Corporate Governance Statement in respect of United Oil & Gas PLC
Deliver Growth (Principle One to Four and Principle Ten)
Business Model and Strategy
The Board has concluded that the highest medium and long-term value can be delivered to its shareholders by the adoption of a strategy to build a portfolio of production, development and low-risk appraisal and exploration of oil and gas assets in Europe, whilst remaining alert for exceptional growth opportunities on a global basis, primarily in Caribbean, Latin America and Africa.
The Company’s interests currently consist of a multi-stage portfolio of low risk European development and appraisal assets and exploration assets in Jamaica.
Principle Two and Principle 10
Understanding Shareholder Needs and Expectations and Build Trust.
The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. Shareholders and analysts have the opportunity to discuss issues and provide feedback at key industry events and presentations from the Company. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting. Investors also have access to current information on the Company though its website www.uogplc.com
The Company, through its public relations firms and its firstname.lastname@example.org email address, seek to provide communication lines through which private shareholders can engage with the Company. Through its public announcements, management seeks to engage with shareholders and manage expectations.
The Company shall include, when relevant, in its annual report, any matters of note arising from the audit or remuneration committees.
Considering wider stakeholder and social responsibilities
The Board recognises that the long-term success of the Company is reliant not only upon the efforts of the employees of the Company but also its contractors, suppliers, regulators, local communities and other stakeholders. The Board has sought feedback from stakeholders and has systems in place to ensure that there is oversight, accountability and contact with its key resources and relationships.
In addition to its other roles and responsibilities, the Audit and Remuneration Committees are responsible to the Board for ensuring that procedures are in place and are being implemented effectively to identify, evaluate and manage the significant risks faced by the Company and to ensure that risk management is reflected in board remuneration.
The risk assessment matrix below sets out those risks, and identifies their impact 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 Audit and Compliance Committee 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:
|Management||Recruitment and retention of key staff||Reduction in operating capability||Stimulating and safe working environment|
Balance base salary with longer term incentive plans to align remuneration with shareholders.
|Regulatory adherence||Breach of rules||Censure or withdrawal of authorisation||Strong compliance regime instilled at all levels of the Company|
|Geological||Hydrocarbons are not discovered|
Recoverable hydrocarbons are not produced in the quantities expected
|Reduction in asset value|
Reduction in asset value
|Effective due diligence and technical screening|
Portfolio strategy mitigates exposure to single asset
Reduce exposure by seeking to partner on Company projects
|Strategic||Damage to reputation||Inability to secure new capital||Effective and consistent communications with shareholders|
|Financial||Liquidity, market and credit risk|
Inappropriate controls and accounting policies
|Inability to continue as going concern|
Reduction in asset values
|Capital management policies and procedures|
Appropriate authority and investment levels.
The Directors have 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.
Maintain A Dynamic Management Framework (Principle Five to Nine)
A Well Functioning Board of Directors
The Board comprises: the Chief Executive Officer, Brian Larkin, the Chief Operating Officer, Jonathan Leather and two Non-Executive Directors, Chairman, Graham Martin and Non-Executive Director, Alberto Cattaruzza who are considered by the Board to be independent.
In addition, the Company has committed to (i) appoint another independent non-executive director with appropriate financial expertise within six months of the date of admission to trading on AIM; and (ii) to appoint a finance director at the appropriate juncture (for example if the Company undertakes a larger transaction or progresses to production).
Executive and Non-Executive Directors are subject to re-election at the Company’s annual general meeting at intervals of no more than three years. The service agreements and letters of appointment of all Directors are available for inspection at the Company’s registered office during normal business hours. The Directors are expected to provide as much time to the Company as is required. The Board elects a Non-Executive Chairman to chair every meeting.
The Board expects to meet at least six times per annum. It has established an Audit Committee, a Remuneration Committee and an AIM Rules Compliance Committee, particulars of which appear hereafter. The Board has agreed that appointments to the Board at this stage would be made by the Board as a whole and so has not created a Nominations Committee.
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 Directors meet formally and informally both in person and by telephone.
Appropriate Skills and Experience of the Directors
The Board currently consists of four Directors. The Company believes that, at its current stage of development, the balance of skills in the Board as a whole, reflects a sufficiently broad range of commercial and professional skills, together with an in-depth knowledge of the sector and experience of public markets that is necessary to ensure the Company is equipped to deliver its strategy.
Full Biographies of the Board are available on the Company’s website www.uogplc.com
Evaluation of Board Performance
Internal evaluation of the Board, the Committees and individual Directors is to be undertaken on an ad hoc basis in the form of peer appraisal and discussions to determine the effectiveness and performance in various as well as the Directors’ continued independence. This process can be regular as part of the board meeting process or ad hoc when the Director or Board deem it necessary.
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.
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.
The Company maintains an open and respectful dialogue with employees, partners 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 Directors 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.
Maintenance of Governance Structures and Processes
Ultimate authority for all aspects of the Company’s activities rests with the Board, the respective responsibilities of the Non-Executive Chairman and Chief Executive Officer 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 Non-Executive Chairman is responsible for the effectiveness of the Board together with the responsibility to oversee the company’s corporate governance practices. The responsibility for the company’s day-to-day operations has been delegated by the Board to the Chief Executive Officer. The Board has also established Committees to oversee the effectiveness of its operations and to monitor that remuneration is aligned to their effective performance, which are detailed below.
The Audit Committee comprises Alberto Cattaruzza and Graham Martin. This committee has primary responsibility for monitoring the quality of internal controls and ensuring that the financial performance of the Company is properly measured and reported on and for reviewing reports from the Company’s auditors relating to the Group’s accounting and internal controls. The Committee is also responsible for making recommendations to the Board on the appointment of auditors and the audit fee and for ensuring that the financial performance of the Group is properly monitored and reported. The audit committee will meet no less than three times a year.
The Remuneration which comprises Alberto Cattaruzza and Graham Martin, is responsible for the review and recommendation of the scale and structure of remuneration for senior management including any bonus arrangements or the award of share options with due regard to the interests of the Shareholders and the performance of the Group.
The Board has agreed that appointments to the Board will be made by the Board as a whole and so has not created a Nominations Committee.
AIM Rules compliance committee
From admission to AIM, the Company will have established an AIM Rules compliance committee which will comprise Graham Martin and Brian Larkin and which prime responsibility will be to ensure the Company has sufficient procedures in place to ensure ongoing compliance with the AIM Rules. The Company has adopted an AIM Rules compliance code to ensure that they have sufficient procedures for ensuring compliance with the AIM Rules.
1 March 2019