Governance

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

Block Energy’s purpose is to deliver shareholder value through the development of its high-impact strategic  projects and international new ventures with the aim of becoming an international independent oil and gas  company.  

The Company has developed several Projects in Georgia and  made good progress on its aim of converting resources to reserves and reserves to production to catalyse growth  of the Group for the long-term. Production within the Project I & II portfolio provides meaningful cashflow with  which to support the development of the Group’s high-impact Projects. in 2026, the Company made a  strategic entry into Gabon with the aim of providing further material upside through discovered oil and  exploration productivity as well as diversification from a political and subsurface risk perspective.  

Georgia has long been recognised as a business-friendly country, with historically high rankings in global ease of  doing business indices. It possesses proven but underdeveloped reserves of oil and gas, approaching growing  interest from major energy companies. Gabon is a well-known hydrocarbon jurisdiction with a business-friendly  government and active investment from a range of international energy companies and fits well with the existing  assets in Georgia.  

Our objective to deliver shareholder value in the medium to long term is based on the continued  commercialisation of our existing projects and the identification and development of new projects within and  outside of Georgia and Gabon to secure the Company’s growth and long-term future.  

We have designed a robust business model to implement our strategy.

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

Our core values underpin our long-term growth:

• We continually develop and nurture good relationships with our stakeholders: 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 values and we are dedicated to the successful execution of our  current and future strategy. 
• We endeavour to develop individual members of our staff and the team as a whole.
• 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 employ a full-time HSES department in Georgia to develop and manage  our HSES processes.  
• We recognise the risks posed by climate change and are committed to playing a responsible role as an  oil and gas producer. We are actively exploring initiatives such as carbon capture to reduce our  environmental impact.

Our values are expressed and communicated regularly to staff through internal communications and forums. They are included in our employment contracts, induction processes and training programmes.  

The Board believes that the promotion of our core values across the Company’s operations gives Block a critical advantage, improving our internal efficiency and the quality of our stakeholder relationships. 

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 compliance 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 11^th June 2018, the Company has used multiple channels to understand the needs and expectations of its shareholder base.  

The AGM is one of our many forums for dialogue with shareholders and we encourage all shareholders to spend  and participate. The members of the Board spend the AGM, when possible, and are available to answer questions raised by shareholders.  

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, and a mailing list. These are displayed  prominently on our website together with 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 actives. 

The Directors continually review our engagement with shareholders and our communications approach.  

The Directors take every opportunity to communicate our purpose, strategy and business plan to existing and  potential 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 by  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 expectation. 

Take into account wider stakeholder interests, including social and environmental 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 on pages 31-34 of the Annual Report 2025.  

The revised Code calls for a stronger emphasis on ESG factors and their integration into the company’s decision making process. 

The company integrates ESG factors into its strategy and operations, particularly focusing on environmental sustainability and social responsibility. Block Energy collaborates closely with Georgian authorities, investing in community programs and job creation, including working with the Tbilisi Technical Institute to provide paid internships to students.

In early 2025, the Company completed an agreement with JSC Rustavi Azot to investigate capture and  sequestration of carbon from the emissions from their fertiliser factory within our Patardzueli-Samgori Middle  Eocene reservoir. This marks a pleasing step towards reducing our carbon footprint and showcasing the Company’s commitment to reducing its environmental impact.  

The Company continues to implement initiatives aimed at reducing emissions of methane and carbon dioxide  from its field operations and motor vehicles. In 2024, the Company installed an in-house oil processing facility  for the Patardzueli field which uses previously vented gas to feed a heat exchanger for oil processing, reducing  methane emissions. 

Embed effective risk management, internal controls and assurance activities, considering both  opportunities and threats, throughout the organisation

The Board is responsible for establishing 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.  

Risk assessments are carried out for future prospects and new risks (for existing projects) are identified through  periodic assessments. This involves both internal teams and where necessary, external consultants who can  provide fresh insights and identify emerging risks. The Company monitors industry trends and regulatory  changes, especially those related to environmental legislation and sustainability standards. This helps in proactively identifying and assessing climate-related risks that could impact compliance, operational costs, or reputation. 

The Board regularly reviews risk management strategies as part of its governance responsibilities. This process ensures that emerging risks are identified, communicated, and addressed effectively across the organisation. The Company uses cost effective technology to measure and contain geological risk. It maintains regular dialogue with central and local government bodies to identify and contain sovereign risk.

The following Committees play a crucial role in executing these governance functions.

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, the objectives of the auditor and the independence 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 also has oversight over the remuneration policies for all staff. 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 the Market Abuse Regulations (“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, Environment and Social Performance (HSES) Committee

The HSES Committee aims to meet at least quarterly and reviews the Company’s HSES policies, performance and  goals. The Committee meets in the event of any serious HSES lapse to review the causes and identify remedial  action. The HSES 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.

Establish and 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 Chair.  

The Board currently consists of three Directors, one executive and two independent non-executives who do not  participate in day-to-day operations, including the Chair. To support its work, the Board has established several  committees, as detailed above in this Report. In accordance with the revised Code, the Board acknowledges its  current lack of diversity, largely due to the limited pool of qualified candidates. However, it is committed to  prioritising diversity considerations in future appointments should the Board’s size increase.  

Board meetings are held regularly (at least one formal meeting every two months). 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.

The Board follows a regular schedule to address key business, financial and operational matters. Relevant papers  are provided in advance for review. Each committee has compiled a work plan to ensure that all Board  responsibilities are covered.

The Chair ensures Directors receive accurate and ,mely informa,on for decision  making. Board meetings are minuted, with all presented papers included. Directors can have concerns minuted  and seek independent advice at the Company’s expense, if needed.  

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 qualify because the Directors make themselves available as  required.  

The revised Code also recommends that shareholders vote annually on the re-election of all board members.  However, the Company does not resubmit the entire Board each year. Our articles require one-third of the Board  to be submitted for re-election annually. With only three directors, removal of more than one director at any one could cause unnecessary disruption, so while we acknowledge the new recommendation, we con,nue with  our current approach. 

Maintain appropriate governance structures and ensure that individually and collectively 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 with which they have been entrusted, are available in this Report on page 35 and on our website.  

The Board believes its blend of experience, skills, personal quali,es and capabilities is sufficient to support  effective strategy executive, with Directors staying updated through seminars, industry events, and professional  advice. 

The Nominations Committee regularly reviews Board expertise and appoints new directors as needed. Directors  are kept informed on governance and AIM regulations and receive training from the Nominated Advisor and lawyers upon appointment. They also have access to the Company’s advisors, Secretary, and external experts as  needed. 

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 seeing and promoting the culture, values and practices that operate throughout the business, and by defining the Company’s strategic goals. The Board delegates certain defined responsibilities to its Committees as described in principle 5.

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 either formally or  informally, 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.  

Evaluating board performance against annual objectives is challenging and costly for a small board, but we will undertake this process with external expertise if and when deemed necessary.

Establish a remuneration policy which is supportive of long-term value creation and the  company’s purpose, strategy and culture

The revised Code emphasises the importance of aligning remuneration policies with the Company’s purpose, strategy, and culture, ensuring they incentivise management to focus on long-term sustainable growth. It also recommends that shareholders have a voice in remuneration policies and reporting. The Committee believes that  its long-term incentive plan is consistent with this Principle, ensuring that remuneration structures are  transparent and support long-term value creation for shareholders.

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

We provide regular updates on governance and performance through periodic RNS’ and publication of both our annual and interim reports. We ensure that all this information is available on our website and is understandable  for all stakeholders. 

We use a variety of communication channels and maintain an up-to-date website which includes all relevant  governance documents. The Company has an active shareholder dialogue, especially with institutional and major shareholders and is looking for ways to improve its communications with retail investors. Currently, the latter shareholders have the opportunity to meet, vote on governance matters and ask questions at the AGM. 

The annual report and website clearly communicate our Board composition and corporate governance policies. They also set out our view on risks and opportunities and our financial information. We seek to actively engage  with our shareholders and stakeholders, maintaining regular dialogue with our advisors to address any issues or concerns they may have.