(loss) 109 73
Administrative expenses 2 (1,081) (1,519)
Foreign exchange (losses)/gains (610) 990
Operating loss 4 (1,582) (456)
Finance costs 3 (764) (234)
Loss on ordinary activities before taxation (2,346) (690)
Taxation 5 - -
Loss for the year attributable to:
Equity shareholders of the parent (2,346) (690)
(2,346) (690)
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations (26) 15
Other comprehensive income for the year attributable to:
Equity shareholders of the parent (26) 26
Non-controlling interests - (11)
Other comprehensive income (26) 15
Total comprehensive loss attributable to:
Equity shareholders of the parent (2,372) (664)
Non-controlling interests - (11)
Total comprehensive loss (2,372) (675)
2023 2022
Pence Pence
Loss per share attributable to the equity shareholders of the parent per per
share share
Basic & diluted loss per share 7 (0.10) (0.04)
The Notes form part of these financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2023
Group Group
2023 2022
Note £'000 £'000
Assets
Non-current assets
Intangible assets 8 4,703 5,033
Property, plant and equipment 9 - -
Investments at FVTPL 10 1,637 1,830
Other receivables 11 40 23
6,380 6,886
Current assets
Trade and other receivables 11 34 101
Cash and cash equivalents 12 62 206
96 307
TOTAL ASSETS 6,476 7,193
Liabilities
Current liabilities
Loans 13 (445) (1,144)
Convertible loan-debt element 13 - (148)
Convertible loan-derivative liability 13 - (143)
Trade and other payables 14 (123) (346)
(568) (1,781)
Net current (liabilities)/assets (472) (1,474)
TOTAL LIABILITIES (568) (1,781)
Total net assets 5,908 5,412
Shareholders' equity
Share capital 16 - -
Share premium 17 34,886 32,527
Warrant reserve 18 390 1,374
Translation reserve (225) (199)
Retained deficit (29,143) (28,290)
Equity attributable to owners of the parent 5,908 5,412
Total equity 5,908 5,412
The financial statements were approved and authorised for issue by the Board
of Directors on 28 March 2024.
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 2023
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 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) 16, 17 - 1,385 - - - 1,385 - 1,385
Issue of finance - - 165 - - 165 - 165
Exercise of warrants 18 (140) 140 - - -
Expiry of warrants 18 - - (1,230) - 1,230 - - -
Purchase of non-controlling interest - - - - (466) (466) 454 (12)
Share-based payment charge 19 - - - - 184 184 - 184
At 30 September 2022 - 32,527 1,374 (199) (28,290) 5,412 - 5,412
Loss for the year - - - - (2,346) (2,346) - (2,346)
Comprehensive (loss)/income for the year - - - (26) - (26) - (26)
Total comprehensive loss for the year - - - (26) (2,346) (2,372) - (2,372)
Issue of shares (net of costs) 16,17 - 2,359 32 - - 2,391 - 2,391
Issue of finance - - 193 - - 193 - 193
Expiry of warrants 18 - - (1,209) - 1,209 - - -
Expiry of conversion options - - - - 284 284 - 284
At 30 September 2023 - 34,886 390 (225) (29,143) 5,908 - 5,908
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.
The Notes on form part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
Note Group Group
2023 2022
£'000 £'000
Cash flows from operating activities
Loss after tax 2 (2,346) (690)
Adjustments for:
Finance costs 3 764 234
Share based payment charge - 194
Unrealised foreign exchange (profits)/losses 581 (1,039)
Share of loss of joint venture - -
Decrease in trade and other receivables 46 24
(Decrease)/Increase in trade and other payables (221) 5
Cash used in operations (1,176) (1,272)
Interest (paid)/received (87) (153)
Net cash outflow from operating activities (1,263) (1,425)
Cash flows from investing activities
Investment in intangibles 8 (202) (637)
Purchase of investments at FVTPL 10 - (1,171)
Purchase of non-controlling interest - (11)
Net cash used in investing activities (202) (1,819)
Cash flows from financing activities
Issue of equity instruments 17,18 1,425 1,460
Costs of share issue (84) (75)
Settlement of options - (10)
(Repayment of)/ receipt of loan finance 13 (580) 973
Convertible loans 13 625 375
Costs of convertible loans 13 (65) -
Net cash generated from financing activities 1,321 2,723
Net decrease in cash and cash equivalents (144) (521)
Cash and cash equivalents at beginning of financial year 206 726
Foreign currency translation differences - 1
Cash and cash equivalents at end of financial year 62 206
The Notes on pages 22 to 41 form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 30 SEPTEMBER 2023
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.
Tomco Energy Plc ("the Company") was incorporated in the Isle of Man. The
registered office is 2nd Floor, Sixty Circular Road, Douglas, Isle Of Man,
Isle Of Man, IM1 1SA. The principal activity of the Company is that of seeking
to develop, through its wholly owned subsidiary Greenfield Energy LLC, the oil
sands resources contained in the TSHII site via the exploitation of separation
technology to achieve sustained future production.
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
The financial statements have been prepared in accordance with UK-adopted
International Accounting Standards.
The financial statements are presented in GBP. The Company's functional
currency is also GBP and has been assessed by the Directors based on
consideration of the currency and economic factors that mainly influence the
Company's fundraising, investments, operating costs and related transactions.
Changes to these factors may have an impact on the judgement applied in the
determination of the Company's functional currency.
Assets and liabilities in foreign currencies are translated into sterling at
the rate of exchange ruling at the balance sheet date. Transactions in foreign
currencies are translated into sterling at the rate of exchange ruling at the
date of transaction. Foreign exchange differences arising on translation are
recognised in profit or loss.
The preparation of financial statements in conformity with UK-adopted
International Accounting Standards requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in
the process of applying the Company accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed in note
1.2.
The Group's financial statements have been prepared in accordance with
UK-adopted International Financial Reporting Standards ("IFRS") 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, except where IFRS requires assets and liabilities to be
stated at fair value.
1.2 Critical Estimates and Judgements
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 and estimates
- Convertible loans
The terms of the convertible loans issued during the year included an option
for the loans to be settled in whole or in part by the issue of a variable
number of shares. On this basis, the loans were 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 2023 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 prior 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 they
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 the Directors are still
awaiting its acceptance by regulators. On receipt of this first permit, the
Group is 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 the Board is satisfied as to the technical
feasibility of the production processes. The Board has 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.
In assessing the possible impairment of these assets, the Board considers the
likelihood of sufficient financial resources being available to exploit the
assets. This is dependent upon Greenfield's ability to achieving the necessary
funding described elsewhere in this report. At the date of approval of these
financial statements, the directors consider it probable that sufficient
resources will be available, and it remains probable that economic benefits
from the asset will flow to the group.
- 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") in November 2021 and held an option to purchase the remaining 90%
for additional cash consideration of $17.25 million by an extended deadline of
31 December 2023. The Group is in discussions to seek a further extension to
the exercise period of the option. The Directors have determined that the cost
of the asset is an appropriate estimate of the fair value of the Group's
investment in TSHII as at 30 September 2023. 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 reserves on the mining properties comprising the TSHII site.
Further details are disclosed in the Directors' Report. The Directors do not
consider there to be any impairment of the investments as at 30 September
2023.
Estimates
- Share based payments
Estimates were required in determining the fair value of share 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 concerned.
This assumes that historic share price volatility is the best estimate of
future volatility. The Black-Scholes model is used for valuing the warrants.
Estimates are also made of the likely time of exercise of the warrants.
In measuring the value of the deferred equity consideration payable in respect
of the purchase of the balancing 50% interest in Greenfield from Valkor LLP in
2021, 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.
1.3 Going concern
At 28 March 2024, the Group had cash reserves of approximately £0.1 million.
The Group's financial statements have been prepared on a going concern basis,
which presumes that the Group will be able to meet its obligations as they
fall due for the foreseeable future.
The Directors have prepared a cash flow forecast for the twelve months to 30
April 2025. As set out in the Chairman's Statement, discussions with potential
funders to secure sufficient finance for the Group's plans including its
working capital requirements are at an advanced stage but have not yet been
concluded. These plans include the acquisition of the remaining 90% of TSHII
by Greenfield; funding for up to two oil sand processing plants and associated
infrastructure; the potential drilling of wells into the deeper oil sands that
are too deep to mine for the implementation of oil recovery processes; and
repayment of the remainder of the Valkor Loan.
On 30 November 2022, the terms of the Valkor Loan, which is unsecured, were
varied such that the loan is only repayable on completion of a suitable
funding transaction for Greenfield that provides sufficient funds to enable
the Company to affect such repayment. Hence, the abovementioned cash flow
forecast does not include any funding which would arise from a successful
conclusion to the ongoing discussions with the identified potential
financiers, nor does it include repayment of the Valkor Loan.
The forecast, which includes all commitments at the date of these financial
statements and reflects receipt of the net proceeds of the £0.3m equity
fundraising announced on 21 February 2024 (as detailed in Note 26 to these
financial statements - Subsequent Events), indicates that the Group will need
to secure approximately an additional £0.5m in Q2 2024 to meet its currently
envisaged working capital requirements for the twelve months to 30 April 2025,
beyond which further funding will be required. Based on historical and recent
support from new and existing investors and debt providers, the Board
reasonably believes that additional funding can be obtained when required, via
further debt or equity issuances and in the meantime is carefully preserving
its existing cash and taking measures to reduce costs and defer expenditure
(including director salaries) such that it continues to consider it
appropriate to prepare the financial statements on a going concern basis.
However, the Board's ability to raise such funds cannot be guaranteed. As a
consequence, there is a material uncertainty as to the going concern status of
the Group. The financial statements do not include the adjustments that
would result if the Group was unable to continue as a going concern.
1.4 Future changes in accounting standards
The following standards have been published and are mandatory for accounting
periods beginning after 1 January 2023 but have not been early adopted by the
Group and could have an impact on the Group financial statements:
i. Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets
between an Investor and its Associate or Joint Venture
ii. Amendments to IAS 1 Classification of Liabilities as Current or
Non-current
iii. Amendments to IAS 1 Non-current Liabilities with Covenants
iv. Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements
v. Amendments to IFRS 16 Lease Liability in a Sale and Leaseback.
The management do not expect that adoption of the standards listed above will
have a material impact on the financial statements of the Group in future
periods.
1.5 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 2023. 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.
1.6 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.
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 relate 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. Such agreement was
suspended in August 2023 in light of the protracted delay in securing the
requisite permits.
1.7 Finance income
Finance income is accounted for on an effective interest basis.
1.8 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.
1.9 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 current
activities, these assets remain impaired in full as at 30 September 2023.
1.10 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 expenditure
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, less impairment provisions. The patents are impaired in full.
1.11 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:
1.10.1 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;
1.10.2 substantive expenditure on further exploration for and evaluation of
mineral resources in a specific area is neither budgeted nor planned;
1.10.3 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
1.10.4 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.
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.
1.12 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.
1.13 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).
1.14 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.
1.15 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.
1.16 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
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.
1.17 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.
1.18 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.
1.19 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. Values attributed to the unexpired option
period at the date of exercise of an option are credited to equity.
1.20 Trade payables
Trade payables are recognised at amortised cost. All of the trade payables are
non-interest bearing.
1.21 Share capital
Ordinary shares are classified as equity. Shares issued in the period are
recognised at the fair value of the consideration received.
1.22 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.
1.23 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 19.
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 reflect 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 2023 2023 2023 2023 2022 2022 2022 2022
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
External revenue - 109 - 109 - 73 - 73
Inter-segment sales - - - - - - - -
Cost of sales - - - - - - - -
Gross profit/(loss) - 109 - 109 - 73 - 73
Administrative expenses (151) (930) - (1,081) (102) (1,417) - (1,519)
Foreign exchange gains/(losses) (589) (21) - (610) 979 11 - 990
Operating profit/(loss) (740) (842) - (1,582) 877 (1,333) - (456)
Finance (costs)/income (91) (673) - (764) (153) (81) - (234)
Loss/(profit) before taxation (831) (1,515) - (2,346) 724 (1,414) - (690)
Non-Current assets:
- Exploration and development assets 4,703 - - 4,703 5,033 - - 5,033
- Other 40 - - 40 23 - - 23
1.22.1 Investments at FVTPL 1,637 - - 1,637 1,830 - - 1,830
6,380 - - 6,380 6,886 - - 6,886
Current assets:
Trade and other receivables 2 32 - 34 47 54 - 101
Other financial assets - - - - - - - -
Cash and cash equivalents - 62 - 62 - 206 - 206
Total assets 6,382 94 - 6,476 6,933 260 - 7,193
Current liabilities:
Trade and other payables - (123) - (123) (29) (317) - (346)
Financial liabilities (445) - (445) (1,144) (291) (1,435)
Total liabilities (445) (123) - (568) (1,173) (608) - (1,781)
3. Finance costs
2023 2022
£'000 £'000
Interest payable 837 223
Change in fair value of derivatives (71) 11
Interest income (2) -
Total finance costs for the financial year 764 234
4. Operating loss
The following items have been charged/(credited) in arriving at operating 2023 2022
loss:
£'000 £'000
Auditors' remuneration: audit services 41 40
Rentals payable in respect of land and buildings - 26
5. Taxation
There is no tax charge in the year due to the loss incurred for the year.
Factors affecting the tax charge: 2023 2022
£'000 £'000
Loss on ordinary activities before tax (2,346) (664)
Loss on ordinary activities at standard rate of corporation tax - -
in the Isle of Man of nil% (2022: nil%)
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
the 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
the uncertainty over the timing of future taxable profits against which the
losses may be offset.
Disclosure concerning deferred tax is given in note 15.
6. Employees and Directors
The Group has one employee (2022: one) other than the Directors, whose
emoluments comprise fees paid for services. The amounts for their services are
detailed below:
Share-based payment expense
Share-based payment expense
Salaries Severance pay Salaries Severance pay
2023 2023 2023 2022 2022 2022
£'000 £'000 £'000 £'000 £'000 £'000
J. Potter 253 - - 233 - 96
M. Groat 50 - - 50 - 39
L. Castro 42 - - 42 - 32
Z. Phillips (appointed 24 January 2022)
36 - - 25 - -
R. Horsman (resigned 24 January 2022)
- - - 12 - 16
Total remuneration 381 - - 362 - 183
In addition, in 2022, Richard Horsman received £30,000 in consideration for
the waiver of his rights over 7.5 million share options. £20,000 of this sum
was expensed to profit and loss. The remaining £10,000 was recognised in
equity.
7. Loss per share
Basic loss per share is calculated by dividing the losses attributable to
ordinary shareholders by the weighted average number of ordinary shares
outstanding during the year. Reconciliations of the losses and weighted
average number of shares used in the calculations are set out below.
Losses Weighted average number of shares Per share Amount
Financial year ended 30 September 2023 £'000 Pe
nc
e
Basic and Diluted EPS
Losses attributable to ordinary shareholders on continuing operations (2,346) 2,444,431,749 (0.10)
Total losses attributable to ordinary shareholders (2,346) 2,444,431,749 (0.10)
Financial year ended 30 September 2022
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)
The warrants, share options and conversion options which were issued or for
which entitlement 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.
8. 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 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
Additions 7 196 - 203
Translation differences (26) (507) - (533)
At 30 September 2023 8,507 5,797 30 14,334
Amortisation/Impairment
At 1 October 2021 (8,287) (1,314) (30) (9,631)
Amortisation - - - -
Impairment - - - -
At 30 September 2022 (8,287) (1,314) (30) (9,631)
Amortisation - - - -
Impairment - - - -
At 30 September 2023 (8,287) (1,314) (30) (9,631)
Net book value
At 30 September 2023 220 4,483 - 4,703
At 30 September 2022 239 4,794 - 5,033
At 30 September 2021 - 3,947 - 3,947
During 2022, 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 and remain so.
9. Property, plant and equipment
Exploration and evaluation equipment
£'000
Cost at 1 October 2021 386
Translation differences -
At 30 September 2022 386
Translation differences -
At 30 September 2023 386
Impairment at 1 October 2021 386
Charge for year -
At 30 September 2022 and 2023 386
Net book value
At 30 September 2023 -
At 30 September 2022 -
At 30 September 2021 -
These assets were impaired in full as at 30 September 2021 and remain so for
the reasons given in note 1.11.
10. Investments at FVTPL
The fair value hierarchy of financial instruments measured at fair value is
provided below
Financial assets at fair value through profit or loss £'000 £'000
Level 3 Total
1,830 1,830
Cost at 30 September 2022
(193)
Foreign Exchange (193)
1,637
Cost at 30 September 2023 1,637
The financial assets splits are as below:
-
Non-current assets - listed
1,637
Non-current assets - unlisted
Total 1,637
The Group purchased a 10% membership interest in Tar Sands Holdings II LLC
("TSHII") and holds an option to purchase the remaining 90% for additional
cash consideration of $17.25 million by an extended deadline of 31 December
2023. At the date of these financial statements, the option has lapsed, and
negotiations are in progress to seek to secure a further extension of this
deadline. The Directors have determined that the value above is an appropriate
estimate of the fair value of the Group's 10% investment in TSHII as at 30
September 2023. 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 reserves on the mining
properties comprising the TSHII site. Further details are disclosed in the
Directors' Report. The Directors do not consider there to be any impairment of
the investments as at 30 September 2023.
11. Trade and other receivables
Group Group
2023 2022
Current £'000 £'000
Other receivables 11 70
Prepayments and accrued income 23 31
34 101
Non-current
Other receivables 40 23
Total Receivables 74 124
As at 30 September 2023, there were no receivables considered past due (2022:
£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.
12. Cash and cash equivalents
Group Group
2023 2022
£'000 £'000
Cash at bank and in hand 62 206
The Group earns 0.05% (2022: 0.05%) interest on its cash deposits,
consequently the Group's exposure to interest rate volatility is not
considered material.
13. Loans
Group Group
2023 2022
Current £'000 £'000
Term loan 445 1,144
Convertible loan-debt element - 148
Convertible loan-derivative liability - 143
445 1,435
The Term Loan relates to the loan issued from Valkor. The terms of the Valkor
Loan were varied to extend the repayment date for the then remaining principal
amount to the completion date of a suitable funding package being secured for
Greenfield's development. The Loan has been classified as current as
management expect to have raised funds within the 12 months following the year
end.
All convertible loans in issue at 30 September 2022 and issued during the year
ended 30 September 2023 were converted during the year ended 30 September 2023
into approximately 425 million new ordinary shares (see note 16).
The convertible loan in 2022 was for a principal sum of £375,000 and due for
settlement by either conversion or repayment prior to 30 November 2022. It
carried a premium on repayment or settlement, irrespective of the date of
settlement, of 5%.
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.
During the year ended 30 September 2023, a further £375,000 of the
convertible loan was drawn under the facility described above, with an issue
of warrants with a fair value of £100,000. The total loans of £750,000, plus
a flat interest charge of £37,500, were settled by the issue of 232.1 million
new ordinary shares.
A further convertible loan note facility of £1 million was negotiated during
the year ended 30 September 2023. Amounts drawn under the facility were due
for settlement or repayment by 31 March 2024. It carried a premium on
repayment or settlement, irrespective of the date of settlement, of 5%.
The conversion price per new Ordinary Share under this new facility was 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%. Warrants with a
fair value of £41,666 were issued as a commitment fee in connection with this
facility and fees of £65,000 were payable in cash in connection with the
facility.
£250,000 was drawn under this facility, with the issue of further warrants
with a fair value of £51,667. This amount was settled plus a flat interest
charge of £12,500, by the issue of 192.9 million ordinary shares. The
remainder of the undrawn facility was cancelled.
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. 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 (there were no instruments measured at fair
value at 30 September 2023)
Fair value measurement at 30 September 2022
Using
Quoted prices in active markets for identical assets (Level 1) Significant other observable inputs Significant unobservable inputs
(Level 2) (Level 3)
£'000 £'000 £'000 £'000
Derivative liabilities 143 - - 143
The derivatives in place during the year ended 30 September
2023 and at 30 September 2022 have been valued using an option model and
Monte Carlo simulation and the following inputs:
Within year ended 30 September 2023 30 September 2022
Share price (range) 0.475p-0.147p 0.475p
Volatility c.80% 88.5%
Risk free rate (range) 2.62%-5.10% 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 2023 2022
£'000 £'000
Opening balance 143 -
Issues during year 212 132
(Gain)/ loss recognised in profit and loss (71) 11
Recognised in equity (284) -
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 20 on financial instruments.
14. Trade and other payables
Group Group
2023 2022
Current £'000 £'000
Trade payables 40 71
Other payables 16 50
Accruals 67 225
123 346
All current amounts are payable within six months and the Directors consider
that the carrying values adequately represent the fair value of all payables.
15. Deferred tax
Unrecognised losses
The Group has tax losses in respect of excess management expenses of
approximately £15 million (2022: £14 million) available for offset against
future Company income. This gives rise to a potential deferred tax asset at
the reporting date of £3.75 million (2022: £3.5 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.
16. Share capital
Number of shares 2023
in issue £
Issued and fully paid at 1 October 2021 - shares of no par value 1,451,412,012 -
November 2021-exercise of warrants (note 18) 46,666,666 -
January 2022-placing (note 18) 250,000,000 -
At 30 September 2022 1,748,078,678 -
October 2022-July 2023 conversion of convertible loans (notes 13 and 18) 425,104,218 -
November 2022-placing (note 17) 264,285,714 -
June 2023-placing and subscription 625,000,000 -
At 30 September 2023 3,062,468,610 -
In addition, there are 592.8 million new ordinary 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.
17. Share premium
2023 2022
£'000 £'000
At 1 October 32,527 31,142
Conversion of convertible loans and associated interest 1,050 -
Placing and subscriptions-net of costs (note 16) 1,309 -
November 2021-Exercise of warrants (note 18) - 210
January 2022-subscription of new shares at 0.5p, net of costs - 1,175
At 30 September 34,886 32,527
18. Warrants
At 30 September 2023, the following share warrants were outstanding in respect
of ordinary shares:
2023 2023 2022 2022
number Weighted average exercise price number Weighted average exercise price
Pence Pence
Outstanding at 1 October 452,427,350 0.88 704,575,640 0.88
Expired during the year (397,427,350) (0.89) (260,481,624) (1.02)
Granted during the year 189,190,463 0.54 55,000,000 0.75
Exercised during the year - - (46,666,666) (0.45)
Outstanding at 30 September 244,190,463 0.58 452,427,350 0.88
Exercisable at 30 September 244,190,463 0.58 452,427,350 0.88
The inputs into the Black-Scholes model for calculating the estimated fair
value of warrants granted, at their grant date, were as follows:
2022
2023
Share price (pence) 0.08-0.385 0.55
Exercise price (pence) 0.08-0.75 0.75
Expected volatility 96%-111% 109%
Risk-free rate 3.5%-3.9% 2.4%
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
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 13.
143,333,320 warrants were issued in the year ended 30 September 2023 at
exercise prices of between 0.6p and 0.75p in connection with the issue of the
convertible loan described in Note 14. In addition, 45,857,143 warrants were
issued at exercise prices of between 0.08p and 0.35p in connection with
placings.
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 Company's Articles.
The warrants outstanding at 30 September 2023 had a weighted average exercise
price of 0.58p (2022: 0.88p) and a weighted average remaining contractual life
of 1.66 years (2022: 0.15 years).
19. 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:
2023 2023 2022 2022
number Weighted average number Weighted average
exercise price exercise price
Pence Pence
Outstanding as at 1 October 98,365,078 0.70 105,865,078 0.70
Granted during the year - - - -
Lapsed during the year - - - -
Settled during the year - - (7,500,000) (0.54)
Outstanding at 30 September 98,365,078 0.70 98,365,078 0.70
Exercisable at 30 September 98,365,078 98,365,078
Details of the options held by each Director are provided in the Directors'
Report on page 4.
No new options were granted in the year ended 30 September 2023 (2022-nil).
The weighted average unexpired life of the options at 30 September 2023 was
6.9 years (2022: 7.9 years).
The charge recognised in profit or loss for 2023 was £nil (2022: £194,000).
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.
20. 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 £650,000 (2022: £545,000).
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
2023 2022
Bank balances £'000 £'000
British Pounds 37 198
US Dollars 25 8
Total 62 206
All financial liabilities of the Group mature in less than 12 months: details
of the analysis of such liabilities is provided in Notes 13 and 14.
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.
21. 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 2023 £'000 £'000 £'000 £'000
1,292 (20) 445
Loans (827)
Total 1,292 (20) (827) 445
Group 2022
- 1,348 1,292
Loans (56)
Total - 1,348 (56) 1,292
22. Related party disclosures
The Directors are Key Management and information in respect of Key Management
is provided in Note 6.
The Company was charged £19,429 for professional services rendered by a
company (Oil and Gas Advisors Ltd) of which a director (Dr Donald Philips) is
the controlling shareholder. £733 was owed to this entity at 30 September
2023.
23. Ultimate controlling party
As at 30 September 2023 and 30 September 2022 there was no ultimate
controlling party.
24. Subsequent events
i. In October 2023, the Company raised a further £100,000 gross of equity
capital by the issue of 125 million new ordinary shares to an existing
shareholder at a price of 0.08p per share.
ii. In January 2024, the Company raised a further £50,000 gross of equity capital
by the issue of 50 million new ordinary shares to an existing shareholder at a
price of 0.1p per share.
iii. In February 2024, the Company raised a further £300,000 gross of equity
capital by the issue of, in aggregate, 666,666,667 new ordinary shares at a
price of 0.045p per share.
iv. The Directors continue to discuss a further extension to the option over the
remaining 90% of Tar Sands Holdings II LLC with an exercise cost of $17.25
million with the counterparty concerned. The latest scheduled expiry date for
the option was 31 December 2023.
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