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Corporate Governance

CORPORATE GOVERNANCE

STATEMENT OF COMPLIANCE WITH THE 2018 QCA CORPORATE GOVERNANCE CODE

Executive Chairman’s Introduction

High standards of corporate governance are a key priority for the Board of Victoria Oil & Gas Plc (‘VOG’ or ‘the Company’ or ‘the Group’) and, in line with the London Stock Exchange’s recent changes to the AIM Rules requiring all AIM-listed companies to adopt and comply with a recognized corporate governance code, the Board has adopted the 2018 Quoted Companies Alliance Corporate Governance Code (the QCA Code) as the basis of the Group’s governance framework. It is the responsibility of the Board to ensure that the Group is managed in an efficient, effective and entrepreneurial manner for the long-term benefit of all shareholders and stakeholders. Corporate governance is an important aspect of this, reducing risk and adding value to our business.

The Directors acknowledge the importance of the ten principles set out in the QCA Code and, in this section, The Group’s current approach to complying with those principles is set out. Further information on our compliance with the QCA Code will be provided in our next annual report.

Kevin Foo

Executive Chairman

This disclosure was last reviewed and updated on 28 September 2018

 

 

VOG CORPORATE GOVERNANCE STATEMENT

DELIVER GROWTH

  1.  

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

Through the Company’s wholly owned subsidiary, Gaz du Cameroun S A, VOG has developed and delivers a fully integrated domestic gas to energy solutions for local industry and communities. The Group’s strategy is explained fully within the Strategic Report of our Annual Report and Accounts to 31 December 2017.

The Board has established a strategy and business model which seeks to promote long-term value for shareholders and has identified the following key areas of operation to focus on improving the Group’s performance going forward;

  • Ensure continued production growth and revenue expansion
  • Developing a diverse customer base to include thermal and power customers to create long term trading partnerships
  • Actively develop compressed natural gas and natural liquid gas vehicle markets.
  • Generate operational efficiencies and synergies
  • Expand the reserves base to support the supply offering
  • Acquisition-led growth where and when appropriate to expand the business model

 

The Group’s strategy is explained within the Strategic Report of our Annual Report and Accounts to 31 December 2017 (‘2017 Annual Report'). Additional information is also available in the  Shareholder Circular dated 26 October 2017. Both documents are available to download in full from this website.

2

Seek to understand and meet shareholder needs and expectations

The Company recognises the importance of engaging with its shareholders and reports formally to them when its full-year and half-year results are published. The Executive Directors are available to present the results to institutional investors, analysts and the media and the Senior Independent Director is also available to attend meetings with investors and analysts as required.

Shareholders are encouraged to attend the Annual General Meeting (‘AGM’) of the Company at which the Group’s activities and results are considered, and questions answered by the Directors. For each vote, the number of proxy votes received for, against and withheld is announced at the meeting. The results of the AGM are subsequently published on the Company’s website. General information about the Group is also available on the Company’s website. This includes an overview of activities of the Group and details of all recent company announcements.

The Board as a whole is kept informed of the views and concerns of major shareholders by briefings from the Executive Chairman and the Chief Executive. At every Board meeting, a summary of engagement with the investors and any key issues raised by the investors is provided. The Board is also provided with brokers’ and analysts’ reports when published. This process enables the Board to be kept informed of major shareholders’ opinions on strategy and governance, and for them to understand any issues or concerns.

The Company maintains a dedicated email address and telephone number which investors may use to contact the Company which, together with the Company’s address, are prominently displayed on the Company’s website.

 

3

Take in to account wider stakeholder and social responsibilities and their implications for long-term success

In addition to its shareholders, the Company believes its main stakeholder groups are its employees, customers, suppliers, communities, relevant Statutory Authorities and business partners.

The Group recognises the increasing importance of corporate social responsibility and endeavours to take it into account when operating its business in the interests of its stakeholders. Detailed information regarding the Company’s relationship with its stakeholders is provided in the Corporate Social Responsibility section of our Strategic Report on pages 18-19 of our 2017 Annual Report.

 

4

Embed effective risk management, considering both opportunities and threats, throughout the organization

The Board has overall responsibility for the Group’s internal control systems and for monitoring their effectiveness. The Board, with the assistance of the Audit Committee, maintains a system of internal controls to safeguard shareholders’ investment and the Group’s assets, and has established a continuous process for identifying, evaluating and managing the significant risks the Group faces.

Further details of the principal risks and how they are mitigated are contained in the 2017 Annual Report. The Company’s internal control and risk management process is also contained in the 2017 Annual Report.

The Board considers risk to the business on an ongoing basis and the Group formally reviews and documents the principal risks at least annually. Both the Board and senior management are responsible for reviewing and evaluating risk and the Executive Directors review ongoing trading performance, discuss budgets and forecasts and any new risks associated with ongoing trading, the outcome of which is reported to the Board

MAINTAIN A DYNAMIC MANAGEMENT FRAMEWORK

5

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

The Board is collectively responsible for the governance of the Company and is accountable to the Company's shareholders for the long-term success of the Group.  The Board sets the Company's strategic objectives and ensures that they are properly pursued within a sound framework of internal controls and risk management. It is ultimately responsible for the management, governance, controls, risk management, direction and performance of the Group.

As at the date of this Statement, the Board of Directors has five members, comprising Kevin Foo Executive Chairman, Ahmet Dik Chief Executive Officer, Andrew Diamond Finance Director and Roger Kennedy and John Bryant as two independent Non-Executive Directors. Iain Patrick resigned as independent Non-Executive Director on 23 April 2018 and the Company is seeking to appoint an additional independent Non-Executive Director.

 

The Board has appointed Roger Kennedy as a Senior Independent Director.

 

The Executive Chairman is responsible for leadership of the Board. He is assisted by other Board members in formulating strategy and, once agreed by the Board, the Executive Directors are responsible for its delivery.  The structure of the Board ensures that no one individual dominates the decision-making process and the Chairman facilitates and ensures that there is effective contribution from other Executive and Non-Executive Directors.  

 

The Board provides effective leadership and overall management of the Group’s affairs. The Board approves the Group’s strategy and investment plans and regularly reviews operational and financial performance and risk management matters. A schedule of matters reserved for Board decision is maintained. This includes the approval of business plans, the annual budget, major capital expenditure, acquisitions and disposals, risk management policies and the approval of the financial statements.

 

The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to and where appropriate, agreed with the rest of the Board.

 

The Board holds six scheduled meetings each year and additional meetings are held where necessary to consider matters of importance which cannot be held over until the next scheduled meeting. All Directors devote time and attention as necessary to effectively discharge their responsibilities. The Executive Directors are full time employees of the Company.

 

The Board delegates certain of its responsibilities to the Board committees, which have clearly defined terms of reference. Further details of the composition of the Board and the Directors’ attendance records for the year ended 31 December 2017 at Board and Committee meetings are set out in the 2017 Annual Report on pages 30- 31.        

 

All Directors have access to the advice and services of the Company’s solicitors and the Company Secretary, who is responsible for ensuring that all Board procedures are followed. Any Director may take independent professional advice at the Company’s expense in the furtherance of his duties.

 

The Company’s Articles of Association requires one-third of the Directors to retire by rotation at each AGM of the Company and each may be re-elected. Furthermore, every Director must stand for re-election once every three years. The Company’s Articles also require any new Director appointed by the Board during the year to retire at the next AGM.

6.

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

The Board currently represents an effective balance of skills and experience in resource exploration and production, finance, corporate and business development as well as entrepreneurial and country background. The experience and knowledge of each of the Director gives them the ability to constructively challenge the strategy and to scrutinise performance. As the Company develops its non-grid power business, the Board’s skills and experience in this area may need to be strengthened. The Board is committed to ensuring diversity of skill, experience and gender balance.

Biographies for each Board member are published both on the Company’s website and in the 2017 Annual Report on pages 28-29.

 

Throughout their period in office, the Directors are continually updated on the Group’s business, the industry and competitive environment in which it operates, corporate social responsibility matters and other changes affecting the Group by written briefings, meetings with senior executives, external market and technical experts. They are also updated on changes to the legal and governance requirements of the Group on an ongoing basis. The Board uses external advisors and specialist consultants where necessary to enhance knowledge or to gain access to particular skills or capabilities as well as technical expertise, Accountants, lawyers and other technical experts are used for diligence work and feasibility studies for major capital expenditures; recruitment and employment consultants are used for new board appointments and remuneration policy matters and specialist advisors have assisted the Board to address specific matters in relation to the drilling activity and the insurance claim.

7.

  • Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

The performance of the Board and its Committees is monitored by the Executive Chairman on an ongoing basis. The Company undertakes regular monitoring of corporate performance using agreed key performance indicators and detailed financial reporting to the Board. The performance of the Executive Directors is assessed against the corporate objectives and the key performance indicators by the Independent Non-Executive Directors with the Executive Chairman.

Succession planning is reviewed on an ongoing basis alongside the capability of the senior management and Directors

8

Promote a corporate culture that is based on ethical values and behaviors

The Corporate Social Responsibility section of our Strategic Report on pages 18-19 of our 2017 Annual Report details the ethical values the Group applies to its business operations and in particular to the employees, environment, social and community relationships and health and safety matters.

The Group recognizes the importance of investing in its employees and, as such, the Group provides them with favorable working conditions that are free from unnecessary risk and to maintain fair and competitive terms and conditions of service at all times as well as opportunities for training and personal development. These values are applied regardless of age, race, religion, gender, sexual orientation or disability.

The Board has approved the following policies to apply across the Group:

Share Dealing Code

Integrity Policy (Anti-Corruption and Bribery)

 

9

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

Our Corporate Governance Statement on pages 30 – 31 of the 2017 Annual Report and on our website details the Company’s governance structures and its appropriateness for the Company. The statement includes a summary of  matters reserved for decision by the Board and the terms of reference for the Board Committees.

BUILD TRUST

10

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

The Company encourages two-way communication with both its institutional and private investors and will respond to all queries received, subject compliance with the AIM Rules and the Market Abuse Regulations Executive Directors talk regularly with the Group’s major shareholders and ensures that their views are communicated fully to the Board.

The Board recognizes the AGM as an important opportunity to meet private shareholders. The Directors are available to listen to the views of shareholders informally immediately following the AGM. The results of the proxy votes received from the shareholders are published on the Company’s website in following all general meetings.

The work of each Board Committees undertaken during the previous financial year is detailed in the 2017 Annual Report. The Company’s financial reports for previous years can be found on the Company’s website together with the notice of general meetings.

 

Board

The Board is collectively responsible for the governance of the Company and is accountable to the Company's shareholders for the long-term success of the Group.  The Board sets the Company's strategic objectives and ensures that they are properly persued within a sound framework of internal controls and risk management.

The Board of Directors currently has five members, comprising the Executive Chairman, Chief Executive Officer, Finance Director and two independent Non-Executive Director. The structure of the Board ensures that no single individual dominates the decision-making process. The Directors together have significant and relevant resource exploration and production experience together with finance and corporate development skills. 

The Board has appointed Roger Kennedy as a Senior Independant Director.

The Board meets at least six times each year providing effective leadership and overall management of the Group’s affairs through the schedule of matters reserved for its decision. This includes the approval of the Group budget and business plan, major capital expenditure, acquisitions and disposals, risk management policies and the approval of the financial statements. Formal agendas, papers and reports are sent to the Directors in a timely manner prior to Board meetings. The Board delegates certain of its responsibilities to the Board committees, listed below, which have clearly defined terms of reference.

All Directors have access to the advice and services of the Company’s solicitors and the Company Secretary, who is responsible for ensuring that all Board procedures are followed. Any Director may take independent professional advice at the Company’s expense in the furtherance of his duties.

One-third of the Directors retire by rotation at each Annual General Meeting of the Company and each may be re-elected. Furthermore, every Director must stand for re-election once every three years.

Audit Committee

The committee meets at least four times per year. It is responsible for ensuring that the financial activities of the Group are properly monitored, controlled and reported on complying with relevant legal requirements. The committee receives and reviews reports from management and the Group’s auditors relating to the Group’s Annual Report, the interim results and review of the accounting policies. Meetings are held at least twice a year with the auditors, once at the audit planning stage to consider the scope of the audit and thereafter at the reporting stage, to receive post-audit findings. The committee reviews draft annual and interim reports before recommending their publication to the Board. It discusses with the Chief Executive Officer, Finance Director and external auditors the significant accounting policies, estimates and judgments applied in preparing these reports. The ultimate responsibility for reviewing and approving the Annual Report remains with the Board of Directors.

The committee is also responsible for reviewing the relationship with the external auditors, making recommendations to the Board on their appointment and remuneration, monitoring their independence, as well as assessing scope and results of their work, including any non-audit work. The committee authorises any non-audit work to be carried out by the external auditors. Following a review of the remuneration for the external auditors for the latest financial year-end, the committee is satisfied that the objectivity and independence of the external auditor has not been impaired in anyway by the nature of the non-audit work undertaken, the level of non-audit fees charged for such work or any other factors.

The committee reviews with management the effectiveness of internal controls. John Bryant and Roger Kennedy are members of the committee and the Finance Director attends the committee by invitation.  The Committee is chaired by Roger Kennedy.

The Chairman of the committee will attend the Annual General Meeting and respond to any shareholder questions on the committee’s activities.

Remuneration Committee

The remuneration committee sets the scale and structure of the Executive Directors’ remuneration and that of senior management and the basis of their service agreements with due regard to the interests of shareholders. In determining the remuneration of the Executive Directors and senior management, the committee seeks to ensure that the Company will be able to attract and retain executives of the highest calibre. It makes recommendations to the full Board concerning bonus awards. No Director participates in discussions or decisions concerning his own remuneration. The membership of the Committee comprises John Bryant and Roger Kennedy and the committee is chaired by John Bryant.

The Chairman of the committee will attend the Annual General Meeting and respond to any shareholder questions on the committee’s activities.

Nomnation Committee

The nomination committee oversees the composition of the Board and its Committees including skills, knowledge and experience, senior executive recruitment and succession, the process for appointment of Directors and makes recommendations to the Board for any changes. Any decisions relating to the appointment of Directors are made by the entire Board based the merits of the candidates and the relevance of their background and experience. The Committee is chaired by Kevin Foo and other members of the committee are John Bryant and Roger Kennedy.

Internal controls

The Board acknowledges that it is responsible for establishing and maintaining the Group’s system of internal controls and reviewing its effectiveness. The procedures that include, inter alia, financial, operational, health and safety, compliance matters and risk management (as detailed in the Strategic Report) are reviewed on an ongoing basis. The Group’s internal control procedures include Board approval for all significant projects, including corporate transactions and major capital projects. The Board receives and reviews regular reports covering both the technical progress of projects and the Group’s financial affairs to facilitate its control. The Group has in place internal control and risk management systems in relation to the Group’s financial reporting process and the Group’s process for preparing consolidated accounts. These systems include policies and procedures to ensure that adequate accounting records are maintained and transactions are recorded accurately and fairly to permit the preparation of consolidated financial statements in accordance with International Financial Reporting Standards (“IFRSs”). The internal control system can only provide reasonable and not absolute assurance against material misstatement or loss. The Board has considered the need for a separate internal audit function but, bearing in mind the present size and composition of the Group, does not consider it necessary at the current time.

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