Scirocco Energy Regulatory News (SCIR)

30 June 2023

Scirocco Energy plc

("Scirocco Energy" or "the Company")

Publication of Annual Report and Final Results

Scirocco Energy (AIM: SCIR), the AIM investing company targeting attractive assets within the European sustainable energy and circular economy markets, is pleased to announce the publication of its annual report and audited annual results for the period ended 31 December 2022. The Company will shortly be publishing its Notice of AGM and a further announcement will be made in this regard.

The Annual Report & Accounts will be posted to the Company's website at https://www.sciroccoenergy.com/.

Highlights

· Agreed in June 2022 to divest of 25% non-operated interest in Ruvuma asset for up to $16 million

o  Initial consideration of US$3 million payable on completion of the disposal, which is now expected to be in Q3 2023

· Ruvuma disposal approved by Shareholders at a general meeting held on 29th June 2022

· In December 2022, the Tanzanian Fair Competition Commission ("FCC") granted its unconditional approval for the transaction and issued the Company with the Merger Clearance Certificate - an important step towards completion of the asset divestment.

· Strong operational and financial performance from Greenan (GGL) through 2022 including:

o  GGL delivered c. 4 million kWh during 12 month period of EAG ownership

o  Operational availability in excess of 93%

o  EAG/GGL Revenue of £1,414k (2021:£1,163k)

o 

o  EAG/GGL EBITDA of £619k (2021: £352k)

o  £295,000 of mechanical upgrades and improvements made to future proof the GGL asset

Post Period Highlights

· Scirocco and APT have executed amendments to extend the longstop date of the proposed transaction from 30 June 2023 to 31 August 2023

· Operational and financial performance at Greenan Generation Limited ("GGL") remains on a positive trend 

· Board changes to reflect strategic evolution of business with appointments of Matt Bower and Niall Roberts replacing Muir Miller and the outgoing Don Nicolson

· Continued focus on cost management to preserve cash and establish a sustainable burn-rate

Commenting on the Results, Alastair Ferguson, Non-Executive Chairman, said:

"2022 was a year of strategic progress for the Group as we worked towards completion of the divestment of legacy assets, in particular Ruvuma, and continued the development of the Company's sustainable energy investment strategy. This being said, it is important to acknowledge the delay to the initially anticipated timeline for completion of the Ruvuma divestment and its impact on our strategic progress, we therefore thank our shareholders, new and old, for their patience and for supporting the strategy to build a business of scale that is capable of delivering long-term growth and sustainable shareholder value."

For further information:

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2022

On behalf of the Board of Directors, I hereby present the financial statements of Scirocco Energy plc (the "Company") and its subsidiaries (the "Group") for the year ended 31 December 2022.

2022 was a year of strategic progress for the Group as we worked towards completion of the divestment of legacy assets, in particular Ruvuma, and continued the development of the Company's sustainable energy investment strategy. The macro backdrop continues to support the new strategy as the importance of delivering secure and sustainable energy solutions for the UK and beyond becomes increasingly clear, while increased volatility in the oil and gas markets, exacerbated by Russia's invasion of Ukraine, has demonstrated the prudence of the Board and shareholders' decision to pivot to an investment strategy that offers a risk/reward profile better aligned to a company of Scirocco's scale and ability to deliver sustainable long-term returns.

With this in mind, in my capacity as Non-Executive Chairman of the Group, I am pleased to provide a review of the 2022 financial year along with an outlook for the current fiscal year and beyond.

Strategy and Portfolio

During 2022 the Group made significant strides towards divesting its legacy oil and gas assets in order to progress its strategy to invest in sustainable and circular economy assets which meet our criteria for value creation, such as the Company's ongoing investment into Energy Acquisitions Group Limited ("EAG") and support for its acquisition and subsequent operation of Greenan Generation Limited ("GGL"), which EAG acquired in September 2021.

A significant amount of work was undertaken in the second half of 2022 to identify and high grade potential portfolio opportunities to build on what has been achieved in GGL.  In line with our strategy we continue to review opportunities across all three target investment segments: energy, circular and vector.

Ruvuma Disposal

As initially announced to the market in the RNS dated 13 June 2022, the Group entered into a conditional binding agreement with Wentworth Resources plc to divest its 25% non-operated interest in the Ruvuma asset, Tanzania. Following this announcement, and in accordance with the terms of the Joint Operating Agreement ("JOA") associated with Ruvuma, ARA Petroleum Tanzania Limited ("APT") informed the Company that it would be exercising its pre-emption rights in relation to the sale of the Company's interest in the asset for a total consideration of up to US$16 million comprised of:

• Initial consideration of US$3 million payable on completion of the disposal, which is now expected to be in Q3 2023;

• US$3 million payable upon final investment decision being taken by the parties to the Ruvuma Asset Production Sharing Agreement or the JOA as the case may be;

• Deferred consideration of up to US$8 million payable in the form of a 25% net revenue share from the point when Ruvuma commences delivery of gas to the gas buyer;

• Contingent consideration of US$2 million payable on gross production reaching a level equal to or greater than 50Bcf.

In addition, APT would provide Scirocco with a loan of up to ceiling $6,250,000 to meet all cash calls pursuant to the Ruvuma JOA arising between 1 January 2022 and the expected completion date - thereby removing the risk of default and possible relinquishment of Scirocco's interest in the project. During the period between signature of the sale agreements and completion the loan accrues as cash calls are paid by APT on Scirocco's behalf. The consideration payable at completion is also increased by the cash calls incurred. At completion the accrued loan will be offset against the increased consideration balance, cancelling out the loan. In March 2023, Scirocco and APT agreed to increase the contractional longstop date to 31 August 2023 from 30 June 2023.

The total potential consideration represents a significant premium to Scirocco's prevailing market capitalisation and the deal strengthens Scirocco's balance sheet and, critically, removed the imminent need to raise capital to fund the Ruvuma work programme during 2022 and into 2023 - which given the highly challenging market backdrop was a genuine risk that the Board were committed to avoid at all costs.

Pursuant to Rule 15 of the AIM Rules for Companies, the Proposed Transaction was presented for shareholder approval by way of an ordinary resolution at a General Meeting in June 2022, and the resolution received the shareholders to approve the transaction.

In December 2022, the Tanzanian Fair Competition Commission ("FCC") granted its unconditional approval for the transaction and issued the Company with the Merger Clearance Certificate - an important step towards completion of the asset divestment. Following the end of the period we have seen significant progress on the asset in terms of an accelerated timeline to first gas, which we see as a positive step towards receiving the contingent payments relating to FID and the deferred consideration linked to a share of gas revenue.

As communicated to the market in an RNS dated 25 May 2023, the Company and APT have extended the long stop date to 31 August 2023 and both parties expect to complete the transaction within this timeframe. Completion of this divestment represents a material strategic event for the Company and enables the business to move forward with a clear strategic vision, a significantly strengthened balance sheet and belief that the material upside associated with contingent elements of that transaction will provide funds to accelerate Scirocco's stated growth strategy

EAG/GGL

Following the acquisition of GGL in September 2021, EAG implemented a number of operational and technical improvements to the site, using their extensive experience of operating and maintaining anaerobic digestion plants to minimise downtime and maximise efficiency gains. As reported to the market in April 2023, in Q4'22 GGL supported by wholesale power prices performed strongly, exceeding the key performance indicators of production, revenue and EBITDA achieved in Q4'21 and clearly demonstrating the positive impact of EAG's operatorship and the overall approach to optimisation of these low-risk, cash-generative assets.

During the period, Scirocco supported EAG's team in identifying and reviewing a number of potential investments with similar profiles to GGL and good progress continues to be made in the screening and due diligence processes. That being said, factors including the delayed completion of the Ruvuma divestment and the absence of authority to issue new share capital have hindered more substantial progress on these opportunities . However, the Board remains confident of completing the Ruvuma transaction before the newly extended long stop date of 31 August 2023 which will deliver funds and potentially further contingent payments within the remainder of 2023 that will provide capital for further investment.

In parallel, Scirocco will continue to support EAG as it investigates alternative sources of potential investment funds to secure attractive acquisition opportunities currently under consideration. Longer-term, as the EAG JV continues to forge a track record for consistent delivery and value uplift from its ownership and operatorship of Anaerobic Digestion installations, we hope to broaden the appeal of our investment proposition.

Other Assets

Corallian Energy Limited

Under its previous investment policy, in 2018 Scirocco undertook a minor investment in Corallian Energy Limited through the subscription for 83,333 shares at a price of £1.50 per share. In September 2022 Corallian's parent company, Reabold Resources plc, announced the conditional sale of Corallian at a price of up to £3.20 per share as a combination of initial cash plus contingent payments, providing a profitable exit from a legacy investment for Scirocco. The proceeds further strengthened the Company's balance sheet and supported ongoing opportunity screening being undertaken by the Joint Venture with EAG.

Helium One

During 1H 2022 Scirocco sold 1,550,000 shares of Helium One at an average price of 6.7p/share.

Scirocco held its shares in an account with Pello Capital which entered administration in October 2022. As a result, Scirocco's Helium One shareholding was split into two tranches.

• 1,906,088 shares held in a brokerage account.

• 1,000,000 shares held within the general Pello Capital Crest account which had not been credited to the Scirocco named account

Scirocco has been engaged with the administrator, Evelyn Partners, regarding the recovery of the 1 million shares. At 31 December 2022 Scirocco held 2,906,088 shares in Helium, 1 million of which are the subject of ongoing recovery discussions with the Pello Capital administrator.

I am pleased to see the monetisation of the Helium One investment continue.

Governance/Shareholder Engagement

As we report on the first full year of implementing Scirocco's reshaped investment strategy, and despite the overwhelming mandate delivered by shareholders in support of this strategy in 2021, the Board recognises that there remained some shareholder objections to the pivot to investing in sustainable energy and the circular economy which drove the strategic divestment of the legacy investment in Ruvuma.

As a result, the Directors and I took part in several live sessions, both virtual and in person, with shareholders throughout 2022 in order to better understand shareholder concerns. This culminated in an investor event in December 2022 around the Group's investment into EAG and its forward strategy which was positively received by all attendees.

At the same time, the Board acknowledges the results of the shareholder vote at the AGM in August 2022, especially on Resolution 6 - Disapplication of Pre-emption Rights. As stated at the time and above, we believe this has impacted the Group's ability to execute swiftly on opportunities that meet our criteria for value creation to the detriment of all stakeholders. In the constructive spirit of shareholder engagement activity in 2022, where appropriate the Board will continue its efforts to engage on this topic with all shareholders to alleviate concerns, outline the long- term growth strategy and emphasise how the decisions undertaken by the Board support delivery of that strategy.

A final point on Governance, is the evolution of the Board composition to reflect the change in strategic direction of Scirocco. The Board recognises that it is of the utmost importance that it retains the appropriate level of skills, experience and independence in order to be able to execute its strategy on behalf of its shareholders. In that regard, post-period, there have been a number of changes with Muir Miller stepping down, and Don Nicolson notifying of his intention to step down in due course. I'd like to thank both Muir and Don for their good insights and guidance through what has been a highly transitional and challenging period for the Company.

Scirocco has been fortunate to replace these Directors with two candidates put forward as representatives of our largest shareholder G.P. Jersey in the form of Matt Bower and Niall Roberts who join as Non-Executive Directors. Both Matt and Niall bring directly applicable skills and experience within the broader renewables/clean-tech space which will be invaluable to Scirocco moving forward. Reflecting our commitment to good Governance, we are in the process of recruiting a suitable independent non-executive director with the requisite skills to assume the role as Chairman of the Audit Committee which will come available through the departure of Don Nicolson.

Outlook

While progress is being made across our strategic priorities, it is important to acknowledge the delay to the initially anticipated timeline for completion of the Ruvuma divestment and its impact on our strategic progress. While this is not uncommon in transactions of this nature in Tanzania, we understand and share shareholder frustration and acknowledge there has been a knock-on impact on the Company's ability to deploy capital for further investments in the sustainable energy sector as rapidly as we would have liked.

As outlined above, the Company expects to complete the transfer of ownership of its 25% interest in Ruvuma to APT by the longstop date of 31 August 2023, which will deliver net funds immediately upon completion and potentially further funds through contingent payments during 2023 which will provide capital for further investment within the sustainable energy and circular economy sectors.

Recognising that growth will require funding, the Board continues to investigate sources of parallel investment which would reduce the call on Scirocco's balance sheet in the short term by bringing in third party capital alongside Scirocco balance sheet cash as we seek to build a self-sustaining business of scale.

Closing Remarks

The Group began 2022 with a mandate to pursue its strategy of investing in sustainable energy and the circular economy while removing the overhang of legacy investments in hydrocarbon production.

Having secured an agreement to divest Ruvuma to APT and realised significant upside in the Company's investment in Corallian Energy, we have established a clear path to strengthen Scirocco's balance sheet and, upon completion of the Ruvuma divestment, will have the ability to fund follow on investments in the anaerobic digestion space through the joint venture with EAG, as we seek to replicate the success of Greenan over the past year and build a business of scale for the benefit of all stakeholders.

The Company will continue to support EAG in its operatorship of Greenan and its business development efforts, as it identifies, screens and pursues potential acquisition targets and other growth opportunities. EAG has a high quality team with a unique network and pipeline of opportunities. I'd like to thank the EAG team for their patience while Scirocco fully completes its strategic re-positioning and are pleased to be aligned with them as we jointly pursue value accretive opportunities that deliver a multitude of stakeholder benefits in terms of UK's pathway to net-zero.

I'd like to commend Tom Reynolds for his diligent work across the various work-streams associated with the Ruvuma divestment, the development of the investment strategy and the progression of the EAG Joint Venture.

Finally, I'd like to thank our shareholders, new and old, for their patience.  There is no doubt that long-term shareholders in the Company have had a tough ride and we fully recognise that, despite our best efforts, things did not work out the way that they had hoped when they invested in the Company on the basis of Tanzania. That said, it is for exactly that reason that the Board has changed the Company's investment strategy to reflect changing market demand and broader macro drivers, and we see strong opportunities ahead to build a business of scale and relevance that is capable of delivering long-term growth and sustainable shareholder value.

Section 172 (1) Statement

The Group was admitted to the AIM Market of the London Stock Exchange on 12 April 2007 and has been a public company from this date. The Group is required to provide a Section 172(1) statement under the terms of its AIM listing. This disclosure aims to describe how the Directors have acted to promote the success of the company for the benefit of its members as a whole, taking into account (amongst other matters) the matters set out in section 172(1)(a) to (f) of the Companies Act which are set out below.

(a)  the likely consequences of any decision in the long term

As discussed above, the decision to propose and adopt the new investment policy - approved and adopted by shareholder vote at the AGM in July 2021 - the decision to sell the Ruvuma asset and the investment made in EAG (which supported EAG to acquire GGL) have been taken with the long term future of the company in mind. In taking these decisions the Board has taken account of the relative risk involved in each of the relevant investments and chosen a sustainable course of action which allows the company to be developed in a more predictable manner by targeting investment assets with significantly lower levels of uncertainty and which deliver cash flow in the short term which is then available to be reinvested. The Group has not made any other decisions which will likely affect the company in the long term in the current financial year.

(b)  the interests of the company's employees

Aside from the Directors, the Group has one employee and the decisions to promote the success of the company for the benefit of its members as a whole as described above are entirely consistent with the interests of the company's employee.

(c)  the need to foster the company's business relationships with suppliers, customers and others

Aside from a small number of service providers, the success of the Group's investment strategy will be driven in part by the business relationships that exist between the Directors and the management of the Group's investee companies and as such the maintenance of such relationships is given a very high priority by the Directors.

-

(d)  the impact of the company's operations on the community and the environment

During the current investment phase the Group has no operations. The Directors are nevertheless cognisant of the potential impact of future investments on affected communities and the environment and such factors will continue to be considered as part of investment appraisal and decision making.

(e)  the desirability of the company maintaining a reputation for high standards of business conduct

The Group's standing and reputation with other energy companies, equity investors, providers of debt, advisers and the relevant authorities are key in the Company achieving its investment objectives and the Group's ethics and behaviour, as summarised in the Group's Business Principle and Ethics, will continue to be central to the conduct of the Directors. The Group is advised by blue-chip experienced advisers which also assist in maintaining high standards of conduct.

(f)  the need to act fairly as between members of the company

The Directors will continue to act fairly between the members of the Group as required under the Companies Act, the AIM Rules and QCA corporate governance principles.

Alastair Ferguson

Non-Executive Chairman

Date: 29 June 2023

The notes on pages 45 to 82 form part of these financial statements.

The financial statements were approved by the board of directors and authorised for issue on 29 June 2023 and are signed on its behalf by:

..............................

Mr Tom Reynolds

Director

STATEMENT OF FINANCIAL POSITION (CONTINUED)

AS AT 31 DECEMBER 2022

The notes on pages 45 to 82 form part of these financial statements.

The company has taken advantage of the exemption under section 408 of the Companies act 2006 to not present a Company statement of comprehensive income. Profit for the year for the Company was £4,845k.

The financial statements were approved by the board of directors and authorised for issue on 29 June 2023 and are signed on its behalf by:

..............................

Mr Tom Reynolds

Director

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2022

The notes on pages 45 to 82 form part of these financial statements.

* the adjustment is made to correct deferred shares incorrectly recorded as share premium in the prior year

STATEMENT OF CHANGES IN EQUITY (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

The notes on pages 45 to 82 form part of these financial statements.

* the adjustment is made to correct deferred shares incorrectly recorded as share premium in the prior year

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2022

2022 2021

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2022

1  Accounting policies Company information

Scirocco Energy plc ("Scirocco", the "Group") is a public listed company incorporated in England & Wales. The address of its registered office 1 Park Row, Leeds, United Kingdom, LS1 5AB. The Company's ordinary shares are traded on the AIM Market operated by the London Stock Exchange. The financial statements of Scirocco Energy plc for the year ended 31 December 2022 were authorised for issue by the Board on X and the statement of financial position is signed on the Board's behalf by Mr Reynolds.

Investing policy

Scirocco's investing policy is to acquire a diverse portfolio of direct and indirect interests in sustainable energy and circular economy assets within the European energy market. The Board is seeking to invest in opportunities which meet the following criteria:

•  cash generative, with the potential to re-invest operational cash flow in further growth;

•  situated within the European energy space;

•  acquisition targets within the low-carbon space, including renewable energy, circular economy and energy storage and transfer sectors;

•  assets which can attract the necessary investment capital, taking appropriate account of growing investor sentiment towards ESG and SRI indicators; and

• assets which deliver stable returns, with lower exposure to global commodity prices.

The Company may invest by way of outright acquisition or by the acquisition of assets, including the intellectual property, of a relevant business, partnerships or joint venture arrangements. Such investments may constitute a minority stake in the company (which may be private or listed on a stock exchange, and which may be pre-revenue) or project in question. The Company's investments may take the form of equity, joint venture debt, convertible instruments, licence rights, or other financial instruments as the Directors deem appropriate.

Scirocco intends to be a long-term investor and the Directors will place no minimum or maximum limit on the length of time that any investment may be held. There is no limit on the number of projects into which the Company may invest, nor the proportion of the Company's gross assets that any investment may represent at any time.

Statement of compliance with UK adopted IAS

The financial statements of the Group and the Company have been prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006. The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and not presented an income statement nor a statement of comprehensive income for the Company alone. The principal accounting policies adopted by the Group are set out below.

Accounting convention

The financial statements have been prepared on the historical cost basis, except for the measurement to fair value of assets and financial instruments as described in the accounting policies below, and on a going concern basis.

The financial report is presented in Pound Sterling (£) and all values are rounded to the nearest thousand pounds (£'000) unless otherwise stated. The functional currency of the Group and Company are also GBP.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1 Accounting policies (Continued)

Going concern

The Directors note the losses that the Group has made for the year ended 31 December 2022. The Directors have prepared cash flow forecasts for the period ending 30 June 2023 which take account of the current cost and operational structure of the Group. The base case forecast takes account of the sale of Ruvuma to ARA Petroleum Tanzania ("APT") and the loan structure provided within that structure to cover cash calls arising from the asset. With the Ruvuma cash calls covered following the approval of shareholders at the general meeting on 29th June 2022, the remaining cost structure of the Group comprises a proportion of discretionary spend and therefore in the event that cash flows become constrained, costs can be reduced to enable the Group to operate within its available funding. These forecasts demonstrate that the Group has sufficient cash funds available, on the assumption that further funds can be sourced as and when needed, to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements.

Accordingly, the financial statements have been prepared on a going concern basis. Comments on going concern are included in the Operations report and note 1. Although the Ruvuma asset has been sold, no guarantee can be made that the sale completes within 12 months of the approval of the financial statements. The critical assumption in the going concern determination is that the Ruvuma PSA and the costs associated with the development of the Ntoyra natural gas discovery are met by the Group drawing against the loan provided by APT for its 25% interest. Based on this, there is material uncertainty present, given that draws on the facility would become due in the event the sale does not complete. In the event the sale did not complete, it is assumed that - if required - the Group would be able to access additional funding. If additional funding was not available there is a risk that commitments could not be fulfilled, and assets would be relinquished.

Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2022. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

•  Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee)

•  Exposure, or rights, to variable returns from its involvement with the investee

•  The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

•  The contractual arrangement(s) with the other vote holders of the investee

•  Rights arising from other contractual arrangements

•  The Group's voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1 Accounting policies (Continued)

Profit or loss and each component of OCI are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group's accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.  If the Group loses control over a subsidiary, it recognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

Investment in joint ventures

An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries. The Group's investment in its associate and joint venture are accounted for using the equity method.

Under the equity method, the investment in an associate or a joint venture is initially recognised at cost. The carrying amount of the investment is adjusted to recognise changes in the Group's share of net assets of the associate or joint venture since the acquisition date. Goodwill relating to the associate or joint venture is included in the carrying amount of the investment and is not tested for impairment separately.

The statement of profit or loss reflects the Group's share of the results of operations of the associate or joint venture. Any change in OCI of those investees is presented as part of the Group's OCI. In addition, when there has been a change recognised directly in the equity of the associate or joint venture, the Group recognises its share of any changes, when applicable, in the statement of changes in equity. Unrealised gains and losses resulting from transactions between the Group and the associate or joint venture are eliminated to the extent of the interest in the associate or joint venture.

The aggregate of the Group's share of profit or loss of an associate and a joint venture is shown on the face of the statement of profit or loss as part of operating loss and represents profit or loss after tax and non- controlling interests in the subsidiaries of the associate or joint venture.

The financial statements of the associate or joint venture are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group.

After application of the equity method, the Group determines whether it is necessary to recognise an impairment loss on its investment in its associate or joint venture. At each reporting date, the Group determines whether there is objective evidence that the investment in the associate or joint venture is impaired. If there is such evidence, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate or joint venture and its carrying value, and then recognises the loss within 'Share of profit of an associate and a joint venture' in the statement of profit or loss.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1 Accounting policies (Continued)

Current assets held for sale

Current assets are classified as assets held for sale when their carrying amount is to be recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell.

Discontinued operations

In accordance with IFRS 5 'Non-current assets held for sale and discontinued operations', the net results relating to the assets held for sale are presented within discontinued operations in the income statement (for which the comparatives have been restated) and the assets and liabilities of these operations are presented separately in the balance sheet. Refer to note 10 for further details.

Fair value measurement

IFRS 13 establishes a single source of guidance for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. The resulting calculations under IFRS 13 affected the principles that the Group 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 Group. It requires specific disclosures about fair value measurements and disclosures of fair values, some of which replace existing disclosure requirements in other standards.

Cash and cash equivalents

Cash in the statement of financial position comprise cash at banks and on hand, which are subject to an insignificant risk of changes in value.

Financial instruments

Financial assets and financial liabilities are recognised on the balance sheet when the Group has become a party to the contractual provisions of the instrument.

Classification

The Group classifies its financial assets and liabilities in the following measurement categories:

•  those to be measured subsequently at fair value (either through Other Comprehensive Income or through profit or loss); and

•  those to be measured at amortised cost.

The classification depends on the entity's business model for managing the financial assets and the contractual terms of the cash flows.

Recognition and measurement

A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e. the date the Group commits itself to purchase or sell the asset.

At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss ("FVTPL"), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in profit or loss.

Subsequent measurement of debt instruments depends on the Group's business model for managing the asset and the cash flow characteristics of the asset. Currently, the Group's financial assets are all held for collection of contractual cash flows, which are solely payments of principal and interest. Accordingly, the Group's financial assets are measured subsequent to initial recognition at amortised cost.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1 Accounting policies (Continued)

Impairment

On a forward-looking basis, the Group estimates the expected credit losses associated with its receivables and other financial assets carried at amortised cost, and records a loss allowance for these expected losses.

Trade and other receivables

Trade and other receivables outside of normal payment terms accrue interest at a rate determined by the operator and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

Financial liability and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

Trade and other payables

Trade and other payables are non interest bearing and are stated at their nominal value.

Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Financial assets at fair value through profit or loss

Financial assets are classified as at FVTPL when the financial asset is held for trading. This is the case if:

•  the asset has been acquired principally for the purpose of selling in the near term, or

•  on initial recognition it is part of a portfolio of identified financial instruments that the company manages together and has a recent actual pattern of short-term profit taking, or

•  it is a derivative that is not designated and effective as a hedging instrument.

Financial assets at FVTPL are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset. Interest and dividends are included in 'Investment income' and gains and losses on remeasurement included in 'other gains and losses' in the statement of comprehensive income.

Equity reserves

Share capital is determined using the nominal value of shares that have been issued.

The share premium account represents premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits.

The share based payment reserve represents the cumulative amount which has been expensed in the income statement in connection with share based payments, less any amounts transferred to retained earnings on the exercise of share options.

Retained earnings includes all current and prior period results as disclosed in the income statement.

Deferred shares includes shares that have been allocated to investment partners that will be converted to share capital when certain future conditions are met

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1 Accounting policies (Continued)

Derivatives

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to fair value at each reporting end date. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge relationship.

A derivative with a positive fair value is recognised as a financial asset, whereas a derivative with a negative fair value is recognised as a financial liability. A derivative is presented as a non-current asset or liability if the remaining maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other derivatives are classified as current.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1 Accounting policies (Continued)

Taxation

The tax expense represents the sum of the current tax and deferred tax.

Current tax

The current tax is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. The liability for current tax is calculated by using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction which affects neither the tax profit not the accounting profit.

Provisions

Provisions are recognised for liabilities of uncertain timings or amounts that have arisen as a result of past transactions and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability.

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the income statement over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the income statement over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the income statement is charged with the fair value of goods and services received. Equity-settled share-based payments are measured at a fair value at the date of grant except if the value of the service can be reliably established. The fair value determined at the grant date of equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.

Foreign exchange

Transactions in currencies other than Sterling are recorded at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses arising on retranslation are included in the income statement for the period.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1 Accounting policies (Continued)

Oil and gas properties and other property, plant and equipment

• Initial recognition

Oil and gas properties and other property, plant and equipment are stated at cost, less accumulated depreciation and accumulated impairment losses.

The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to bringing the asset into operation, the initial estimate of the decommissioning obligation and, for qualifying assets (where relevant), borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of any other consideration given to acquire the asset. The capitalised value of a finance lease is also included within property, plant and equipment.

When a development project moves into the production stage, the capitalisation of certain construction/ development costs ceases, and costs are either regarded as part of the cost of inventory or expensed, except for costs which qualify for capitalisation relating to oil and gas property asset additions, improvements or new developments.

• Depreciation/amortisation

Oil and gas properties are depreciated/amortised on a unit-of production basis over the total proved developed and undeveloped reserves of the field concerned, except in the case of assets whose useful life is shorter than the lifetime of the field, in which case the straight-line method is applied. Rights and concessions are depleted on the unit-of-production basis over the total proved developed and undeveloped reserves of the relevant area.

The unit-of production rate calculation for the depreciation/amortisation of field development costs takes into account expenditures incurred to date, together with sanctioned future development expenditure. An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss and other comprehensive income when the asset is derecognised.

The asset's residual values, useful lives and methods of depreciation/amortisation are reviewed at each reporting period and adjusted prospectively.

• Major maintenance, inspection and repairs

Expenditure on major maintenance refits, inspections or repairs comprises the cost of replacement assets or parts of asset, inspection costs and overhaul costs. Where an asset, or part of an asset that was separately depreciated and is now written off is replaced and it is probably that future economic benefits associated with the item will flow to the Group, the expenditure will be capitalised. Where part of the asset replaced was not separately considered as a component and therefore not depreciated separately, the replacement value is used to estimate the carrying amount of the replaced asset(s) and is immediately written off. Inspection costs associated with major maintenance programmes are capitalised and amortised over the period of the next inspection. All other day-to-day repairs and maintenance costs are expensed as incurred.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

1 Accounting policies (Continued)

Provision for rehabilitation / Decommissioning Liability

The Group recognises a decommissioning liability where it has a present legal or constructive obligation as a result of past events, and it is probably that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of obligation can be made.

The obligation generally arises when the asset is installed or the ground/environment is disturbed at the field location. When the liability is initially recognised, the present value of the estimated costs is capitalised by increasing the carrying amount of the related oil and gas assets to the extent that it is incurred by the development/construction of the field. Any decommissioning obligations that arise through the production of inventory are expensed when the inventory item is recognised in cost of goods sold.

Changes in the estimated timing or cost of decommissioning are dealt with prospectively by recording an adjustment to the provision and a corresponding adjustment to oil and gas assets. Any reduction in the decommissioning liability and, therefore, any deduction from the asset to which it relates, may not exceed the carrying amount of that asset. If it does, any excess over the carrying value is taken immediately to the statement of profit or loss and other comprehensive income.

Segmental reporting

A business segment is a group of assets or operations engaged in providing services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing services within a particular economic environment that is subject to different risks and returns from other segments in other economic environments. The company has two segments; corporate head office costs and Tanzania.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as Thomas Reynolds that makes strategic decisions. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

Investments

The Group's financial asset investments are classified and measured at fair value, under IFRS 9, with changes in fair value recognised in profit and loss as they arise.

Gains and losses on investments disposed of or identified are included in the net profit or loss for the period.

Investments held by the Group are held for resale, therefore where the Group's equity stake in an investee company is 20% or more, equity accounting for these associates is not considered to be appropriate.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

2  Adoption of new and revised standards and changes in accounting policies

In the current year, the following new and revised Standards and Interpretations have been adopted by the Company. The adoption of these standards has had no impact on the current period however may have an effect on future periods.

Standards which are in issue but not yet effective

At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective (and in some cases had not yet been adopted by the United Kingdom):

The directors do not expect that the adoption of the other Standards listed above will have a material impact on the financial statements of the Company aside from additional disclosures.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

3  Critical accounting estimates and judgements

The Group makes estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

The preparation of the Financial Statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the period. Actual results may vary from the estimates used to produce these Financial Statements.

Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Items subject to such estimates and assumptions, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial years, include but are not limited to:

Share-based payments (note 20)

The Group utilised an equity-settled share-based remuneration scheme for employees. Employee services received, and the corresponding increase in equity, are measured by reference to the fair value of the equity instruments at the date of grant, excluding the impact of any non-market vesting conditions. The fair value of share options are estimated by using Black-Scholes valuation method as at the date of grant. The assumptions used in the valuation are described in Note 21 and include, among others, the expected volatility, expected life of the options and number of options expected to vest.

Deferred taxation (note 9)

Deferred tax assets are recognised when it is judged more likely than not that they will be recovered. Deferred tax assets are currently nil based on the likelihood of recovery.

Recoverability of assets held for sale (note 15)

The Company assesses assets held for sale each reporting period to determine whether any indication of impairment exists. Where an indicator of impairment exists, a formal estimate of the recoverable amount is made, which is considered to be the fair value less costs of sale. The assessments require the use of estimates and assumptions such as long-term oil prices (considering current and historical prices, price trends and related factors), discount rates, operating costs, future capital requirements, decommissioning costs, exploration potential reserves (see(a) Hydrocarbon reserves and resource estimates above) and operating performance (which includes production and sales volumes). These estimates and assumptions are subject to risk and uncertainty. Therefore, there is possibility that changes in circumstances will impact these projections, which may impact the recoverable amount of assets and/or CGUs.

Recoverability of loan receivable from joint venture (note 16)

The Company has determined that the loan to the joint venture is fully recoverable and enforceable based on a signed loan agreement and the value of the underlying company. At the time of signing the financial statements the loan was repayable on demand, but will not be callable within twelve months of the signing of the financial statements. The loan has been classified as a non-current asset, reflecting Management's intention.

Decommissioning provisions (note 15)

There is uncertainty around the cost of decommissioning as cost estimates can vary in response to many factors, including changes to the relevant legal requirements, the emergence of new technology or experience at other assets. The expected timing, work scope and amount and currency mix of expenditure may also change. Therefore, significant estimates and assumptions are made in determining the provision for decommissioning.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

• Critical accounting estimates and judgements (Continued)

The estimated decommissioning costs are reviewed annually. Provision for environmental clean-up and remediation costs is based on current legal and contractual requirements, technology and management's estimate of costs with reference to current price levels. Future cost estimates are discounted to present value using a rate that approximates the time value of money, which is currently 5.89%. The discount rate is based on the average yield on Tanzanian Government bonds for foreign currency loans of a duration of more than 10 years. The company assess the reasonableness of the decommissioning provision annually and believes it represents a fair view of the potential liability.

• Operating Segments

Based on risks and returned, the directors consider that the primary reporting format is by business segment. The directors consider that there are two business segments:

• Head office support from the UK

• Discontinued operations on its investments in Tanzania

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

Trade receivables accrue interest for non payment. Outstanding trade debtors accrue interest at a rate in accordance with the joint venture agreement and are generally on terms of 30 days. In 2022, there is a provision of £nil (2021: nil) for expected credit losses on trade receivables.

Interest income relates to interest charged on outstanding invoices.

An operating segment is a distinguishable component of the Company that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Company's chief operating decision maker to make decisions about the allocation of resources and assessment of performance and about which discrete financial information is available.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

7  Employees

The average number of employees (excluding executive directors) was one (2021:1).

During the year ended 31 December 2022 the Directors opted to receive remuneration in the form of share options in lieu of fees (note 20).

Directors remuneration

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

No deferred tax asset has been recognised because there is uncertainty of the timing of suitable future profits against which they can be recovered. The company has losses carried forward of £7,079k (2021 - £6,312k).

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

10  Discontinued operations

The Company has a 25% interest in a high-quality development project in Tanzania which the Directors are actively seeking to divest. This stake has been valued at $16m and operations relating to this stake are detailed below. For details on the divestment please refer to the Strategic Report.

The results of the discontinued business, which have been included in the income statement, balance sheet and cash flow statement, were as follows:

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

Remaining cash received from financing activities was used for other operational expenses.

11 Earnings per share

The calculation of loss per share is based on the loss after taxation divided by the weighted average number of shares in issue during the year.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

14  Joint ventures

The Group has a 50% (2021: 50%) interest in joint venture, Energy Acquisitions Group Limited, a company incorporated in Northern Ireland. The primary activity of Energy Acquisitions Group Limited is to acquire and finance renewable energy assets in the United Kingdom.

The Group's interest in EAG is accounted for using the equity method in the consolidated financial statements. Summarised financial information of the joint venture, and reconciliation with the carrying amount of the investment in the consolidated financial statements at 31 December 2022 are set out below:

Energy Acquisitions Group Limited consolidated summary statement of financial position (unaudited)

Energy Acquisitions Group Limited consolidated summary profit and loss account (unaudited)

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

14  Joint ventures (Continued)

There were no dividends received from the joint venture during the year and there are no dividends forecast.

The joint venture had no contingent liabilities or commitments as at 31 December 2022 and 221. The financial statements of the JV are prepared for the same reporting period as the Group. When necessary, adjustments are made to bring the accounting policies in line with those of the Group. Presentation of the summarised financial information has been made on the basis of the Joint Venture's published financial statements.

At the date of authorisation of the financial statements it was determined that a sale would be highly probable (see note 10).

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

The directors have assessed the trade and other receivables for impairment and consider that the carrying amount of trade and other receivables approximates to their fair value.

The directors have assessed the trade and other receivables for impairment and consider that the carrying amount of trade and other receivables approximates to their fair value.

The directors consider that the carrying amount of trade payables approximates to their fair value.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

The directors consider that the carrying amount of trade payables approximates to their fair value.

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

• Total Share options in issue

During the year no incentive options were granted (2021: nil). As at 31 December 2022 there were 51,419,781 incentive options in issue (2021: 51,419,781)

During the year 26,733,539 (2021: 24,997,841) share options in lieu of salary and/or fees due to the relevant option holders were granted. As at 31 December 2022 there were 70,787,245 share options in lieu of salary and/or fees in issue (2021: 44,053,706).

• Total warrants in issue

All warrants lapsed in the year and no warrants were issued, cancelled or exercised during the year (2021: no warrants were issued).

As at 31 December 2022 there were no warrants outstanding (2021: 12,500,000).

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022

20  Share based payment GROUP AND COMPANY

The Company has opted to remunerate the directors for the year to 31 December 2022 by a grant of an option over the ordinary shares of the capital of the Company as detailed in the deed of option grants. The life of the options is 18 months. There are three executive directors and two non-executive directors who are members of the plan. The following table summarises the expense recognised in the Statement of Comprehensive Income since the options were granted.

During June 2020 (and the height of the Covid-19 pandemic) the Company sought to put in place a strategy that would help to conserve the Company's cash position in the near term and also to maximise alignment between the Board, Management Team and Shareholders.

Accordingly, the Company proposed to grant nominal cost options over new Ordinary Shares of 0.2p (£0.0020) to Directors and select members of the Management Team ("the Director Options"). The Director Options were granted over a total of 26,733,539 (2021: 24,997,841) Ordinary Shares and have an aggregate value equal (on a net basis, after deduction of the nominal exercise price per Ordinary Share) to the fair value of salary and/or fees due to the relevant option holders up to December 2022.

Members of the Management Team were also awarded options over Ordinary Shares with an exercise price of

1.3p (£0.013) ("the Incentive Options"), which was approximately a 24% premium to the closing midmarket price of the Company's Ordinary Shares on 26 June 2020. Each Incentive Option is ordinarily exercisable on the 2nd anniversary of the grant date (being 30 June 2022), except in the event of specified corporate events or, exceptionally, if the option holder leaves as a 'good leaver'.

The Company used the Black-Scholes model to determine the value of the incentive options and the inputs. The value of the options and the inputs for the year ended 31 December 2022 were as follows:

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 31 DECEMBER 2022