Annual Report and
Financial Statements
2021
TomCo Energy plc
For further information visit us online at:
www.tomcoenergy.com or email us at: info@tomcoenergy.com
COMPANY DETAILS
TOMCO ENERGY PLC
Company Numbers
Isle of Man
England & Wales
Country of
Incorporation
6969V
FC022829
Isle of Man
Board of Directors
Non-Executive Chairman
Malcolm Groat
Chief Executive Officer
John Potter
Zac Phillips
Non-Executive Director
Louis Castro Non-Executive Director
Registered Office
1st Floor
Sixty Circular Road
Douglas
Isle of Man IM1 1AE
Broker
Novum Securities Limited
2nd Floor Lansdowne House
57 Berkeley Square London
W1J 6ER
Nominated Adviser
Strand Hanson Limited
26 Mount Row
London
W1K 3SQ
Registrars
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
CONTENTS
Chairman’s statement
Directors’ report
Corporate governance statement
Audit committee report
Remuneration committee report
Independent auditors’ report
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Page
1
4
9
15
16
17
24
25
26
27
28
3
CHAIRMAN’S STATEMENT
I am pleased to be delivering my second Chairman’s statement to the
shareholders of TomCo Energy plc (“TomCo” or the “Company” or, with its
subsidiaries, the “Group”), together with the Annual Report and Financial
Statements for the year ended 30 September 2021.
Operational Review
Greenfield Energy LLC
The primary focus for the Company
during the year was on Greenfield
Energy LLC (“Greenfield”) and its
plans to pursue the construction of
an initial 5,000 barrels of oil per day
(“bopd”) production facility at the
earliest opportunity, as well as
exploiting
opportunities
available to it.
other
Whilst the shadow of Covid-19 still
darkens the global economic picture,
though much less so than this time
last year, we have managed to make
considerable progress during the
financial year under review.
into
trial
During the first half of the year, the
focus of Greenfield was on the third-
party oil sands plant at Asphalt
Ridge. This was enhanced and
production,
brought
extracting oil from sands in a manner
that we believe could be scaled up to
be commercially viable
large,
purpose-built plants. Importantly, the
work undertaken by Greenfield in
modifying, upgrading and operating
the test plant for a temporary lease
period provided sufficient information
for a FEED (Front-End Engineering
and Design) study to be completed,
together with a third-party verification
exercise.
in
The completed FEED study and
third-party report was received at the
end of July 2021. The FEED study
outlined better economics for the
proposed plant than we had initially
envisaged, and together with the
third-party
verification
technical approach is appropriate.
provided
proposed
report
that
the
to
fully benefit
Further to an agreement reached
with our former 50% joint venture
partner, Valkor LLC (“Valkor”), as
announced on 26 August 2021,
TomCo now owns 100% of
Greenfield, with full control, thereby
affording TomCo’s shareholders the
opportunity
from
Greenfield's significant potential,
whilst retaining Valkor as a valued
stakeholder and future substantial
shareholder in the Company. The
consideration for the acquisition only
becomes payable upon Greenfield
receiving funds from, or drawing
upon, a loan or credit facility in
connection with the construction of
an oil sands processing facility as
specified in the FEED study, which I
personally
to
believe
demonstrate Valkor’s confidence in
our plans and ability to deliver.
serves
The
Prior to this, on 9 June 2021, we
announced Greenfield’s potential
acquisition of up to 100% of the
ownership and membership rights
and interests in Tar Sands Holdings
II LLC (“TSHII”) (the “Membership
successful
Interests”).
completion of the acquisition of an
initial 10% of
the Membership
Interests was announced post year
end on 16 November 2021.
Greenfield
retains an exclusive
option, at its sole discretion, to
acquire the remaining 90% of the
Membership Interests for additional
cash consideration up
to 31
December 2022, as detailed in the 9
June 2021 announcement.
1 | P a g e
TSHII owns approximately 760 acres
of land and certain non-producing
assets (the “Site”) in Uintah County,
Utah, USA. Subject to securing the
requisite funding, Greenfield plans to
use the Site for the potential future
mining of oil sands and construction
of a commercial scale processing
plant.
The Site has existing
infrastructure, plant and equipment,
together with an existing Large Mine
Permit No. M0470032, that could
facilitate any future development by
Greenfield.
Alongside the acquisition of the initial
10% of the Membership Interests, a
newly
incorporated subsidiary of
Greenfield was granted a lease over
approximately 320 acres of the 760-
acre site owned by TSHII. The lease
provides Greenfield’s subsidiary with
the exclusive right to explore, drill,
and mine for, and extract, store, and
remove oil, gas, hydrocarbons, and
other
substances,
together, inter alia, with the right to
erect, construct and use such plant
and equipment and infrastructure as
required.
associated
the
the
remaining
acquire
90%
Membership Interest in TSHII, (ii) drill
a number of production wells on the
Site and (iii) pursue
future
construction of an initial 5,000 bopd
facility at the earliest opportunity, the
Company has engaged specialist oil
and
advisers
experienced in the structuring and
securing of such financings. They
are currently exploring a number of
potential funding options.
industry
gas
Greenfield
has
Additionally,
commenced detailed engineering
and design work in connection with
its future plans including engaging
Stantec Inc, a global design and
delivery
extensive
firm with
experience in the oil and gas and
mining sectors, on mine planning,
is working with Netherland
and
Sewell & Associates,
global
petroleum consultants, on a reserves
other
report,
preparatory work. This is in addition
to
detailed
continuing
engineering design and planning
work being undertaken by Valkor.
together
with
the
TurboShale RF Technology
is
in
of Greenfield’s
Greenfield
advanced
discussions with potential off-takers
of both oil and sand from the TSHII
site and it appears ideally suited for
the future construction, subject to
first
funding,
commercial scale plant. Whilst there
can be no certainty that Greenfield
can secure the required funding to
complete the acquisition of 100% of
the Membership Interests, I remain
optimistic, based on discussions with
potential
that
acquisition of the remaining 90% can
be completed at a cost of $16.25
funding
million and
secured.
is not
If
secured, our current business plan
would be curtailed, but a viable
project, albeit a fraction of the size,
would remain.
the required
funding
the
to date,
funders
To assist Greenfield in progressing
its plans for the TSHII site and
(i)
obtaining
funding
further
to:
in
to
During the previous financial year, at
the onset of the Covid-19 pandemic,
we took the decision to put the
our
relation
activities
frequency
radio
TurboShale
technology on hold in order to focus
our resources on Greenfield. This
has remained the case throughout
2021 and, post the year end, we
have purchased the remaining 20%
of our subsidiary holding
the
technology and are considering how
best to proceed with it during 2022.
Pending
that decision, we have
recognised an impairment provision
against all of the Turboshale and Oil
Mining Company assets in these
2021 financial statements.
Corporate
As expected, the year under review
was a busy one for TomCo and one
2 | P a g e
of significant progress. During the
year, we raised £3.5 million (gross)
via a placing in November 2020,
through the issue of 777,777,777
new ordinary shares at a price of
0.45 pence per share, with the net
proceeds being used
to provide
general working capital and to fund
Greenfield’s development. Following
the financial year-end, the Company
raised a further £1.25 million (gross)
in a placing of 250,000,000 new
ordinary shares, at a price of 0.50
pence per share in January 2022.
their excellent contribution and
particularly to John Potter for his
outstanding work as our Chief
Executive. The Company’s activities
are continuing to evolve and we will
look to add further relevant expertise
as appropriate going forward.
Outlook and Summary
The Board appreciates the strong
our
continuing
support
to
shareholders as we continue
progress our plans for Greenfield.
of
Kirchner.
In early November 2020, Stephen
West and Alexander Benger stepped
down from the Board to focus on their
other commitments elsewhere,
I
assumed the role of Chairman, and
we appointed two new non-executive
directors, Richard Horsman and
Robert
Robert
subsequently resigned in June 2021
to focus on his other commitments,
but we were very
in
securing Louis Castro’s services as a
non-executive director in April 2021.
to TomCo
Louis has brought
significant sector experience and
governance expertise, including as a
former AIM Nominated Adviser.
fortunate
Towards the end of January 2022,
Richard Horsman left the Company
to pursue his other interests and we
recruited as his successor an oil
industry expert, Zac Phillips, who had
a good pre-existing knowledge of our
business already via his work as a
consultant to Greenfield.
I am grateful to my colleagues for
regarding
Membership
Greenfield is engaged in ongoing
funding
discussions
options to potentially achieve the
ultimate acquisition of 100% of the
TSHII
Interests,
together with the proposed drilling of
a number of production oil wells and
further construction of the planned
first 5,000 barrels of oil per day
production plant, whilst progressing
other preparatory work. Whilst there
can be no certainty that Greenfield
can secure the requisite funding or
the further permitting required, I am
optimistic, based on discussions with
potential funders to date, that the
required funding to implement our
plans can ultimately be secured.
These are very exciting times for
TomCo as we
realise
Greenfield's significant potential.
look
to
Malcolm Groat
Chairman
31 March 2022
3 | P a g e
DIRECTORS’ REPORT
The Directors submit their report and the financial statements of the Group for the year ended 30 September
2021.
PRINCIPAL ACTIVITY
The principal activity of the Group is that of deploying technology on its oil shale leases and other
unconventional oil resources for future production.
RISK ASSESSMENT
The Group’s oil and gas activities are subject to a range of financial and operational risks which can significantly
impact on its performance, with the key risks for the year ended 30 September 2021 set out below.
Operational risk
During the financial year, the Company completed all the engineering due diligence on the oil sands separation
process and completed the third-party verification and design for a 5,000 barrels of oil per day plant. Efforts
have now moved towards securing the requisite funding for plant design and potential future construction. While
some of the project risk has been reduced by way of securing a suitable site that has an appropriate pre-
existing large mining permit, the site itself contains the remnants of a third-party facility that has not been in
operation for more than 10 years. As a result, a detailed review of the historic plant has been arranged to make
sure that there are no potential liabilities.
Risks relating to environmental, health and safety and other regulatory standards
The Group’s future extraction activities are subject to various US federal and state laws and regulations relating
to the protection of the environment including the obtaining of appropriate permits and approvals by relevant
environmental authorities. Such regulations typically cover a wide variety of matters including, without limitation,
prevention of waste, pollution and protection of the environment, labour regulations and worker safety.
Furthermore, the future introduction or enactment of new laws, guidelines and regulations could serve to limit
or curtail the growth and development of the Group’s business or have an otherwise negative impact on its
operations. The Group ensures that it complies with the relevant laws and regulations in force in the jurisdictions
in which it operates.
Liquidity and interest rate risks
The Group is ultimately dependent on sources of equity and/or debt funding to develop Greenfield and any
other recovery technology and in turn the Group’s exploration assets and to meet its day-to-day capital
commitments and overheads. Cash forecasts identifying the liquidity requirements of the Group are produced
frequently and are reviewed regularly by management and the Board. This strategy will continually be reviewed
in light of developments with existing projects and new project opportunities as they arise. For further
information regarding the Group’s cash resources and future funding requirements, refer to the ‘Going Concern’
section below.
Currency risk
Due to the limited income and expenses denominated in foreign currencies, it was not considered cost effective
to manage transactional currency exposure on an active basis. However, as the financial statements are
reported in sterling, any movements in the exchange rate of foreign currencies against sterling may affect the
Group’s statements of comprehensive income and financial position. The Group holds some cash in US dollars
to mitigate the foreign exchange risk and keeps its currency profile under review.
COVID-19 risk
In 2021 while COVID-19 continues to have an adverse impact on the global economy, oil prices were, absent
the effects of the war in Ukraine, projected to continue to recover during 2022 and beyond. The Group’s
continued activity with respect to Greenfield is not currently expected to be significantly affected by COVID-19.
4 | P a g e
Financial instruments
It was not considered an appropriate policy for the Group to enter into any hedging activities or trade in any
financial instruments. Further information can be found in Note 22.
RESULTS AND DIVIDENDS
The statement of comprehensive income is set out on page 20. The Directors do not propose the payment of
a dividend (2020: £nil).
REVIEW OF THE KEY EVENTS DURING THE YEAR
TurboShale
There were no further developments in respect of our TurboShale technology during the financial year. In the
period since the end of the financial year, the remaining 20% of TurboShale not owned by TomCo has been
acquired and the Board will review the next steps for TurboShale during H1 2022. In the meantime, an
impairment provision has been recognised against its assets.
Greenfield Energy LLC
Our joint venture company took over all operations at the Petroteq Oil Sands Plant (POSP) in July 2020 and
through January 2021 made the modifications identified by Valkor to help improve the separation process. The
start-up of the plant occurred in January 2021 during which further additions were identified as being required,
with such upgrades being completed in March 2021. Between March and the end of June 2021 the process
was assessed, and a testing schedule completed. A third-party engineering company, Kahuna Ventures LLC
observed the plant operations and completed an assessment with their report being submitted in July 2021. As
a result of the testing programme and Kahuna’s independent report, Crosstrails Engineering LLC (a Valkor
subsidiary) was able to complete a Front-End Engineering and Design (FEED) study for a 5,000 barrels of oil
per day production plant in August 2021.
During the financial year, Netherland, Sewell & Associates, Inc (NSAI) were engaged to produce a reserves
report on the oil sands resource contained within the Tar Sands Holdings II LLC acreage. Further to an
agreement reached with Valkor LLC (“Valkor”), as announced on 26 August 2021, TomCo now owns 100% of
Greenfield, with full control, thereby affording TomCo’s shareholders the opportunity to fully benefit from
Greenfield's significant potential, whilst retaining Valkor as a valued stakeholder and future substantial
shareholder in the Company.
Financing
During the financial year, TomCo completed one equity fund raise involving the issue of 777,777,777 new
ordinary shares and 388,888,888 new warrants, raising £3,500,000 (gross). The funds were deployed as a loan
to Greenfield to assist it in securing the Tar Sands Holdings II LLC entity that holds 760 acres of land, with a
pre-existing Large Mining Permit, Greenfield holds a multi-site licence for deployment of the Oil Sands
Technology, as well as for general working capital purposes.
Following the end of the financial year, the Company undertook a further placing of 250,000,000 new ordinary
shares, raising £1,250,000 (gross). These funds are to be used to cover the costs of drilling 3 exploration wells
on the TSHII site and the anticipated costs of the due diligence process in seeking the requisite funding for a
5,000 barrel per day oil sand separation plant. Additionally, the funds were used to complete the purchase of
the remaining 20% of TurboShale, not previously owned by TomCo and to provide additional working capital
reserves for the group.
TomCo also secured a loan from Valkor Oil and Gas LLC of US$1,500,000 in order to complete the purchase
of 10% of Tar Sands Holdings II LLC. Such loan is repayable by Greenfield through a number of potential
options, or combination of such options, at its sole election, such combination adding up to the US$1.5 million
principal amount of the loan, plus any applicable interest or fees incurred. The repayment options include
granting a share of potential net production revenues to offset initially the principal amount and for a period of
five years thereafter from any oil well(s) planned to be drilled on a defined lease area, but for which the requisite
further funding and permits have not yet been secured; and/or straight repayment of the principal amount plus
interest and fees amounting to 15% of the principal amount of the loan, payable on the maturity date. In any
event, unless a production share is granted, or both parties agree an extension to the repayment date, a
minimum of US$1.5 million must be repaid on or before 30 May 2022. To the extent that any part of the principal
5 | P a g e
amount has not been paid by the scheduled maturity date (which may be extended by mutual agreement of the
parties) then interest of 2% per month shall be applied to such unpaid amount from time to time until it has been
repaid in full.
Directors
The Directors who served on the Board during the year to 30 September 2021 and to date were as follows:
Malcolm Groat
John Potter
Richard Horsman (appointed 1 November 2020; resigned 24 January 2022)
Robert Kirchner (appointed 1 November 2020; resigned 4 June 2021)
Louis Castro (appointed 19 April 2021)
Zac Phillips (appointed 24 January 2022)
Directors’ interests in the ordinary shares of the Company, including family interests, as at 30 September 2021
were as follows:
30 September 2021
30 September 2020 (or date of appointment)
M. Groat
J. Potter
R. Horsman
(resigned 24
January 2022)
R. Kirchner
(resigned 4
June 2021)
L. Castro
Ordinary shares
of nil par value
11,887
26,500
Share
warrants
-
-
Share options
20,380,952
52,714,285
-
-
-
38,387
-
-
-
-
7,500,000
-
15,000,000
95,595,237
Ordinary shares
of nil par value
11,887
26,500
-
-
-
38,387
Share
warrants
-
-
Share
options
2,380,952
7,714,285
-
-
-
-
-
-
-
10,095,237
Details of the remuneration, share warrants and share options can be found in the Remuneration Committee
Report and Notes 7, 19 and 21 to the financial statements.
Payments of payables
The Group’s policy is to negotiate payment terms with its suppliers in all sectors to ensure that they know the
terms on which payment will take place when the business is agreed and to abide by those terms of payment.
Going Concern
At 28 March 2022, the Group had cash of approximately £1.12 million, and a loan due to Valkor of approximately
£1.14 million ($1.5 million)
The Directors have prepared a cash flow forecast for the period to 30 June 2023. The forecast, which includes
capital expenditure committed at the date of this report, indicate that the Group needs to raise additional finance
in April 2023 in order to continue as a going concern. The cash flow forecast assumes, amongst other things,
the following:
•
•
that either the Valkor loan of $1.5 million, which is due for repayment by 30 May 2022, is extended by
mutual agreement, which would lead to an increase in financing costs, or is settled by the grant of a
production share over wells on land now occupied by the group under arrangements concluded after the
year-end;
the payment which is due in respect of the TSHII option by 31 December 2022 of $16,250,000 requires
sufficient additional funding to be raised prior to December 2022 otherwise the option lapses. Should the
option lapse because funding cannot be secured then the Group’s current business plan would be curtailed
but, in the Board’s view, the Group would remain a going concern subject to the occurrence of other currently
unforeseen events.
6 | P a g e
The cash currently held by the Group is sufficient to fund ongoing overhead costs for approximately 12 months,
beyond which further funding will be required.
The Group has a reasonable expectation that it can raise the required additional funds based on a history of
raising funds. However, there are currently no binding agreements in place.
It is possible that rather than extend the term or grant a production share, the Group would wish to refinance
the Valkor loan by May 2022 and that additional capital expenditure beyond that committed at the date of this
report will be necessary prior to April 2023 to maximise the opportunities presented by, in particular, Greenfield.
Any such refinance or additional expenditure would be subject to funding, in whole or in part, via additional debt
or equity or a combination of both.
The Directors note that because of both the lingering effects of COVID-19 and the war in Ukraine there remains
considerable uncertainty concerning the global economy and oil prices continue to be volatile, albeit reaching
higher levels of late, which may have implications in respect of securing additional funding, either for the Group’s
day-to-day operations or additional capital expenditure. These conditions represent a material uncertainty which
may cast significant doubt over the Group’s ability to continue as a going concern. Whilst acknowledging this
material uncertainty, the Directors remain confident of raising any additional funds required and therefore the
Directors consider it appropriate to prepare the financial statements on a going concern basis. The financial
statements do not include the adjustments that would result if the Group was unable to continue as a going
concern.
Going concern is also discussed at note 1.1 of the financial statements
Directors’ responsibilities
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the
Group’s transactions and disclose, with reasonable accuracy at any time, the financial position of the Group
and enable them to ensure that financial statements may be prepared, in accordance with the Isle of Man
Companies Act 2006. They are also responsible for safeguarding the assets of the Group and for taking steps
for the prevention and detection of fraud and other irregularities.
The Directors are required to prepare financial statements in accordance with the rules of the London Stock
Exchange for companies with securities trading on the AIM market. In accordance with those rules, the Directors
have elected to prepare the Group’s financial statements in accordance with International Financial Reporting
Standards (IFRSs), as issued by the International Accounting Standards Board. The Directors must not approve
the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that year. In preparing these financial statements, the Directors
are required to:
•
•
•
•
consistently select and apply appropriate accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the
entity’s financial position and financial performance; and
state that the Group has complied with IFRS, subject to any material departures disclosed and explained
in the financial statements.
The Directors confirm that they have complied with these requirements, and, having a reasonable expectation
that the Group has adequate resources to continue in operational existence for the foreseeable future, have
continued to adopt the going concern basis in preparing the financial statements
Auditors
All the current Directors have taken all the steps that they ought to have taken to make themselves aware of
any information needed by the Company’s auditors for the purposes of their audit and to establish that the
auditors are aware of that information. The Directors are not aware of any relevant audit information of which
the auditors are unaware.
BDO LLP have expressed their willingness to continue in office and a resolution to re-appoint them will be
7 | P a g e
proposed at the annual general meeting.
By order of the Board
John Potter
CEO
31 March 2022
8 | P a g e
CORPORATE GOVERNANCE STATEMENT
As Chairman, I am pleased to present the Company’s Governance Statement under the QCA Corporate Governance
Code (the “QCA Code”). Establishing effective corporate governance structures that evolve with the business and
protect shareholder value is a key element of my role, together with the Board as a whole. Set out below are details
of the Company’s governance framework benchmarked against the QCA Code principles.
The Board of Directors of TomCo (the “Board”) monitors the business affairs of the Company and its subsidiaries on
behalf of its shareholders. The Board currently consists of the Chief Executive Officer and three Non-Executive
Directors. None of the Non-Executive Directors have previously held an executive position with the Company. The
Directors have responsibility for the overall corporate governance of the Company and recognise the need for the
highest standards of behaviour and accountability. The Directors are committed to the principles underlying best
practice in corporate governance and have adopted the QCA Code.
This statement explains, at a high level, how the QCA Code is applied by the Company and how its application
supports the Company’s medium to long-term success. Further information on the application of the QCA Code can
be found on the Company’s website at https://tomcoenergy.com/investors/governance/.
The Board is responsible for the stewardship of the Company through consultation with the management of the
Company. Management represents the Executive Director. Any responsibility that is not delegated to management
or to the committees of the Board remains with the Board, subject to the powers of shareholder meetings. The
frequency of Board meetings, as well as the nature of agenda items, varies depending on the state of the Company’s
affairs and in light of opportunities or risks which the Company faces. Members of the Board are in frequent contact
with one another, and meetings of the Board are held as deemed necessary.
Statement of compliance with the QCA Code
Throughout the year ended 30 September 2021, the Company has been in compliance with the provisions set out in
the QCA Code.
Application of the QCA Code principles
The Company has applied the principles set out in the QCA Code, by complying with it as reported above. Further
explanations of how the principles have been applied is set out below.
Principle One – Business Model and Strategy
TomCo is an oil exploration and development company focused on using innovative technology to unlock
unconventional hydrocarbon resources, initially in Utah, USA.
The Company, as a result of the success of the opportunity developed within Greenfield Energy LLC, has shifted its
primary focus onto developing the oil sand separation process with the planned potential future development of a
5,000 barrels of oil per day plant.
Principle Two – Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communications and having constructive dialogue with its shareholders.
Shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the
Company and management.
All shareholders are encouraged to attend and participate in all shareholder meetings called by the Company, in
particular its Annual General Meeting (AGM). Investors also have access to current information on the Company and
the Group through its website at: www.tomcoenergy.com.
Principle Three – Considering wider stakeholder and social responsibilities
The Board recognises that the long-term success of the Group is reliant upon the efforts of the employees of the
Group, its partners, consultants, contractors, suppliers, regulators and other stakeholders. The Board have put in
place a range of processes and systems to ensure that there is close oversight and contact with its key stakeholders.
9 | P a g e
Corporate Governance Statement
The Group is subject to oversight by a number of different U.S. State and other regulatory bodies, who directly or
indirectly are involved with the permitting and approval process of its oil and gas operations in Utah, including those
conducted by Greenfield. Additionally, given the nature of the Group’s business, including the activities of Greenfield
there are other parties who, whilst not having regulatory power, nonetheless have an interest in seeing that the Group
conducts its operations in a safe, environmentally responsible, ethical and conscientious manner.
The Group makes all reasonable efforts, directly or through its advisers, to engage in and maintain active dialogue
with each of these governmental and non-governmental bodies, to ensure that any issues faced by the Group,
including but not limited to regulations or proposed changes to regulations, are well understood and ensuring to the
fullest extent possible that the Group is in compliance with all appropriate regulations, standards and specific
licensing obligations, including environmental, social and safety aspects, at all times.
Principle Four – Risk Management
In addition to its other roles and responsibilities, the Board is responsible for ensuring that procedures are in place
and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Group.
As a result of the process described above, a number of risks have been identified. The principal risks and the manner
in which the Company and its Board seek to mitigate them are set out below. The Board reviews the principal risks
facing the business as part of its meetings through the year and changes to those risks as the Company develops.
Where risks change or new risks are identified the Board implements risk management strategies as applicable.
Risk
Operational risks
Comment
See Directors’ Report.
Environmental, health
and safety and other
regulatory standards
See Directors’ Report.
Mitigation
The group’s operations are limited currently, pending
completion of the detailed review of the potential site for
the 5,000 barrels of oil per day plant. The directors are in
funders
discussions with a number of potential
concerning securing funding for the potential plant.
As is common with projects of this nature the Company
has mitigated the potential risk around a new design by
utilising existing technology and by commissioning a
detailed FEED study which has been successfully
reviewed by a reputable third party.
The Company has engaged leading advisers to assist it
in securing relevant permits or licences to operate.
The Company maintains ongoing oversight of health and
safety and environmental compliance.
Liquidity risk
See Directors’ Report
including ‘Going Concern’
section.
The Company maintains a detailed cashflow forecast and
carefully monitors expenditure and may seek to raise
additional funding as required and as referred to in Note
1.1.
Currency risk
See Directors’ Report.
The Company aims to manage currency exposures by
holding funds in the applicable currency to match
anticipated expenditure.
The Board considers that an internal audit function is not necessary or practical due to the 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.
10 | P a g e
Corporate Governance Statement
Principle Five – A Well-Functioning Board of Directors
The Board currently comprises the Chief Executive, John Potter, and three independent Non-Executive Directors,
Malcolm Groat, Louis Castro and Zac Phillips.
Biographies for each of the current Directors are set out on the Company’s website. Executive and Non-Executive
Directors are subject to re-election usually at the Company’s Annual General Meeting, at intervals of no more than
three years.
The Board meets on a regular basis, typically at least once a month.
The Board is responsible for formulating, reviewing and approving the Group’s strategy, budgets and corporate
actions. As such, the Company has established separate Audit and Remuneration Committees.
The Audit Committee comprises Louis Castro (Chairman,), Malcolm Groat and Zac Phillips. The Audit Committee
meets at least twice a year to consider the integrity of the financial statements of the Company, including its annual
and interim accounts; the effectiveness of the Company’s internal controls and risk management systems; auditor
reports; and terms of appointment and remuneration for the auditor.
The Company’s Remuneration Committee comprises Louis Castro (Chairman,), Malcolm Groat and Zac Phillips. The
Remuneration Committee meets from time to time, but not less than once a year, to review and determine, amongst
other matters, the remuneration of Executives on the Board and any share incentive plans of the Company.
The QCA Code recommends that the Chairman must have adequate separation from the day-to-day business to be
able to make independent decisions. Malcolm Groat is the Company’s Non-Executive Chairman and the Board
believe that he has adequate separation from the day-to-day business of the Company to be able to make
independent decisions. As the Board is comprised of only four members, one of whom is Executive and three of
whom are independent Non-Executive Directors, including the Chairman, the Board does not believe it is currently
necessary to appoint a senior independent director.
The Chief Executive is a full-time employee of the Company. Whilst each of the Non-Executive Directors are
considered to be part time, they are expected to provide as much time to the Company as is required. The attendance
record of the Directors at Board and committee meetings held during the year ended 30 September 2021 was as
follows:
Meetings held
Attendance:
Malcolm Groat
John Potter
Richard Horsman (appointed 1 November 2020; resigned 24 January
2022)
Robert Kirchner (appointed 1 November 2020; resigned 4 June 2021)
Louis Castro (appointed 19 April 2021)
Main
Board
Audit
Committee
Remuneration
Committee
14
14
14
4
10
2
-
2
1
1
2
-
1
1
2
Principle Six – Appropriate Skills and Experience of the Directors
The Board believes that the current balance of skills held by the Board as a whole, reflects a very broad range of
commercial and professional skills across geographies and industries and each of the Directors has previous
experience of public markets.
The Board believes that the Directors are well suited to the Company’s fundamental objective of enhancing and
preserving long-term shareholder value and ensuring that the Group conducts its business in an ethical and safe
manner. The Board is considered to be of a sufficient number to provide more than adequate experience and
perspective to its decision-making process and, given the size and nature of the Group, the Board does not consider
11 | P a g e
Corporate Governance Statement
at this time that it is appropriate to increase the size of the Board or amend its composition.
As the Board is not currently anticipating any change to its size or composition, it has not yet implemented a written
policy regarding the identification and nomination of female directors. In the event that one of the existing members
of the Board stands down from their current position, the Company will, at that time, give further consideration to the
specific selection of a female member of the Board and the adoption of a formal policy relating to the positive
appointment of additional female members of the Board for future opportunities.
The Board is responsible for: (a) ensuring that all new Directors receive a comprehensive orientation, that they fully
understand the role of the Board and its committees, as well as the contribution individual directors are expected to
make (including the commitment of time and resources that the Company expects from its directors) and that they
understand the nature and operation of the Group’s business; and (b) providing continuing education opportunities
for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure
that their knowledge and understanding of the Group’s business remains current.
Given the size of the Company and the in-depth experience of its Directors, the Board has not deemed it necessary
to develop a formal process of orientation for new Directors but encourages all its Directors to visit the Group’s
operations to ensure familiarity and proper understanding.
Skills & Experience of Board Members
Malcolm Groat
Malcolm is a Chartered Accountant and has a wide range of experience in corporate life, with roles as Chairman,
Non-Executive Director, Chairman of Audit Committees, CEO, COO and CFO for a number of public companies. He
is an adviser on compliance and governance, strategy and operational improvement, and managing the risks of rapid
change.
John Potter
John is an accomplished Chief Executive and project manager with many years’ experience working within the energy
sector. John brings a wide range of skills, knowledge and industry connections. His proficiencies in understanding
and identifying best technologies in projects and his proven abilities in developing relationships with stakeholders,
including operators, politicians, financiers, technology providers and regulators, are well proven and have brought
great value to the companies he has previously worked with.
Louis Castro
Louis is a graduate engineer and PwC Chartered Accountant who has spent his career in the City in investment
banking and capital markets, advising growth companies on a wide range of matters including fund-raising and M&A.
He served as an AIM Nomad for many years before becoming CFO of a listed oil company. In recent years, Louis
has become Executive Chairman of Orosur Mining Inc. which is quoted on both the TSXV and on AIM, and he is also
a non-executive director on Tekcapital plc; Predator Oil & Gas plc; and Stanley Gibbons plc.
Zac Phillips
Zac has over 25 years’ experience in oil and gas finance, having worked for BP, Chevron, Merrill Lynch and ING
Barings. He was previously CFO for Dubai World’s oil and gas business (DB Petroleum) with responsibility for risk
management and authoring of investment proposals. He has a degree in Chemical Engineering and a PhD in
Chemical Engineering from Bath University.
Principle Seven – Evaluation of Board Performance
The Board has determined that it shall be responsible for assessing the effectiveness and contributions of the Board
as a whole and its committees (which currently comprise the Audit Committee and the Remuneration Committee).
The small size of the Board allows for open discussion. The Chairman has regular dialogue with the Chief Executive
whereby the Board’s role and effectiveness can be considered.
No formal assessments have been prepared in the year. However, the Board assesses its effectiveness on an
ongoing basis. The Board will keep this matter under review and especially if either the size of the Board or the
number of committees increases, which in turn may require a more formalised assessment and evaluation process
to be established to ensure continued effectiveness.
12 | P a g e
Corporate Governance Statement
Principle Eight – Corporate Culture
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Group
as a whole and that this will impact the performance of the Group. The Board is very aware that the tone and culture
set by the Board will greatly impact all aspects of the Group. The corporate governance arrangements that the Board
has adopted are designed to ensure that the Group delivers long-term value to its shareholders and that shareholders
have the opportunity to express their views and expectations for the Company in a manner that encourages open
dialogue with the Board.
A large part of the Group’s activities is centred upon what needs to be an open and respectful dialogue with partners,
suppliers, consultants and other stakeholders. Therefore, the importance of sound ethical values and behaviour is
crucial to the ability of the Group to successfully achieve its corporate objectives.
The Directors consider that, at present, the Group has an open culture facilitating comprehensive dialogue and
feedback and enabling positive and constructive challenge.
Principle Nine – Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Group’s activities rests with the Board, with the responsibilities of the
Executive Director arising as a consequence of delegation by the Board.
The Board has adopted appropriate delegations of authority which set out matters which are reserved to the Board.
The Chairman is responsible for the effectiveness of the Board and compliance with the QCA Code, while
management of the Group’s business and primary contact with shareholders has been delegated by the Board to
the Chief Executive Officer.
Non-Executive Directors
The Board evaluates its performance and composition on a regular basis and will make adjustments as and when
indicated. When assessing the independence of each Non-Executive Director, length of service is one of the
considerations. The Board will, when assessing new appointments in the future, consider the need to balance the
experience and knowledge that each independent director has of the Group and its operations, with the need to
ensure that independent directors can also bring new perspectives to the business.
In accordance with the Isle of Man Companies Act 2006, the Board complies with: a duty to act within their powers;
a duty to promote the success of the Company; a duty to exercise independent judgement; a duty to exercise
reasonable care, skill and diligence; a duty to avoid conflicts of interest; a duty not to accept benefits from third parties
and a duty to declare any interest in a proposed transaction or arrangement.
Principle Ten – Shareholder Communication
The Board is accountable to the Company’s shareholders and, as such, it is important for the Board to appreciate
the aspirations of the shareholders and equally that the shareholders understand how the actions of the Board and
short-term financial performance relate to the achievement of the Group’s longer-term goals.
The Board reports to the Company’s shareholders on its stewardship of the Group through the publication of interim
and final financial results. The Company announces significant developments which are disseminated via various
outlets
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.
including, before anywhere else, RNS.
In addition,
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.
13 | P a g e
Corporate Governance Statement
Malcolm Groat
Non-Executive Chairman
31 March 2022
14 | P a g e
AUDIT COMMITTEE REPORT
Overview
The Committee met twice during the year to consider the full year 2020 accounts and interim 2021 accounts. It has
also met after the year end to consider the full year 2021 accounts.
In April 2021, Louis Castro was appointed Chairman of the Committee by the Board. Following the departure of
Robert Kirchner in June 2021, the other Committee members during the year under review have been Malcolm Groat
and Richard Horsman. From February 2022, the Committee comprises Louis Castro, Zac Phillips and Malcolm Groat.
Financial Reporting
The Committee monitored the integrity of the interim and annual financial statements and reviewed the significant
financial reporting issues and accounting policies and disclosures in the financial reports. The external auditor
attended the Committee meeting as part of the full year accounts approval process. The process included the
consideration of reports from the external auditor identifying the primary areas of accounting judgements and key
audit risks identified as being significant to the full year audited accounts.
Audit Committee Effectiveness
The Board considers the effectiveness of the Committee on a regular basis but not as part of a formal process.
External Audit
The Committee is responsible for managing the relationship with the Company’s external auditor, BDO LLP.
The objectivity and independence of the external auditor is safeguarded by reviewing the auditor’s formal
declarations, monitoring relationships between key audit staff and the Group and reviewing the non-audit fees
payable to the auditor. Non-audit services are not performed by the auditor. During the year, audit fees of £34,337
(2020: £33,500) were paid to BDO LLP.
Internal Audit
The Committee considered the requirement for an internal audit function. The Committee considered the size of the
Group, its current activities and the close involvement of senior management. Following the Committee’s review, it
did not deem it necessary to operate an internal audit function during the year.
Louis Castro
Chairman, Audit Committee
31 March 2022
15 | P a g e
REMUNERATION COMMITTEE REPORT
This report is on the activities of the remuneration committee for the financial year ended 30 September 2021.
The Remuneration Committee meets from time to time, but not less than once a year, to review and determine,
amongst other matters, the remuneration of the Executive(s) on the Board and any share incentive plans of the
Company. At the end of the year, the Remuneration Committee comprised Louis Castro (Chairman), Richard
Horsman and Malcolm Groat. From February 2022, the Committee comprises Louis Castro, Zac Phillips and Malcolm
Groat.
The Group has no employees other than the Directors; whose emoluments comprise fees paid for services. The
amounts for their services are detailed below:
Salaries
2021
£’000
Severance
pay
2021
£’000
Salaries
2020
£’000
Severance
pay
2020
£’000
M Groat
J Potter
R Horsman (appointed 1 November 2020;
resigned 24 January 2022)
R Kirchner (appointed 1 November 2020;
resigned 4 June 2021)
L Castro (appointed 19 April 2021)
S West (resigned 30 September 2020)
A Benger (resigned 30 September 2020)
A Jones (resigned 16 March 2020)
38
139
30
15
19
-
-
-
-
-
-
30
-
20
91
-
-
-
27
20
100
-
-
-
--
-
-
150
As detailed in Note 21, the Company has in place a share option scheme for its Directors.
The Committee met twice during the year in conjunction with Board meetings to review salaries and to issue share
options as set out in Note 21.
Louis Castro
Chairman, Remuneration Committee
31 March 2022
16 | P a g e
Independent auditor’s report to the members of TomCo
Energy plc
Opinion on the financial statements
In our opinion the financial statements:
•
give a true and fair view of the state of the Group’s affairs as at 30 September 2021 and of its loss for the
year then ended; and
• have been properly prepared in accordance with IFRSs as issued by the IASB.
We have audited the financial statements of TomCo Energy Plc (the ‘Parent Company’) and its
subsidiaries (the ‘Group’) for the year ended 30 September 2021 which comprise the consolidated
statement of comprehensive income, the consolidated statement of financial position, the consolidated
statement of changes in equity and the consolidated statements of cash flows and notes to the financial
statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the financial statements is
applicable law and International Financial Reporting Standards (IFRSs) as issued by the International Accounting
Standards Board (IASB).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain independent of the Group and the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements.
Material uncertainty related to going concern
We draw attention to note 1.1 to the financial statements concerning the Group’s ability to continue as a
going concern. As stated in note 1.1 the Group has forecasted that it will need to repay or extend the
existing debt by May 2022 and raise additional finance by March 2023. In respect of this there are currently
no binding agreements in place.
As stated in note 1,1 these events or conditions, along with the other matters set out in note 1.1 indicate
that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate.
Because of the judgements made by the Directors, and the significance of this area, we have determined
going concern to be a key audit matter. As described in note 1.1 the Directors expect to be able to either
repay or extend the existing debt and raise additional financing. However, the ability of the Group to
achieve this is not fully within the Directors’ control.
Our evaluation of the Directors’ assessment of the Group’s ability to continue to adopt the going concern
basis of accounting and in response to the key audit matter included:
17 | P a g e
• Reviewing the latest cash flow forecasts for the group, which covered the period to June 2023. Our work
included assessing the forecast cash outflows again historical data and publicly stated plans for the
future development of business.
• Testing the mathematical accuracy of the model.
• Verifying the receipt of the proceeds of the equity placing post the year end.
•
• Challenging directors on their ability to raise further financing with the references to the previous fund
Sensitising the scenario by inflating the overheads.
raises and considering the future impact this could have on further fundraises.
• Reviewing the terms of the $1.5m loan agreement.
• Reviewing the disclosures in note 1.1 to ensure they provide appropriate and sufficient information related
to the going concern position of the Group.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in
the relevant sections of this report.
Overview
Coverage
All areas were subject to full scope audit
Key audit matters
Carrying
Intangible assets
value
2021
of
2020
Accounting treatment of
in
investment
the
Greenfield Energy LLC
Going Concern
Materiality
Group financial statements as a whole
£78,000 (2020: £160,000) based on 1.5% (2020: 1.5%) of total
assets
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s
system of internal control, and assessing the risks of material misstatement in the financial statements. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of
bias by the Directors that may have represented a risk of material misstatement.
Our group audit scope focused on the group’s principle operating locations, being the United Kingdom and USA. We
determined there to be three significant components, TomCo Energy Plc, Greenfield Energy LLC and TurboShale
Inc. There were no insignificant components.
The group audit team carried out a full scope audit on all entities and performed all the work necessary to issue the
group audit opinion including undertaking all of the audit work on the key audit matters and other risk areas.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the
18 | P a g e
efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters. In addition to the matter described in the material uncertainty related to going concern
section of our report, we have determined the matters below to be the key audit matters to be
communicated in our report.
Key audit matter
of
Carrying
value
Intangible
assets
(note 9) and
relevant
notes
within
Group’s
accounting
policies
(note
and
estimates
and
judgements
(note 1.1)
1.9)
The Group has recognised
significant intangible assets,
related to expenditure on
researching and developing
the design and operation of a
pilot plant acquired in the
year and through the
acquisition of the remaining
50% of Greenfield Energy LLC.
The Directors are required to
assess these intangible assets
for indicators of impairment
at each reporting date.
The assessment of whether or
not there are any indicators of
impairment is described in the
Group’s accounting policies
and includes making estimates
and judgments.
The subjectivity of
these
estimates and judgements
along with
the material
carrying value of the assets
and disclosure thereof in the
financial statements make
this a key audit matter.
the scope of our audit
How
addressed the key audit matter
We reviewed Directors’ assessment which
concluded that the Greenfield project is in
the development phase, and therefore the
costs relating to the development are
capitalised within Greenfield, and in doing
so our work included:
• Corroborating the basis for
Directors’ conclusions to
supporting evidence such as the
FEED study which supported
Directors’ conclusion that the
project is commercially viable.
We have assessed Directors’ review of
whether there are any indicators of
impairment and our procedures included
the following:
• Making specific enquires of
Directors, reviewing market
announcements and reviewing
Board minutes to establish
whether there was any evidence
that the Group did not plan to
proceed with the future use of the
intangible assets.
• Reviewing the impairment
assessment prepared by Directors
and making enquiries of Directors
to understand the impact of
current market on the future of
the project and challenging
Directors 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:
Based on the work performed we have no
matters to communicate in respect of
Directors’ assessment of the carrying
value of the group’s intangible assets
Accounting
treatment of
the
investment
in Greenfield
The Group acquired the
remaining 50% shareholding in
Greenfield during the year. As
disclosed in this note this did
not satisfy the criteria for a
We have assessed Directors’ judgements
regarding the determination whether the
acquisition of remaining 50% of Greenfield
represented an asset acquisition.
19 | P a g e
Energy LLC
(note 11)
and related
estimates
and
judgements
(note 1.1)
business combination under
IFRS 3 and therefore was
accounted as an asset
acquisition.
The determination of whether
or not this acquisition
represents a business or asset
acquisition requires
judgement.
Further judgement is required
on identification of assets
purchased and the valuation
of the cost of the purchase.
The consideration for the
acquisition is the issue of
592.8 million shares. The issue
of the shares is contingent
upon the Company receiving
funds from, or drawing down
on, a loan or credit facility
granted for construction of an
oil sands processing facility by
August 2024.
The judgments involved in
making these assessments
and the disclosures within
the
statements
made this a key audit matter.
financial
Our audit procedures included reviewing
the acquisition Agreement and Directors’
representations against the requirements
of IFRS3 “Business Combinations” and
challenging Directors’ on the key terms to
determine whether these are indicative of
asset acquisition or a business
combination.
We also evaluated the adequacy of
Directors’ estimation of the fair value of
the net assets acquired by auditing the
assets and liabilities as at the acquisition
date.
We have assessed the appropriateness of
using the equity method for valuation of
the existing 50% holding in Greenfield
prior to acquisition made in the year.
We have reviewed Directors’ methodology
of estimation of the contingent
consideration and challenged the Directors
on the appropriateness of valuation of the
consideration based on historic cost of
assets or probability of the contingent
shares to be issued.
We also evaluated the adequacy of the
disclosures provided within the financial
statements in relation to the transaction
against
the
the
accounting standards.
requirements of
Key observations:
Based on the work performed we have
no matters to communicate in respect of
Director’s assessment of investment or
the share of the loss recognised in the
group financial statements.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect
of misstatements. We consider materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also
take account of the nature of identified misstatements, and the particular circumstances of their
occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole
and performance materiality as follows:
20 | P a g e
for
Materiality
Basis
determining
materiality
Rationale for the
benchmark
applied
Performance
materiality
Basis
determining
performance
materiality
for
Group financial statements
2020
2021
£m
£m
£78,000
1.5% of total assets
£160,000
1.5% of total assets
We considered total assets to be the most significant
determinant of the Group’s financial performance by
users of the financial statements.
£54,000
£120,000
70% of the above
materiality level given
the slightly increased
volume of errors in prior
year audit
75% of the above
materiality level
given the historical low
volume of errors
Component materiality
We set materiality for each component of the Group based on a percentage of between 50% and 95% of Group
materiality dependent on the size and our assessment of the risk of material misstatement of that component.
Component materiality ranged from £39,000 to £74,000 (2020: £80,000 to £144,000). In the audit of each component,
we further applied performance materiality levels of 70% of the component materiality to our testing to ensure that
the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £1,500
(2020: £3,200). We also agreed to report differences below this threshold that, in our view, warranted reporting on
qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report and financial statements other than the financial statements and our auditor’s
report thereon. Our opinion on the financial statements does not cover the other information and, except
to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon. Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the course
of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the financial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to liquidate the Group or to cease
21 | P a g e
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
Based on our understanding of the Group and industry, we considered those laws and regulations that have a direct
impact on the preparation of the financial statements such as Companies Act 2006 and income tax. The Group are
also subject to many other laws and regulations where the consequences of non-compliance could have a material
effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation.
We identified the following areas as those most likely to have such an effect: anti-bribery, employment law and certain
aspects of relevant applicable legislation.
We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements
(including the risk of override of controls), and determined that the principal risks were related to posting inappropriate
journal entries to revenue, management bias in accounting estimates and the adoption of inappropriate accounting
policies.
Audit procedures performed by the Group engagement team included:
inspecting correspondence with regulators, tax authorities and lawyers;
o
o discussions with management including consideration of known or suspected instances of non-compliance
with laws and regulation and fraud;
inspecting legal and professional fees for indications of non-compliance with laws and regulations;
o Communicating risks of fraud and non-compliance with the engagement team
o
o considering management’s controls designed to prevent and detect irregularities;
o
identifying and testing journals, in particular journal entries posted with unusual account combinations,
postings by unusual users or with unusual descriptions; and
o challenging assumptions and judgements made by management in their critical accounting estimates as
mentioned in Key audit matters.
Our audit procedures were designed to respond to risks of material misstatement in the financial
statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than
the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for
example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit
procedures performed and the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s Members, as a body, in accordance with our engagement letter
dated 31 March 2022. Our audit work has been undertaken so that we might state to the Parent Company’s Members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
22 | P a g e
permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the
Parent Company’s Members as a body, for our audit work, for this report, or for the opinions we have formed.
BDO LLP
Chartered Accountants
London, UK
31st March 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number
OC305127).
23 | P a g e
Consolidated Statement of Comprehensive Income
for the financial year ended 30 September 2021
Note
£’000
Revenue
Cost of sales
Gross loss
Administrative expenses
Impairment losses
Operating loss
Finance income/(costs)
Share of loss of joint venture
Loss on ordinary activities before taxation
Taxation
Loss for the year attributable to:
Equity shareholders of the parent
Non-controlling interests
Items that may be reclassified
subsequently to profit or loss
Exchange differences on translation of
foreign operations
Other comprehensive income for the year
attributable to:
Equity shareholders of the parent
Non-controlling interests
Other comprehensive income
Total comprehensive loss attributable to:
Equity shareholders of the parent
Non-controlling interests
Total comprehensive loss
2
2
2
3
5
4
11
6
20
20
20
Loss per share attributable to the equity
shareholders of the parent
2021
£’000
-
-
-
(1,528)
(8,679)
(10,207)
-
(84)
(10,291)
-
(10,291)
£’000
2020
£’000
-
-
-
(1,031)
-
(1,031)
1
(40)
(1,070)
-
(1,070)
(10,017)
(274)
(1,028)
(42)
(10,291)
(1,070)
(507)
4
(10,524)
(270)
(503)
(350)
(356)
6
(503)
(350)
(10,794)
(1,384)
(36)
2021
Pence
(1,420)
2020
Pence
per share
per share
Basic & diluted loss per share
8
(0.76)
(0.30)
The Notes on pages 23 to 42 form part of these financial statements.
24 | P a g e
Consolidated Statement of Financial Position
as at 30 September 2021
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investment in joint venture
Other receivables
Current assets
Trade and other receivables
Other financial assets
Cash and cash equivalents
TOTAL ASSETS
Liabilities
Current liabilities
Trade and other payables
Net current assets
TOTAL LIABILITIES
Total net assets
Shareholders’ equity
Share capital
Share premium
Warrant reserve
Translation reserve
Retained deficit
Equity attributable to owners of the parent
Non-controlling interests
Total equity
Note
9
10
11
12
12
13
14
15
17
18
19
20
Group
2021
£’000
3,947
-
-
25
3,972
104
371
726
1,201
5,173
(808)
(808)
393
(808)
4,365
-
31,142
2,579
(225)
(28,688)
4,808
(443)
4,365
Group
2020
£’000
8,834
411
1,224
26
10,495
118
-
334
452
10,947
(215)
(215)
237
(215)
10,732
-
29,222
1,288
282
(19,887)
10,905
(173)
10,732
The financial statements were approved and authorised for issue by the Board of Directors on 31 March 2022.
The Notes on pages 23 to 42 form part of these financial statements.
John Potter
Director
Malcolm Groat
Director
25 | P a g e
Consolidated Statement of Changes in Equity
for the financial year ended 30 September 2021
Group
Equity attributable to equity holders of the parent
Note
Share capital Share premium
Balance at 1 October 2019
Loss for the year
Comprehensive income for the year
Total comprehensive loss for the
year
Issue of shares (net of costs)
Exercise of warrants
Expiry of warrants
Share-based payment charge
At 30 September 2020
Loss for the year
Comprehensive income for the year
Total comprehensive loss for the
year
Issue of shares (net of costs)
Expiry of warrants
Share-based payment arrangements
At 30 September 2021
17, 18
19
19
21
17,18
19
21
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£’000
28,247
-
-
-
866
109
-
-
29,222
-
-
-
1,920
-
-
31,142
Warrant
reserve
£’000
Translation
reserve
£’000
65
-
-
-
1,377
(114)
(43)
3
1,288
-
-
-
1,306
(15)
-
2,579
638
-
(356)
(356)
-
-
-
-
282
-
(507)
(225)
-
-
-
(225)
Retained Deficit
£’000
(19,012)
(1,028)
-
(1,028)
-
114
43
(4)
(19,887)
(10,017)
-
Total
£’000
9,938
(1,028)
(356)
(1,384)
2,243
109
-
(1)
10,905
(10,017)
(507)
Non-controlling
interest
Total
Equity
£’000
(137)
(42)
6
(36)
-
-
-
-
(173)
(274)
4
£’000
9,801
(1,070)
(350)
(1,420)
2,243
109
-
(1)
10,732
(10,291)
(503)
(10,017)
(10,524)
(270)
(10,794)
-
15
1,201
(28,688)
3,226
-
1,201
4,808
-
-
-
(443)
3,226
-
1,201
4,365
The following describes the nature and purpose of each reserve within owners' equity:
Descriptions and purpose
Reserve
Amount subscribed for share capital at nominal value, together with transfers to share premium upon redenomination of the shares to nil par value.
Share capital
Share premium
Amount subscribed for share capital in excess of nominal value, together with transfers from share capital upon redenomination of the shares to nil
par value.
Warrant reserve
Amounts credited to equity in respect of warrants to acquire ordinary shares in the Group.
Translation reserve Gains and losses on the translation of foreign operations.
Retained deficit
Cumulative net gains and losses recognised in the consolidated statement of comprehensive income less transfers to retained deficit on expiry.
Non-controlling interest
Non-controlling interest share of losses of TurboShale Inc., together with adjustments associated with the initial recognition of, and changes in, the
non-controlling interest. Refer to Note 20.
The Notes on pages 23 to 42 form part of these financial statements.
26 | P a g e
Consolidated Statement of Cash Flows
for the financial year ended 30 September 2021
Cash flows from operating activities
Loss after tax
Adjustments for:
Finance costs
Amortisation
Impairment losses
Share based payment charge/(credit)
Unrealised foreign exchange losses
Share of loss of joint venture
Decrease/(Increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Cash used in operations
Interest received/(paid)
Net cash outflow from operating activities
Cash flows from investing activities
Investment in intangibles
Purchase of financial assets
Investment in joint venture
Cash acquired on acquisition of control of joint venture
Net cash used in investing activities
Cash flows from financing activities
Issue of equity instruments
Costs of share issue
Net cash generated from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of financial year
Foreign currency translation differences
Cash and cash equivalents at end of financial year
The Notes on pages 23 to 42 form part of these financial statements.
Note
2
4
9
11
11
17,18
Group
2021
£’000
Group
2020
£’000
(10,291)
(1,070)
-
6
8,679
135
67
84
22
63
(1)
6
-
(1)
81
40
(21)
(384)
(1,235)
(1,350)
-
1
(1,235)
(1,349)
(2)
(219)
(1,502)
124
(1,599)
3,500
(274)
3,226
392
334
-
726
(29)
-
(1,279)
-
(1,308)
2,535
(182)
2,353
(304)
639
(1)
334
27 | P a g e
Notes to the financial statements
for the financial year ended 30 September 2021
1. Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented,
unless otherwise stated.
1.1 Basis of preparation and going concern
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations and with those parts of the Isle of Man Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements have been prepared under the historic cost convention.
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions. Although these estimates are based on management’s best
knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Details of the Group’s significant accounting judgments are set out in these
financial statements and include:
Judgements
- Purchase of remaining interest in Greenfield Energy LLC (“Greenfield”)
On acquisition of the remaining 50% of Greenfield not already owned by the Group, the Directors were required to assess whether the acquisition was of a business, as defined by
IFRS 3, or a group of assets. They determined that, as Greenfield had, at the date of acquisition, neither outputs, namely goods or services to customers, nor an organised workforce,
or access to such a workforce, the IFRS 3 definition of a business combination was not met. Therefore, the Directors concluded that the acquisition represented an asset purchase
to be accounted for at cost.
Further judgement was then required concerning:
i.
ii.
the identification of assets purchased; and
measurement of accumulated cost of the purchase, including the accumulated cost of the Group’s initial holding in Greenfield up to the date of acquisition of the remaining
50% interest; and the cost of the remaining 50%, which is principally determined by reference to the directors’ estimate of the probability of those events occurring that
would trigger the issue of equity consideration under the agreement to purchase the remaining interest.
-
Impairment indicator assessment on intangible assets and property, plant and equipment used in exploration and evaluation activities
The Directors consider that impairment indicators existed at 30 September 2021 concerning its tangible and intangible assets employed in exploration and evaluation activities in
relation to oil shale. Having carried out a subsequent impairment review the directors have decided to impair these assets in full at 30 September 2021.
-
Internally generated development assets
Greenfield has incurred expenditure on researching and developing the design and operation of a pilot plant and processes that is not of a scale economically feasible for commercial
production. Judgement is required In determining what constitutes research expenditure, to be expensed in profit and loss, and what constitutes development expenditure that meets
the criteria set out in IAS 38, which must be capitalised. Qualifying expenditure is capitalised from the point at which Greenfield’s board are satisfied as to the technical feasibility of
the production processes. The board have deemed that this was achieved when the preliminary results of the Pre-Feed study were released, which indicated the use of the Oil
Sands Technology was likely to be economically viable. Judgements on these matters affect the Group’s share of Greenfield’s net assets and profits that are recognised under the
equity method up to the point that the remaining 50% of Greenfield was acquired and the cost of intangible assets thereafter.
28 | P a g e
Notes to the financial statements
for the financial year ended 30 September 2021
- Joint arrangements
Prior to the acquisition of the remaining 50% of Greenfield, judgement was required In assessing whether the Group was party to a joint arrangement under IFRS 11. The Group
considered whether decisions about relevant activities of the investee entity required the unanimous consent of the investors (“joint control”). Having established the existence of
joint control, judgement was required to establish whether the structure of the arrangement, the contractual terms or other facts and circumstances give the parties to the arrangement
rights to the assets and obligations for the liabilities of the investee entity. In those circumstances, the entity is a joint operation. Having evaluated the matter, the Group determined
that the parties to the arrangement did not have rights to the assets and obligations of the investee entity and therefore the joint arrangement was a joint venture prior to the acquisition
of control of Greenfield.
Estimates
- Share based payments
Estimates were required in determining the fair value of share options and warrants granted in the year including future share price volatility and the instrument life. Volatility is
estimated using TomCo’s historic share prices for a period of time that matches the exercise period of the warrant or option. This assumes that historic share price volatility is the
best estimate of future volatility. The Black-Scholes model is used for valuing both options and warrants. Estimates are also made of the likely time of exercise of the options or
warrants.
In measuring the value of equity consideration for the purchase of the remaining 50% of Greenfield, the Directors have applied IFRS 2. Where goods or services are provided by
persons other than employees, the value of the share-based payment is determined by reference to the fair value of the assets acquired. Because of the unique nature of the
principal asset acquired, namely the pilot plant processes developed by Greenfield, the directors have determined that cost is the best estimate of fair value at acquisition.
The Group has consistently applied all applicable accounting standards.
Going concern
At 28 March 2022, the Group had cash of approximately £1.12 million, and a loan due to Valkor of approximately £1.14 million ($1.5 million).
The Directors have prepared a cash flow forecast for the period to 30 June 2023. The forecast, which includes capital expenditure committed at the date of this report, indicates that the
Group needs to raise additional finance in order to continue as a going concern. The cash flow forecast assumes, amongst other things, the following:
• that either the Valkor loan of $1.5 million, which is due for repayment by 30 May 2022, is extended by mutual agreement, which would lead to an increase in financing costs, or is settled
by the grant of a production share over wells on land now occupied by the group under arrangements concluded after the year-end.
• the payment which is due in respect of the TSHII option by 31 December 2022 of $16,250,000 requires sufficient additional funding to be raised prior to December 2022 otherwise the
option lapses. Should the option lapse because funding cannot be secured then the Group’s current business plan would be curtailed but, in the Board’s view, the Group would remain a
going concern subject to the occurrence of other currently unforeseen events.
The cash currently held by the Group is sufficient to fund ongoing overhead costs for approximately 12 months, beyond which further funding will be required.
The Group has a reasonable expectation that it can raise the required additional funds based on a history of raising funds. However, there are currently no binding agreements in place.
It is possible that rather than extend the term or grant a production share, the Group would wish to refinance the Valkor loan by May 2022 and that additional capital expenditure beyond
that committed at the date of this report will be necessary prior to April 2023 to maximise the opportunities presented by, in particular, Greenfield. Any such refinance or additional expenditure
would be subject to funding, in whole or in part, via additional debt or equity or a combination of both.
29 | P a g e
Notes to the financial statements
for the financial year ended 30 September 2021
The Directors note that because of both the lingering effects of COVID-19 and the war in Ukraine there remains considerable uncertainty concerning the global economy and oil prices
continue to be volatile, albeit reaching higher levels of late, which may have implications in respect of additional funding, either for the Group’s day-to-day operations or additional capital
expenditure. These conditions represent a material uncertainty which may cast significant doubt over the Group’s ability to continue as a going concern. Whilst acknowledging this material
uncertainty, the Directors remain confident of raising any additional funds required and therefore the Directors consider it appropriate to prepare the financial statements on a going concern
basis. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.
1.2 Future changes in accounting standards
The IFRS financial information has been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period.
There are currently no new or revised standards, amendments and interpretations to existing standards that are not effective for the financial year ended 30 September 2021 and
have not been adopted early, which, when effective, might have an impact upon the Group’s financial statements.
1.3 Basis of consolidation
The Group accounts consolidate the accounts of the parent company, TomCo Energy plc, and all of its subsidiary undertakings drawn up to 30 September 2021. All intra-group
transactions, balances, income and expenses are eliminated on consolidation.
The acquisition of subsidiaries where the acquisition represents the purchase of a business is accounted for on the purchase basis. A subsidiary is consolidated where the
Company has control over an investee. The Group controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may
be a change in any of these elements of control. On acquisition, all of the subsidiary’s assets and liabilities which existed at the date of acquisition are recorded at their fair values
reflecting their condition at the time. If, after re-assessment, the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost
of the business combination, the excess is recognised immediately in the statement of comprehensive income.
Acquisitions of subsidiaries where the IFRS 3 definition of a business combination are not met are accounted for as the purchase of relevant assets less liabilities at cost. Where
the acquisition is a stepped acquisition, cost represents the accumulated cost, under the equity method, of the Group’s initial interest in the subsidiary plus cost of equity
consideration measured in accordance with IFRS 2. Identifiable assets acquired are stated at their respective relative fair values.
Entities over which the Group had joint control were classified as joint ventures and were accounted for using the equity method of accounting. On initial recognition the investment
in the joint venture was recognised at cost. The carrying amount was increased or decreased to recognise the Group’s share of the profit or loss of the joint venture after the date
of acquisition. During the year, the Group acquired control of the remaining unowned interest in it’s joint venture. The accumulated cost on the equity basis to the date of acquisition
forms part of the total acquisition cost referred to in the preceding paragraph.
1.4 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been
identified as the Board of Directors.
Based on an analysis of risks and returns, the Directors consider that the Group has two principal business segments based on geographical location. The loss before taxation
arises principally within the UK and US. Net assets are principally in the UK and the US.
30 | P a g e
Notes to the financial statements
for the financial year ended 30 September 2021
1.5 Revenue
Revenue represents the Group’s share of sales of oil during the year, excluding sales tax and royalties. Income arises from the US and is recognised when the oil is delivered to
the customer. No revenue has arisen in the current or prior year.
1.6 Finance income
Finance income is accounted for on an effective interest basis.
1.7 Property, plant and equipment
Property, plant and equipment employed in exploration and evaluation activities are carried at cost. Following a review of the Group’s activities, these assets have been impaired
in full as at 30 September 2021.
1.8
Intangible assets
Exploration and development licences
The Group applies the full cost method of accounting for oil and gas operations. For evaluation properties, all mineral leases, permits, acquisition costs, geological and geophysical
costs and other direct costs of exploration appraisal, renewals and development are capitalised as intangible fixed assets in appropriate cost pools, with the exception of tangible
assets, which are classed as property, plant and equipment. Costs relating to unevaluated properties are held outside the relevant cost pool and are not amortised until such time
as the related property has been fully appraised. When a cost pool reaches an evaluated and bankable feasibility stage, the assets are transferred from intangible to oil properties
within property, plant and equipment.
Development assets
Greenfield has incurred expenditure on researching and developing the design and operation of a pilot plant and processes for oil sands extraction that is not of a scale economically
feasible for commercial production. Development expenditure at acquisition is measured at cost. Development expenditure incurred following the acquisition of Greenfield that meets the
requirements of IAS 38 for recognition as intangible assets are capitalised. All other expenditure is expensed. No amortisation is charged on such assets until commercial exploitation of
the processes commences.
Technology licences
Amortisation is not charged on technology licences associated with oil and gas assets until they are available for use.
Patents and patent applications
Patents and patent applications acquired in consideration for a combination of cash and the issue of shares in subsidiary undertakings are recognised at fair value, and amortised
over their expected useful lives, which is 12 years being the patent term.
1.9
Impairment
Exploration and development licences
Exploration and development assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed the recoverable amount. In
accordance with IFRS 6 the Group firstly considers the following facts and circumstances in their assessment of whether the Group’s exploration and evaluation assets may be
impaired, namely whether:
the period for which the Group has the right to explore in a specific area has expired during the period or will expire in the near future, and is not expected to be renewed;
31 | P a g e
Notes to the financial statements
for the financial year ended 30 September 2021
substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither budgeted nor planned;
exploration for and evaluation of hydrocarbons in a specific area have not led to the discovery of commercially viable quantities of hydrocarbons and the Group has decided
to discontinue such activities in the specific area; and
sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely
to be recovered in full, either from successful development or by sale.
The Directors have concluded that the above facts and circumstances applied in respect of its oil shale exploration and evaluation activities, because at present there is no
programme in place or committed budget to continue exploration in this area. Having conducted a review, they have therefore determined to impair tangible and intangible assets
employed in those activities in full. Impairment losses are recognised in the income statement and separately disclosed.
Research and development activities
The directors do not consider any impairment indicators exist with regard to the Group’s research and development activities with regard to oil sands extraction. If any such facts
or circumstances were noted, the Group would perform an impairment test in accordance with the provisions of IAS 36.
Technology licences
The carrying amount of the Group’s other intangible asset, its patents and technology licences, is reviewed at each reporting date to determine whether there is any indication of
impairment. If such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its
recoverable amount. Impairment losses are recognised in the income statement.
1.10 Taxation
Taxation expense represents the sum of current tax and deferred tax.
Current tax is based on taxable profits for the financial period using tax rates that have been enacted or substantively enacted by the reporting date. Taxable profit differs from net
profit as reported in the statement of comprehensive income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes. If deferred tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit nor loss, it is not accounted for. Deferred tax is determined using tax rates that have been enacted or substantively enacted at the reporting
date and that are expected to apply when the related deferred income tax asset is realised, or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversals of the temporary differences is controlled by the
Group and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
32 | P a g e
Notes to the financial statements
for the financial year ended 30 September 2021
1.11 Foreign currencies
The accounts have been prepared in pounds sterling being the presentational currency of the Group. The functional currency of the holding company is also pounds sterling. The
functional currency of the US subsidiaries is US dollars. Assets and liabilities held in the Group or overseas subsidiaries in currencies other than the functional currency are
translated into the functional currency at the rate of exchange ruling at the reporting date.
Transactions entered into by Group entities in a currency other than the functional currency of the entity are recorded at the rates ruling when the transactions occur. Exchange
differences arising from the settlement of monetary items are included in the statement of comprehensive income for that period.
The assets and liabilities of subsidiaries and joint ventures with functional currencies other than sterling are translated at balance sheet date rates of exchange. Income and
expense items are translated at the average rates of exchange for the period. Exchange differences arising are recognised in other comprehensive income (attributed to the parent
equity holder and non-controlling interests as appropriate).
1.12 Leases
The Group is party as lessee only to low value or short-term leases. Rentals payable under such leases, net of lease incentives, are charged to the statement of comprehensive
income on a straight-line basis over the period of the lease.
1.13 Debt instruments at amortised cost
These assets are non-derivative financial assets which are held in a business model whose objective is to collect contractual cashflows and whose contractual terms give rise on
specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. They arise principally through types of contractual monetary asset such
as receivables. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised
cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognised based on expected credit losses over the asset’s life.
The Group’s assets held at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.
1.14 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at the bank and other short-term liquid investments with original maturities of three months or less.
1.15 Trade payables
Trade payables are recognised at amortised cost. All of the trade payables are non-interest bearing.
1.16 Share capital
Ordinary shares are classified as equity. Shares issued in the period are recognised at the fair value of the consideration received.
1.17 Warrants
33 | P a g e
Notes to the financial statements
for the financial year ended 30 September 2021
Warrants issued as part of financing transactions in which the holder receives a fixed number of shares on exercise of the warrant are fair valued at the date of grant and recorded
within the warrant reserve. Fair value is measured by the use of the Black-Scholes model.
On expiry or exercise, the fair value of warrants is credited to reserves as a change in equity.
1.18 Non-controlling interests
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-controlling shareholders that are present ownership
interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests’ proportionate share
of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling interests are initially
measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling
interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a
deficit balance.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group’s interests and
the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Group.
Details concerning non-wholly owned subsidiaries of the Group that have material non-controlling interests are set out in note 18.
1.19 Share-based payments
Equity-settled share-based payments to directors are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of
equity-settled share-based transactions is set out in Note 18.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period or periods, based on the Group’s estimate of equity instruments that will
eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates,
if any, is recognised in profit or loss such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to equity reserves.
In respect of equity-settled arrangements within the scope of IFRS 2 representing contingent consideration for the acquisition of assets, the value of the equity instruments is
presumed to be equivalent to the fair value of the assets acquired. In the case of assets acquired on the acquisition of Greenfield, cost is deemed to be the best estimate of fair
value.
34 | P a g e
Notes to the financial statements
for the financial year ended 30 September 2021
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.
Year ended 30 September
External revenue
Inter-segment sales
Cost of sales
Gross profit/(loss)
Impairment
Administrative expenses
Operating loss
Financial income
2021
£’000
-
United States United Kingdom
2021
£’000
-
88
-
88
-
(1,202)
(1,114)
-
-
-
(8,679)
(414)
(9,093)
-
Share of loss of joint venture
Loss before taxation
(84)
(9,177)
-
(1,114)
Non-Current assets:
– Exploration and development assets
– Other
– Property, plant and equipment
– Patents
- Investments in joint venture
Current assets:
Trade and other receivables
Other financial assets
Cash and cash equivalents
Total assets
Current liabilities:
Trade and other payables
Total liabilities
3,947
25
-
-
-
3,972
-
371
15
4,358
(498)
(498)
-
-
-
-
-
-
104
-
711
815
(310)
(310)
Eliminations
2021
£’000
(88)
-
(88)
-
88
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
2021
£’000
-
-
-
-
(8,679)
(1,528)
(10,207)
-
(84)
(10,291)
3,947
25
-
-
-
3,972
104
371
726
5,173
(808)
(808)
United States
2020
£’000
-
-
-
-
(241)
(241)
-
(40)
(281)
8,819
26
411
15
1,224
10,495
-
4
10,499
(309)
(309)
United Kingdom
2020
£’000
-
94
-
94
-
(884)
(790)
1
-
(789)
-
-
-
-
-
-
398
330
728
(186)
(186)
Eliminations
2020
£’000
(94)
-
(94)
94
-
-
-
-
-
-
-
-
-
-
(280)
Total
2020
£’000
-
-
-
-
-
(1,031)
(1,031)
1
(40)
(1,070)
8,819
26
411
15
1,224
10,495
118
334
(280)
10,947
280
280
(215)
(215)
35 | P a g e
3.
Impairment losses
Impairment losses recognised during the year were as follows:
Oil shale exploration property, plant and equipment
Oil shale exploration intangible assets
Total impairment losses for the financial year
2021
£’000
386
8,293
8,679
2020
£’000
-
-
The impairments arose as a result of the reassessment by the Directors of the Group’s future strategy and intentions
for the commitment of future resources towards oil shale exploration and extraction activities and the absence of a
committed budget or programme for such work.
.
4. Finance costs
Interest income
Total finance costs for the financial year
5. Operating loss
The following items have been charged in arriving at operating loss:
Auditors’ remuneration: audit services
Rentals payable in respect of land and buildings
6. Taxation
There is no tax charge in the year due to the loss for the year.
Factors affecting the tax charge:
Loss on ordinary activities before tax
Loss on ordinary activities at standard rate of corporation tax
in the UK of 19% (2020: 19%)
Effects of:
Group share of joint venture losses
Losses carried forward
Tax charge for the financial year
2021
£’000
-
-
2021
£’000
43
10
2020
£’000
(1)
(1)
2020
£’000
33
52
2021
£’000
2020
£’000
(10,291)
(1,070)
(1,955)
(203)
16
1,939
-
7
196
-
36 | P a g e
7. Employees and Directors
The Group has one employee (2020-none) other than the Directors, whose emoluments comprise fees paid for services.
The amounts for their services are detailed below:
Salaries
Severance
pay
2021
£’000
2021
£’000
Share-
based
payment
expense
2021
£’000
Salaries
Severance
pay
Share-based
payment
expense
2020
£’000
2020
£’000
2020
£’000
J Potter
M Groat
R Horsman (appointed 1
November 2020;
resigned 24 January
2022)
L Castro (appointed 19
April 2021)
R Kirchner (appointed 1
November 2020;
resigned 4 June 2021)
S West
A Benger
A Jones
Total remuneration
139
38
30
19
15
-
-
-
241
-
-
-
-
30
-
-
-
30
74
28
10
20
-
-
-
-
132
91
20
-
--
-
27
20
100
258
-
-
-
-
-
-
-
150
150
20
5
--
4
5
(35)
(1)
Unvested share options granted to Mr Jones were outstanding on his resignation, and this has resulted in a credit to profit
and loss in 2020 in respect of charges for share-based payment previously recognised in respect of those options that have
been forfeited.
37 | P a g e
8. Loss per share
Basic loss per share is calculated by dividing the losses attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year. Reconciliations of the losses and weighted average number of shares
used in the calculations are set out below.
Financial year ended 30 September 2021
Basic and Diluted EPS
Losses
£’000
Weighted
average
number of
shares
Per share
Amount
Pence
Losses attributable to ordinary shareholders on continuing operations
(10,017)
1,323,206,884
Total losses attributable to ordinary shareholders
(10,017)
1,323,206,884
Financial year ended 30 September 2020
Basic and Diluted EPS
Losses attributable to ordinary shareholders on continuing operations
(1,028)
339,346,801
Total losses attributable to ordinary shareholders
(1,028)
339,346,801
(0.76)
(0.76)
(0.30)
(0.30)
The warrants and share options which were issued or for which entitlement to warrants was established in the current and
prior years (Notes 17 and 18) are anti-dilutive. As these instruments would be anti-dilutive a separate diluted loss per share
is not presented.
9.
Intangible assets
Oil & Gas
Oil & Gas
Oil & Gas
Oil & Gas
Exploration and
evaluation
expenditure
Development
expenditure
Patents and
patent
applications
£’000
£’000
£’000
9,200
29
(410)
8,819
2
-
(534)
8,287
-
-
-
-
8,287
8,287
-
8,819
9,200
1,314
-
1,314
-
3,875
72
5,261
1,314
-
1,314
-
-
1,314
3,947
-
-
34
-
(1)
33
-
-
(3)
30
12
6
18
6
6
30
-
15
22
Cost
At 1 October 2019
Additions
Translation differences
At 30 September 2020
Additions
Acquisition of subsidiary
Translation differences
At 30 September 2021
Amortisation/Impairment
At 1 October 2019
Amortisation
At 30 September 2020
Amortisation
Impairment
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
At 30 September 2019
Total
£’000
10,548
29
(411)
10,166
2
3,875
(465)
13,578
1,326
6
1,332
6
8,293
9,631
3,947
8,834
9,222
38 | P a g e
The assets acquired with Greenfield are described at note 1.8. The exploration and development licences comprise nine
Utah oil shale leases covering approximately 15,488 acres. These assets have been impaired in full on 30 September 2021
for the reasons given in note 1.9.The impairment value represents the estimated value in use of the assets concerned, which
is estimated at nil. The discount rate is not relevant for the purposes of computing the quantum of the impairment loss. The
impairment relates to assets in the US geographical reporting segment.
10. Property, plant and equipment
Cost at 30 September 2019
Translation differences
At 30 September 2020
Translation differences
At 30 September 2021
Impairment
Charge for year
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
At 30 September 2019
Exploration and evaluation equipment
Total
£’000
431
(20)
411
(25)
386
386
386
-
411
431
These assets have been impaired in full at 30 September 2021 for the reasons given in note 1.9.The impairment value
represents the estimated value in use of the assets concerned, which is estimated at nil. The discount rate is not relevant
for the purposes of computing the quantum of the impairment loss. The impairment relates to assets in the US geographical
reporting segment.
11.
Investment in joint venture
Carrying value under equity method
At 1 October 2019
Cost
Share of loss of joint venture
Other comprehensive income-translation differences
At 30 September 2020
Share of loss of joint venture
Other comprehensive income-translation differences
Acquisition of controlling interest
At 30 September 2021
At 30 September 2020
At 30 September 2019
£’000
-
1,279
(40)
(15)
1,224
(84)
(77)
1,063
(1,063)
-
1,224
-
During the year, the Group acquired the remaining 50% interest in Greenfield not previously owned by it. The acquisition did
not satisfy the criteria for a business combination under IFRS 3, such that the acquisition has been accounted for as an asset
purchase. The consideration for the acquisition is the issue to Valkor LLC, the Group’s former joint venture partner, of 592.8
million new ordinary shares in TomCo. The issue of the shares is contingent upon the Company receiving funds from, or
drawing down on, a loan or credit facility granted in connection with the proposed construction of an oil sands processing
facility by August 2024.
39 | P a g e
Details of the assets and liabilities acquired by the Group on the acquisition of control of Greenfield are as follows:
Non-current assets
Development asset
Intangible assets
Current assets
Receivables at amortised cost
Other financial assets
Bank balances and cash
Total assets
Trade and other payables
Loans
Net assets
Cost under equity method at date of acquisition
Consideration for acquisition of remaining interest-
contingent equity consideration
£’000
3,875
3,875
6
146
124
276
4,151
(523)
(1,502)
2,126
1,063
1,063
There is no quoted market price for the Group’s investment in Greenfield. The fair value of the net assets acquired was
deemed to be their cost. The value of the contingent consideration is deemed to be the fair value of the net assets acquired,
in accordance with IFRS 2.
Summarised financial information for Greenfield at and for the period from 1 October 2020 to 25 August 2021 (comparative
information is given for the period from May 2020 (its incorporation) to 30 September 2020), when it ceased to be a joint
venture and became a subsidiary, is as follows:
Revenue
Loss from continuing operations
Other comprehensive income
Total comprehensive loss
Group share of total comprehensive loss (50%)
Non-current assets
Current assets
Total assets
Trade and other payables
Loans
Net assets
Group share of net assets (50%)
2021
£’000
-
(168)
(154)
(322)
(161)
3,875
276
4,151
(523)
(1502)
2,126
1,063
2020
£’000
-
(80)
(30)
(110)
(55)
2,091
507
2,598
(150)
-
2,448
1,224
40 | P a g e
12. Trade and other receivables
Current
Other receivables
Prepayments and accrued income
Non-current
Other receivables
Total Receivables
Group
2021
£’000
51
53
104
25
129
Group
2020
£’000
64
54
118
26
144
As at 30 September 2021, there were no receivables considered past due (2020: £Nil). The maximum exposure to credit
risk at the reporting date is the fair value of each class of receivable and cash and cash equivalents as disclosed in Note 14.
All current receivable amounts are due within six months.
13. Other financial assets
Current
Deposit
Total
Group
2021
£’000
371
371
Group
2020
£’000
-
-
As at 30 September 2021, Greenfield had paid a deposit of US$500,000 against a possible acquisition of a 10% interest in
Tar Sands Holdings II LLC, a Utah limited liability company for US$2 million, The sum paid is deductible against the final
consideration, which was paid after the end of the financial year. In the Directors’ opinion, the fair value of the deposit was
equivalent to its cost.
14. Cash and cash equivalents
Cash at bank and in hand
Group
2021
£’000
726
Group
2020
£’000
334
The Group earns 0.05% (2020: 0.05%) interest on its cash deposits, consequently the Group’s exposure to interest rate
volatility is not considered material.
15. Trade and other payables
Current
Trade payables
Other payables
Accruals
Group
2021
£’000
160
395
253
808
Group
2020
£’000
28
30
157
215
All current amounts are payable within six months and the Directors consider that the carrying values adequately represent
the fair value of all payables.
16. Deferred tax
Unrecognised losses
The Group has tax losses in respect of excess management expenses of approximately £12.7 million (2020: £10.8
million) available for offset against future Company income. This gives rise to a potential deferred tax asset at the
reporting date of £2.9 million (2020: £2.0 million). No deferred tax asset has been recognised in respect of the tax
losses carried forward as the recoverability of this benefit is dependent on the future profitability of the Company, the
41 | P a g e
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 £9 million for which no deferred tax asset is recorded
given the uncertainty of future profits.
17. Share capital
Issued and fully paid at 1 October 2019 - shares of no par value
December 2019 - placing of new ordinary shares (note18)
July 2020 - placing of new ordinary shares (note 18)
July 2020 - exercise of warrants (notes 18 and 19)
At 30 September 2020
November 2020-placing of new ordinary shares (note 18)
At 30 September 2021
Number of shares
in issue
2020
£
133,451,543
142,307,692
375,000,000
22,875,000
673,634,235
777,777,777
1,451,412,012
-
-
-
-
-
-
In July 2020 the Company issued 375 million shares and 187.5 million warrants at a price of 0.4pence per share
There are 592.8 million contingent shares issuable (note 11).
18. Share premium
At 1 October
December 2019 - placing of new shares at 0.65 pence per share, net of costs
July 2020 - placing of new shares at 0.4 pence, net of costs
July 2020 - exercise of warrants (note 19)
November 2020 - subscription of new shares at 0.45 pence per share, net of
costs
Issue of warrants to placees (note 19)
Issue of warrants as part of placing fees (note 19)
At 30 September
2021
£’000
29,222
-
-
-
3,226
(1,306)
-
31,142
2020
£’000
28,247
864
1,379
110
-
(1,223)
(155)
29,222
19. Warrants
At 30 September 2021, the following share warrants were outstanding in respect of ordinary shares:
Outstanding at 1 October
Expired during the year
Granted during the year
Exercised during the year
Outstanding at 30 September
Exercisable at 30 September
2021
2021
2020
2020
Weighted average
exercise price
Pence
1.0
(3.5)
0.85
-
0.88
0.88
number
269,791,515
(771,429)
435,555,554
-
704,575,640
704,575,640
number
967,429
(196,000)
291,895,086
(22,875,000)
269,791,515
269,791,515
Weighted
average
exercise price
Pence
4.4
(8.2)
1.0
0.5
1.0
1.0
42 | P a g e
The inputs into the Black-Scholes model for calculating the estimated fair value of warrants granted, at their grant date,
were as follows:
Share price (pence)
Exercise price (pence)
Expected volatility
Risk-free rate
Expected period before exercise (years)
2021
0.45
0.45-0.9
148%
1%
2
2020
0.64-0.65
0.4-1.5
171%
1%
2
Expected volatility was determined by calculating the historical volatility of the Company’s share price. The expected
life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
Issue of Warrants
3,610,520 warrants were issued during 2019 in connection with the placing of new shares. The fair value of these
warrants was assessed at £59,000. Of the warrants issued during 2019, warrants over 2,839,091 ordinary shares were
exercised in 2019 and the remaining 771,429 expired in 2021.
291,895,086 warrants were issued during the year ended 30 September 2020 at exercise prices ranging from 0.4p per
share to 5.25p per share. 22,875,000 of those warrants were exercised during that year at exercise prices ranging
from 0.4p per share to 0.8p per share.
435,555,554 warrants were issued during the year ended 30 September 2021 at exercise prices of between 0.45p and
0.9p per share.
Each warrant in issue is governed by the provisions of warrant instruments representing the warrants which have been
adopted by the Company. The rights conferred by the warrants are transferable in whole or in part subject to and in
accordance with the transfer provisions set out in the Articles. The warrants outstanding at 30 September 2021 had a
weighted average exercise price of 0.88p (2020: 1p) and a weighted average remaining contractual life of 0.95 years
(2020: 1.59 years).
20. Non-controlling interests
Details of non-controlling interests are as follows:
Name of subsidiary
Proportion of
ownership interests
and voting rights
held by non-
controlling interests
2020
2021
%
%
Total
comprehensive loss
allocated to non-
controlling interest
2020
2021
£’000
£’000
Accumulated
non-
controlling
interest
2021
£’000
2020
£’000
TurboShale Inc.
20
20
(270)
(36)
(443)
(173)
Summarised financial information for TurboShale Inc is as follows:
Revenue
Loss from continuing operations
Impairment losses
Other comprehensive income
Total comprehensive loss
Group share of total comprehensive loss (80%)
2021
£’000
-
(185)
(1,185)
17
(1,353)
(1,083)
2020
£’000
-
(209)
-
31
(178)
(142)
43 | P a g e
Non-current assets
Current assets-bank balances and cash
Total assets
Trade and other payables
Net liabilities
-
2
2
(2,215)
(2,213)
1,266
4
1,270
(2,130)
(860)
21. Share-based payments
The Company implemented a share option scheme for its Directors during the year ended 30 September 2018. Further
issues of options took place in June 2020 and June 2021. Options are exercisable at a price equal to the quoted market
price of the Company’s shares at the date of grant. The vesting period is between six months and 1 year. If the options
remain unexercised after a period of ten years from the date of grant (5 years in the case of options granted in June
2020) the options expire. Options are forfeited if the director leaves the Company before the options vest.
Details of the share options issued during the year and outstanding at the year-end are as follows:
Outstanding at 1 October
Granted during the year
Lapsed during the year
Outstanding at 30 September
Exercisable at 30 September
2021
2021
2020
2020
number
17,365,078
90,500,000
(2,000,000)
105,865,078
15,365,078
Weighted average
exercise price
Pence
1.50
0.54
0.60
0.70
Weighted average
exercise price
Pence
5.25
0.60
5.25
1.50
number
5,142,855
14,000,000
(1,777,777)
17,365,078
2,539,682
Details of the options held by each Director are provided in the Directors’ Report on page 5.
The inputs into the Black-Scholes model for calculating the estimated fair value of options granted, at their grant date,
were as follows:
Share price (pence)
Exercise price (pence)
Expected volatility
Risk-free rate
Expected period before exercise (years)
2021
0.54
0.54
127-142%
1%
1.5
2020
0.6
0.6
150%
1%
1.5
Expected volatility was determined by calculating the historical volatility of the Company’s share price. The expected
life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability,
exercise restrictions and behavioural considerations.
The fair value of each option granted during the year was estimated at 0.35 pence (2020: 0.35 pence) at the date of
grant. The weighted average unexpired life of the options at 30 September 2021 was 8.95 years (2020: 5.97 years).
The charge (2020: credit) recognised in profit or loss for 2021 was £135,000 (2020: £1,000).
Where equity instruments to be issued as consideration for the purchase of a group of assets that does not constitute
a business are within the scope of IFRS 2, the value of the equity instruments is determined by reference to the fair
value of the net assets acquired. This is deemed to be cost at the date of acquisition.
22. Financial instruments
The Group’s financial instruments, other than its investments, comprise cash and items arising directly from its
operations such as other receivables, and trade payables.
44 | P a g e
Management review the Group’s exposure to currency risk, interest rate risk, liquidity risk and credit risk on a regular
basis and consider that through this review they manage the exposure of the Group. No formal policies have been put
in place in order to hedge the Group’s activities to the exposure to currency risk or interest risk, however, this is
constantly under review.
There is no material difference between the book value and fair value of the Group and Company’s cash and other
financial assets.
Currency risk
The Group has overseas subsidiaries which operate in the United States and include expenses, assets and liabilities
denominated in US$. Foreign exchange risk is inherent in the Group’s activities and is accepted as such. The effect of
a 10% strengthening or weakening of the US dollar against sterling at the reporting date on the dollar denominated
balances would, all other variables held constant, result in a gain or loss of approximately £6,000 (2020: £1,000).
Interest rate risk
The Group and Company manage the interest rate risk associated with the Group’s cash assets by ensuring that
interest rates are as favourable as possible, whether this is through investment in floating or fixed interest rate deposits,
whilst managing the access the Group requires to the funds for working capital purposes.
The Group’s cash and cash equivalents are subject to interest rate exposure due to changes in interest rates. Short-
term receivables and payables are not exposed to interest rate risk. The Group has no borrowings as at 30 September
2021.
A 1% increase or decrease in the floating rate attributable to the cash balances held at the year-end would not result
in a significant difference on interest receivable.
Liquidity risk
At the year end the Group and Company had cash balances comprising the following:
Bank balances
British Pounds
US Dollars
Total
Group
2021
£’000
667
59
726
Group
2020
£’000
319
15
334
All financial liabilities of the Group mature in less than 12 months: details of the analysis of such liabilities is provided
in Note 14.
Liquidity risk arises from the Group management of working capital. It is the risk that the Group will encounter difficulty
in meeting its financial obligations as they fall due. Refer to Note 1.1 for details of going concern.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become
due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a
period of at least 90 days.
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails to meet
its contractual obligations. The Group is principally exposed to credit risk on cash and cash equivalents with banks and
financial institutions. For banks and financial institutions, only independently rated parties with an acceptable rating
are utilised. There has been no significant change in credit risk since the recognition of applicable assets and therefore
no credit losses have been recognised on financial assets.
Capital management policies
In managing its capital, the Group’s primary objective is to maintain a sufficient funding base to enable the Group to
meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve
45 | P a g e
these aims, through new share issues or debt, the Group considers not only its short-term position but also its long-
term operational and strategic objectives.
23. Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-
cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will
be, classified in the cash flow statement as cash flows from financing activities:
Group 2021
Loans
Total
Group 2020
Loans
Total
1 October
Financing cash flows
£’000
£’000
Non-cash
transactions
£’000
30 September
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24. Related party disclosures
The Directors are Key Management and information in respect of key management is provided in Note 6.
25. Ultimate controlling party
As at 30 September 2021 and 30 September 2020 there was no ultimate controlling party.
26. Operating lease commitments
At 30 September 2021, the Group had no operating lease commitments (2020: £nil).
27. Subsequent events
i.
ii.
iii.
iv.
v.
vi.
In November 2021, the Group completed the acquisition of a 10% interest in Tar Sands Holdings II LLC at a
cost of US$2 million, less amounts paid to 30 September 2021 of US$500,000. The completion of the purchase
was financed by a loan of US$1.5 million from Valkor Oil & Gas LLC, its former joint venture partner in
Greenfield. The terms of this loan are summarised in the directors’ report.
A newly formed subsidiary of Greenfield entered into an oil and mineral lease with Tar Sands II Holdings LLC
over approximately 320 acres of land in Uintah County Utah USA for a period of 10 years from 15 November
2021. The lease gives the Group exclusive rights to explore, drill and mine for, and extract, store and remove
oil, gas, hydrocarbons and associated substances on the site. A royalty is payable equal to 12% of the net
return per barrel of product.
In November 2021, warrants in respect of 46.6 million new ordinary shares were exercised for a total
consideration of £210,000.
In January 2022, the Group raised £1.25 million before costs in a placing of 250 million new ordinary shares
at 0.5p per share.
In January 2022, on retirement from the Board, Richard Horsman waived 7.5 million options on receipt of a
payment of £30,000 from the Company.
In January 2022, the Group entered into a services agreement with Heavy Sweet Oil LLC to assist it with
permitting and government relations in respect of their planned drilling programme adjacent to the D Tract of
the Tar Sands Holdings II LLC ("TSHII") site in the Uinta Basin, Utah, United States. Heavy Sweet Oil agreed
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to pay TomCo US$10,000 per month for its services, with the agreement backdated to start from 1 January
2022.
vii.
In March 2022, Greenfield entered into a Memorandum of Understanding ("MoU") with Vivakor Inc. ("Vivakor'')
covering, inter alia, the proposed development by Vivakor of an enhanced oil sands processing plant on the
Tar Sands Holdings II LLC ("TSHII") site located in the Uinta Basin, Utah, United States and the provision of
professional services by Greenfield. In addition, Vivakor entered into a lease with TSHII covering approximately
three acres of the TSHII site to accommodate its planned operations, which includes the future supply of oil
sands by TSHII.
ONLINE
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info@tomcoenergy.com
TELEPHONE
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ADDRESS
TomCo Energy plc
60 Circular
Road
Douglas
Isle of Man
IM1 1SA
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