Corporate Governance

Principle 1
Establish a strategy and business model which promote long-term value for shareholders

Disclosure
Explain the company’s business model and strategy, including key challenges in their execution (and how those will be addressed).

2023 annual report: 9 and 15

Principle 2
Seek to understand and meet shareholder needs and expectations

Disclosure
explain the ways in which the Company seeks to engage with shareholders.

Copies of our annual report, Notice of Annual General Meetings (AGM) and the interim report are available to all shareholders and can be downloaded from the investors section of our website.

We engage with shareholders through updates to the Market via regulatory news flow (“RNS”) on matters of a material substance and regulatory nature.

Our AGM is an annual opportunity for shareholders to meet with the Board and the executive team and to receive a full update on the Company’s business and strategy. All shareholders are provided with an opportunity to ask questions and raise issues during the formal business or more informally following the meeting.

At the AGM, separate resolutions are proposed on each substantial issue. For each proposed resolution, shareholders are provided with an opportunity to vote in advance of the AGM by proxy if they are unable to vote in person. Our registrars, Link Group count the proxy votes which are properly recorded, and the results of the AGM are announced through an RNS.

The Board is keen to ensure that the voting decisions of shareholders are reviewed and monitored and that approvals sought at the Company’s AGM are as much as possible within the recommended guidelines of the QCA Code.

The Company, where appropriate, responds to shareholder queries directly (whilst maintaining diligence on MAR restrictions on inside information and within the requirements of the AIM Rules for Companies). Investor events are also arranged with shareholders throughout the year which presents an opportunity for shareholders to speak with the executive directors in a formal environment and a more informal one to one. In addition, the Company hosts a forum ‘fireside chat’ at regular intervals which presents a further opportunity for shareholders or interested parties to ask questions or raise any issues.

Shareholders with queries should email sound@flagstaffcomms.com .

Principle 3
Consider wider stakeholder and social responsibilities and their implications for long tern success

Disclosure
Explain how the business model identifies the key resources and relationships on which the business replies. Explain how the company obtains feedback from stakeholders.

Our business model and strategy are clear and are set out in our annual report. Our business model is underpinned by a series of fundamental building blocks that we must have in place to manage our risks and provides us with a licence to operate. These include:

• having an engaged, industry experienced and entrepreneurial team with a balance of technical, commercial and financial skills;
• appropriate governance coupled with effective risk management; and
• a culture of safe and sustainable operations, enabling us to achieve high standards of health and safety and minimise our environmental and social impact.

We value the feedback we receive from our stakeholders and we take every opportunity to ensure that where possible the wishes of stakeholders are considered. There is an open-door policy from the executive team down where employees are able to voice their opinions and make suggestions.

Principle 4
Embed effective risk management, considering both opportunities and threats, throughout the
organisation

Disclosure
Describe how the board has embedded effective risk management in order to execute and deliver strategy. This should include a description of what the board does to identify, assess and manage risk and how it gets assurance that the risk management and related control systems in place are effective.

2023 annual report: p 31-34

Principle 5
Maintain the board as a well-functioning balanced team led by the Chair

Disclosure
Identify those directors who are considered to be independent; where there are grounds to question the independence of a director, through length of service or otherwise, this must be explained.

2023 annual report: p39 – 40

Disclosure
Describe the time commitment required from directors (including non-executive directors as well as part-time executive directors).

The executive directors are expected to devote substantially the whole of their time to their duties with the Company. The non-executives have a lesser time commitment. It is anticipated that each of the non-executives, will dedicate 24 days a year.

Disclosure
Include the number of meetings of the board (and any committees) during the year, together with the attendance record of each director.

2023 annual report: p42

Principle 6
Ensure that between them the directors have the necessary up to date experience, skills and capabilities

The Board comprises of the Executive Chairman, one Senior Independent Non-Executive Director and once Independent Non-Executive Director. Details on the Board can be found on the Company’s website at ‘The Team’. The Board has significant international, industrial, financial, public markets and governance experience, possessing the necessary mix of experience, skills, personal qualities and capabilities to deliver the strategy of the Company for the benefit of the shareholders over the medium to long-term. Whilst the Board recognises that an Executive Chairman is not considered best practice this is believed to be the best solution for the business at present whilst the Executive team is secured and embedded. The role of Executive Chairman will continue to be kept under review.

The Chairman is responsible for leading the Board and ensuring that the Board discharges its responsibilities and also for facilitating full and constructive contributions from directors in the determination of the Group’s strategy and overall commercial objectives. Graham Lyon currently serves as the Executive Chairman of the Company. Graham is a Petroleum Engineer by training who has over 40 years of experience in the Oil and Gas industry. He brings wealth of experience across technical, operational, governance and commercial leadership roles in the International arena. Graham is a member of the Nominations Committee.

David Blewden, Independent Non-Executive Director brings a wealth of knowledge and experience in the Oil and Gas industry, finance, investment banking and capital markets to the Board. David with his extensive experience in Finance and Investment banking has also been appointed to Chair the Company’s Audit Committee and is a member of the Remuneration and Nominations Committee. David is currently the CFO of Sunny Hill Energy Limited and has been in that position since October 2016.

Christian Bukovics, Senior Independent Non-Executive Director is a senior Oil and Gas sector executive with for 40 years of international experience across a variety of roles. Since 2013, he has worked as founder, advisor and non-executive director in small-cap Oil and Gas companies and was part of the board of LSE premium listed JKX Oil and Gas plc. Prior to this, he held several senior leadership positions with Shell Internationally. Christian holds a doctorate. Christian has been appointed to Chair the HSSE Committee and Remuneration and Nominations Committee. He is also a member of the Audit Committee.

The Board is kept abreast with developments of governance and AIM regulations. The Company Secretary and Company’s lawyers provide updates on governance issues and the Company’s NOMAD provides regular board AIM Rules refresher training as well as the initial training as part of a new director’s onboarding.

The directors have access to the Company’s advisers as and when required and are able to obtain advice from other external bodies when necessary.

The Company is mindful of diversity although Board appointments are made with the primary aim of ensuring that the candidate offers the required skills, knowledge and experience.

Principle 7
Evaluate board performance based on clear and relevant objectives, seeking continuous improvement

Disclosure
A description of the Board performance evaluation process.

The directors studiously consider the effectiveness of the Board, Committees and individual performance.

The Board meets formally four or five times a year with multiple ad hoc Board meetings as the business demands. There is a strong flow of communication between the directors. The Agenda is set with the consultation of the Executive Chairman, with consideration being given to both standing Agenda items and the strategic and operational needs of the business. Papers are circulated well in advance of the meetings, giving directors ample time to review the documentation and enabling an effective meeting. Resulting actions are tracked for appropriate delivery and follow up.

In 2022, the Company conducted a Board evaluation review whereby the Board undertook an anonymous survey facilitated by AMBA Company Secretarial Servies Limited (AMBA). The confidential questionnaires covered key areas such as risk management and internal controls, strategic oversight, Committees of the Board and Board support and administration. It enabled the directors to consider the functioning of the Board both within the Board room and the relationships of the non-executive and executive directors. The area of Board composition continues to be monitored. It is planned that an evaluation shall be carried out every few years to ensure that the Board continues to function as effectively as possible.

The Board continuously monitors and evaluates the governance structure already in place and reforms are recommended where necessary. On-going review of the functioning of the Board and ensuring that the highest level of governance is maintained whilst being mindful of the size and stage of development of the Company.

In addition to the above, the directors have a wide knowledge of the business and requirements of director’s fiduciary duties. The directors have access to the Company’s advisers if and when required. They are also able, at the Company’s expense, to obtain advice from external bodies if required. The Board as a whole is mindful of the need for succession planning. The Remuneration and Nominations Committee will continue to meet and monitor the requirement for succession planning.

Principle 8
Promote a corporate culture that is based on ethical values and behaviours

Disclosure
How the Board ensures that the Company has the means to determine ethical values and behaviours

The directors are committed to ethical values and behaviours across the Board and the Company as a whole. The Board is mindful of the industry and jurisdictions in which the business operates in and takes all issues of ethical behaviours seriously. These behaviours are instilled throughout the organisation.

The importance of delivering success in a safe environment is never undermined. Governance structures and processes that are fit for purpose and support good decision-making by the Board are maintained.

Issues of bribery and corruption are taken seriously, the Company has a zero-tolerance approach to bribery and corruption and has an anti-bribery and corruption policy in place to protect the Company, its employees and those third parties with which the business engages with. The policy is provided to staff upon joining the business and training is provided to ensure that all employees within the business are aware of the importance of preventing bribery and corruption. Each employee is required to sign an agreement to confirm that they will comply with the policies. Annually staff are provided with refresher courses to ensure that the issues of bribery and corruption remain at the forefront of people’s minds. There are strong financial controls across the business to ensure on going monitoring and early detection.

A whistleblowing policy is in place, which enables staff to raise any concerns in confidence. The Chairman has assumed the role of whistleblowing officer.

Principle 9
Maintain governance structures and processes that are fit for purpose and support good decision-making by the Board

Disclosure
Roles and responsibilities of the chair, CEO and other directors with commitments. Describe the roles of the Committees

The Board retains ultimate accountability for governance and is responsible for monitoring the activities of the executive team. The Chairman has the responsibility for ensuring that the Board discharges its responsibilities. No one individual has unfettered powers of decision.

The Chairman is responsible for facilitating full and constructive contributions from each member of the Board in determination of the Group’s strategy and overall commercial objectives. Graham Lyon was appointed as the Executive Chairman of the Company on 25 February 2020. Graham is a member of the Nominations Committee.

David Blewden is an independent Non-Executive Director and the chairman of the Audit Committee. David is also a member of the Remuneration and Nominations Committee.

Christian Bukovics is the Senior Independent Non-Executive Director and the chairman of the HSE Committee and Remuneration and Nominations Committee. Christian is also a member of the Audit Committeee

The Audit Committee meets at least two times a year and consists of two members, both Non-Executive Directors. The Committee assists with the Board’s oversight of the integrity of the financial reporting and the independence and performance of the Company’s Auditor.

The Remuneration and Nominations Committee meets at least twice a year to consider all material elements of remuneration, including the executive directors’ remuneration and performance. In addition, the Committee meets as and when required to consider matters related to succession planning and new nominations to the Board.

The HSSE Committee generally meets four to five times a year and is primarily focussed on ensuring that the HSSE policies are adopted and applied across the Group. The meeting is attended by the HSSE Manager, who is accountable to the Committee on HSSE matters across the Group.

All Board Committees report back to the Board following a Committee meeting.

The Board retains full and effective control over the Company and holds regular meetings at which financial, operational and other reports are considered and where appropriate voted upon. The Board is responsible for the Group’s strategy and key financial and compliance issues.

There are certain matters that are reserved for the Board, they include:

• Approval of the Group’s strategic aims and objectives;
• Approval of the Group’s annual operating and capital expenditure budgets and any material changes to them;
• Review of Group performance and ensuring that any necessary corrective action is taken;
• Extension on the Group’s activities into new business or geographical areas;
• Any decision to cease to operate all or any part of the Group’s business;
• Major changes to the Group’s corporate structure and management and control structure;
• Any changes to the Company’s listing;
• Changes to governance and key business policies;
• Ensuring maintenance of a sound system of internal control and risk management; and
• Approval of half yearly and annual report and accounts and preliminary announcements of final year results Reviewing material contracts and contracts not in the ordinary course of business.

As the Company grows, the directors will ensure that the governance framework remains in place to support the development of the business.

Principle 10
Communicate how the Company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders

Disclosure
Outcomes of votes cast by shareholders to be disclosed in a clear and transparent manner. If a significant number of votes were cast against a resolution put to a general meeting (20%) explain the reasons behind the votes cast.

If a significant proportion of votes were ever cast against a resolution, the Company would, on a timely basis, provide an explanation of what actions it intends to take to understand the reasons behind that vote result, and, where appropriate, any different action it has taken, or will take, as a result of the vote.