Corporate governance
We believe in the value and importance of good corporate governance and our accountability to our stakeholders, shareholders, staff, contractors, clients, suppliers, and the communities we operate.
We maintain high standards of corporate governance. The Board meets every two months for a thorough review all aspects of the business and the strategy and in between to consider and approve individual investment decisions or extraordinary situations. Our Board Committees also meet frequently.
QCA Corporate Governance Code (2018)
From 28th September 2018, AIM Rules require AIM quoted companies to apply a recognised corporate governance code. We have chosen to adhere to the Quoted Companies Alliance’s Corporate Governance Code for Small and Mid-Sized Companies (‘QCA Code’) to meet the requirements of AIM Rule 26.
The QCA Code is constructed around ten broad principles and disclosures. The QCA has stated what it considers appropriate arrangements for growing companies and asks companies to explain how they are meeting the principles through the prescribed disclosures. This statement explains how Block will follow the 10 principles of the QCA Code as specified in the AIM Rules for Companies (PDF) published by the London Stock Exchange.
We have reviewed the updated QCA Code (2024) and plan to assess the changes within and update our governance statements accordingly in our next Annual Report and Financial Statements.
Principle 1. Establish a strategy and business model which promote long-term value for shareholders
Block Energy aims to build on its position as the leading independent oil and gas producer in Georgia by realising the potential of previously discovered fields suited for deploying advanced subsurface, drilling and production technologies. The Company is developing valuable intellectual property with regard to the specific geology of the region it operates in and is undertaking exploration activities within the portfolio.
Georgia is a stable, business friendly country (7th in the World Bank’s ‘Ease of Doing Business’ Index) with proven but underdeveloped reserves and resources of oil and gas and is of increasing interest to major oil and gas companies.
The Company has working interests in seven licences: XIB (100%), XIF (100%), IX (100%), Didi Lilo (50%), South Samgori (50%), Norio (100%) and Satskhenisi (90%). All are within the region’s Kura basin, which has historically had major discoveries of oil.
We have designed a robust business model to implement our strategy:
- The Company has completed a drilling, development and commercialisation programme primarily associated with production from the West Rustavi/Krtsanisi oilfield. It acquired a proprietary 3D seismic survey over the West Rustavi portion of the West Rustavi/Krtsanisi field in 2019 and, following the acquisition in 2020, of Block IX and XIB, which includes the Krtsanisi portion of the West Rustavi/Krtsanisi field, the Company integrated the 3D seismic data acquired across XIF and XIB and performed a complete re-interpretation of the combined/enlarged 3D data set. The Company has drilled/sidetracked a total of seven wells since 2019 and completed a total of 149 heavy and light workover interventions. Total operational man-hours exceed 1,500,000. Additionally, the Company has procured, constructed oil and gas processing facilities, sales infrastructure, and undertaken geological and other subsurface studies across four projects as well as the CCS opportunity.
- Successful execution of the Company’s business plan requires a management and technical team with extensive knowledge of Georgia’s oil and gas sector, legal and regulatory environment and geological setting. Block Energy is led by a management team with deep experience both in Georgia and across the international oil and gas industry and its operations and subsurface team have significant expertise in developing naturally fractured reservoirs analogues to those in Georgia.
- The Company’s principal technical challenges are associated with determining economically efficient methods of extracting the oil and gas that is proven within its assets, whilst managing and where possible, mitigating execution risks. The Company utilises proven and cost-effective technologies in this endeavour and allocates the time and resources required to risk and rank the opportunities across its portfolio, leading to the planning and execution of risk management. The Company has been operating in Georgia since 2017 and has built a strong body of knowledge which it draws upon to mitigate the risks associated with asset development.
- All of our operations are conducted within a robust HSES framework, with a full-time HSE department, Board level HSE and ESG Committees and HSES performance targets in the Key Performance Indicators of senior executives and managers. The Company places a great emphasis on HSES and it is a daily topic for senior management and for operational personnel. All staff and contractors working on-site are made aware of the importance that the Board place on HSES and we continue to work to embed a safety culture throughout the organisation.
- The Board recognise the importance of developing effective communication channels with current and prospective investors. We regularly update the market as appropriate with announcements which are posted on our website as soon as they appear on the London Stock Exchange’s Regulatory News Service (“RNS”). We distribute the RNS announcements and other Block and industry news through a mailing list and social media and continue to make the Company’s business case at investor meets and with institutional investors in the UK and internationally. We post video updates and interviews with the executive and senior management. All of our communications are available on our website and social media and we aim to meet our major institutional investors on a regular basis. We contract an experienced financial communications company to assist with our communications activities.
- The Company continuously investigates and evaluates new production and exploration opportunities in Georgia, regionally and internationally. We maintain a robust M&A screening framework and assess opportunities from a technical, commercial, economic and strategic perspective. We are an ambitious operating company and seek to grow our portfolio both organically and inorganically.
Principle 2. Seek to understand and meet shareholder needs and expectations
The Board strives to keep shareholders informed with clear and transparent information on the Company’s operations, strategy and financial position. Details of all shareholder communications are provided on the Company’s website, in accordance with AIM Rules. RNS updates, reports, circulars, videos, podcasts and presentations are all published on the Company’s website or social media channels.
Primary responsibility for investor relations rests with the Chief Executive Officer, supported by the other Directors and senior management. Since Block Energy began trading on AIM on 11th June 2018, the Company has used multiple channels to understand the needs and expectations of its shareholder base.
The AGM is our principal forum for dialogue with shareholders, and we encourage all shareholders to attend and participate. The Notice of Meeting is sent to shareholders at least twenty-one days before the meeting. Whenever possible, the Chair of the Board and all Committees attend the AGM and are available to answer questions raised by shareholders. Shareholders vote on each resolution by way of a poll. We announce the number of votes withheld, received for and against each resolution and publish them on our website.
In addition to maintaining digital communications channels the Company maintains a dedicated email address (info@blockenergy.co.uk) which investors can use to contact the Company. This address is displayed prominently on our website, together with an online enquiries form and our address and telephone number. All enquiries received are reviewed and distributed as appropriate. We also contract an experienced financial communications company to assist with our communications activities.
The Directors continually review our engagement with shareholders and our communications approach.
The Directors take every opportunity to communicate our objectives, strategy and business plan to existing and potential institutional investors. We routinely make presentations to institutions and industry analysts, particularly after the announcement of significant news. We keep in touch with institutional investors through a combination of formal meetings, participation at investor conferences, roadshows and informal briefing with management. The majority of meetings with shareholders and potential investors are arranged by the Company’s brokers or directly with the Company. The brokers provide frequent feedback to the Company to assist in understanding sentiment and market expectations.
Principle 3. Take into account wider stakeholder and social responsibilities and their implications for long-term success
We understand that our long-term success depends on our relationships with our stakeholders. We set out our stakeholder engagement process in our Statement of Corporate Responsibility in our 2023 annual report.
Principle 4. Embed effective risk management, considering both opportunities and threats, throughout the organisation
The Board is responsible for putting in place and communicating robust systems to manage risk and implement internal control. We recognise that risk management is an essential business practice: we work to balance risk and return, threat and opportunity.
Audit and Risk Committee
The Audit and Risk Committee meets to consider the scope of the annual audit and the interim financial statements and to assess the effectiveness of the Company’s system of internal controls. It reviews the results of the external audit, its cost effectiveness and the objectives of the auditor. Given the present size of the Company, the Audit and Risk Committee considers that an internal audit function is not currently justified. The Audit and Risk Committee currently comprises Jeremy Asher (Chair) and Philip Dimmock.
Remuneration Committee
The Remuneration Committee reviews the performance of the Executive Director and makes recommendations to the Board on matters relating to his remuneration and terms of employment. The Remuneration Committee also makes recommendations to the Board on proposals for granting share options and other equity incentives pursuant to the share option scheme. The Board sets the remuneration and terms and conditions of appointment of the non-executive Directors of the Group. The Executive Director is invited to attend for agenda items that require his contribution although he does not take part in any discussion on his own benefits and remuneration. The Remuneration Committee currently comprises Philip Dimmock (Chair) and Jeremy Asher.
Nominations Committee
The Nominations Committee considers appointments to the Board, senior management positions and succession planning. The Nominations Committee currently comprises Philip Dimmock (Chair), Jeremy Asher and Paul Haywood. The Committee met informally through the year after Board meetings.
Disclosure Committee
The Disclosure Committee has the primary responsibility and authority to make decisions on disclosure delay for the purposes of MAR. The Disclosure Committee currently comprises Jeremy Asher (Chair) and Philip Dimmock.
Technical Committee
The Technical Committee meets every two months, and sometimes more frequently on an informal basis, to consider surface and sub-surface technical and operational matters. The Technical Committee currently comprises Guram Maisuradze (non-Board Chair) and Philip Dimmock.
Health, Safety and Environment (HSE) Committee
The HSE Committee aims to meet at least quarterly and reviews the Company’s HSE policies, performance and goals. The Committee meets in the event of any serious HSE lapse to review the causes and identify remedial action. The HSE Committee currently comprises Philip Dimmock (Chair), and Paul Haywood.
Environmental, Social and Governance (ESG) Committee
The ESG Committee meets during the year and reviews the Company’s environmental and social impact, including monitoring the Company’s emissions, any unplanned flaring of gas and the Company’s social impact. The ESG Committee currently comprises Philip Dimmock (Chair), Jeremy Asher and Paul Haywood
Principle 5. Maintain the Board as a well-functioning, balanced team led by the Chair
The members of the Board have a collective responsibility and legal obligation to promote the interests of the Company and are jointly responsible for defining corporate governance arrangements. Ultimate responsibility for the quality of, and approach to, corporate governance lies with the Chairman.
The Board currently consists of three Directors, one of whom is an executive and two independent non-executives (including the Chairman). The Board has established a set of committees to support its work as described in this Report.
Board meetings are held regularly. All Directors, executive and non-executive, are required to attend and to make every effort to attend in person. They are also required to be available at other times as necessary for face-to-face and telephonic and video conference meetings with staff and investors.
Executive and non-executive Director attendance at Board and committee meetings during the year ended 31 December 2023 is summarised below:
| Director | Board Meetings | Audit & Risk Committee | Remuneration Committee | Technical Committee | HSE Committee | ESG Committee |
|---|---|---|---|---|---|---|
| Philip Dimmock | 9/9 | 3/3 | 1/1 | 9/9 | 1/1 | 1/1 |
| Jeremy Asher | 9/9 | 3/3 | 1/1 | – | – | 1/1 |
| Paul Haywood (1) | 7/7 | – | – | – | 1/1 | 1/1 |
(1) Due to being a related party in the secured loan, Paul Haywood did not attend two board meetings (associated with the first and second tranche respectively) connected with considering the issue.
The Board follows a schedule of regular business, financial and operational matters and each committee has compiled a schedule of work to ensure that all areas for which the Board has responsibility are addressed and reviewed during the period. The Chairman is responsible for ensuring Directors receive accurate, sufficient and timely information to facilitate their decision making. The Company’s Board Meetings are minuted and any papers presented are included in the final minuted Board pack. Directors are aware of the right to have any concerns minuted and to seek independent advice at the Company’s expense where appropriate.
The Board has at least one formal meeting every two months. Papers are issued covering the full range of subjects of interest to the Board in good time for review prior to each meeting. The Directors also dedicate time to committee meetings. The committees meet based on their own schedules and more frequently if there is a specific requirement. The Directors will attend the AGM whenever possible and will review the Annual Report and Statement of Accounts in preparation. The Directors also visit Georgia regularly to meet staff and stakeholders. In addition to these formal events, the Directors frequently discuss day-to-day Company matters in person and by conference call. The number of days committed to the Company is challenging to quantify because the Directors make themselves available as required.
The Board believes its blend of experience, skills, personal qualities and capabilities is sufficient to enable it to execute the Company’s strategy successfully. The Directors attend seminars and other regulatory and trade events to help ensure their knowledge remains current, as well as receiving advice from the Company’s professional advisors.
The Board has established a Nominations Committee. As well as making appointments to the Board, it maintains a list of candidates for potential future selection.
Principle 6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
Together, the Directors have broad and deep experience in the governance of publicly listed companies, HSES management, well and production operations, petroleum reservoir engineering, oil and gas field development, contractual negotiation, commercial and financial experience and government and community relations. Two of our Directors have previous experience working in Georgia and all of our Directors have publicly listed company board experience.
Profiles of our executive and non-executive Directors demonstrating their suitability for the responsibilities which they have been entrusted with are available in this Report and on our website.
All of our Directors accept personal responsibility for undertaking continuous professional development through means including seminars, conferences and self-directed study to understand and take advantage of the most recent developments in the sector, whether technical, commercial or related to governance.
The Nominations Committee continues to assess the suitability of the Board’s skills and expertise for developing and implementing the Company’s strategy and, when warranted, will appoint new directors with the required skills.
The Board is kept abreast of developments of governance and AIM regulations and is in regular contact with the Company’s Nominated Advisor and the Company Secretary. In the course of a new Director being appointed, the Company’s Nominated Advisor provides training and support on the AIM Rules for companies.
The Directors have access to the Company’s Nominated Advisor, Company Secretary, lawyers and auditors as and when required and are able to obtain advice from other external bodies when necessary.
Principle 7. Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
The performance of each member of the Board (and senior management) is evaluated to assess their contribution to the Company’s success. The Board is collectively responsible for the evaluation of the performance of each member. The Executive Director is incentivised to seek continuous improvement and innovation through remuneration schemes linked to share price and, ultimately, Company performance.
Principle 8. Promote a corporate culture that is based on ethical values and behaviours
Our core values underpin our long-term growth:
- We continually work to develop and maintain good relationships with all of our stakeholders: with staff, shareholders, suppliers, national and local governments and the communities within which our operations are embedded.
- We are an agile and ambitious company. We have a team carefully selected for their skills and experience, we are committed to our valued and we are dedicated to the successful execution of our current and future strategy.
- We are committed to employing cost-effective technology and processes to achieve our objectives and deliver value to our stakeholders.
- We are courteous, honest and straightforward in all our dealings, honouring diversity, individuality and personal differences and are committed to observing the highest personal, professional and ethical standards in conducting our business.
- We are acutely conscious of our particular responsibilities as an oil and gas producer. Our HSES obligations are the first operations-related agenda item at all of our daily and weekly meetings as well as our Board meetings and we have employed a full-time HSES department in Georgia to develop and manage our HSES processes.
Our values are expressed and communicated regularly to staff through internal communications and forums. They are enshrined in employment contracts and evidence of commitment to these values by candidates is considered as part of the selection process.
The Board believes that the promotion of our core values across the Company’s operations gives Block a critical competitive advantage, improving our internal efficiency and the quality of our stakeholder relationships.
Principle 9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
The Board provides the Company’s strategic leadership and operates within the scope of a robust corporate governance framework. It ensures delivery of long-term shareholder value by setting and promoting the culture, values and practices that operate throughout the business, and defining the Company’s strategic goals. The Board delegates certain defined responsibilities to its Committees. The Chair of each committee reports its activities to the Board.
The Chairman has overall responsibility for the quality of corporate governance. The Chair:
- Leads and chairs the Board;
- Ensures that Committees are properly structured and operate within appropriate Terms of Reference;
- Ensures that the performance of individual Directors, the Board and its Committees are reviewed on a regular basis;
- Leads the development of strategy and the setting of objectives;
- Oversees communication between the Company and its shareholders and stakeholders.
The Chief Executive Officer (‘CEO’) oversees the coherent leadership and management of the Company. The CEO:
- Is responsible for providing strategic direction and leadership to the Company, as agreed by the Board. Including, but not limited to, setting strategic long-term goals, developing business plans, and identifying growth and expansion opportunities.
- Plays a crucial role in ensuring the Company operates within legal and regulatory frameworks and adheres to the Company’s corporate governance principles.
- Overseas budgeting, financial reporting, capital allocation and risk management.
- Leads stakeholder relations, including investors, employees and the public, ensuring thoughtful management and development of the company’s reputation and long-term success.
- Is responsible for identifying and managing risk which could impact the company’s operational, financial performance or reputation.
- Plays a key role in attracting, developing and retaining top talent within the Company.
- Monitors, reviews and manages key risks and strategies with the Board.
- Ensures that the Company’s assets are secured and safeguarded.
The CEO is responsible for implementing and delivering the operational decisions agreed by the Board making operational and financial decisions required in the day-to-day operation of the Company, providing executive leadership to managers, championing the Company’s core values and promoting talent management.
The independent non-executive Directors contribute independent thinking and judgement through the application of their external experience and knowledge, scrutinising the performance of management, provide constructive challenge to the executive Director and ensure that the Company is operating within the governance and risk framework approved by the Board.
The CEO is responsible for providing clear and timely information flow to the Board and its committees and the Company Secretary and Legal Counsel support the Board on matters of corporate governance and risk.
The matters reserved for the Board are:
- Setting long-term objectives and commercial strategy;
- Approving annual operating and capital expenditure budgets;
- Monitoring the implementation of the HSES Policy and Management Plan;
- Changing the share capital or corporate structure of the Company;
- Approving results and reports;
- Approving dividend policy and the declaration of dividends;
- Approving major investments, disposals, capital projects or contracts;
- Approving resolutions to be put to general meetings of shareholders and the associated documents or circulars;
- Approving changes to the Board structure.
The Board has adopted the QCA Code as its governance framework against which this statement has been prepared. The Board monitors the suitability of this Code on an annual bases and will consider any relevant revisions to its governance framework as appropriate as the Company evolves. The Board’s committees are described in detail above.
Principle 10. Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders
All historical annual reports, notices of general meetings and other corporate governance related material are available on our website. We publish information on the activities of our Board Committees within our annual reports. We highlight our adoption of the QCA Code and disclose in detail our corporate governance policies and strategies, our view on risks and opportunities and our financial information. We seek to discuss governance issues with shareholders and relevant stakeholders where possible and maintain regular dialogue with our advisors over these issues and any concerns that shareholders or stakeholders may have.
If there is a resolution passed at a General Meeting with 20% or more votes against, the Company will seek to understand the reason for the result and, where appropriate, take suitable action.
Principles
- Establish a strategy and business model which promote long-term value for shareholders
- Seek to understand and meet shareholder needs and expectations
- Take into account wider stakeholder and social responsibilities and their implications for long-term success
- Embed effective risk management, considering both opportunities and threats, throughout the organisation
- Maintain the Board as a well-functioning, balanced team led by the Chair
- Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities
- Evaluate Board performance based on clear and relevant objectives, seeking continuous improvement
- Promote a corporate culture that is based on ethical values and behaviours
- Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board
- Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders