Annual Report and
Financial Statements
2022
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 Registration
Numbers
Isle of Man
England & Wales
6969V
FC022829
Country of
Incorporation
Isle of Man
Board of Directors
Non-Executive Chairman
Malcolm Groat
John Potter
Chief Executive Officer
Louis Castro Non-Executive Director
Non-Executive Director
Zac Phillips
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
3
11
16
17
18
23
24
25
26
27
3
CHAIRMAN’S STATEMENT
I am pleased to be delivering my third 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 2022.
Operational Review
Greenfield Energy LLC
The Company’s primary focus during
remained on Greenfield
the year
Energy LLC (“Greenfield”) and
its
plans to pursue the construction of two
oil sands separation plants capable of
processing at least 6,000 tonnes per
day of oil sands in Utah, USA, at the
earliest opportunity, as well as
other
exploiting
potentially
opportunities available to it.
of
the
delivery
required
strategy.
to purchase
financial year
During
to 30
September 2022, the Company sought
in securing
to support Greenfield
its
funding
for
abovementioned
This
essentially requires: (i) raising the
to exercise an
$16.25m
exclusive option
the
remaining 90% of Tar Sands Holdings
II (“TSHII”), which owns, 760 acres
with a Large Mining Permit in Utah,
and (ii) raising the requisite additional
two
to construct up
sums
commercial
sands
oil
scale
separation/processing plants on such
also
permitted
commencing drilling of wells into the
deeper oil sands that are too deep to
mine for the implementation of oil
recovery processes. Simultaneously,
the Company
been
strengthening
relationship with
Valkor Oil & Gas LLC (“Valkor”) and
other technical parties, working on the
specification for the proposed oil sands
processing plants.
whilst
area,
also
has
its
to
the
financial year end,
Post
the
Company has continued to work on
securing the requisite funding package
for Greenfield’s development, with one
potential
scenario
in
disposal of a majority stake
involving
the
certain upfront
Greenfield to a partner(s) in return for,
inter alia,
cash
consideration, a continuing equity
participation for TomCo in Greenfield
without the requirement for further
capital contributions from TomCo and
the provision of a sizeable funding
package to Greenfield. Discussions
are ongoing and the Board remains
confident
funding
arrangements can be successfully
concluded during 2023 despite the
current challenging macroeconomic
environment. Following agreement
with the vendor of TSHII, the deadline
for Greenfield to exercise its option
over the remaining 90% stake has
recently been extended to 30 April
2023.
suitable
that
TurboShale RF Technology
Our focus has been, and remains, on
Greenfield. The potential exploitation
of the Company’s TurboShale and Oil
Mining Company assets, now fully
impaired
accounting
perspective, will be
revisited and
reviewed when appropriate in due
course.
from
an
Corporate
In late January 2022, the Company
raised £1.25 million gross via a placing
involving the issue of 250 million new
ordinary shares at a price of 0.50
pence per share, with the net proceeds
to satisfy general
being utilised
working capital
the
costs associated with drilling three
exploration wells on the TSHII site and
to progress Greenfield’s funding plans.
requirements,
On 1 September 2022, the Company
obtained an unsecured facility of up to
£0.75 million via a convertible loan
associated
and
instrument
____
1
with
subscription and put option entered
subscribers
certain
into
introduced by the Company’s broker.
Such facility was subsequently draw
down and converted in full and the
in
proceeds utilised
aggregate, $0.5 million of the principal
amount of the unsecured $1.5 million
loan previously advanced by Valkor to
Greenfield
in
connection with its purchase of an
initial 10% Membership Interest in
TSHII, and
for general corporate
purposes.
“Valkor Loan”)
repay,
(the
to
to cover
Following the financial year end, on 30
November 2022, the Company raised
a further £0.925 million gross through
the placing of 264,285,714 new
ordinary shares at a price of 0.35
pence per share to provide additional
funds
the Company’s
expenditure as it progresses its plans
for Greenfield. The terms of the Valkor
Loan were also varied to extend the
repayment date for the remaining $1
million principal amount
the
completion date of a suitable funding
transaction for Greenfield that provides
sufficient funds to TomCo to, inter alia,
enable it to affect repayment. As at the
date of this statement the principal
amount outstanding in respect of the
Valkor Loan was $750k.
to
On 30 March 2023, the Company
secured a new four tranche committed
unsecured convertible loan facility of
up to £1 million to provide additional
working capital for the group whilst
funding
seeking
arrangements for Greenfield.
finalise
to
of
to announce
In late January 2022, the Company
the
was pleased
appointment of Zac Phillips as a Non-
Executive Director following Richard
Horsman stepping down and there
have been no further changes to the
Board since that time. The Company’s
three Non-Executive Directors (Louis
Castro, Zac Phillips and I) visited Utah
in May 2022 in order to deepen our
Greenfield’s
understanding
development plans project and to meet
the key parties, including a potential
sand off-take partner, that John Potter,
our CEO, has assembled to bring the
project
fruition. Based on my
personal experience of serving on a
number of AIM quoted companies'
the
truly believe
boards,
Company’s current Board comprises a
particularly
and
effective team. I am extremely grateful
to all directors
their excellent
for
contributions and particularly to John
Potter for his unstinting efforts to
realise the Company’s clear strategic
objectives.
knowledgeable
that
to
I
and
Outlook and Summary
The Company acknowledges and
the ongoing
greatly appreciates
our
of
support
shareholders as we seek to progress
the Greenfield development project as
well as exploit TomCo’s other
significant potential despite the current
global economic headwinds.
patience
Malcolm Groat
Chairman
6 April 2023
____
2
DIRECTORS’ REPORT
The Directors submit their report and the financial statements of the Group for the year ended 30 September
2022.
PRINCIPAL ACTIVITY
The principal activity of the Group is that of seeking to develop, through its wholly owned subsidiary Greenfield
Energy LLC, the oil sands resources contained in the Tar Sands Holdings II LLC site via the exploitation of
separation technology to achieve sustained future production.
RISK ASSESSMENT
The Group’s oil and gas activities are subject to a range of financial and operational risks which can significantly
impact on its performance, with the key risks for the year ended 30 September 2022 set out below.
Operational risk
During the financial year, the Group further developed, with its engineering partners, the oil sands separation
process incorporating an (identified but still to be licenced) reagent which has served to simplify the separation
process. Initial site preparation has taken place involving a clearance plan in respect of the historic facility on
the site, along with detailed site surveys to establish plans for a new access road for the first processing plant
to be constructed on the site. Suitable off-take partners have been identified for both the oil and sand products
intended to be produced by the separation process, with initial discussions undertaken to confirm likely levels
of demand and pricing terms.
Discussions with potential funding partners for the requisite plant construction and supporting development
costs are now at an advanced stage, subject to the Group’s due diligence being satisfactorily completed.
Executing on the preferred funding package will likely require the prior approval of the Company’s shareholders,
which, if forthcoming, will then enable the purchase of the 90% balance of Tar Sands Holdings II LLC to take
place along with the instigation of the Detailed Engineering work for the first separation plant with the capacity
to process 6,000 tonnes per day of oil sands. The Detailed Engineering phase is expected to take three months
with construction of the first plant to take approximately 12-15 months thereafter before initial operations can
commence. There can be no certainty that such preferred funding arrangements can be successfully concluded
or as to the terms and structure of any such financing.
The Group continues to operate with a small team, which it is highly reliant on. Information is openly shared
within the team to ensure that reliance is not placed on individuals.
Risks relating to environmental, health and safety and other regulatory standards
The Group’s future extraction activities are subject to various US federal and state laws and regulations relating
to the protection of the environment including the obtaining of appropriate permits and approvals by relevant
environmental authorities. Such regulations typically cover a wide variety of matters including, without limitation,
prevention of waste, pollution and protection of the environment, labour regulations and worker safety.
Furthermore, the future introduction or enactment of new laws, guidelines and regulations could serve to limit
or curtail the growth and development of the Group’s business or have an otherwise negative impact on its
operations. The Group ensures that it complies with the relevant laws and regulations in force in the jurisdictions
in which it operates.
Liquidity and interest rate risks
The Group is ultimately dependent on sources of equity and/or debt funding to develop Greenfield and any of
the Group’s other exploration assets and/or technology and to meet its day-to-day capital commitments and
overheads. Cash forecasts identifying the liquidity requirements of the Group are produced frequently and are
reviewed regularly by management and the Board. This strategy will continually be reviewed in light of existing
project developments and new project opportunities as they arise. For further information regarding the Group’s
cash resources and future funding requirements, please refer to the ‘Going Concern’ section below.
____
3
Currency risk
Due to the limited income and expenses denominated in foreign currencies, it was not considered cost effective
to manage transactional currency exposure on an active basis. However, as the financial statements are
reported in sterling, any movements in the exchange rate of foreign currencies against sterling may affect the
Group’s statements of comprehensive income and financial position. The Group holds some cash in US dollars
to mitigate the foreign exchange risk and keeps its currency profile under review.
COVID-19 risk
While COVID-19 continued to have an adverse impact on the global economy to some extent in 2022, oil prices
were, absent the effects of the war in Ukraine, projected to continue to recover during 2022 - 2023 and beyond.
The Group’s continued activity with respect to Greenfield is not expected to be significantly affected by COVID-
19 going forwards.
Financial instruments
It was not considered an appropriate policy for the Group to enter into any hedging activities or trade in any
financial instruments in 2022. Further information can be found in Note 23.
RESULTS AND DIVIDENDS
The statement of comprehensive income is set out on page 23. The Directors do not propose the payment of
a dividend (2021: £nil).
REVIEW OF KEY EVENTS DURING THE YEAR
TurboShale
During the year, the Group purchased the remaining interest it did not already own, for $15,000, therefore now
owns 100% of the Company. There were no further developments in respect of our TurboShale technology
during the financial year with the TurboShale and Oil Mining Company assets remaining fully impaired.
Greenfield Energy LLC
In October 2021, AC Oil LLC, a Utah incorporated company, was established as a vehicle to develop the
deeper, non-minable oil sands on Tar Sands Holdings II’s lands. An exploration permit was secured in February
2022 to drill 3 exploration wells to recover core and perform in hole surveys to collate detailed data on the
location and quality of the oil sand formation. The results of the surveys were utilised to produce a potential
drilling programme for a steam injection process to recover the oil in the formations. A permit application for an
initial production well has been submitted and we are awaiting its acceptance. On receipt of this first permit, we
are planning to submit up to a further 24 applications.
TSHII
On 16 November 2021, the Group announced that Greenfield had exercised its option to acquire an initial 10%
of the membership rights and interests in TSHII (the “Membership Interests”) for a total cash consideration of
$2 million, of which $500,000 was satisfied by crediting the deposits paid previously. The balance of the
consideration payable was financed by way of an unsecured loan from Valkor to Greenfield, full details of which
are set out in the Company’s announcement of 16 November 2021. Following this acquisition, Greenfield retains
an exclusive option, at its sole discretion, to acquire the remaining 90% of the Membership Interests for certain
additional cash consideration up to 30 April 2023.
Alongside the acquisition of the initial 10% of the Membership Interests, a newly incorporated subsidiary of
Greenfield was granted a lease over approximately 320 acres of the 760-acre site owned by TSHII (the “Lease
Area”), for a nominal consideration and annual rental of $320, together with a 12% net sales royalty per barrel
of conventional oil and gas produced and removed from the Lease Area. The lease provides Greenfield’s
subsidiary with the exclusive right to explore, drill, and mine for, and extract, store, and remove oil, gas,
hydrocarbons, and other associated substances on and from the Lease Area.
Greenfield is engaged in advanced ongoing discussions regarding possible funding solutions to potentially
achieve the ultimate acquisition of 100% of the Membership Interests.
____
6
TSHII Reserves Report
On 13 January 2022, the Group announced the findings of an independent report commissioned from
Netherland, Sewell & Associates, Inc. (“NSAI”) estimating the proved (1P), proved plus probable (2P), and
proved plus probable plus possible (3P) oil reserves, associated marketable sand volumes, and future net
revenue, as of 31 December 2021 in respect of a 100 per cent. interest in a potential commercial scale project
situated on the mining properties comprising the TSHII site.
NSAI estimated 1P oil reserves of 22.8 million barrels of oil (“bbls”), 2P oil reserves of 33.6 million bbls and 3P
oil reserves of 44.3 million bbls. NSAI further estimated associated volumes of marketable sand at 22.8 million
tonnes (1P), 41.2 million tonnes (2P) and 59.8 million tonnes (3P). Total estimated undiscounted future net
revenues ranged from $942 million based on 1P reserves, to approximately $2.5 billion based on 3P reserves
in respect of a gross 100% interest in TSHII. Estimated discounted future net revenues attributable to TomCo’s
current 10 per cent. interest in TSHII ranged from approximately $30.5 million based on 1P reserves, to
approximately $57.6 million based on 3P reserves.
Third Party Agreements in relation to the TSHII site
TSHII entered into a 10-year lease with a tenant starting from 1 March 2022, covering an existing refinery on
the TSHII site that is not required for Greenfield’s future plans and was previously scheduled to be demolished
should Greenfield eventually acquire 100% of TSHII. The tenant intends to develop a 10,000 barrels of oil per
day refinery on the site and under the terms of the lease has two years in which to do so without potentially
forfeiting the lease. The lease requires the tenant to pay TSHII $10,000 per month by way of rent, together with
a further payment of $3 for every barrel of produced hydrocarbons.
Vivakor Inc (“Vivakor”) entered into a renewed lease with TSHII covering approximately three acres of land for
a term of five years, with an option to extend for a further five years, effective from 9 March 2022, to, inter alia,
accommodate Vivakor's storage needs and planned plant operations at the TSHII site. Under the lease
agreement, TSHII shall supply Vivakor with such quantity of oil sands as Vivakor determines each month, at a
set minimum saturation quality, with a maximum supply of 2,000 tons per day. Vivakor will cover the cost of
mining the oil sands and will pay TSHII $3 per ton of oil sands processed by way of rental for the Lease. Vivakor
paid a $30,000 advance against future rental payments on signing of the Lease.
Additionally, Greenfield entered into a Memorandum of Understanding (“MoU”) with Vivakor covering a
proposed professional services agreement for the potential supply of certain operating and engineering
services, including sand treatment and oil upscaling to Vivakor. In exchange for its services in respect of the
enhancement of Vivakor’s plant, Greenfield would be entitled to receive 50% of the net revenues received by
Vivakor for any post-processed sand material from the plant sold through offtake agreements procured by
Greenfield. The MoU includes a binding five-year exclusivity period for agreeing and entering into any definitive
agreements.
Greenfield also entered into an agreement with Heavy Sweet Oil LLC (“Heavy Sweet Oil”), a US based oil and
gas company, to assist it with permitting and government relations in respect of their planned drilling programme
adjacent to the D Tract of the TSHII site. Should Heavy Sweet Oil progress to producing oil it is anticipated that
some of the supporting infrastructure for their operations would be located on the TSHII site. Such assistance
is being provided alongside Greenfield’s own work to progress its plans for the TSHII site. Heavy Sweet Oil are
paying TomCo $10,000 per month for its services, with the agreement backdated to start from 1 January 2022.
Financing
In late January 2022, the Company raised £1.25 million gross via a placing involving the issue of 250 million
new ordinary shares at a price of 0.50 pence per share, with the net proceeds being utilised to satisfy general
working capital requirements, the costs associated with drilling three exploration wells on the TSHII site and to
progress Greenfield’s funding plans.
On 1 September 2022, the Company obtained an unsecured facility of up to £0.75 million via a convertible loan
instrument and associated subscription and put option entered into with certain subscribers introduced by the
Company’s broker. Such facility was subsequently draw down and converted in full and the proceeds utilised
to repay, in aggregate, $0.5 million of the principal amount of the unsecured $1.5 million loan previously
advanced by Valkor to Greenfield (the “Valkor Loan”) in connection with its abovementioned purchase of an
initial 10% Membership Interest in TSHII, and for general corporate purposes.
____
7
Following the financial year end, on 30 November 2022, the Company raised a further £0.925 million gross
through the placing of 264,285,714 new ordinary shares at a price of 0.35 pence per share to provide additional
funds to cover the Company’s expenditure as it progresses its plans for Greenfield. The terms of the Valkor
Loan were also varied to extend the repayment date for the remaining $1 million principal amount to the
completion date of a suitable funding transaction for Greenfield that provides sufficient funds to TomCo to, inter
alia, enable it to affect repayment. As at the date of this report the principal amount outstanding in respect of
the Valkor Loan was $750k.
On 30 March 2023, the Company secured a new four tranche committed unsecured convertible loan facility of
up to £1 million to provide additional working capital for the Group whilst seeking to finalise funding
arrangements for Greenfield.
Directors
The Directors who served on the Board during the year to 30 September 2022 and to date were as follows:
Malcolm Groat
John Potter
Louis Castro
Zac Phillips (appointed 24 January 2022)
Richard Horsman (resigned 24 January 2022)
____
8
Directors’ interests in the ordinary shares of the Company, including family interests, as at 30 September 2022
were as follows:
M. Groat
J. Potter
L. Castro
Z. Phillips
R. Horsman
(resigned 24
January 2022)
30 September 2022
30 September 2021 (or date of appointment)
Ordinary shares
of nil par value
11,887
26,500
-
-
Share
warrants
-
-
-
-
Share options
Ordinary shares
of nil par value
20,380,952
52,714,285
15,000,000
-
11,887
26,500
-
-
Share
warrants
-
-
-
-
Share
options
20,380,952
52,714,285
15,000,000
-
-
38,387
-
-
-
-
88,095,237
38,387
-
-
7,500,000
95,595,237
Details of the remuneration, share warrants and share options can be found in the Remuneration Committee
Report and Notes 7, 20 and 22 to the financial statements.
Payments of payables
The Group’s policy is to negotiate payment terms with its suppliers in all sectors to ensure that they know the
terms on which payment will take place when the business is agreed and to abide by those terms of payment.
Going Concern
At 30 March 2023, the Group had cash of approximately £0.15million.
The Directors have prepared a cash flow forecast for the twelve months to 30 April 2024.
As set out in the Chairman’s Statement, discussions with potential funders to finance the Group’s plans
including its working capital requirements are at an advanced stage but have not yet been concluded. The plans
include the acquisition of the remaining 90% of TSHII; funding for two oil sand processing plants and associated
infrastructure; drilling of wells into the deeper oil sands that are too deep to mine for the implementation of oil
recovery processes; and repayment of the remainder of the Valkor Loan. On 30 November 2022, the terms of
the Valkor Loan, which is unsecured, had been varied to extend the repayment date beyond 31 March 2023 for
the remaining principal amount of the loan to the completion date of a suitable funding transaction for Greenfield
that provides sufficient funds to enable the Company to affect such repayment. Hence, the forecast does not
include any funding which would be received from a successful conclusion to these discussions with the
identified potential financiers, nor does it include repayment of the Valkor Loan.
The forecast, which includes all commitments at the date of this report, indicates that the cash currently held
by the Group together with the most recent convertible loan facility of up to £1 million which was secured post
the financial year end (as detailed in Note 28 to the accounts - Subsequent Events), will be sufficient to fund
ongoing costs for at least the next 12 months, assuming that no revenue is earned by the Group during that
period, beyond which further funding will be required.
Accordingly, given the Group’s current cash balance, the convertible loan facility referred to above, and, based
on a positive history of raising funds, and the fact that the Valkor loan is only payable on completion of a suitable
funding transaction that provides sufficient funds to complete the Greenfield purchase and pay off the Valkor
Loan, the Directors consider it appropriate to prepare the financial statements on a going concern basis. The
financial statements do not include the adjustments that would result if the Group was unable to continue as a
going concern.
Going concern is also discussed at note 1.1 of the financial statements.
Directors’ responsibilities
The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the
Group’s transactions and disclose, with reasonable accuracy at any time, the financial position of the Group
and enable them to ensure that financial statements may be prepared, in accordance with the Isle of Man
Companies Act 2006. They are also responsible for safeguarding the assets of the Group and for taking steps
for the prevention and detection of fraud and other irregularities.
____
9
The Directors are required to prepare financial statements in accordance with the rules of the London Stock
Exchange for companies with securities trading on the AIM market. In accordance with those rules, the Directors
have elected to prepare the Group’s financial statements in accordance with International Financial Reporting
Standards (IFRSs), as issued by the International Accounting Standards Board. The Directors must not approve
the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that year. In preparing these financial statements, the Directors
are required to:
•
•
•
•
consistently select and apply appropriate accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the
entity’s financial position and financial performance; and
state that the Group has complied with IFRS, subject to any material departures disclosed and explained
in the financial statements.
The Directors confirm that they have complied with these requirements, and, having a reasonable expectation
that the Group has adequate resources to continue in operational existence for the foreseeable future, have
continued to adopt the going concern basis in preparing the financial statements.
Auditors
All the current Directors have taken all the steps that they ought to have taken to make themselves aware of
any information needed by the Company’s auditors for the purposes of their audit and to establish that the
auditors are aware of that information. The Directors are not aware of any relevant audit information of which
the auditors are unaware.
The Company engaged PKF Littlejohn LLP as its auditor following the Company’s last AGM and they have
expressed their willingness to continue in office and a resolution to re-appoint them will be proposed at the
Company’s next annual general meeting.
By order of the Board
John Potter
CEO
6 April 2023
____
10
CORPORATE GOVERNANCE STATEMENT
As Chairman, I am pleased to present the Company’s Governance Statement under the QCA Corporate Governance
Code (the “QCA Code”). Establishing effective corporate governance structures that evolve with the business and
protect shareholder value is a key element of my role, together with the Board as a whole. Set out below are details
of the Company’s governance framework benchmarked against the QCA Code principles.
The Board of Directors of TomCo (the “Board”) monitors the business affairs of the Company and its subsidiaries on
behalf of its shareholders. The Board currently consists of the Chief Executive Officer and three Non-Executive
Directors. None of the Non-Executive Directors have previously held an executive position with the Company. The
Directors have responsibility for the overall corporate governance of the Company and recognise the need for the
highest standards of behaviour and accountability. The Directors are committed to the principles underlying best
practice in corporate governance and have adopted the QCA Code.
This statement explains, at a high level, how the QCA Code is applied by the Company and how its application
supports the Company’s medium to long-term success. Further information on the application of the QCA Code can
be found on the Company’s website at https://tomcoenergy.com/investors/governance/.
The Board is responsible for the stewardship of the Company through consultation with the management of the
Company. Management represents the Executive Director. Any responsibility that is not delegated to management
or to the committees of the Board remains with the Board, subject to the powers of shareholder meetings. The
frequency of Board meetings, as well as the nature of agenda items, varies depending on the state of the Company’s
affairs and in light of opportunities or risks which the Company faces. Members of the Board are in frequent contact
with one another, and meetings of the Board are held as deemed necessary.
Statement of compliance with the QCA Code
Throughout the year ended 30 September 2022, the Company has been in compliance with the provisions set out in
the QCA Code.
Application of the QCA Code principles
The Company has applied the principles set out in the QCA Code, by complying with it as reported above. Further
explanations of how the principles have been applied is set out below.
Principle One - Business Model and Strategy
TomCo is an oil exploration and development company focused on using innovative technology to unlock
unconventional hydrocarbon resources, initially in Utah, USA.
The Company, as a result of the success of the opportunity developed within Greenfield Energy LLC, has shifted its
primary focus onto developing an oil sand separation process with the planned potential future development of two
commercial scale 6,000 tonnes of sand per day processing plants.
Principle Two - Understanding Shareholder Needs and Expectations
The Board is committed to maintaining good communications and having constructive dialogue with its shareholders.
Shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the
Company and management.
All shareholders are encouraged to attend and participate in all shareholder meetings called by the Company, in
particular its Annual General Meeting (AGM). Investors also have access to current information on the Company and
the Group through its website at: www.tomcoenergy.com.
Principle Three - Considering wider stakeholder and social responsibilities
The Board recognises that the long-term success of the Group is reliant upon the efforts of the employees of the
Group, its partners, consultants, contractors, suppliers, regulators and other stakeholders. The Board have put in
place a range of processes and systems to ensure that there is close oversight and contact with its key stakeholders.
The Group is subject to oversight by a number of different U.S. State and other regulatory bodies, who directly or
____
11
Corporate Governance Statement
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.
Mitigation
The Group’s operations are limited currently, pending
completion of the funding for the two planned 6,000
tonnes day processing plants. The Directors are in
detailed discussions with a potential funder concerning,
inter alia, securing funding for the plants, along with the
completion of the purchase of the remaining 90% of the
site for the plant and an in-situ well program. Permitting
for the in-situ well program is still on going and while the
process to be deployed is proven, its use into Oil Sands
is less common and this has extended the permitting
completion timing.
Environmental, health
and safety and other
regulatory standards
Liquidity risk
See Directors’ Report.
The Company has engaged leading advisers to assist it
in securing relevant permits or licences to operate.
The Company maintains ongoing oversight of health and
safety and environmental compliance.
See Directors’ Report
including ‘Going Concern’
section.
The Company maintains a detailed cashflow forecast and
carefully monitors expenditure and may seek to raise
additional funding as required and as referred to in Note
1.1.
Currency risk
See Directors’ Report.
The Company aims to manage currency exposures by
holding funds in the applicable currency to match
anticipated expenditure.
The Board considers that an internal audit function is not necessary or practical due to the current size of the Group
and the close day to day control exercised by the Executive Director. However, the Board will continue to monitor
the need for an internal audit function. The Executive Director has established appropriate reporting and control
mechanisms to ensure the effectiveness of the Group’s control systems for the size of the business and its activities.
The Board obtains regular updates on risks from the Executive Director, which allows it to monitor the effectiveness
of risk management and through its regular engagement and review of reporting on areas such as the status of the
Company’s projects, budgets, results and cash flow position of the Company, it considers the effectiveness of
controls on an ongoing basis.
____
12
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 such
independent decisions. As the Board is comprised of only four members, one of whom is Executive and three of
whom are independent Non-Executive Directors, including the Chairman, the Board does not believe it is currently
necessary to appoint a senior independent director.
The Chief Executive is a full-time employee of the Company. Whilst each of the Non-Executive Directors are
considered to be part time, they are expected to provide as much time to the Company as is required. The attendance
record of the Directors at Board and committee meetings held during the year ended 30 September 2022 was as
follows:
Meetings held
Attendance:
Malcolm Groat
John Potter
Louis Castro
Zac Phillips (appointed 24 January 2022)
Richard Horsman (resigned 24 January 2022)
Main
Board
14
Audit
Committee
2
Remuneration
Committee
1
14
14
13
14
2
2
-
2
2
-
1
-
1
1
-
Principle Six - Appropriate Skills and Experience of the Directors
The Board believes that the current balance of skills held by the Board as a whole, reflects a very broad range of
commercial and professional skills across geographies and industries and each of the Directors has previous
experience of public markets.
The Board believes that the Directors are well suited to the Company’s fundamental objective of enhancing and
preserving long-term shareholder value and ensuring that the Group conducts its business in an ethical and safe
manner. The Board is considered to be of a sufficient size to provide more than adequate experience and perspective
to its decision-making process and, given the size and nature of the Group, the Board does not consider at this time
that it is appropriate to increase the size of the Board or amend its composition.
As the Board is not currently anticipating any change to its size or composition, it has not yet implemented a written
policy regarding the identification and nomination of female directors. In the event that one of the existing members
____
13
Corporate Governance Statement
of the Board stands down from their current position, the Company will, at that time, give further consideration to the
specific selection of a female member of the Board and the adoption of a formal policy relating to the positive
appointment of additional female members of the Board for future opportunities.
The Board is responsible for: (a) ensuring that all new Directors receive a comprehensive orientation, that they fully
understand the role of the Board and its committees, as well as the contribution individual directors are expected to
make (including the commitment of time and resources that the Company expects from its directors) and that they
understand the nature and operation of the Group’s business; and (b) providing continuing education opportunities
for all directors, so that individuals may maintain or enhance their skills and abilities as directors, as well as to ensure
that their knowledge and understanding of the Group’s business remains current.
Given the size of the Company and the in-depth experience of its Directors, the Board has not deemed it necessary
to develop a formal process of orientation for new Directors but encourages all its Directors to visit the Group’s
operations to ensure familiarity and proper understanding.
Skills & Experience of Board Members
Malcolm Groat
Malcolm is a Chartered Accountant and has extensive corporate experience, with roles as Chairman, Non-Executive
Director, Chairman of Audit Committees, CEO, COO and CFO for a number of public companies. He is an adviser
on compliance and governance, strategy and operational improvement, and managing the risks of rapid change.
John Potter
John is an accomplished Chief Executive and project manager with many years of experience working within the
energy sector. John brings a wide range of skills, knowledge and industry connections. His proficiency in
understanding and identifying best technologies in projects and his proven abilities in developing relationships with
stakeholders, including operators, politicians, financiers, technology providers and regulators, are well proven and
have brought great value to the companies he has previously worked with.
Louis Castro
Louis is a graduate engineer and PwC Chartered Accountant who has spent his career in the City in investment
banking and capital markets, advising growth companies on a wide range of matters including fund-raising and M&A.
He served as an AIM Nomad for many years before becoming CFO of a listed oil company. In recent years, Louis
became Executive Chairman of Orosur Mining Inc. which is quoted on both the TSXV and on AIM, and he is also a
non-executive director of Tekcapital plc; Veteran Capital Corp. and Innovative Eyewear, Inc.
Zac Phillips
Zac has over 25 years’ experience in oil and gas finance, having worked for BP, Chevron, Merrill Lynch and ING
Barings. He was previously CFO for Dubai World’s oil and gas business (DB Petroleum) with responsibility for risk
management and authoring of investment proposals. He has a degree in Chemical Engineering and a PhD in
Chemical Engineering from Bath University.
Principle Seven - Evaluation of Board Performance
The Board has determined that it shall be responsible for assessing the effectiveness and contributions of the Board
as a whole and its committees (which currently comprise the Audit Committee and the Remuneration Committee).
The small size of the Board allows for open discussion. The Chairman has regular dialogue with the Chief Executive
whereby the Board’s role and effectiveness can be considered.
No formal assessments have been prepared in the year. However, the Board assesses its effectiveness on an
ongoing basis. The Board will keep this matter under review and especially if either the size of the Board or the
number of committees increases, which in turn may require a more formalised assessment and evaluation process
to be established to ensure continued effectiveness.
Principle Eight - Corporate Culture
The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Group
as a whole and that this will have an effect on the performance of the Group. The Board is very aware that the tone
and culture set by the Board will greatly impact all aspects of the Group. The corporate governance arrangements
that the Board has adopted are designed to ensure that the Group delivers long-term value to its shareholders and
____
14
Corporate Governance Statement
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
the Company maintains a website
outlets
(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.
Malcolm Groat
Non-Executive Chairman
6 April 2023
____
15
Corporate Governance Statement
AUDIT COMMITTEE REPORT
Overview
The Committee met twice during the year to consider the full year 2021 accounts and interim 2022 accounts. It has
also met after the year end to consider the full year 2022 accounts.
Louis Castro is Chairman of the Committee. The other Committee members during the year under review have been
Malcolm Groat, Zac Phillips and Richard Horsman. From February 2022, the Committee comprised Louis Castro,
Zac Phillips and Malcolm Groat.
Financial Reporting
The Committee monitored the integrity of the interim and annual financial statements and reviewed the significant
financial reporting issues and accounting policies and disclosures in the financial reports. The external auditor
attended the Committee meeting as part of the full year accounts approval process. The process included the
consideration of reports from the external auditor identifying the primary areas of accounting judgements and key
audit risks identified as being significant to the full year audited accounts.
Audit Committee Effectiveness
The Board considers the effectiveness of the Committee on a regular basis but not as part of a formal process.
External Audit
The Committee is responsible for managing the relationship with the Company’s external auditor, PKF Littlejohn LLP.
The objectivity and independence of the external auditor is safeguarded by reviewing the auditor’s formal
declarations, monitoring relationships between key audit staff and the Group and reviewing the non-audit fees
payable to the auditor. Non-audit services are not performed by the auditor. During the year, audit fees of £74,800
(2021: £34,337) were paid to BDO LLP, the previous auditor.
Internal Audit
The Committee considered the requirement for an internal audit function. The Committee considered the size of the
Group, its current activities and the close involvement of senior management. Following the Committee’s review, it
did not deem it necessary to operate an internal audit function during the year.
Louis Castro
Chairman, Audit Committee
6 April 2023
____
16
REMUNERATION COMMITTEE REPORT
This report is on the activities of the remuneration committee for the financial year ended 30 September 2022.
The Remuneration Committee meets from time to time, but not less than once a year, to review and determine,
amongst other matters, the remuneration of the Executive(s) on the Board and any share incentive plans of the
Company. As at 1 October 2021, the Remuneration Committee comprised Louis Castro (Chairman), Richard
Horsman and Malcolm Groat. From February 2022, the Committee comprised Louis Castro, Zac Phillips and Malcolm
Groat.
The Group has no employees other than the Directors; whose emoluments comprise fees paid for services. The
amounts for their services are detailed below:
Salaries
2022
£’000
Severance
pay
2022
£’000
Salaries
2021
£’000
Severance
pay
2021
£’000
M. Groat
J. Potter
L. Castro
Z. Phillips (appointed 24 January 2022)
R. Horsman (resigned 24 January 2022)
50
233
42
25
12
-
-
-
-
-
38
139
19
-
30
-
-
-
-
-
Richard Horsman was also paid £30,000 on his resignation in consideration for the waiver of his share option
rights.
As detailed in Note 22, the Company has in place a share option scheme for its Directors.
The Committee met twice during the year in conjunction with Board meetings to review salaries and to issue share
options as set out in Note 22.
Louis Castro
Chairman, Remuneration Committee
6 April 2023
____
17
Independent auditor’s report to the members of TomCo
Energy plc
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF TOMCO ENERGY PLC
Opinion
We have audited the financial statements of TomCo Energy Plc (the ‘parent company’) and its subsidiaries (the
‘group’) for the year ended 30 September 2022 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Changes in Equity,
and the Consolidated Statement of Cash Flows and notes to the financial statements, including significant
accounting policies.
In our opinion:
•
•
the financial statements give a true and fair view of the state of the Group’s affairs as at 30 September 2022
and of its loss for the year then ended; and
the financial statements have been properly prepared in accordance with IFRSs as adopted by the
International Accounting Standards Board;
The financial reporting framework that has been applied in the preparation of the financial statements is applicable
law and International Financial Reporting Standards (IFRSs) as adopted by the International Accounting Standards
Board.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the financial statements section of our report. We are independent of the group and parent company in
accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK,
including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’
assessment of the group and parent company’s ability to continue to adopt the going concern basis of
accounting included:
● Reviewing the cash flow forecasts prepared by management for the period up to 12 months from the approval
of financial statements by challenging the key assumptions and reviewing for their reasonableness; and
● Comparing the actual results for the year to past budgets to assess the forecasting ability/accuracy of
management; and
● Reviewing post-year end regulatory news service announcements and holding discussions with management
on future plans; and
● We sensitised the cash flow forecasts and performed stress tests, in order to assess the impact on cash
reserves of a shortfall against budget
● Assessing the adequacy of going concern disclosures within the Annual Report and Financial Statements
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the group’s or parent company's ability
to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern
are described in the relevant sections of this report.
____
18
Our application of materiality
The scope of our audit was influenced by our application of materiality. The quantitative and qualitative
thresholds for materiality determine the scope of our audit and the nature, timing and extent of our audit
procedures. Group materiality was £107,000 (2021: £78,000) based upon 1.5% of gross assets. We consider
gross assets to be the main driver of the business as the group is still in the pre-revenue stage and therefore
no revenues are currently being generated, and that current and potential investors will be most interested in
the recoverability of the exploration and evaluation assets.
Whilst materiality for the financial statements as a whole was set at £107,000, (2021: £78,000) each
significant component of the group was audited to an overall materiality ranging between £73,000 (2021:
£39,000) to £107,000 (2021: £78,000) with performance materiality set at 60%(2021: 70%) for all
components.
We agreed with the audit committee that we would report to the committee all audit differences identified
during the course of our audit in excess of £5,350 (2021: £1,500) as well as differences below these
thresholds that, in our view, warranted reporting on qualitative grounds.
Our approach to the audit
In designing our audit, we determined materiality and assessed the risk of material misstatement in the
financial statements. In particular, we looked at areas requiring the directors to make subjective judgements,
for example in respect of significant accounting estimates including the convertible loan, internally generated
development assets, carrying value of exploration assets, carrying value of unquoted investments and share
based payments the consideration of future events that are inherently uncertain. We also addressed the risk
of management override of internal controls, including evaluating whether there was evidence of bias by the
directors that represented a risk of material misstatement due to fraud.
An audit was performed on the financial information of the group’s operating entities which for the year ended
30 September 2022 were located in the Isle of Man (in the United Kingdom) and United States of America.
The audit work on each significant component was performed by us as group auditor based upon materiality
or risk profile, or in response to potential risks of material misstatement to the group.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit
of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key Audit Matter
How our scope addressed this matter
Carrying value and appropriate capitalisation of
Intangible Assets
Development Expenditure (£4,794k):
The group has significant intangible assets,
comprising predominantly of expenditure on
researching and developing the design and
operation of a pilot plant acquired in the prior
year. The carrying value of intangible assets at
30 September 2022 was £5,033k of which
£4,794k relates to the pilot plant. The balance of
£239k relates to exploration asset expenditure
during the year ended 30 September 2022.
There is the risk that the carrying value of these
assets have not been correctly recognised /
measured in accordance with IFRS and that
they should be impaired.
We reviewed management’s assessment which
concluded that the Greenfield project is in the
development phase, and
the costs
relating to the development are capitalised within
Greenfield and in doing so our work included
• Challenging management on the
therefore
classification of assets and determining
whether these met the definition of
development costs under IAS 38
‘intangible assets’.
We have assessed management’s review of
whether there are any indicators of impairment
and our procedures included the following:
____
19
• Making specific enquires of management,
reviewing market announcements and
reviewing Board minutes to establish
whether there was any evidence that the
Group did not plan to proceed with the
future use of the intangible assets.
• Reviewing the impairment assessment
prepared by management and making
enquiries of management to understand
the impact of current market on the future
of the project and challenging
management on whether these factors are
indicators of impairment.
We also evaluated the adequacy of the
disclosures provided within the financial
statements in relation to the impairment
assessment against the requirements of the
accounting standards.
Key observations:
The Group is in the process of acquiring the 90%
balance of Tar Sands Holdings II LLC which will
allow them to commence detailed engineering
work using the technological knowhow gained
from the development expenditure, to build the
first separation plant with the capacity to
process 6,000 tonnes per day of oil sands.
Based on the work performed and the progress on
the acquisition, we have no matters to
communicate in respect of management’s
assessment of the carrying value of the group’s
development expenditure included in the
intangible assets.
Exploration Asset (£239k)
Our work in this area included:
the applicable exploration
• Confirmation that the Group has good title
to
licences,
including new licences obtained during the
year;
• Review of the additions in the year to
ensure capitalisation criteria IFRS 6 is met;
• Review of management’s impairment paper
and challenge of all key assumptions there
in, as well as considerations of
the
impairment indicators within IFRS 6; and
• Ensuring disclosures made in the financial
statements in relation to critical accounting
judgements are adequate and in line with
our understanding of the group and its
activities.
____
20
Key observations:
Based on the work performed and the progress on
the exploration wells from drilling to date, we note
that the exploration licence, obtained in 2022,
expires in November 2023. The group have
submitted a permit application for an initial
production well and the directors are awaiting its
acceptance. On receipt of this first permit, the
directors are planning to submit up to a further 24
applications. At the same time, the exploration
licence is also likely to be renewed.
We have no matters to communicate in respect of
management’s assessment of the carrying value
of the group’s exploration expenditure included in
the intangible assets.
Other information
The other information comprises the information included in the annual report, other than the financial
statements and our auditor’s report thereon. The directors are responsible for the other information contained
within the annual report. Our opinion on the group and parent company financial statements does not cover the
other information and, except to the extent otherwise explicitly stated in our report, we do not express any form
of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements, or our knowledge obtained
in the course of the audit, or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a
material misstatement in the financial statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the group and parent company financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the group and parent company financial statements, the directors are responsible for assessing
the group and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,
including fraud is detailed below:
____
21
• We obtained an understanding of the group and the sector in which they operate to identify laws and
regulations that could reasonably be expected to have a direct effect on the financial statements. We
obtained our understanding in this regard discussions with management.
• We determined the principal laws and regulations relevant to the group in this regard to be those arising
from AIM Rules, relevant local laws and regulations in the where the Group operates (Isle of Man and
United States, UK Bribery Act, QCA Corporate governance, and Permit and Environmental compliance
in the United States.
• We designed our audit procedures to ensure the audit team considered whether there were any
indications of non-compliance by the group and parent company with those laws and regulations. These
procedures included, but were not limited to:
o Enquiries of management regarding potential non-compliance
o Review of legal and professional fees to understand the nature of the costs and the existence
of any non-compliance with laws and regulations; and
o Review of minutes of meetings of those charged with governance and regulatory news service
announcements.
• We also identified the risks of material misstatement of the financial statements due to fraud. We
considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management
override of controls, that the judgements and estimates made by management in their assessment of
the recoverability of intangible assets represented the most significant risk of material misstatement.
Refer to the key audit matter above.
• We addressed the risk of fraud arising from management override of controls by performing audit
procedures which included but were not limited to: the testing of journals; reviewing accounting
estimates for evidence of bias; and evaluating the business rationale of any significant transactions that
are unusual or outside the normal course of business.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including
those leading to a material misstatement in the financial statements or non-compliance with regulation. This
risk increases the more that compliance with a law or regulation is removed from the events and transactions
reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance.
The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves
intentional concealment, forgery, collusion, omission or misrepresentation.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our
auditor’s report.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with our engagement letter
dated 31 October 2022. Our audit work has been undertaken so that we might state to the company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility to anyone, other than the company and the
company's members as a body, for our audit work, for this report, or for the opinions we have formed.
[Signature]
PKF Littlejohn LLP
Chartered Accountants
London, UK
6 April 2023
15 Westferry Circus
Canary Wharf
London E14 4HD
____
22
Consolidated Statement of Comprehensive Income
for the financial year ended 30 September 2022
Note
£’000
Revenue
Other Income
Gross profit/(loss)
Administrative expenses
Impairment losses
Foreign exchange gains
Operating loss
Finance (costs)/income
Share of loss of joint venture
Loss on ordinary activities before
taxation
Taxation
Loss for the year attributable to:
Equity shareholders of the parent
2
2
2
3
5
4
.
6
Non-controlling interests
21
2022
£’000
-
73
73
(1,519)
-
990
(456)
(234)
-
(690)
-
(690)
£’000
2021
£’000
-
-
-
(1,873)
(8,679)
345
(10,207)
-
(84)
(10,291)
-
(10,291)
(690)
-
(10,017)
(274)
(690)
(10,291)
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
Loss per share attributable to the equity
shareholders of the parent
21
21
26
(11)
(664)
(11)
15
(503)
(507)
4
15
(503)
(10,524)
(270)
(675)
(10,794)
2022
Pence
2021
Pence
per share
per share
Basic & diluted loss per share
8
(0.04)
(0.76)
The Notes on pages 27 to 47 form part of these financial statements.
____
23
Consolidated Statement of Financial Position
as at 30 September 2022
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments at FVTPL
Other receivables
Current assets
Trade and other receivables
Other financial assets
Cash and cash equivalents
TOTAL ASSETS
Liabilities
Current liabilities
Loans
Convertible loan-debt element
Convertible loan-derivative liability
Trade and other payables
Net current (liabilities)/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
15
15
16
18
19
20
21
Group
2022
£’000
5,033
-
1,830
23
6,886
101
-
206
307
7,193
(1,144)
(148)
(143)
(346)
(1,781)
(1,474)
(1,781)
5,412
-
32,527
1,374
(199)
(28,290)
5,412
-
5,412
The financial statements were approved and authorised for issue by the Board of Directors on 30 March 2023.
The Notes on pages 27 to 47 form part of these financial statements.
John Potter
Chief Executive Officer
Malcolm Groat
Non-Executive Chairman
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
____
24
Consolidated Statement of Changes in Equity
for the financial year ended 30 September 2022
Group
Equity attributable to equity holders of the parent
Note
Share capital Share premium
Warrant
reserve
Translation
reserve
Retained Deficit
Balance at 1 October 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 charge
At 30 September 2021
Loss for the year
Comprehensive income for the year
Total comprehensive loss for the
year
18, 19
20
22
Issue of shares (net of costs)
18,19
Issue of finance
Exercise of warrants
Expiry of warrants
Purchase of non-controlling interest
Share-based payment arrangements
At 30 September 2022
20
20
22
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
£’000
29,222
-
-
-
1,920
-
-
31,142
-
-
-
1,385
-
-
-
-
£’000
1,288
-
-
-
1,306
(15)
-
2,579
-
-
-
-
165
(140)
(1,230)
-
-
32,527
1,374
£’000
282
-
(507)
(225)
-
-
-
(225)
-
26
26
-
-
-
-
-
(199)
£’000
(19,887)
(10,017)
-
(10,017)
-
15
1,201
(28,688)
(690)
-
(690)
-
-
140
1,230
(466)
184
(28,290)
Total
£’000
10,905
(10,017)
(507)
(10,524)
3,226
-
1,201
4,808
(690)
26
(664)
1,385
165
-
-
(466)
184
5,412
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 21.
The Notes on pages 27 to 47 form part of these financial statements.
Non-controlling
interest
Total
Equity
£’000
(173)
(274)
4
(270)
-
-
-
(443)
-
(11)
(11)
-
-
-
-
454
-
-
£’000
10,732
(10,291)
(503)
(10,794)
3,226
-
1,201
4,365
(690)
15
(675)
1,385
165
-
-
(12)
184
5,412
____
25
Consolidated Statement of Cash Flows
for the financial year ended 30 September 2022
Cash flows from operating activities
Loss after tax
Adjustments for:
Finance costs
Amortisation
Impairment losses
Share based payment charge
Unrealised foreign exchange (profits)/losses
Share of loss of joint venture
Decrease in trade and other receivables
Increase in trade and other payables
Cash used in operations
Interest (paid)/received
Net cash outflow from operating activities
Cash flows from investing activities
Investment in intangibles
Purchase of investments at FVTPL
Purchase of other financial assets
Purchase of non-controlling interest
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
Settlement of options
Loan finance
Convertible loans
Net cash generated from financing activities
Net (decrease)/increase 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 27 to 47 form part of these financial statements.
Note
2
4
9
11
Group
2022
£’000
Group
2021
£’000
(690)
(10,291)
234
-
-
194
(1,039)
-
24
5
(1,272)
(153)
(1,425)
(637)
(1,171)
(11)
-
-
(1,819)
-
6
8,679
135
67
84
22
63
(1,235)
-
(1,235)
(2)
-
(219)
-
(1,502)
124
(1,599)
3,500
(274)
-
-
-
3,226
392
334
-
726
____
26
18,19
1,460
15
15
(75)
(10)
973
375
2,723
(521)
726
1
206
Notes to the financial statements
for the financial year ended 30 September 2022
1. Accounting policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented,
unless otherwise stated.
1.1 Basis of preparation and going concern
The Group’s financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards
Board and International Financial Reporting Interpretations Committee (“IFRIC”) interpretations and with those parts of the Isle of Man Companies Act 2006 applicable to companies
reporting under IFRS. The financial statements have been prepared under the historic cost convention.
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions. Although these estimates are based on management’s best
knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Details of the Group’s significant accounting judgments are set out in these
financial statements and include:
Judgements
- Convertible loan
The terms of the convertible loan issued during the year included an option for the loan to be settled in whole or in part by the issue of a variable number of shares. On this basis,
the loan is classified as a liability, with an embedded written call option. In accordance with IFRS 9, the embedded option has been separated from the host contract. Judgement is
required concerning the inputs to the valuation of the conversion option on issue and subsequently. Judgements include the choice of model, volatility, and risk-free rates to be used
in the valuations. Judgements on these matters affect finance costs recognised in the profit and loss account.
-
Impairment indicator assessment on intangible assets used in exploration and evaluation activities
The Directors consider that there were no impairment indicators as at 30 September 2022 concerning the Group’s intangible assets employed in exploration and evaluation activities
in relation to oil sands which have been impaired in previous years. In the current year, an exploration permit was secured in February 2022 to drill 3 exploration wells to recover
core and perform in hole surveys to collate detailed data on the location and quality of the oil sand formation. The results of the surveys were positive, and it was utilised to produce
a potential drilling programme for a steam injection process to recover the oil in the formations. A permit application for an initial production well has been submitted and we are
awaiting its acceptance. On receipt of this first permit, we are planning to submit up to a further 24 applications. Following the results of the exploration wells, the directors have
concluded that no impairment is required.
-
Internally generated development assets
Greenfield has incurred expenditure on researching and developing the design and operation of a pilot plant and processes that is not of a scale economically feasible for commercial
production. Judgement is required in determining what constitutes research expenditure, to be expensed in profit and loss, and what constitutes development expenditure that meets
the criteria set out in IAS 38, which must be capitalised. Qualifying expenditure is capitalised from the point at which Greenfield’s board is satisfied as to the technical feasibility of
the production processes. The board have deemed that this was achieved when the preliminary results of the Pre-Feed study were released, which indicated the use of the Oil
Sands Technology was likely to be economically viable. Judgements on these matters affect the cost of intangible assets.
- Carrying value of unquoted investment
The Group follows the guidance of IFRS 9 to determine when a financial asset is impaired. This determination requires significant judgement. In making this judgement, the Group
evaluates, among other factors, the duration and extent to which the fair value of an investment is less than its cost, and the financial health of, and short-term business outlook
for, the investee, including factors such as industry and sector performance, changes in technology and operational, financing cash flow and proposed fundraising.
____
27
Notes to the financial statements
for the financial year ended 30 September 2022
The Group purchased a 10% membership interest in Tar Sands Holdings II LLC (“TSHII”) during the year and holds an option to purchase the remaining 90% for additional cash
consideration of $16.25 million by an extended deadline of 30 April 2023. The Directors have determined that the asset is an appropriate estimate of the fair value of the Group’s
investments in TSHII as at 30 September 2022. To further support the carrying value, the Group also announced the findings of an independent report commissioned from Netherland,
Sewell & Associates, Inc. (“NSAI”) estimating the on the mining properties comprising the TSHII site. Further details are disclosed in the Strategic Report. The Directors do not
consider there to be any impairment of the investments as at 30 September 2022.
The Directors also separately assessed the fair value of the option and concluded that the option was not material due to its short expiry date and has therefore not been recognised
as intangible asset.
Estimates
- Share based payments
Estimates were required in determining the fair value of share options and warrants granted in the year including future share price volatility and the instrument life. Volatility is
estimated using TomCo’s historic share prices for a period of time that matches the exercise period of the warrant or option. This assumes that historic share price volatility is the
best estimate of future volatility. The Black-Scholes model is used for valuing both options and warrants. Estimates are also made of the likely time of exercise of the options or
warrants.
In measuring the value of the deferred equity consideration in respect of the purchase of the remaining 50% of Greenfield, the Directors have applied IFRS 2. Where goods or
services are provided by persons other than employees, the value of the share-based payment is determined by reference to the fair value of the assets acquired. Because of the
unique nature of the principal asset acquired, namely the pilot plant processes developed by Greenfield, the Directors have determined that cost is the best estimate of fair value at
acquisition.
The Group has consistently applied all applicable accounting standards.
Going concern
At 30 March 2023, the Group had cash of approximately £0.15million.
The Directors have prepared a cash flow forecast for the twelve months to 30 April 2024.
As set out in the Chairman’s Statement, discussions with potential funders to finance the Group’s plans including its working capital requirements are at an advanced stage but
have not yet been concluded. The plans include the acquisition of the remaining 90% of TSHII; funding for two oil sand processing plants and associated infrastructure; drilling of
wells into the deeper oil sands that are too deep to mine for the implementation of oil recovery processes; and repayment of the remainder of the Valkor Loan. On 30 November
2022, the terms of the Valkor Loan, which is unsecured, had been varied to extend the repayment date beyond 31 March 2023 for the remaining principal amount of the loan to
the completion date of a suitable funding transaction for Greenfield that provides sufficient funds to enable the Company to affect such repayment. Hence, the forecast does not
include any funding which would be received from a successful conclusion to these discussions with the identified potential financiers, nor does it include repayment of the Valkor
Loan.
The forecast, which includes all commitments at the date of this report, indicates that the cash currently held by the Group together with the most recent convertible loan facility of
up to £1 million which was secured post the financial year end (as detailed in Note 28 to the accounts - Subsequent Events), will be sufficient to fund ongoing costs for at least the
next 12 months, assuming that no revenue is earned by the Group during that period, beyond which further funding will be required.
____
28
Notes to the financial statements
for the financial year ended 30 September 2022
Accordingly, Given the Group’s current cash balance, the convertible loan facility referred to above, and, based on a positive history of raising funds, and the fact that the Valkor
loan is only payable on completion of a suitable funding transaction that provides sufficient funds to complete the Greenfield purchase and pay off the Valkor Loan, the Directors
consider it appropriate to prepare the financial statements on a going concern basis.
1.2 Future changes in accounting standards
The IFRS financial information has been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period.
There are currently no new or revised standards, amendments and interpretations to existing standards that are not effective for the financial year ended 30 September 2022 and
that have not been adopted early, which, when effective, might have an impact upon the Group’s financial statements.
1.3 Basis of consolidation
The Group’s financial statements consolidate the accounts of the parent company, TomCo Energy plc, and all of its subsidiary undertakings drawn up to 30 September 2022. All
intra-group transactions, balances, income and expenses are eliminated on consolidation.
The acquisition of subsidiaries where the acquisition represents the purchase of a business is accounted for on the purchase basis. A subsidiary is consolidated where the
Company has control over an investee. The Group controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may
be a change in any of these elements of control. On acquisition, all of the subsidiary’s assets and liabilities which existed at the date of acquisition are recorded at their fair values
reflecting their condition at the time. If, after re-assessment, the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost
of the business combination, the excess is recognised immediately in the statement of comprehensive income.
Acquisitions of subsidiaries where the IFRS 3 definition of a business combination are not met are accounted for as the purchase of relevant assets less liabilities at cost. Where
the acquisition is a stepped acquisition, cost represents the accumulated cost, under the equity method, of the Group’s initial interest in the subsidiary plus cost of equity
consideration measured in accordance with IFRS 2. Identifiable assets acquired are stated at their respective relative fair values.
1.4 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker has been
identified as the Board of Directors.
Based on an analysis of risks and returns, the Directors consider that the Group has two principal business segments based on geographical location. The loss before taxation
arises principally within the UK and US. Net assets are principally in the UK and the US.
1.5 Revenue
Oil sales
Revenue represents the Group’s share of sales of oil during the year, excluding sales tax and royalties. Income arises from the US and is recognised when the oil is delivered to
the customer. No such revenue has arisen in the current or prior year.
____
29
Notes to the financial statements
for the financial year ended 30 September 2022
Other Revenue
Revenue from services provided to other oil and gas exploration entities is recognised as services are provided in accordance with the terms of the relevant contract.
These services related to an agreement with Heavy Sweet Oil LLC (“Heavy Sweet Oil”), a US based oil and gas company, to assist it with permitting and government relations in
respect of their planned drilling programme adjacent to the D Tract of the TSHII site. Heavy Sweet Oil are paying TomCo $10,000 per month for its services, which is recorded as
other income
1.6 Finance income
Finance income is accounted for on an effective interest basis.
1.7 Finance costs
Finance costs comprise two elements. Interest on debt instruments is recognised by reference to the effective interest rate computed after the deduction of issue costs and the
separation of embedded derivatives. Finance costs also include the change in fair value of embedded derivatives.
1.8 Property, plant and equipment
Property, plant and equipment employed in exploration and evaluation activities are carried at cost. Following a review of the Group’s activities, these assets remain impaired in
full as at 30 September 2022.
1.9
Intangible assets
Exploration and development licences
The Group applies the full cost method of accounting for oil and gas operations. For evaluation properties, all mineral leases, permits, acquisition costs, geological and geophysical
costs and other direct costs of exploration appraisal, renewals and development are capitalised as intangible fixed assets in appropriate cost pools, with the exception of tangible
assets, which are classed as property, plant and equipment. Costs relating to unevaluated properties are held outside the relevant cost pool and are not amortised until such time
as the related property has been fully appraised. When a cost pool reaches an evaluated and bankable feasibility stage, the assets are transferred from intangible to oil properties
within property, plant and equipment.
Development assets
Greenfield has incurred expenditure on researching and developing the design and operation of a pilot plant and processes for oil sands extraction that is not of a scale economically
feasible for commercial production. Development expenditure at acquisition was measured at cost. Development expenditure incurred following the acquisition of Greenfield that meets the
requirements of IAS 38 for recognition as intangible assets are capitalised. All other expenditure is expensed. No amortisation will be charged on such assets until future commercial
exploitation of the processes commences.
Technology licences
Amortisation is not charged on technology licences associated with oil and gas assets until they are available for use.
____
30
Notes to the financial statements
for the financial year ended 30 September 2022
Patents and patent applications
Patents and patent applications acquired in consideration for a combination of cash and the issue of shares in subsidiary undertakings are recognised at fair value, and amortised
over their expected useful lives, which is 12 years being the patent term.
1.10 Impairment
Exploration and development licences
Exploration and development assets are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed the recoverable amount. In
accordance with IFRS 6 the Group firstly considers the following facts and circumstances in their assessment of whether the Group’s exploration and evaluation assets may be
impaired, namely whether:
-
the period for which the Group has the right to explore in a specific area has expired during the period or will expire in the near future, and is not expected to be renewed;
- substantive expenditure on further exploration for and evaluation of mineral resources in a specific area is neither budgeted nor planned;
- exploration for and evaluation of hydrocarbons in a specific area have not led to the discovery of commercially viable quantities of hydrocarbons and the Group has decided to
discontinue such activities in the specific area; and
- sufficient data exists to indicate that although a development in a specific area is likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be
recovered in full, either from successful development or by sale.
The Directors concluded that the above facts and circumstances applied in 2021 in respect of the Group’s oil shale exploration and evaluation activities, because at the time, there
was no programme in place or committed budget to continue exploration in such area. Having conducted a review, the Directors therefore determined to impair tangible and
intangible assets employed in those activities in full in 2021. Impairment losses are recognised in the income statement and separately disclosed.
Research and development activities
The directors do not believe that any impairment indicators exist in relation to the Group’s research and development activities with regard to oil sands extraction. If any such facts
or circumstances were noted, the Group would perform an impairment test in accordance with the provisions of IAS 36.
Technology licences
The carrying amount of the Group’s other intangible asset, its patents and technology licences, is reviewed at each reporting date to determine whether there is any indication of
impairment. If such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its
recoverable amount. Impairment losses are recognised in the income statement.
1.11 Taxation
Taxation expense represents the sum of current tax and deferred tax.
Current tax is based on taxable profits for the financial period using tax rates that have been enacted or substantively enacted by the reporting date. Taxable profit differs from net
profit as reported in the statement of comprehensive income because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes
____
31
Notes to the financial statements
for the financial year ended 30 September 2022
items that are never taxable or deductible.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes. If deferred tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects
neither accounting nor taxable profit nor loss, it is not accounted for. Deferred tax is determined using tax rates that have been enacted or substantively enacted at the reporting
date and that are expected to apply when the related deferred income tax asset is realised, or the deferred tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.
Deferred tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversals of the temporary differences is controlled by the
Group and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax is charged or credited in the statement of comprehensive income, except when it relates to items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
1.12 Foreign currencies
The accounts have been prepared in pounds sterling being the presentational currency of the Group. The functional currency of the holding company is also pounds sterling. The
functional currency of the US subsidiaries is US dollars. Assets and liabilities held in the Group or overseas subsidiaries in currencies other than the functional currency are
translated into the functional currency at the rate of exchange ruling at the reporting date.
Transactions entered into by Group entities in a currency other than the functional currency of the entity concerned are recorded at the rates ruling when the transactions occur.
Exchange differences arising from the settlement of monetary items are included in the statement of comprehensive income for that period.
The assets and liabilities of subsidiaries and joint ventures with functional currencies other than sterling are translated at balance sheet date rates of exchange. Income and
expense items are translated at the average rates of exchange for the period. Exchange differences arising are recognised in other comprehensive income (attributed to the parent
equity holder and non-controlling interests as appropriate).
1.13 Leases
The Group is party as lessee only to low value or short-term leases. Rentals payable under such leases, net of lease incentives, are charged to the statement of comprehensive
income on a straight-line basis over the period of the lease.
1.14 Financial assets at amortised cost
These assets are non-derivative financial assets which are held in a business model whose objective is to collect contractual cashflows and whose contractual terms give rise on
specified dates to cash flows that are solely payments of principal and interest on the principal outstanding. They arise principally through types of contractual monetary asset such
as receivables. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised
cost using the effective interest rate method, less provision for impairment. Impairment provisions are recognised based on expected credit losses over the asset’s life.
The Group’s assets held at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.
Fair value measurement
IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on
____
32
Notes to the financial statements
for the financial year ended 30 September 2022
how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the Company uses to assess the fair
value, but the assessment of fair value under IFRS 13 has not materially changed the fair values recognised or disclosed. IFRS 13 mainly impacts the disclosures of the Company. It
requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards.
1.15 Financial Instruments
Financial investments
Non-derivative financial assets comprising the Company’s strategic financial investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. These assets
are classified as investments at fair value through profit or loss. They are carried at fair value with changes in fair value recognised through the income statement. Where there is a
significant or prolonged decline in the fair value of a financial investment (which constitutes objective evidence of impairment), the full amount of the impairment is recognised in the
income statement.
Due to the nature of these assets being unlisted investments or held for the longer term, the investment period is likely to be greater than 12 months and therefore these financial assets
are shown as non-current assets in the Statement of financial position.
Trade and other receivables
Trade receivables are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. Trade and other
receivables are accounted for at original invoice amount less any provisions for doubtful debts. Provisions are made where there is evidence of a risk of non-payment, taking into
account the age of the debt, historical experience and general economic conditions. If a trade debt is determined to be uncollectable, it is written off, firstly against any provisions
already held and then to the statement of comprehensive income. Subsequent recoveries of amounts previously provided for are credited to the statement of comprehensive income.
Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss in accordance with the expected credit loss model under IFRS 9. For trade and other
receivables which do not contain a significant financing component, the Company applies the simplified approach. This approach requires the allowance for expected credit losses to be
recognised at an amount equal to lifetime expected credit losses. For other debt financial assets the Company applies the general approach to providing for expected credit losses as
prescribed by IFRS 9, which permits for the recognition of an allowance for the estimated expected loss resulting from default in the subsequent 12-month period. Exposure to credit
loss is monitored on a continual basis and, where material, the allowance for expected credit losses is adjusted to reflect the risk of default during the lifetime of the financial asset
should a significant change in credit risk be identified.
The majority of the Company's financial assets are expected to have a low risk of default. A review of the historical occurrence of credit losses indicates that credit losses are insignificant
due to the size of the Company's clients and the nature of its activities. The outlook for the natural resources industry is not expected to result in a significant change in the Company's
exposure to credit losses. As lifetime expected credit losses are not expected to be significant the Company has opted not to adopt the practical expedient available under IFRS 9 to
utilise a provision matrix for the recognition of lifetime expected credit losses on trade receivables. Allowances are calculated on a case-by-case basis based on the credit risk applicable
to individual counterparties.
Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. fair value
measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
•
•
In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability principal or the most advantageous market must be accessible by the Group.
____
33
Notes to the financial statements
for the financial year ended 30 September 2022
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in
their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling
it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable
inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as a whole:
•
•
•
Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by
re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the
level of the fair value hierarchy, as explained above.
Impairment of non-current assets
carrying values of all non-current assets are reviewed for impairment when there is an indication that the assets might be impaired. Any provision for impairment is charged to the statement
of comprehensive income in the year concerned.
Impairment losses on other non-current assets are only reversed if there has been a change in estimates used to determine recoverable amounts and only to the extent that the revised
recoverable amounts do not exceed the carrying values that would have existed, net of depreciation or amortisation, had no impairments been recognised.
1.16 Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held at the bank and other short-term liquid investments with original maturities of three months or less.
1.17 Financial liabilities at amortised cost
Financial liabilities at amortised cost include debt instruments and the host contract element of hybrid liabilities containing embedded derivatives. These liabilities are measured
initially at transaction price, less issue costs and the separation of the fair value of embedded derivatives. They are subsequently measured at amortised cost using the effective
interest method.
1.18 Derivative liabilities
Embedded derivatives are separated from the host contract at their estimated fair value at the date of the transaction. They are subsequently measured at fair value through profit
and loss.
____
34
Notes to the financial statements
for the financial year ended 30 September 2022
1.19 Trade payables
Trade payables are recognised at amortised cost. All of the trade payables are non-interest bearing.
1.20 Share capital
Ordinary shares are classified as equity. Shares issued in the period are recognised at the fair value of the consideration received.
1.21 Warrants
Warrants issued as part of financing transactions in which the holder receives a fixed number of shares on exercise of the warrant are fair valued at the date of grant and recorded
within the warrant reserve. Fair value is measured by the use of the Black-Scholes model.
On expiry or exercise, the fair value of warrants is credited to reserves as a change in equity.
1.22 Non-controlling interests
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-controlling shareholders that are present ownership
interests entitling their holders to a proportionate share of net assets upon liquidation may initially be measured at fair value or at the non-controlling interests’ proportionate share
of the fair value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis. Other non-controlling, interests are initially
measured at fair value. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling
interests’ share of subsequent changes in equity. Total comprehensive income is attributed to non-controlling interests even if this results in the non-controlling interests having a
deficit balance.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group’s interests and
the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Group.
Details concerning non-wholly owned subsidiaries of the Group that have material non-controlling interests are set out in note 21. The remaining non-controlling interest was
purchased during 2022.
1.23 Share-based payments
Equity-settled share-based payments to directors are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of
equity-settled share-based transactions is set out in Note 22.
The fair value determined at the grant date is expensed on a straight-line basis over the vesting period or periods, based on the Group’s estimate of equity instruments that will
eventually vest. At each balance sheet date, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates,
if any, is recognised in profit or loss such that the cumulative expenses reflects the revised estimate, with a corresponding adjustment to equity reserves.
In respect of equity-settled arrangements within the scope of IFRS 2 representing contingent consideration for the acquisition of assets, the value of the equity instruments is
presumed to be equivalent to the fair value of the assets acquired. In the case of assets acquired on the acquisition of Greenfield, cost is deemed to be the best estimate of fair
value.
____
35
Notes to the financial statements
for the financial year ended 30 September 2022
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
Foreign exchange gains/(losses)
Operating profit/(loss)
Finance (costs)/income
Share of loss of joint venture
Profit/(loss) before taxation
Non-Current assets:
– Exploration and development assets
– Other
- Investments at FVTPL
Current assets:
Trade and other receivables
Other financial assets
Cash and cash equivalents
Total assets
Current liabilities:
Trade and other payables
Financial liabilities
Total liabilities
United States United Kingdom
2022
£’000
73
-
-
73
-
(1,417)
11
(1,333)
(81)
2022
£’000
-
-
-
-
-
(102)
979
877
(153)
Eliminations
2022
£’000
-
-
-
-
-
-
-
-
-
-
724
5,033
23
1,830
6,886
47
-
-
6,933
(29)
(1,144)
(1,173)
-
(1,414)
-
-
-
-
54
-
206
260
(317)
(291)
(608)
-
-
-
-
-
-
-
-
-
-
-
-
Total
2022
£’000
73
-
-
73
-
(1,519)
990
(456)
(234)
-
(690)
5,033
23
1,830
6,886
101
-
206
7,193
(346)
(1,435)
(1,781)
United States
2021
£’000
-
-
-
(8,679)
(773)
359
(9,093)
-
(84)
(9,177)
3,947
25
-
3,972
-
371
15
4,358
(498)
(498)
United Kingdom
2021
£’000
-
88
-
88
-
(1,188)
(14)
(1,114)
-
-
(1,114)
-
-
-
-
104
-
711
815
(310)
(310)
Eliminations
2021
£’000
-
(88)
-
(88)
-
88
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
2021
£’000
-
-
-
-
(8,679)
(1,873)
345
(10,207)
-
(84)
(10,291)
3,947
25
-
3,972
104
371
726
5,173
(808)
(808)
____
36
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
2022
£’000
-
-
-
2021
£’000
386
8,293
8,679
The impairments in 2021 arose as a result of the reassessment by the Directors of the Group’s future strategy and
intentions for the commitment of future resources towards oil shale exploration and extraction activities and the absence
of a committed budget or programme for such work.
4. Finance costs
Interest payable
Change in fair value of derivatives
Interest income
Total finance costs for the financial year
5. Operating loss
The following items have been charged/(credited) 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 Isle of Man of 0% (2021: 0%)
Tax charge for the financial year
2022
£’000
223
11
-
234
2022
£’000
40
26
2022
£’000
(664)
-
-
2021
£’000
-
-
(1)
(1)
2021
£’000
43
10
2021
£’000
(10,291)
-
-
No charge to taxation arises due to the losses incurred. TomCo is not subject to tax in Isle of Man, but is subject to tax in its
subsidiaries operating in USA, however, the Group is loss making and has no taxable profits to date. No deferred tax asset
has been recognised on accumulated tax losses because of uncertainty over the timing of future taxable profits against
which the losses may be offset.
Disclosure concerning deferred tax is given in note17.
____
37
7. Employees and Directors
The Group has one employee (2021: one) other than the Directors, whose emoluments comprise fees paid for services.
The amounts for their services are detailed below:
Salaries
Severance
pay
2022
£’000
233
50
42
25
12
-
362
2022
£’000
-
-
-
-
-
-
-
Share-
based
payment
expense
2022
£’000
96
39
32
-
16
-
183
Salaries
Severance
pay
Share-based
payment
expense
2021
£’000
2021
£’000
2021
£’000
139
38
19
-
30
15
241
-
-
-
-
-
30
30
74
28
20
-
10
-
132
J. Potter
M. Groat
L. Castro
Z. Phillips (appointed 24
January 2022)
R. Horsman (resigned 24
January 2022)
R. Kirchner (resigned 4
June 2021)
Total remuneration
In addition, during the year Richard Horsman received £30,000 in consideration for the waiver of his rights over 7.5 million
share options. £20,000 of this sum has been expensed to profit and loss. The remaining £10,000 has been recognised in
equity.
____
38
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 2022
Basic and Diluted EPS
Losses
£’000
Weighted
average
number of
shares
Per share
Amount
Pence
Losses attributable to ordinary shareholders on continuing operations
(690)
1,661,402,854
Total losses attributable to ordinary shareholders
(690)
1,661,402,854
Financial year ended 30 September 2021
Basic and Diluted EPS
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
(0.04)
(0.04)
(0.76)
(0.76)
The warrants, share options and conversion options which were issued or for which entitlement to warrants was established
in the current and prior years (Notes 18 and 19) are anti-dilutive. As these instruments would be anti-dilutive a separate
diluted loss per share is not presented.
9.
Intangible assets
Oil & Gas
Oil & Gas
Oil & Gas
Oil & Gas
Exploration and
evaluation
expenditure
Development
expenditure
Patents and
patent
applications
£’000
£’000
£’000
Cost
At 1 October 2020
Additions
Acquisition of subsidiary
Translation differences
At 30 September 2021
Additions
Adjustment (see below)
Translation differences
At 30 September 2022
Amortisation/Impairment
At 1 October 2020
Amortisation
Impairment
At 30 September 2021
Amortisation
Impairment
8,819
2
-
(534)
8,287
204
-
35
8,526
-
-
8,287
8,287
-
-
1,314
-
3,875
72
5,261
433
(136)
550
6,108
1,314
-
-
1,314
-
-
At 30 September 2022
8,287
1,314
Net book value
At 30 September 2022
At 30 September 2021
At 30 September 2020
239
-
8,819
4,794
3,947
-
33
-
-
(3)
30
-
-
-
30
18
6
6
30
-
-
30
-
-
15
Total
£’000
10,166
2
3,875
(465)
13,578
637
(136)
585
14,664
1,332
6
8,293
9,631
-
-
9,631
5,033
3,947
8,834
____
39
During the year creditors of £136,000 in respect of additions to development expenditure in 2022 were waived.
The assets acquired with Greenfield are described at note 1.9. The exploration and development licences comprise nine
Utah oil shale leases covering approximately 15,488 acres. These assets were impaired in full as at 30 September 2021 for
the reasons given in note 1.10.The impairment value represents the estimated value in use of the assets concerned, which
is estimated at nil. The discount rate is not relevant for the purposes of computing the quantum of the impairment loss. The
impairment relates to assets in the US geographical reporting segment.
10. Property, plant and equipment
Cost at 1 October 2020
Translation differences
At 30 September 2021
Translation differences
At 30 September 2022
Impairment at 1 October 2020
Charge for year
At 30 September 2021 and 2022
Net book value
At 30 September 2022
At 30 September 2021
At 30 September 2020
Exploration and evaluation equipment
Total
£’000
411
(25)
386
-
386
-
386
386
-
-
411
These assets were impaired in full as at 30 September 2021 and remain so for the reasons given in note 1.10.The impairment
value represents the estimated value in use of the assets concerned, which is estimated at nil. The discount rate is not
relevant for the purposes of computing the quantum of the impairment loss. The impairment relates to assets in the US
geographical reporting segment.
11.
Investments at FVTPL
Financial assets at fair value through profit or loss
Amortised cost at 30 September 2021
Transfer of deposit from current asset
Additions
Foreign Exchange
Amortised cost at 30 September 2022
The financial assets splits are as below:
Non-current assets – listed
Non-current assets – unlisted
Total
£0
£0
Level 3
Total
-
-
371
371
1,171
1,171
288
288
1,830
1,830
-
1,830
1,830
-
-
-
____
40
The Group purchased a 10% membership interest in Tar Sands Holdings II LLC (“TSHII”) during the year and holds an option
to purchase the remaining 90% for additional cash consideration of $16.25 million by an extended deadline of 30 April 2023.
The Directors have determined that the asset is an appropriate estimate of the fair value of the Group’s investments in TSHII
as at 30 September 2022. To further support the carrying value, the Group also announced the findings of an independent
report commissioned from Netherland, Sewell & Associates, Inc. (“NSAI”) estimating the on the mining properties
comprising the TSHII site. Further details are disclosed in the Strategic Report. The Directors do not consider there to be
any impairment of the investments as at 30 September 2022.
The Directors also separately assessed the fair value of the option and concluded that the option was not material due to its
short expiry date and has therefore not been recognised as intangible asset.
12. Trade and other receivables
Current
Other receivables
Prepayments and accrued income
Non-current
Other receivables
Total Receivables
Group
2022
£’000
70
31
101
23
124
Group
2021
£’000
51
53
104
25
129
As at 30 September 2022, there were no receivables considered past due (2021: £Nil). The maximum exposure to credit
risk at the reporting date is the fair value of each class of receivable and cash and cash equivalents as disclosed in Note 14.
All current receivable amounts are due within six months.
13. Other financial assets
Current
Deposit
Total
Group
2022
£’000
-
-
Group
2021
£’000
371
371
As at 30 September 2021, Greenfield had paid a deposit of US$500,000 against the possible acquisition of a 10%
membership interest in Tar Sands Holdings II LLC, a Utah limited liability company for US$2 million. In 2022, this amount
was used for the purchase a 10% interest. See note Error! Reference source not found..
14. Cash and cash equivalents
Cash at bank and in hand
Group
2022
£’000
206
Group
2021
£’000
726
The Group earns 0.05% (2021: 0.05%) interest on its cash deposits, consequently the Group’s exposure to interest rate
volatility is not considered material.
____
41
15. Loans
Current
Term loan
Convertible loan-debt element
Convertible loan-derivative liability
Group
2022
£’000
1,144
148
143
1,435
Group
2021
£’000
-
-
-
-
The convertible loan was for a principal sum of £375,000 and due for settlement by either conversion or repayment by
30 November 2022. It carried a premium on repayment or settlement, irrespective of the date of settlement, of 5%. The
loan was convertible at any time prior to 30 November 2022.
The conversion price per new Ordinary Share under the loan facility was the lower of: (i) 0.75 pence; and (ii) the volume-
weighted average price of an Ordinary Share during any five of the fifteen business days prior to service or deemed
service of a conversion notice, as selected by the noteholder(s) concerned and sourced from Bloomberg L.P.,
discounted by 15%. TomCo could elect to repay the loan amounts, but noteholders were entitled to exercise the
conversion option prior to receipt of a notice of intention to repay. Conversion was mandatory for any holders that had
not been repaid or converted prior to 30 November 2022.
Because the loans were capable of being settled by the issue of a variable number of ordinary shares, the loan was
accounted for as a liability. Further, there was an embedded written call option that had to be separated out from the
host contract and accounted for at fair value. In addition, warrants with a fair value of £165,000 were issued to the loan
note holders, and these were accounted for as issue costs in connection with the facility. The debt element, net of the
derivative liability and issue costs, was accounted for at amortised cost using the effective interest method.
Fair value disclosures
Recurring fair value measurements
Fair value
measurement at
30 September 22
Using
Quoted
prices in
active
markets for
identical
assets
(Level 1)
£’000
-
Significant
other
observable
inputs
(Level 2)
£’000
-
Significant
unobservable
inputs
(Level 3)
£’000
143
Derivative liabilities
£’000
143
The derivative has been valued using an option model and Monte Carlo simulation and the following inputs:
Share price
Volatility
Risk free rate
30 September 2022
0.475p
88.5%
4.14%
The valuation was carried out by external third parties and reviewed and adopted by the Directors. The Group does not
have formal processes and policies in connection with fair value measurement, as it is not a routine feature of the
Group’s business model.
____
42
Reconciliation of fair value measurements using Level 3 inputs
Derivative liabilities
Opening balance
Issues during year
Unrealised loss recognised in profit and loss
Closing balance
£’000
-
132
11
143
The Level 3 inputs used in the fair value measurement were volatility assumptions. An increase in volatility by itself
would lead to an increase in the value of the liability and vice versa.
Further disclosure is provided in note 23 on financial instruments.
In early October 2022, the principal amount of the above mentioned unsecured convertible loan facility of £375,000,
together with associated interest, was settled by way of share issue. Further details are disclosed in note 28.
16. Trade and other payables
Current
Trade payables
Other payables
Accruals
Group
2022
£’000
71
50
225
346
Group
2021
£’000
160
395
253
808
All current amounts are payable within six months and the Directors consider that the carrying values adequately represent
the fair value of all payables.
17. Deferred tax
Unrecognised losses
The Group has tax losses in respect of excess management expenses of approximately £14.0 million (2021: £12.7
million) available for offset against future Company income. This gives rise to a potential deferred tax asset at the
reporting date of £3.5 million (2021: £2.9 million). No deferred tax asset has been recognised in respect of the tax
losses carried forward as the recoverability of this benefit is dependent on the future profitability of the Company, the
timing of which cannot reasonably be foreseen but the excess management expenses have no expiry date. In addition,
subsidiary entities have accumulated losses of approximately £8.5 million for which no deferred tax asset is recorded
given the uncertainty of future profits.
18. Share capital
Issued and fully paid at 1 October 2020 - shares of no par value
November 2020-placing of new ordinary shares (note 19)
At 30 September 2021
November 2021-exercise of warrants (note 20)
January 2022-placing (note 19)
At 30 September 2022
Number of shares
in issue
2022
£
673,634,235
777,777,777
1,451,412,012
46,666,666
250,000,000
1,748,078,678
-
-
-
-
In addition to shares for which warrants and options were issued as consideration for the acquisition of the remaining 50%
interest in Greenfield in August 2021, there are 592.8 million shares potentially issuable to Valkor LLC. The issue of such
shares is contingent upon the Company receiving funds from, or drawing down on, a loan or credit facility granted in
connection with the proposed construction of an oil sands processing facility by August 2024.
____
43
19. Share premium
At 1 October
November 2020 - subscription of new shares at 0.45 pence per share, net of
costs
Issue of warrants to placees (note 20)
November 2020-Exercise of warrants (note 20)
January 2022-subscription of new shares at 0.5p, net of costs
At 30 September
20. Warrants
2022
£’000
31,142
-
-
210
1,175
32,527
2021
£’000
29,222
3,226
(1,306)
-
-
31,142
At 30 September 2022, 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
2022
2022
2021
2021
number
704,575,640
(260,481,624)
55,000,000
(46,666,666)
452,427,350
452,427,350
Weighted average
exercise price
Pence
0.88
(1.02)
0.75
(0.45)
0.88
0.88
number
269,791,515
(771,429)
435,555,554
-
704,575,640
704,575,640
Weighted
average
exercise price
Pence
1.0
(3.5)
0.85
-
0.88
0.88
The inputs into the Black-Scholes model for calculating the estimated fair value of warrants granted, at their grant date,
were as follows:
Share price (pence)
Exercise price (pence)
Expected volatility
Risk-free rate
Expected period before exercise (years)
2022
0.55
0.75
109%
2.4%
2
2021
0.45
0.45-0.9
148%
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
435,555,554 warrants were issued during the year ended 30 September 2021 at exercise prices of between 0.45p and
0.9p per share.
55,000,000 warrants were issued in the year ended 30 September 2022 at an exercise price of 0.75p in connection
with the issue of the convertible loan described in note 15.
Each warrant in issue is governed by the provisions of warrant instruments representing the warrants which have been
adopted by the Company. The rights conferred by the warrants are transferable in whole or in part subject to and in
accordance with the transfer provisions set out in the Articles. The warrants outstanding at 30 September 2022 had a
weighted average exercise price of 0.88p (2021: 0.88p) and a weighted average remaining contractual life of 0.15
years (2021: 0.95 years).
____
44
21. Non-controlling interests
Details of non-controlling interests are as follows:
Name of subsidiary
Proportion of
ownership interests
and voting rights
held by non-
controlling interests
2021
2022
%
%
Total
comprehensive loss
allocated to non-
controlling interest
2021
2022
£’000
£’000
Accumulated
non-
controlling
interest
2022
£’000
2021
£’000
TurboShale Inc.
-
20
(11)
(270)
-
(443)
The remaining non-controlling interest in TurboShale was purchased during the year for $15,000.
22. Share-based payments
The Company implemented a share option scheme for its Directors during the year ended 30 September 2018. Further
issues of options took place in June 2020 and June 2021. Options are exercisable at a price equal to the quoted market
price of the Company’s shares at the date of grant. The vesting period is between six months and 1 year. If the options
remain unexercised after a period of ten years from the date of grant (5 years in the case of options granted in June
2020) the options expire. Options are forfeited if the director leaves the Company before the options vest.
Details of the share options issued during the year and outstanding at the year-end are as follows:
Outstanding as at 1 October
Granted during the year
Lapsed during the year
Settled during the year
Outstanding at 30 September
Exercisable at 30 September
2022
2022
2021
2021
number
105,865,078
-
-
(7,500,000)
98,365,078
98,365,078
Weighted average
exercise price
Pence
0.70
-
-
(0.54)
0.70
number
17,365,078
90,500,000
(2,000,000)
-
105,865,078
17,365,078
Weighted average
exercise price
Pence
1.50
0.54
0.60
-
0.70
Details of the options held by each Director are provided in the Directors’ Report on page 9.
The inputs into the Black-Scholes model for calculating the estimated fair value of options granted, at their grant date,
were as follows:
Share price (pence)
Exercise price (pence)
Expected volatility
Risk-free rate
Expected period before exercise (years)
2022
-
-
-
-
-
2021
0.54
0.54
127-142%
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.
No new options were granted in the year ended 30 September 2022.The fair value of each option granted during 2021
year was estimated at 0.35 pence at the date of grant. The weighted average unexpired life of the options at 30
September 2022 was 7.9 years (2021: 8.95 years).
The charge recognised in profit or loss for 2022 was £194,000 (2021: £135,000).
Where equity instruments to be issued as consideration for the purchase of a group of assets that does not constitute
a business are within the scope of IFRS 2, the value of the equity instruments is determined by reference to the fair
value of the net assets acquired. This is deemed to be cost at the date of acquisition.
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23. Financial instruments
The Group’s financial instruments, other than its investments, comprise cash and items arising directly from its
operations such as other receivables, and trade payables.
Management review the Group’s exposure to currency risk, interest rate risk, liquidity risk and credit risk on a regular
basis and consider that through this review they manage the exposure of the Group. No formal policies have been put
in place in order to hedge the Group’s activities to the exposure to currency risk or interest risk, however, this is
constantly under review.
There is no material difference between the book value and fair value of the Group and Company’s cash and other
financial assets.
Currency risk
The Group has overseas subsidiaries which operate in the United States and include expenses, assets and liabilities
denominated in US$. Foreign exchange risk is inherent in the Group’s activities and is accepted as such. The effect of
a 10% strengthening or weakening of the US dollar against sterling at the reporting date would, all other variables held
constant, result in a gain or loss reported in profit and loss of approximately £545,000 (2021: £422,000).
Interest rate risk
The Group and Company manage the interest rate risk associated with the Group’s cash assets by ensuring that
interest rates are as favourable as possible, whether this is through investment in floating or fixed interest rate deposits,
whilst managing the access the Group requires to the funds for working capital purposes.
The Group’s cash and cash equivalents are subject to interest rate exposure due to changes in interest rates. Short-
term receivables and payables are not exposed to interest rate risk. The Group borrows at fixed interest rates and
therefore there is no effect on profit and loss attributable to changes in interest rates.
A 1% increase or decrease in the floating rate attributable to the cash balances held at the year-end would not result
in a significant difference in interest receivable.
Liquidity risk
At the year end the Group and Company had cash balances comprising the following:
Bank balances
British Pounds
US Dollars
Total
Group
2022
£’000
198
8
206
Group
2021
£’000
667
59
726
All financial liabilities of the Group mature in less than 12 months: details of the analysis of such liabilities is provided
in Notes 15 and 16.
Liquidity risk arises from the Group’s management of working capital. It is the risk that the Group will encounter difficulty
in meeting its financial obligations as they fall due. Refer to Note 1.1 for details of going concern.
The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become
due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a
period of at least 90 days.
Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails to meet
its contractual obligations. The Group is principally exposed to credit risk on cash and cash equivalents with banks and
financial institutions. For banks and financial institutions, only independently rated parties with an acceptable rating
are utilised. There has been no significant change in credit risk since the recognition of applicable assets and therefore
no credit losses have been recognised on financial assets.
Capital management policies
In managing its capital, the Group’s primary objective is to maintain a sufficient funding base to enable the Group to
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meet its working capital and strategic investment needs. In making decisions to adjust its capital structure to achieve
these aims, through new share issues or debt, the Group considers not only its short-term position but also its long-
term operational and strategic objectives.
24. Changes in liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-
cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will
be, classified in the cash flow statement as cash flows from financing activities:
Group 2022
Loans
Total
Group 2021
Loans
Total
1 October
Financing cash flows
£’000
-
-
-
-
£’000
1,348
1,348
-
-
Non-cash
transactions
£’000
(56)
(56)
-
-
30 September
£’000
1,292
1,292
-
-
25. Related party disclosures
The Directors are Key Management and information in respect of Key Management is provided in Note 7.
26. Ultimate controlling party
As at 30 September 2022 and 30 September 2021 there was no ultimate controlling party.
27. Operating lease commitments
At 30 September 2022, the Group had no operating lease commitments (2021: £nil).
28. Subsequent events
i
ii
iii
iv
In early October 2022, the Group drew down the second £375,000 balancing tranche of the committed unsecured
convertible loan facility on similar terms to those described in note 15. Warrants over a further 50 million shares, with
an exercise price of 0.75p per share, were issued in connection with this additional drawdown.
During October 2022, the entire £750,000 principal amount of the abovementioned two tranche unsecured convertible
loan facility, together with associated interest, was settled by way of the issue of, in aggregate, 237,140,577 new
ordinary shares.
On 30 November 2022, the Company raised £0.925 million gross through the placing of 264,285,714 new ordinary
shares at a price of 0.35 pence per share to provide additional funds to cover the Company’s expenditure as it
progresses its plans for Greenfield. The Valkor Loan, having previously been extended on 31 May 2022, 28 June 2022,
1 August 2022, 1 September 2022, 14 October 2022 and 1 November 2022, was also further varied to extend the
repayment date for the then remaining $1 million principal amount to the completion date of a suitable funding
transaction for Greenfield that provides sufficient funds to TomCo to, inter alia, enable it to affect repayment. The
principal amount outstanding in respect of the Valkor Loan is currently $750k raising £925,000 (gross).
On 30 March 2023, the Company obtained a new four tranche unsecured committed convertible loan note facility of up
to £1 million to provide additional working capital for the Group as required, whilst the Company seeks to finalise funding
arrangements for Greenfield. If and when drawn down, interest equating to a fixed amount of five per cent. of the
principal amount drawn down shall accrue until repayment, conversion or redemption of the relevant notes with a
scheduled maturity date of 31 March 2024. The conversion price per new ordinary share under the facility shall be
determined as the lower of: (i) 0.60 pence; and (ii) the volume-weighted average price of an ordinary share during any
five of the fifteen business days prior to service or deemed service of a conversion notice, as selected by the
noteholder(s) concerned and sourced from Bloomberg L.P., discounted by 15 %. Greenfield’s option over the remaining
90% Membership Interest in TSHII for $16.25m, having previously been extended on several occasions, was also further
extended to no later than 30 April 2023.
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ONLINE
www.tomcoenergy.com
info@tomcoenergy.com
TELEPHONE
+44 20 3823 3635
ADDRESS
TomCo Energy plc
60 Circular Road
Douglas
Isle of Man
IM1 1SA
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