As an AIM-quoted company, Reabold Resources plc (“Reabold” or the “Company”) is required to apply a recognised corporate governance code, demonstrating how the Company complies with such corporate governance code and where it departs from it.

 

The Directors of the Company have formally taken the decision to apply the Quoted Companies Alliance Corporate Governance Code (the “QCA Code”). The Board recognises the principles of the QCA Code, which focus on the creation of medium to long-term value for shareholders without stifling the entrepreneurial spirit in which small to medium sized companies, such as Reabold, have been created. The Company will provide annual updates on its compliance with the QCA Code in its Annual Report.

 

CORPORATE GOVERNANCE REPORT

 

The QCA Code sets out 10 principles that should be applied. These are listed below together with a short explanation of how the Company applies each of the principles:

 

Principle One: Establish a strategy and business model which promote long-term value for shareholders

The Board has concluded that the highest medium and long term value can be delivered to its shareholders by the adoption of a single strategy for the Company.

 

The investing policy of the Company is to acquire direct and indirect interests in exploration and producing projects and assets in the natural resources sector, and consideration is given to investment opportunities globally.  However, under that policy, the Board is focused on investments in pre-cashflow upstream oil and gas projects. Those projects are primarily in the form of significant minority or controlling interests in non-operating unlisted oil & gas companies, with interests in on-shore or near-shore assets with low-cost drilling opportunities that can provide medium term production and hence cashflow.

 

The Company is an investor in upstream oil and gas projects globally with an aim to create value from each project by investing in undervalued, low-risk, near-term upstream oil & gas projects and by identifying realistic potential exit plans prior to investment.

 

The Company’s long term strategy is to re-invest capital made through its investments into larger projects in order to grow the Company. The Company aims to gain exposure to assets with limited downside and high potential upside, capitalising on the value created between the entry stage and exit point of its projects. The Company invests in projects that have limited correlation to the oil price.

 

The Company only invests in projects which meet its stringent requirements.

 

The Company may be both an active and a passive investor depending on the nature of the individual investments.

 

Although the Company intends to be a medium to long-term investor, the Company will place no minimum or maximum limit on the length of time that any investment may be held and therefore shorter term disposal of any investments cannot be ruled out. The Company intends there to be no limit on the number of projects into which the Company may invest, and the Company’s financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a reverse takeover pursuant to Rule 14 of the AIM Rules. The investing policy will allow investments to be in all types of assets and there will be no investment restrictions.

 

The Company may offer new Ordinary Shares by way of consideration as well as cash, thereby helping to preserve the Company’s cash resources for working capital. The Company may, in appropriate circumstances, issue debt securities or otherwise borrow money to complete an investment. The Company does not intend to acquire any cross-holdings in other corporate entities that have an interest in the Ordinary Shares.

 


 

Principle Two: Seek to understand and meet shareholder needs and expectations

 

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. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company.

 

All shareholders are encouraged to attend the Company’s Annual General Meeting and any general meetings held by the Company.

 

Investors also have access to current information on the Company through its website, https://reabold.com/, and through Sachin Oza and Stephen Williams, the Co-Chief Exective Directors, who are available to answer investor relations enquiries.

 

Principle Three: Take into account wider stakeholder and social responsibilities and their implications for long-term success

 

The Board recognises that the long term success of the Company is reliant upon the efforts of the employees of the Company and its contractors, suppliers, regulators and other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight and contact with its key resources and relationships. The Company has close ongoing relationships with a broad range of its stakeholders and provides them with the opportunity to raise issues and provide feedback to the Company.

 

Principle Four: Embed effective risk management, considering both opportunities and threats, throughout the organisation

 

The Board ensures that procedures are in place and such procedures are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company. The risk assessment matrix below sets out those risks, and identifies their ownership and the controls that are in place. This matrix is updated as changes arise in the nature of risks or the controls that are implemented to mitigate them. The Board reviews the risk matrix and the effectiveness of scenario testing on a regular basis. The following principal risks and controls to mitigate them, have been identified:

 

Activity Risk Impact Control(s)

 

Management Recruitment and retention of key staff Reduction in operating capability Stimulating and safe working environment

 

Balancing salary with longer term incentive plans

 

Regulatory adherence Breach of rules Censure or withdrawal of authorisation Strong compliance regime instilled at all levels of the Company

 

Strategic Damage to reputation

 

 

 

 

 

 

Inadequate disaster recovery procedures

 

Inability to secure new capital or clients

 

 

 

 

 

Loss of key operational and financial data

Effective communications with shareholders coupled with consistent messaging to our customers

 

Robust compliance

Secure off-site storage of data

 

Financial Liquidity, market and credit risk

 

 

Inappropriate controls and accounting policies

Inability to continue as going concern

 

 

Reduction in asset values

 

Incorrect reporting of assets

 

Robust capital management policies and procedures

 

Appropriate authority and investment levels as set by Treasury and Investment Policies

 

 

The Board has established procedures, as represented by this statement, for the purpose of providing a system of internal control. An internal audit function is not considered necessary or practical due to the size of the Company and the close day to day control exercised by the executive directors. However, the Board will continue to monitor the need for an internal audit function. The Board works closely with and has regular ongoing dialogue with the Company’s financial controller and has established appropriate reporting and control mechanisms to ensure the effectiveness of its control systems.

 

Principle Five: Maintain the board as a well-functioning, balanced team led by the chair

 

As at the date of publication, the Board comprised of Jeremy Edelman as the Non-Executive Chairman, Anthony Samaha, Marcos Mozetic and Michael Felton as Non-Executive Directors and Sachin Oza and Stephen Williams, the Co-Chief Exective Directors. Biographical details of the current Directors are set out within Principle Six below.

 

The Executive and Non-Executive Directors are subject to re-election at the second annual general meeting of the Company after their last appointment or reappointment, if not before. The letters of appointment of the Non-Executive Directors and the service agreements of the Executive Directors are available for inspection at the Company’s registered office during normal business hours.

 

The Executive Directors are considered to be full time employees. The Non-Executive Directors are considered to be part time but are expected to provide as much time to the Company as is required.

 

The Board elects a Chairman to chair every meeting. The Board meets at least six times per annum. The Board has agreed that appointments to the Board are made by the Board as a whole and so has not yet created a Nominations Committee.

 

The Board has implemented an Audit committee comprising Michael Felton (Chair), Jeremy Edelman, and Anthony Samaha.

 

The Board has implemented a Remuneration committee comprising Marcos Mozetic (Chair), Jeremy Edelman, and Michael Felton.

 

The Board will implement a Nomination committee at the appropriate time in line with changes to the structure, size and composition of the Board.

 

The Non-executive Chairman, Jeremy Edelman, and Non-executive Directors, Michael Felton and Marcos Mozetic are considered to be Independent Directors. The Board notes that the QCA recommends a balance between executive and non-executive Directors and recommends that there be two independent non-executives. The Board will review further appointments as scale and complexity grows.

 

The role of the Chairman is to provide leadership of the Board and ensure its effectiveness on all aspects of its remit to maintain control of the Company. In addition, the Chairman is responsible for the implementation and practice of sound corporate governance. The Chairman is considered independent and has adequate separation from the day-to-day running of the Company.

 


 

Attendance at Board and Committee Meetings

 

The Company shall report annually on the number of Board and committee meetings held during the year and the attendance record of individual Directors. In order to be efficient, the Board meet formally and informally both in person and by telephone. To date there have been at least bimonthly meetings of the Board, and the volume and frequency of such meetings is expected to continue at this rate.

 

Principle Six: Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities

 

The Board currently consists of six Directors. In addition to holding office as Non-Executive Director, Anthony Samaha also currently holds the office of Company Secretary. The Company believes that the current balance of skills in the Board as a whole, reflects a very broad range of commercial and professional skills across geographies and industries.

 

The Board recognises that it currently has a limited diversity and this will form a part of any future recruitment consideration if the Board concludes that replacement or additional directors are required.

 

The Board shall review annually the appropriateness and opportunity for continuing professional development whether formal or informal.

 

Mr Jeremy Edelman, Non-Executive Chairman

Mr Edelman has worked for some of the world’s leading investment banks, including Bankers Trust and UBS Warburg in debt and acquisition finance. He has also held consulting and director positions in listed companies in the UK and Australia with a focus on resource exploration and development, including investment companies established with the specific objective of investing in resources projects. Mr Edelman also has extensive experience in corporate finance, having been responsible for co-coordinating a number of companies in making acquisitions in a variety of resource sectors.

 

Mr Anthony Samaha, Non-Executive Director

 

Mr Samaha is a Chartered Accountant with over 20 years’ experience in accounting and corporate finance, including in resources development. He has worked with leading international accounting firms, including Ernst & Young, principally in corporate finance. Mr Samaha has extensive experience in the listing and management of AIM-quoted companies, such as Equatorial Palm Oil Plc, Altona Energy Plc and Braemore Resources Plc, including fund raisings, project development and mergers and acquisitions.

 

Mr Sachin Oza, Co-Chief Executive Director

 

Mr Oza has 17 years’ investment experience and has spent the last seven focussing on the energy sector. He joined Guinness Asset Management in April 2016, having previously worked as an investment analyst at M&G Investments for 13 years, where he covered the Utility, Transport, Mining and Oil & Gas sectors on a global basis. Mr Oza has also held investment analyst roles at Tokyo Mitsubishi Asset Management and JP Morgan Asset Management.

 

Mr Stephen Williams, Co-Chief Executive Director

 

Mr Williams has 13 years’ experience in the energy sector. He joined Guinness Asset Management in April 2016, having previously worked as an investment analyst at M&G between 2010 and 2016, where he focussed on energy and resources. Prior to this, Mr Williams worked as an energy investment analyst for Simmons & Company International between 2005 and 2010 and from 2003 to 2005 he worked as an analyst at ExxonMobil.

 

Mr Marcos Mozetic, Non-Executive Director

 

Mr Mozetic, an exploration geologist, brings over 41 years of international technical experience in the oil and gas industry to the Company. His most recent experience was in designing, implementing and leading Repsol S.A’s exploration strategy between 2004 and 2016. During this period Repsol become a leader in reserve replacement and participated in some of the most exciting discoveries worldwide. Previous to this, Mr Mozetic worked as a development geologist in 1975 with Bridas, before moving into the exploration department, which he later led. Following this, Mr Mozetic worked for BHP Petroleum and BHP Minerals as Chief Geologist for Argentina and later Country Leader. Mr Mozetic holds a BSc and Post-Graduate degree in Petroleum Geology from the University of Buenos Aires.

 

Mr Michael Felton, Non-Executive Director

 

Mr Felton is an experienced fund manager in the City and brings over 29 years of financial expertise to the Company. Mr Felton previously served as Head of UK Retail Equities at M&G Investments and was Manager of the M&G UK Select Fund, growing the fund’s assets from £110m to circa £550m at its peak. Mr Felton has also previously served as Joint Head of Equities at ISIS Asset Management and Manager of ISIS UK Prime Fund, as well as Chief Investment Officer at Lumin Wealth, a position he still retains part-time. Mr Felton sits on the International Tennis Federation’s Investment Advisory Panel and is a Business Ambassador for Anthony Nolan, the UK’s blood cancer charity and bone marrow register.

 

Principle Seven: Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

 

Internal evaluation of the Board and individual Directors is to be undertaken on an annual basis in the form of peer appraisal and discussions to determine the effectiveness and performance in various applicable areas to their role as well as the Directors’ continued independence.

 

The results and recommendations that come out of the appraisals for the Directors shall identify the key corporate and financial targets that are relevant to each Director and their personal targets in terms of career development and training. Progress against previous targets shall also be assessed where relevant.

 

Principle Eight: Promote a corporate culture that is based on ethical values and behaviours

 

The Board recognises that their decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company.

 

The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its shareholders and that shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. A large part of the Company’s activities is centred upon what needs to be an open and respectful dialogue with employees, clients and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company to successfully achieve its corporate objectives. The Board places great import on this aspect of corporate life and seeks to ensure that this flows through all that the Company does.

 

The Board consider that at present the Company has an open culture facilitating comprehensive dialogue and feedback and enabling positive and constructive challenge. The Company has adopted, with effect from the date on which its shares were admitted to AIM, a code for Directors’ and employees’ dealings in securities which is appropriate for a company whose securities are traded on AIM and is in accordance with the requirements of the Market Abuse Regulation which came into effect in 2016, and which is a major part of how the Company determine that ethical values and behaviours are recognised and respected.

 

Principle Nine: Maintain governance structures and processes that are fit for purpose and support good decision-making by the board

 

Ultimate authority for all aspects of the Company’s activities rests with the Board with the respective responsibilities of the Chairman and the Executive Directors 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, while management of the Company’s business and primary contact with shareholders has been delegated by the Board to the Co-Chief Executive Directors.

 

The Board has adopted guidelines for the appointment of Non-Executive Directors which have been in place and which have been observed throughout the year. These provide for the orderly and constructive succession and rotation of the Chairman and non-executive directors.

 

In accordance with the 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.

 

The role of the Chairman is to provide leadership of the Board and ensure its effectiveness on all aspects of its remit to maintain control of the Company. In addition, the Chairman is responsible for the implementation and practice of sound corporate governance. The Chairman is considered independent and has adequate separation from the day-to-day running of the Company.

 

Principle Ten: Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

 

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. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company.

 

All shareholders are encouraged to attend the Company’s Annual General Meeting and any general meetings held by the Company.

 

Investors also have access to current information on the Company through its website, https://reabold.com/, and through Sachin Oza and Stephen Williams, the Co-Chief Exective Directors, who are available to answer investor relations enquiries.

 

Jeremy Edelman

Non-Executive Chairman