TIDMTRP
RNS Number : 9467A
Tower Resources PLC
07 June 2021
7 June 2021
Tower Resources plc
Preliminary Results to 31 December 2020
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)),
the AIM listed oil and gas company with its focus on Africa,
announces its preliminary results for the 12 months ended 31
December 2020.
Highlights:
-- Thali PSC $2.2 million (2019: $3.9 million) exploration and evaluation expenditure;
-- Algoa-Gamtoos TCP $440k (2019: $537k). Second renewal phase
approved by PASA effective 17 November 2020;
-- Administrative costs net of impairments and share-based
payment charges reduced significantly to $237k (2019: $987k);
-- Cash balance at year-end of $10k (2019: $39k);
-- Award of extension to the Initial Exploration Period of the Thali PSC to 15 September 2020;
-- Completion of NJOM-3 appraisal well site survey by the
Geoquip Marine survey vessel MV investigator;
-- Cameroon Reserves Report update reconfirming gross mean
contingent resources of 18 MMbbls of oil across the proven Njonji-1
and Njonji-2 fault blocks, with an NPV10 of the Best Estimate
Contingent Resources of $119 million using the March 10(th) 2020
Brent Forward Curve, and an EMV10 of $91 million;
-- Completion of placing and subscription to raise GBP500k at
placing and subscription price of 0.375 pence per share;
-- Notification to the Government of Cameroon of an event of
Force Majeure in respect of the Covid-19 pandemic, affecting the
timing for completion of the Group's work programme in the Initial
Exploration Period of the Group's Thali Production Sharing
Contract;
-- Appointment of Paula Brancato and Dr Mark Enfield to the board as Non-Executive Directors.
Post-reporting period events:
-- 14 January 2021: Placing of 384,615,384 shares to raise
GBP1.25 million at 0.325p per
share;
-- 27 January 2021: Issue of 20,000,000 shares to EPI Group in
lieu of GBP65,000 of fees
-- 8 February 2021: Algoa Gamtoos Operator resource upgrade
following reprocessing of subsurface data;
-- 4 March 2021: Extension of Pegasus loan facility to November 2021;
-- 10 May 2021: Solvent liquidation of the wholly owned
subsidiary, Wilton Petroleum Limited
-- 19 May 2021: Extension to the First Exploration Period of the
Thali PSC to 11 May 2022;
-- 21 May 2021: FTT VAT decision in the Company's favour is
upheld by the UTTC
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via
Regulatory Information Service ('RIS'), this inside information is
now considered to be in the public domain.
Contacts
Tower Resources plc +44 20 7157 9625
Jeremy Asher
Chairman and CEO
Andrew Matharu
VP - Corporate Affairs
SP Angel Corporate Finance
LLP
Nominated Adviser and Joint
Broker
Stuart Gledhill + 44 20 3470
Caroline Rowe 0470
ETX Capital
Joint Broker + 44 20 7392
Elliot Hance 1436
Turner Pope Investments
(TPI) Limited
Joint Broker
Andy Thacker + 44 20 3657
Zoe Alexander 0050
Panmure Gordon (UK) Limited
Joint Broker
Nick Lovering + 44 20 7886
Hugh Rich 2500
CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT
2020 has been an extremely challenging year, however we have
made significant progress since our 2019 annual report was issued,
and we are expecting to achieve much more tangible results over the
year ahead.
A year ago the full scale of the COVID-19 pandemic had become
apparent, and any hopes that the consequences would be short-lived
had been dashed. Oil prices had fallen to around $40 per barrel,
although they had recovered from an even lower trough that had
included a brief but exciting period of negative prices for WTI on
Nymex. At the time I pointed out that forward prices were still
above $50 per barrel, and that there was potential for supply to be
tighter in the future, given the under-investment that was taking
place in our sector.
As I write this, Brent prices are once again around $70 per
barrel, as they were in early 2020, and forward prices in 2025 are
close to $60 per barrel. As usual, the forward prices have been
less volatile than the price for nearby months; but the overall
prognosis for oil prices has improved and, despite the
understandable concerns about the long-term sustainability of the
sector, there is a growing realisation that the industry still
needs short-cycle, low-cost projects to sustain oil production over
the next few years, as well as long term gas production. This is
especially true in Africa.
This realisation is reflected in the continued interest within
the industry, including among the Major oil companies, in
exploration of the offshore frontiers of Namibia and South Africa.
It is also reflected more specifically in the work that a number of
companies have been doing in the data room for our joint-venture
license in South Africa, where the partnership (operated by NewAge)
has made considerable progress in identifying and quantifying the
potential reservoir targets in the Deep-water (Outeniqua Basin)
section of the block, which adjoins both Total's Blocks 11B/12B to
the West and Shell's blocks to the East.
It is also reflected in the effort that a number of companies
have put into due diligence work on our Thali farm-out process,
which we hope will be completed soon, now that the license
extension itself has been clarified. We are working on the NJOM-3
well preparation, although we remain cautious about the timetable
for both this and the farm-out process given the continuing
uncertainties over the COVID-19 pandemic and the spread of new
variants. We are however confident that if the environment remains
as it is currently, then a combination of good planning and wider
vaccination will allow us to proceed with this crucial well in
2021.
During the latter part of 2020, David Thomas retired from
Tower's board of directors, and Paula Brancato joined the board and
took over the chair of our Audit Committee, and I was able to thank
David and welcome Paula in our Interim Results statement in
September 2020. At the end of November 2020 Peter Taylor retired
from the board, and Mark Enfield joined. Peter, together with his
partner Peter Blakey, was one of the founders of Tower Resources as
an oil and gas company, in 2006, and he has a long and successful
history in the sector. His presence and wisdom in the boardroom
will be missed, but we know we can continue to call on his advice
at any time. Mark Enfield, who founded the geoscience business PDF,
which is now the geosciences unit of EPI, will bring both great
experience of our sector and also great technical expertise to the
board, as well as intimate knowledge of the Company's areas of
focus in Africa.
We are looking forward to continued and, I hope, accelerating
progress over the balance of 2021.
STRATEGIC REPORT
Our strategy remains to shift our near-term focus towards lower
risk exploration and development within proven basins, best
characterised by our 2015 signature of the Thali PSC in the Rio Del
Rey basin, offshore Cameroon. We remain selective in our exposure
to high risk/reward exploration: we have a highly prospective
license in South Africa, and we have a license in Namibia, covering
blocks that we know well from our previous license there. These are
supportive jurisdictions with competitive fiscal terms, and a
number of other companies are now investing in these areas. The
Thali Production Sharing Contract ("PSC") also has a high-reward
exploration upside in the deeper formations, which have not yet
been tested by historical drilling. We continue to believe that all
of our assets are attractive and valuable. However, our near-term
strategy is to focus our current investment on the lower risk,
earlier reward opportunities in Thali during this phase of the
market cycle, before pursuing the other higher risk
opportunities.
This strategy requires finding external finance at the asset
level for our existing exploration commitments wherever possible,
which is why we took the decision some time ago to convert our
working interest in the SADR to a royalty interest, and why we
continue to support our partner and operator, NewAge Energy Algoa
(Pty) Ltd (50%), in seeking a farm-in partner for our Algoa-Gamtoos
block in South Africa. Our financial strategy remains to explore
asset-level financing even for assets that we could also finance
with our own equity, balancing risk to achieve the most economic
overall financing for each asset and the best value for
shareholders.
As an operator, we believe that the scale of local operations is
also important to create synergies and efficiencies across blocks
in the same basin. To some extent, this can be achieved and
reinforced through good relations with other local operators, but
controlling multiple blocks directly is the most obvious way to
achieve such synergies (where they can be found) to the benefit of
all stakeholders. To this end, we are continuing to explore the
possibility of a further PSC in Cameroon in the future, even while
undertaking development of our existing one.
Keeping overhead costs appropriately low, and managing operating
costs well, are always important, but especially so in this phase
of the market cycle. We have always sought to keep fixed costs
down, and total costs flexible, through outsourcing important
functions such as our technical-subsurface relationship with the
EPI Group, and we have reduced our corporate costs substantially
since 2016, as our last few years' financial figures confirm.
Finally, our strategy is to enable and to support the wider
strategic plans of each of the countries in which we operate, to
increase power generation from cleaner sources, including both
renewables and natural gas, both to aid economic development and to
displace less efficient diesel and fuel-oil based power generation,
and to reduce imports of liquid fuels by increasing local
production where possible. These countries' strategic plans depend
critically on the continued development of local oil and gas
production in the near term, in order to meet the national goals
which have been set for the next decade.
OPERATIONAL REVIEW
On an operational level, we conducted a site survey over the
NJOM-3 well location in Cameroon in the first two months of 2020,
but have since been restricted in what we can do by the COVID-19
pandemic.
In Cameroon, we notified the Ministry ("MINMIDT") of a state of
Force Majeure in March, and during the balance of 2020 we were
mainly restricted to planning activity. We acquired explosives for
well perforation, as our intended supplier was planning to stop
holding stocks in country, which might have created additional lead
time issues once we are ready to move forward with the NJOM-3 well,
and we have kept the rest of our inventory of long-lead items
safely stored at our operational base in Douala. A considerable
body of work has been undertaken to assure the timely, safe and
cost effective delivery of the well within currently anticipated
Covid-19 restrictions. Our well design and test design for NJOM-3
remain unchanged, but we have also used this period to develop
further our thinking for the rest of the Phase 1 development of the
Njonji structure assuming a satisfactory NJOM-3 well test.
We received an updated Reserves and Resources Valuation report
from Oilfield International Ltd ("OIL") in March 2020, after the
initial collapse in crude oil prices which was reflected in the
report, and the executive summary is available on our website. It
is worth noting that the current oil price environment is
significantly better than in March 2020 and closer to the
environment when the original 2018 OIL report was prepared. A
comparison of the two reports is useful to illustrate the
robustness of the project economics to different oil price
environments.
In March 2021 we were notified that the President of the
Republic of Cameroon had authorised a further formal extension of
the First Exploration Period of the Thali PSC, and in May we
received a formal notification from MINMIDT of the extension to 11
May 2022.
In Namibia, we have prepared an initial plan of desk work based
on existing data to improve our understanding of the sub-surface
while we wait for further third party data to become available, as
a precursor to planning our own data acquisition. We expect to
review and approve this plan of work with our partners in the
coming months, with the expectation that this work will commence
over the balance of 2021.
In South Africa, our Algoa Gamtoos block is immediately to the
East of Total's block 11B/12B where it made its recent Brulpadda
and Luiperd discoveries. During 2020 our co-venturer and operator
NewAge reprocessed 4,500 line kms of 2D seismic data incorporating
both data already owned by the partners and also further data
acquired from the Petroleum Authority of South Africa ("PASA")
including tie lines from Brulpadda to the Algoa-Gamtoos area,
together with two post-stack merged 3D seismic surveys in the Algoa
Basin. The work was undertaken by PGS and the focus was on creating
a time and phase matched dataset covering the Gamtoos Basin and the
Deep-water (Outeniqua basin) section of the license area.
The resulting seismic dataset was much improved and allowed
NewAge to identify a deeper level slope and three separate
reservoir targets in the Deep-water Outeniqua Basin section of the
block, with unrisked mean expected recoverable resources of 1.4
billion barrels of oil equivalent. Details of this work were
announced on 8 February 2021.
In November 2020, the Algoa Gamtoos partners agreed with PASA to
enter the Second Exploration period of the Algoa Gamtoos license,
which runs for two years and includes a commitment to acquire and
process a further 300 km(2) of 3D seismic data in the license
area.
PRELIMINARY RESULTS FOR THE YEARED 31 DECEMBER 2020
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December 2020 31 December 2019
(audited) (audited)
Note $ $
------------------------------------------------- ----- ----------------- --- -----------------
Revenue - -
Cost of sales - -
------------------------------------------------- ----- ----------------- --- -----------------
Gross profit - -
Administrative expenses (930,357) (2,240,313)
Impairment of exploration and evaluation assets 12 - -
Administrative expenses (930,357) (2,240,313)
------------------------------------------------- ----- ----------------- --- -----------------
Group operating loss 4 (930,357) (2,240,313)
Finance income (255) 703
Finance expense 6 (430,124) (421,973)
------------------------------------------------- ----- ----------------- --- -----------------
Loss for the year before taxation (1,360,736) (2,661,583)
Taxation 7 - -
------------------------------------------------- ----- ----------------- --- -----------------
Loss for the year after taxation (1,360,736) (2,661,583)
------------------------------------------------- ----- ----------------- --- -----------------
Other comprehensive income - -
------------------------------------------------- ----- ----------------- --- -----------------
Total comprehensive expense for the year (1,360,736) (2,661,583)
------------------------------------------------- ----- ----------------- --- -----------------
Basic loss per share (USc) 10 (0.11c) (0.40c)
------------------------------------------------- ----- ----------------- --- -----------------
Diluted loss per share (USc) 10 (0.11c) (0.40c)
------------------------------------------------- ----- ----------------- --- -----------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2020 31 December 2019
(audited) (audited)
Note $ $
----------------------------------- ----- ----------------- -----------------
Non-current assets
Exploration and evaluation assets 12 27,080,202 24,315,816
----------------------------------- ----- ----------------- -----------------
27,080,202 24,315,816
----------------------------------- ----- ----------------- -----------------
Current assets
Trade and other receivables 14 8,805 53,448
Cash and cash equivalents 10,054 38,662
----------------------------------- ----- ----------------- -----------------
18,859 92,110
----------------------------------- ----- ----------------- -----------------
Total assets 27,099,061 24,407,926
----------------------------------- ----- ----------------- -----------------
Current liabilities
Trade and other payables 15 3,796,111 1,815,720
Borrowings 16 1,262,937 840,490
----------------------------------- ----- ----------------- -----------------
5,059,048 2,656,210
----------------------------------- ----- ----------------- -----------------
Non-current liabilities
Borrowings 68,763 -
----------------------------------- ----- ----------------- -----------------
Total liabilities 5,127,811 2,656,210
----------------------------------- ----- ----------------- -----------------
Net assets 21,971,250 21,751,716
----------------------------------- ----- ----------------- -----------------
Equity
Share capital 17 18,254,040 18,251,117
Share premium 17 145,343,446 144,294,128
Retained losses 18 (141,626,236) (140,793,529)
----------------------------------- ----- ----------------- -----------------
Total shareholders' equity 21,971,250 21,751,716
----------------------------------- ----- ----------------- -----------------
The financial statements of Tower Resources plc, registered
number 05305345 were approved by the Board of Directors and
authorised for issue on 4 June 2021.
Signed on behalf of the Board of Directors
Jeremy Asher - Chairman and Chief Executive
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share (1) Share-based Retained Total
capital premium payments losses
reserve
$ $ $ $ $
At 1 January 2019 15,599,626 142,376,317 6,524,592 (145,791,254) 18,709,281
------------------------------------------- ----------- ------------ ---------------- -------------- ------------
Shares issued for cash 2,411,297 1,890,659 - - 4,301,956
Shares issued on settlement of third-party
fees 240,194 255,415 - - 495,609
Share issue costs - (228,263) - - (228,263)
Share-based payment charge for the year - - 1,134,716 - 1,134,716
Total comprehensive expense for the year - - - (2,661,583) (2,661,583)
At 31 December 2019 18,251,117 144,294,128 7,659,308 (148,452,837) 21,751,716
------------------------------------------- ----------- ------------ ---------------- -------------- ------------
Shares issued for cash 2,265 856,595 858,860
Shares issued on settlement of third-party
fees 70 26,150 - - 26,220
Shares issued in settlement of loan
interest 588 225,568 - - 226,156
Share issue costs - (58,995) (58,995)
Share-based payment charge for the year - - 528,029 - 528,029
Total comprehensive expense for the year - - - (1,360,736) (1,360,736)
At 31 December 2020 18,254,040 145,343,446 8,187,337 (149,813,573) 21,971,250
------------------------------------------- ----------- ------------ ---------------- -------------- ------------
(1) The share-based payment reserve has been included within the
retained loss reserve on the consolidated statement of financial
position and is a non-distributable reserve.
CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 2020 31 December 2019
(audited) (audited)
Note $ $
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash outflow from operating activities
Group operating loss for the year (930,357) (2,240,313)
Depreciation of property, plant and equipment 11 - -
Share-based payments 20 264,416 801,755
Shares issued on settlement of third-party fees 26,220 495,609
Impairment of intangible exploration and evaluation assets 12 - -
Loss on disposal of of property, plant and equipment 11 - -
----------------------------------------------------------------------- ----- ----------------- -----------------
Operating cash flow before changes in working capital (639,721) (942,949)
Decrease / (increase) in receivables and prepayments 44,643 (29,469)
Increase in trade and other payables 1,980,391 523,228
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash from / (used in) operations 1,385,313 (449,190)
Interest (paid) / received (255) 703
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash from / (used in) operating activities 1,385,058 (448,487)
----------------------------------------------------------------------- ----- ----------------- -----------------
Investing activities
Exploration and evaluation costs 12 (2,764,386) (4,669,417)
----------------------------------------------------------------------- ----- ----------------- -----------------
Net cash used in investing activities (2,764,386) (4,669,417)
----------------------------------------------------------------------- ----- ----------------- -----------------
Financing activities
Proceeds from loan facilities 16 561,742 770,480
Cash proceeds from issue of ordinary share capital net of issue costs 17 799,865 4,073,693
Interest paid 16 (226) -
Finance costs 6 (10,661) (19,002)
----------------------------------------------------------------------- ----- ----------------- -----------------
Net cash from financing activities 1,350,720 4,825,171
----------------------------------------------------------------------- ----- ----------------- -----------------
Decrease in cash and cash equivalents (28,608) (292,733)
Cash and cash equivalents at beginning of year 38,662 331,395
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash and cash equivalents at end of year 10,054 38,662
----------------------------------------------------------------------- ----- ----------------- -----------------
COMPANY STATEMENT OF FINANCIAL POSITION
31 December 2020 31 December 2019
(audited) (audited)
(restated) (1)
Note $ $
---------------------------------------- ----- ----------------- -----------------
Non-current assets
Property, plant and equipment 11 - -
Loans to subsidiary undertakings 13 15,330,438 14,028,116
Investments in subsidiary undertakings 13 12,307,766 17,610,749
---------------------------------------- ----- ----------------- -----------------
27,770,722 31,638,865
---------------------------------------- ----- ----------------- -----------------
Current assets
Trade and other receivables 14 8,803 53,446
Cash and cash equivalents 7,236 12,055
---------------------------------------- ----- ----------------- -----------------
16,039 65,501
---------------------------------------- ----- ----------------- -----------------
Total assets 27,786,761 31,704,366
Current liabilities
Trade and other payables 15 1,444,429 1,195,912
Borrowings 16 1,262,937 840,490
Loan from subsidiary undertaking 15 - 6,617,600
---------------------------------------- ----- ----------------- -----------------
2,707,366 8,654,002
---------------------------------------- ----- ----------------- -----------------
Non-current liabilities
Borrowings 68,763 -
Total liabilities 2,707,366 8,654,002
---------------------------------------- ----- ----------------- -----------------
Net assets 24,878,114 23,050,364
---------------------------------------- ----- ----------------- -----------------
Equity
Share capital 17 18,254,040 18,251,117
Share premium 17 145,343,446 144,294,128
Retained losses 18 (138,719,372 (139,494,881)
Total shareholders' equity 24,878,114 23,050,364
---------------------------------------- ----- ----------------- -----------------
(1) Restated amounts relate to the impairment of loan interest
charged to Tower Resources Namibia Limited prior to that company's
dissolution in November 2019. See note 24.
In accordance with the provisions of Section 408 of the
Companies Act 2006, the Company has not presented a statement of
comprehensive income and for the year-ended 31 December 2020 the
Company made a profit of $380k (2019: $2.3 million restated)
The financial statements of Tower Resources plc, registered
number 05305345 were approved by the Board of Directors and
authorised for issue on 4 June 2021.
Signed on behalf of the Board of Directors
Jeremy Asher - Chairman and Chief Executive
COMPANY STATEMENT OF CHANGES IN EQUITY
Share Share (1) Share-based Retained Total
capital premium payments losses
reserve (restated)(2)
$ $ $ $ $
At 1 January 2019 15,599,626 142,376,317 6,524,592 (144,814,714) 19,685,821
------------------------------------------ ----------- ------------ ---------------- --------------- ------------
Shares issued for cash 2,411,297 1,890,659 - - 4,301,956
Shares issued on settlement of
third-party fees 240,194 255,415 - - 495,609
Share issue costs - (228,263) - - (228,263)
Share option charge for the year - - 1,134,716 - 1,134,716
Total comprehensive expense for the year - - - (1,556,572) (1,556,572)
At 31 December 2019 18,251,117 144,294,128 7,659,308 (146,371,286) 23,833,267
------------------------------------------ ----------- ------------ ---------------- --------------- ------------
Restatement (see note 24) - - - (782,903) (782,903)
At 31 December 2019 (restated) 18,251,117 144,294,128 7,659,308 (147,154,189) 23,050,364
------------------------------------------ ----------- ------------ ---------------- --------------- ------------
Shares issued for cash 2,265 856,595 - - 858,860
Shares issued on settlement of
third-party fees 70 26,150 - - 26,220
Shares issued in settlement of loan
interest 588 225,568 - - 226,156
Share issue costs - (58,995) - - (58,995)
Share option charge for the year - - 528,029 - 528,029
Total comprehensive expense for the year - - - 247,480 247,480
At 31 December 2020 18,254,040 145,343,446 8,187,337 (146,906,709) 24,878,114
------------------------------------------ ----------- ------------ ---------------- --------------- ------------
(1) The share-based payment reserve has been included within the
retained loss reserve on the Company statement of financial
position and is a non-distributable reserve.
(2) Restated amounts relate to the impairment of loan interest
charged to Tower Resources Namibia Limited prior to that company's
dissolution in November 2019. See note 24.
COMPANY STATEMENT OF CASH FLOWS
31 December 2020 31 December 2019
(audited) (audited)
(restated) (1)
Note $ $
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash outflow from operating activities
Operating profit / (loss) for the year 444,590 (1,989,535)
Share-based payments 20 264,416 801,755
Shares issued on settlement of third-party fees 26,220 -
Impairment of loans due from subsidiaries 13 - 135,879
----------------------------------------------------------------------- ----- ----------------- -----------------
Operating cash flow before changes in working capital 735,226 (1,051,901)
Increase / (decrease) in receivables and prepayments 44,643 (29,469)
Increase / decrease in trade and other payables 248,517 (96,223)
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash from / (used in) operations 1,028,386 (1,177,593)
Interest received 232,897 853,905
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash from / (used in) operating activities 1,261,283 (323,688)
----------------------------------------------------------------------- ----- ----------------- -----------------
Investing activities
Loans granted to subsidiary undertakings 13 (7,919,922) (5,310,120)
Impairment of subsidiary undertaking 13 5,302,983 -
----------------------------------------------------------------------- ----- ----------------- -----------------
Net cash used in investing activities (2,749,456) (5,310,120)
----------------------------------------------------------------------- ----- ----------------- -----------------
Financing activities
Proceeds from loan facilities 16 561,742 770,480
Cash proceeds from issue of ordinary share capital net of issue costs 17 799,865 4,569,302
Interest paid 16 (226) -
Finance costs 6 (10,544) (17,971)
----------------------------------------------------------------------- ----- ----------------- -----------------
Net cash from financing activities 1,350,837 5,321,811
----------------------------------------------------------------------- ----- ----------------- -----------------
Decrease in cash and cash equivalents (4,819) (311,997)
Cash and cash equivalents at beginning of year 12,055 324,052
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash and cash equivalents at end of year 7,236 12,055
----------------------------------------------------------------------- ----- ----------------- -----------------
(1) Restated amounts relate to the impairment of loan interest
charged to Tower Resources Namibia Limited prior to that company's
dissolution in November 2019. See note 24.
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
a) General information
Tower Resources plc is a public company incorporated in the
United Kingdom under the UK Companies Act. The address of the
registered office is 140 Buckingham Palace Road, London, SW1W 9SA.
The Company and the Group are engaged in the exploration for oil
and gas.
These financial statements are presented in US dollars as this
is the currency in which the majority of the Group's expenditures
are transacted and the functional currency of the Company and have
been prepared in accordance with International Financial Reporting
Standards ("IFRS") and Interpretations ("IFRIC") as adopted by the
EU.
b) Basis of accounting and adoption of new and revised standards
Changes in accounting policies
A number of new standards are effective from 1 January 2020 but
they do not have material effect on the Group's financial
statements.
New and amended standards
The following amended standards and interpretation are effective
for financial years commencing on or after 1 January 2021. The
Group does not intend to adopt the standards below, before their
mandatory application date.
Standard Description Effective date EU Endorsement Status UK Endorsement Status
IFRS 9, IAS 39 and IFRS Interest Rate Benchmark 1 January 2021 Endorsed Given these amendments
7 (Amendments) Reform. were endorsed by the EU
before 31 December 2020
they are part of the
EU-IFRS as it stands at
31 December 2020 and
therefore are UK
endorsed. UK effective
date
1 January 2021.
------------------------ --------------- ---------------------- ------------------------
IAS 1 (Amendments) Presentation of 1 January 2021 Endorsed
financial statements'
on classification of
liabilities.
------------------------ --------------- ---------------------- ------------------------
IFRS 17 Insurance Contracts. 1 January 2022 Endorsed
------------------------ --------------- ---------------------- ------------------------
Future accounting pronouncements
The Company intends to adopt the above listed standards and
interpretations in its financial statements for the annual period
beginning 1 January 2021. The Company does not expect the
interpretation to have a material impact on the financial
statements.
c) Going concern
The Group will need to complete its agreed farm-out and/or
another asset-level transaction within the next 9 months, or
otherwise raise further funds, in order to meet its liabilities as
they fall due, particularly with respect to the forthcoming
drilling programme in Cameroon. The Directors believe that there
are a number of options available to them through either, or a
combination of, capital markets, farm-outs or asset disposals with
respect to raising these funds. There can, however, be no guarantee
that the required funds may be raised or transactions completed
within the necessary timeframes which raises uncertainty as to the
application of going concern in these accounts. Having assessed the
risks attached to these uncertainties on a probabilistic basis, the
Directors are confident that they can raise sufficient finance in a
timely manner and therefore believe that the application of going
concern is both appropriate and correct.
d) Basis of consolidation
The consolidated financial statements incorporate the accounts
of the Company and its subsidiaries and have been prepared by using
the principles of acquisition accounting ("the purchase method")
which includes the results of the subsidiaries from their date of
acquisition. Intra-group sales, profits and balances are eliminated
fully on consolidation.
The results of subsidiaries acquired or disposed of are included
in the consolidated statement of comprehensive income from the
effective date of acquisition or up to the effective date of
disposal, as appropriate.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring the accounting policies used
into line with those used by the Group. All intra-group
transactions, balances, income and expenses are eliminated on
consolidation.
As a Consolidated Statement of Comprehensive Income is
published, a separate Statement of Comprehensive Income for the
Parent Company has not been published in accordance with section
408 of the Companies Act 2006.
e) Goodwill
Goodwill is the difference between the amount paid on
acquisition of subsidiary undertakings and the aggregate fair value
of their net assets, of which oil and gas exploration expenditure
is the primary asset. Goodwill is capitalised as an intangible
asset and in accordance with IFRS3 'Business Combinations' is not
amortised but tested for impairment annually and when there are
indications that its carrying value is not recoverable. Goodwill is
shown at cost less any provision for impairment in value. If a
subsidiary undertaking is sold, any unimpaired goodwill arising on
its acquisition is reflected in the calculation of any profit or
loss on sale.
f) Jointly controlled operations
Jointly controlled operations are arrangements in which the
Group holds an interest on a long-term basis which are jointly
controlled by the Group and one or more ventures under a
contractual arrangement. The Group's exploration, development and
production activities are sometimes conducted jointly with other
companies in this way. Since these arrangements do not constitute
entities in their own right, the consolidated financial statements
reflect the relevant proportion of costs, revenues, assets and
liabilities applicable to the Group's interests.
g) Oil and Gas Exploration and Evaluation Expenditure
Costs incurred before the acquisition of a license or permit to
explore an area are expensed to the income statement.
All exploration and evaluation costs incurred following a
license or permit to explore being obtained or acquired on the
acquisition of a subsidiary are capitalised in respect of each
identifiable project area. These costs are classified as intangible
assets and are only carried forward to the extent that they are
expected to be recouped through the successful development of the
area or where activities in the area have not yet reached a stage
which permits reasonable assessment of the existence of
economically recoverable reserves (successful efforts).
Costs incurred by Directors' and employees of the parent Company
on the exploration activities are recharged to the subsidiaries and
capitalised as exploration assets accordingly.
Other costs are expensed unless commercial reserves have been
established or the determination process has not been completed.
Accumulated costs in relation to an abandoned area are written off
in full against profit in the year in which the decision to abandon
the area is made.
When production commences the accumulated costs for the relevant
area of interest are transferred from intangible assets to tangible
assets as 'Developed Oil and Gas Assets' and amortised over the
life of the area according to the rate of depletion of the
economically recoverable costs.
h) Impairment of Oil and Gas Exploration and Evaluation assets
The carrying value of unevaluated areas is assessed when there
has been an indication that impairment in value may have occurred.
The impairment of unevaluated prospects is assessed based on the
Directors' intention with regard to future exploration and
development of individual significant areas and the ability to
obtain funds to finance such exploration and development.
i) Decommissioning costs
Where a material liability for the removal of production
facilities and site restoration at the end of the field life
exists, a provision for decommissioning is made. The amount
recognised is the present value of estimated future expenditure
determined in accordance with local conditions and requirements. An
asset of an amount equivalent to the provision is also created and
depreciated on a unit of production basis. Changes in estimates are
recognised prospectively, with corresponding adjustments to the
provision and the associated asset.
j) Property, plant and equipment
Property, plant and equipment is stated at cost less
depreciation. Depreciation is provided at rates calculated to write
off the cost less estimated residual value of each asset over its
expected useful life as follows:
Computers and equipment, fixtures, fittings and equipment:
straight line over 4 years
Leasehold and office refurbishment costs: over duration of
lease
The assets' residual values and useful lives are reviewed and
adjusted if necessary, at each year-end. Profits or losses on
disposals of plant and equipment are determined by comparing the
sale proceeds with the carrying amount and are included in the
statement of comprehensive income. Items are reviewed for
impairment if and when events indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount
by which the carrying amount of the asset exceeds its recoverable
amount which is the higher of an asset's net selling price and
value in use.
k) Investments
The Parent Company's investments in subsidiary companies are
stated at cost less any expected credit loss for impairment and are
shown in the Company's Statement of Financial Position.
l) Share-based payments
The Company makes share-based payments to certain Directors,
employees and consultants by the issue of share options or
warrants. The fair value of these payments is calculated either
using the Black Scholes option pricing model or by reference to the
fair value of the remuneration settled by way of the grant of such
options or warrants. The expense is recognised on a straight-line
basis over the period from the date of award to the date of
vesting, based on the Company's best estimate of shares that will
eventually vest.
m) Foreign currency translation
i Functional and presentational currency
Items included in the financial statements are shown in the
currency of the primary economic environment in which the Company
operates ("the functional currency") which is considered by the
Directors to be the U.S Dollar. The exchange rate at 31 December
2020 was GBP1 / $1.3649 (2019: GBP1 / $1.3204).
ii Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the statement
of comprehensive income.
Transactions in the accounts of individual Group companies are
recorded at the rate of exchange ruling on the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at the rates ruling at the year-end. All
differences are taken to the statement of comprehensive income.
n) Taxation
i Current tax
The tax currently payable is based on taxable profit for the
year. Taxable profit differs from net profit as reported in the
statement of comprehensive income because it excludes items of
income or expense that are taxable or deductible on other years and
it further excludes items that are never taxable or deductible. The
Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the reporting
date.
ii Deferred taxation
Deferred income taxes are provided in full, using the liability
method, for all temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the
financial statements. Deferred income taxes are determined using
tax rates that have been enacted or substantially enacted and are
expected to apply when the related deferred income tax asset is
realised or the related deferred income tax liability is
settled.
The principal temporary differences arise from depreciation or
amortisation charged on assets and tax losses carried forward.
Deferred tax assets relating to the carry forward of unused tax
losses are recognised to the extent that it is probable that future
taxable profit will be available against which the unused tax
losses can be utilised.
o) Financial instruments
The Group's Financial Instruments comprise of cash and cash
equivalents, loans and receivables. There are no other categories
of financial instrument.
i Cash and cash equivalents
Cash and cash equivalents are carried at cost and comprise cash
in hand, cash at bank, deposits held at call with banks, and other
short-term highly liquid investments with original maturities of
three months or less.
ii Receivables
Receivables are measured at amortised cost unless the time value
of money is immaterial. A provision for impairment of receivables
is established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original
terms of the receivables. The amount of the provision is the
difference between the assets' carrying amount and the recoverable
amount. Expected credit losses for impairment of receivables are
included in the statement of comprehensive income.
iii Payables
Payables are recognised initially at fair values and
subsequently measured at amortised cost using the effective
interest method.
p) Financial liabilities 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 asset of the Group after deducting all of
its liabilities. Equity instruments issued by the Company are
recorded at the proceeds received net of direct issue costs.
q) Share capital
Ordinary shares are classified as equity. Proceeds received from
the issue of ordinary shares above the nominal value are classified
as Share Premium. Costs directly attributable to the issue of new
shares are shown in equity as a deduction from the Share Premium
account.
r) Provisions
Provisions are recognised when the Group has a present
obligation as a result of a past event and it is probable that the
Group would be required to settle that obligation. Provisions are
measured at the managements' best estimate of the expenditure
required to settle the obligation at the reporting date and are
discounted to present value where the effect is material.
s) Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision makers.
The chief operating decision makers have been identified as the
executive Board members.
t) Leases
The Group do not have any leases with a term of 12-months or
more that contain an option to purchase or where the underlying
asset has anything other than a low value and has elected for
exemption to the reporting requirements of IFRS 16 (Leases).
2. Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with
International Financial Reporting Standards requires the use of
accounting estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during
the reporting period. Although these estimates are based on
managements' best knowledge of current events and actions, actual
results ultimately may differ from those estimates. IFRS also
require management to exercise its judgement in the process of
applying the Group's accounting policies.
The prime areas involving a higher degree of judgement or
complexity, where assumptions and estimates are significant to the
financial statements, are as follows:
Recoverability of inter-company balances
Determining whether inter-company balances are impaired requires
an estimation of whether there are any indications that their
carrying values are not recoverable details of which are included
in note 13.
Impairment of capitalised exploration and evaluation
expenditure
The future recoverability of capitalised exploration and
evaluation expenditure is dependent on a number of factors,
including whether it successfully recovers the related exploration
and evaluation asset through sale. Factors which could impact the
future recoverability include the level of proved, probable and
inferred resources, future technological changes which could impact
the cost of drilling and extraction, future legal changes
(including changes to environmental restoration obligations),
changes to commodity prices and licence renewal dates and
commitments.
To the extent that capitalised exploration and evaluation
expenditure is determined to be irrecoverable in the future, this
will reduce profits and net assets in the period in which this
determination is made. In addition, exploration and evaluation
expenditure is capitalised if activities in the area of interest
have not yet reached a stage which permits reasonable assessment of
the existence or otherwise of economically recoverable reserves. To
the extent that it is determined in the future that this
capitalised expenditure should be written off, this will reduce
profits and net assets in the period in which this determination is
made. Details of impairments of capitalised exploration and
evaluation expenditure are included in note 12.
VAT receivable
The future ability of the Group to recover UK VAT is currently
the subject of a dispute with HMRC. On 8 July 2019 the Company
received a judgement in its favour from the First-Tier Tribunal
(Tax Chamber) and a further judgement dated 20 May 2021 from the
Upper-Tier Tribunal, which dismissed HMRC's appeal against the 8
July 2019 judgement. Whilst the Group believes that it has complied
in all material respects with UK VAT legislation, and now has the
benefit of the First-Tier Tribunal and the Upper-Tier Tribunal
judgements in its favour, there remains a possibility that HMRC
could appeal further, to the Court of Appeal or ultimately the
House of Lords. Any appeal by HMRC should be filed within a month
of the 20 May 2021 judgement. If the Group ultimately fails in its
dispute with HMRC, it will be deregistered for VAT and unable to
recover the VAT charged to it by UK suppliers. This would increase
the UK element of its cost base accordingly. The Directors have
made the judgement that the certainty over the Group's continued UK
VAT registration status cannot be guaranteed until all appeals are
exhausted, and have therefore provided against the VAT payables in
note 15.
Capital markets / going concern
The Group relies on the UK equities market and the market for
equity participations in oil and gas exploration assets in order to
raise the funds required to operate as a listed entity and complete
the respective work programmes for its oil and gas exploration
assets. From time to time, and especially in light of the present
Covid-19 pandemic, general economic and market conditions may
deteriorate to a point where it is not possible to raise equity
finance to fund exploration projects, nor debt to develop
projects.
Additional financing may therefore not be available to the Group
restricting the scope of operations, risking both its long-term
expansion programme, its obligations under contracts which may be
withdrawn or terminated for non-compliance and ultimately the
financial stability of the Group to continue as a going
concern.
Please see note 1 (c) for a more detailed discussion of going
concern matters.
Share-based payment transactions
The Group measures the cost of equity-settled transactions with
employees by reference to the fair value of the equity instruments
at the date at which they are granted. The fair value is determined
by using the Black Scholes model and by reference to the value of
the fees or remuneration settled by way of granting of warrants.
The determination of fair value using the Black Scholes methodology
is based on the input parameters chosen and will therefore contain
an element of judgement and uncertainty. Details of share-based
payment transactions are included in note 20.
3. Operating segments
The Group has two reportable operating segments: Africa and Head
Office. Non-current assets and operating liabilities are located in
Africa, whilst the majority of current assets are carried at Head
Office. The Group has not yet commenced production and therefore
has no revenue. Each reportable segment adopts the same accounting
policies. In compliance with IFRS 8 'Operating Segments' the
following table reconciles the operational loss and the assets and
liabilities of each reportable segment with the consolidated
figures presented in these Financial Statements, together with
comparative figures for the year-ended 31 December 2020.
Africa Head Office Total
2020 2019 2020 2019 2020 2019
$ $ $ $ $ $
----------------------------------- ------------ ----------- ------------ ------------ ------------ ------------
Administrative expenses (1) 111,635 (187,893) (805,452) (1,249,856) (693,817) (1,437,749)
Pre-licence expenditures - - (243) (810) (243) (810)
Share-based payment charges - - (236,297) (801,754) (236,297) (801,754)
Interest income (416) - 161 703 (255) 703
Financing costs (117) (1,031) (430,007) (420,942) (430,124) (421,973)
Gain / (loss) on disposal of
subsidiary undertaking 1,314,617 - (1,314,617) - - -
Loss by reportable segment 1,425,719 (188,924) (2,786,455) (2,472,659) (1,360,736) (2,661,583)
Total assets by reportable segment
(2 / 3) 27,083,022 24,342,425 16,039 65,501 27,099,061 24,407,926
----------------------------------- ------------ ----------- ------------ ------------ ------------ ------------
Total liabilities by reportable
segment (4) (2,351,684) (619,810) (2,776,127) (2,036,400) (5,127,811) (2,656,210)
----------------------------------- ------------ ----------- ------------ ------------ ------------ ------------
(1) Administrative expenses include $nil (2019: $65k) of
intangible exploration and evaluation asset impairments in relation
to the Africa segment.
(2) Included within total assets of $27.0 million (2019: $24.4
million) are $13.0 million Cameroon (2019: $10.8 million), $320k
Namibia (2019: $229k) and $13.7 million South Africa (2019: $13.3
million).
(3) Carrying amounts of segment assets exclude investments in
subsidiaries.
(4) Carrying amounts of segment liabilities exclude intra-group
financing.
4. Loss from operations
Loss from operations is stated after charging/(crediting): Total
2020 2019
$ $
----------------------------------------------------------------------------------------- -------- --------
Share-based payment charges included within staff costs 236,297 801,754
Share-based payment charges included within intangible exploration assets 7,485 -
Share-based payment charges included within professional costs 20,632 -
Share-based payment charges included within finance costs 263,613 332,961
Staff costs 2,203 328,221
Gain / (loss) on foreign currencies 164,951 118,906
An analysis of auditor's remuneration is as follows:
Fees payable to the Group's auditors for the audit of the Group and subsidiary annual
accounts 39,329 33,054
Fees payable to the Group's auditors for non-audit assurance services 9,884 1,749
Total audit fees 49,213 34,803
-------------------------------------------------------------------------------------------- -------- --------
5. Employee information
The average monthly number of employees of the Group (including
Directors) was:
2020 2019
Head office 4 4
Africa 3 3
--------------- ----- -----
7 7
------------- ----- -----
Group employee costs during the year (including executive
Directors) amounted to:
2020 2019
$ $
----------------------------- -------- --------
Wages and salaries 2,060 315,343
Social security costs 143 12,878
Share-based payment charges 236,297 468,793
238,500 797,014
----------------------------- -------- --------
During 2020, no awards were made under the Group share incentive
scheme.
During 2019, Jeremy Asher received an award of 15 million shares
under the Group share incentive scheme, a charge for which was been
recognised within the Group income statement of $142,266.
Key management personnel include the executive and non-executive
Directors whose remuneration, including non-cash share-based
payment charges of $399k (2019: $339k), was $399k (2019: $462k);
see Directors' Report for additional detail. During the year $244k
(2019: $206k) of the full-year share-based payment charge of $528k
(2019: $801k) related to employees and their remuneration as
employees.
The highest paid Director was Jeremy Asher $305k (2019:
$350k).
6. Finance costs
During the period covered by these financial statements the
Group incurred costs of $430k (2019: $422k). Included within these
charges is share-based payment costs of $264k (2019: $333k)
relating to warrants issued on drawdown and extension of the
bridging loan facility and the settlement of interest due. The
Company incurred finance costs of $430k (2019: $420k).
7. Taxation
2020 2019
$ $
Current tax
UK Corporation tax - -
-------------------------------------------------------------------------------------- ---------- ----------
Total current tax charge - -
-------------------------------------------------------------------------------------- ---------- ----------
The tax charge for the period can be reconciled to the loss for the year as follows:
Group loss before tax 1,360,733 2,661,584
Tax at the UK Corporation tax rate of 19% (2019: 19%) (258,540) (505,701)
Tax effects of:
Expenses not deductible for tax purposes 44,896 152,333
Tax losses carried forward not recognised as a deferred tax asset 213,644 353,368
Current tax charge - -
---------------------------------------------------------------------------------------- ---------- ----------
8. Deferred tax
At the reporting date the Group had an unrecognised deferred tax
asset of $4.3 million (2019: $4.0 million) relating to unused tax
losses. No deferred tax asset has been recognised due to the
uncertainty of future profit streams against which these losses
could be utilised.
9. Parent company income statement
For the year-ended 31 December 2020 the Parent Company made a
loss of $247k (2019: loss of $2.3 million after restated finance
costs of $783k, see note 24) including financing costs of $430k
(2019: $362k restated) and gains on impairment of subsidiary
undertaking (Wilton Petroleum Limited) following the completion of
its solvent liquidation on 10 May 2021 of $1.3 million (see note
15). Included within finance costs are $264k of share-based
payments with respect to warrants issued to the lenders (2019:
$333k) referred to in note 6, the share-based payments charge of
$528k (2019: $801k) and impairment expected credit losses against
the investments in its operating subsidiaries and intercompany
loans to them of $nil (2019: $136k million). The Company charged
finance interest on intercompany loan accounts of $233k (2019: $70k
after restated finance costs of $783k, see note 24) and fees with
respect to the provision of strategic advice and support of $39k
(2019: $198k). In accordance with the provisions of Section 408 of
the Companies Act 2006, the Parent Company has not presented a
statement of comprehensive income.
10. Loss per share
The diluted weighted average number of shares in issue and to be
issued as at 31 December 2020 is 1,244,247,074 (2019: 671,779,970).
The diluted loss per share has been kept the same as the basic loss
per share because the conversion of share options and share
warrants would decrease the basic loss per share and is thus
anti-dilutive. The number of anti-dilutive shares that have been
excluded from the computation of loss per share is 32,615,562
(2019: 1,296).
Basic & Diluted
2020 2019
$ $
--------------------------------------------------------------------- -------------- ------------
Loss for the year (1,360,736) (2,661,583)
Weighted average number of ordinary shares in issue during the year 1,244,247,074 671,779,970
Dilutive effect of share options outstanding - -
Fully diluted average number of ordinary shares during the year 1,244,247,074 671,779,970
Loss per share (USc) (0.11c) (0.40c)
---------------------------------------------------------------------- -------------- ------------
11. Property, plant and equipment
Group Company
Year-ended 31 December 2020 $ $
Cost
At 1 January and 31 December 2020 1,046 1,046
------------------------------------ ------ --------
Depreciation
At 1 January and 31 December 2020 1,046 1,046
------------------------------------ ------ --------
Net book value
------------------------------------ ------ --------
At 31 December 2019 and 2020 - -
------------------------------------ ------ --------
Group Company
Year-ended 31 December 2019 $ $
Cost
At 1 January 2019 3,368 3,368
Eliminated on disposal (2,322) (2,322)
At 31 December 2019 1,046 1,046
------------------------------- -------- --------
Depreciation
At 1 January 2019 2,428 2,428
Eliminated on disposal (1,931) (1,931)
Charge for the year 549 549
At 31 December 2019 1,046 1,046
------------------------------- -------- --------
Net book value
At 31 December 2019 and 2019 - -
------------------------------- -------- --------
12. Intangible Exploration and Evaluation (E&E) assets
Exploration and evaluation assets Goodwill Total
Year-ended 31 December 2020 $ $ $
---------------------------------- ------------ -------------
Cost
At 1 January 2020 96,324,278 8,023,292 104,347,570
Additions during the year 2,764,386 - 2,764,386
At 31 December 2020 99,088,664 8,023,292 107,111,956
----------------------------- ---------------------------------- ------------ -------------
Amortisation and impairment
At 1 January 2020 (72,008,462) (8,023,292) (80,031,754)
Impairment during the year - - -
At 31 December 2020 (72,008,462) (8,023,292) (80,031,754)
----------------------------- ---------------------------------- ------------ -------------
Net book value
----------------------------- ---------------------------------- ------------ -------------
At 31 December 2020 27,080,202 - 27,080,202
----------------------------- ---------------------------------- ------------ -------------
At 31 December 2019 24,315,816 - 24,315,816
----------------------------- ---------------------------------- ------------ -------------
Exploration and evaluation assets Goodwill Total
Year-ended 31 December 2019 $ $ $
---------------------------------- ------------ -------------
Cost
At 1 January 2019 91,654,861 8,023,292 99,678,153
Additions during the year 4,669,417 - 4,669,417
At 31 December 2019 96,324,278 8,023,292 104,347,570
------------------------------ ---------------------------------- ------------ -------------
Amortisation and impairment
At 1 January 2019 (72,008,462) (8,023,292) (80,031,754)
At 31 December 2019 (72,008,462) (8,023,292) (80,031,754)
------------------------------ ---------------------------------- ------------ -------------
Net book value
----------------------------- ---------------------------------- ------------ -------------
At 31 December 2019 24,315,816 - 24,315,816
------------------------------ ---------------------------------- ------------ -------------
At 31 December 2018 19,646,399 - 19,646,399
------------------------------ ---------------------------------- ------------ -------------
During the year the Group capitalised amounts totalling $2.7
million (2019: $4.7 million) with respect to the following
assets:
2020 2019
$ $
-------------- ---------- ----------
Cameroon 2,233,492 3,908,484
Namibia 91,338 223,962
South Africa 439,556 536,971
Total 2,764,386 4,669,417
-------------- ---------- ----------
In Cameroon the $2.2 million comprised ongoing NJOM-3 appraisal
drilling preparation costs plus the capitalised cost of operating
the local office in Douala.
In South Africa, Rift Petroleum Limited, Tower's wholly owned
subsidiary continues its efforts to seek a farm-in partner and
completed the reprocessing of existing sub-surface data, further
corroborating management's view of the prospectivity of the
Algoa-Gamtoos block which was led by the operator of the licence
New African Global Energy SA (Pty) Ltd.
In Namibia, the Group made various licence commitment payments
to the Government of the Republic of Namibia, and will be looking
to confirm a commitment work program for phase one by the end of
2021.
In accordance with the Group's accounting policies and IFRS 6
'Exploration for and Evaluation of Mineral Resources' the
Directors' have reviewed each of the exploration license areas for
indications of impairment. Having done so, it was concluded that a
full impairment review was not required on the Cameroon, South
Africa or Namibian licences, however, in-line with the treatment
adopted at 31 December 2018, full ongoing impairment of the Zambian
licences is still considered appropriate at this time.
The Directors have not provided for any impairment of the
Group's investment in the Thali license, because potential
transactions and funding discussions with third parties support the
Directors' view that the current carrying value is recoverable.
Furthermore, the operating company, Tower Resources Cameroon SA,
notified the Government of the Republic of Cameroon on 31 March
2020 of a state of force majeure with respect to difficulties and
delays experienced by the ongoing COVID-19 outbreak. On 19 May
2021, the Company subsequently received formal confirmation from
the Minister of Mines, Industry and Technological Development
("MINMIDT") of the details of the formal extension of the First
Exploration Period of the PSC. On 31 March 2021 the Company
announced that the President of the Republic had also approved a
formal extension of the First Exploration Period. The formal
"arrête" from MINMIDT extends the First Exploration Period to 11
May 2022.
In South Africa, Tower's wholly-owned subsidiary Rift Petroleum
Limited and its partner, New African Global Energy SA (Pty) Ltd,
received formal notification of the award of the next Technical
Cooperation Permit ("TCP") phase in November 2020. This phase will
expire on 16 November 2022, the net commitment for which is
approximately $2.5 million to Tower for 2021 and beyond and is
disclosed in note 23.
In the case of the Group's Zambian license, the Directors
continue to await the review of the country's petroleum law and
have not yet agreed with the Government of Zambia the next phase of
work, if any, in respect of Blocks 40 and 41. This uncertainty has
led the Directors to fully impair these assets in accordance with
IAS 36 "Impairment of Assets" due to the lack of clarity regarding
both future work programme and the fiscal terms.
In Namibia, the Company's investment in the current license is
currently just $320k (2019: 229k), which appears well supported by
the valuations implied by recent transactions in the region,
allowing for the early stage of the evaluation and appraisal
process. Furthermore, the Directors continue to believe firmly that
the relatively modest amounts of expenditure incurred on acquiring
and securing tenure to the licence is fully supported by their
initial view of its prospectivity based on the information that is
currently available.
13. Investment in subsidiaries
Loans to subsidiary undertakings Shares in subsidiary
(restated) (1) undertakings Total
Company $ $ $
Cost
At 1 January 2020 (restated) 78,890,242 37,519,722 116,409,964
Net advances during the year 1,302,321 - 1,302,321
Impairments during the year (2) - (5,302,983) (5,302,983)
At 31 December 2020 80,192,563 32,216,739 112,409,302
--------------------------------- --------------------------------- --------------------------------- -------------
Provision for impairment -
At 1 January 2020 (64,862,126) (19,908,973) (84,771,099)
At 31 December 2020 (64,862,126) (19,908,973) (84,771,099)
--------------------------------- --------------------------------- --------------------------------- -------------
Net book value -
--------------------------------- --------------------------------- --------------------------------- -------------
At 31 December 2020 15,330,437 12,307,766 27,638,203
--------------------------------- --------------------------------- --------------------------------- -------------
At 31 December 2019 14,028,116 17,610,749 31,638,865
--------------------------------- --------------------------------- --------------------------------- -------------
(1) Restated amounts relate to the impairment of loan interest
charged to Tower Resources Namibia Limited prior to that company's
dissolution in November 2019. See note 24.
(2) On 10 May 2021 Wilton Petroleum Limited completed its
solvent liquidation and the cost of the investment in that
subsidiary was fully impaired at the year-end.
Included within loans made to subsidiary undertakings during the
year of $1.3 million (2019: 4.5 million restated) are amounts of
$1.0 million Cameroon (2019: $3.5 million), $25k South Africa
(2019: $250k), $256k Rift Petroleum Holdings (2019: $950k) and $15k
(2019: ($220k) restated) Namibia.
Loans made by the parent company to subsidiary undertakings are
interest-bearing in accordance with loan agreements made in 2015,
and are repayable to the parent company on demand.
The subsidiary undertakings at the year-end are as follows
(these undertakings are included in the Group accounts):
Country of Class of
incorporation shares held Proportion of voting rights held Nature of business
2020 2020 2020 2019 2020
--------------------- ------------------- ------------- ----------------- ---------------- --------------------
Tower Resources
Cameroon Limited
(1) England & Wales Ordinary 100% 100% Holding company
Tower Resources Oil and gas
Cameroon SA (2) Cameroon Ordinary 100% 100% exploration
Rift Petroleum
Holdings Limited
(1) Isle of Man Ordinary 100% 100% Holding company
Rift Petroleum Oil and gas
Limited (3) Zambia Ordinary 100% 100% exploration
Rift Petroleum Oil and gas
Limited (3) Isle of Man Ordinary 100% 100% exploration
Tower Resources
(Namibia) Holdings
Limited (1) England & Wales Ordinary 100% 100% Holding company
Tower Resources
(Namibia) Limited Oil and gas
(4) England & Wales Ordinary 100% 100% exploration
Wilton Petroleum Oil and gas
Limited (1/5) England & Wales Ordinary 100% 100% exploration
--------------------- ------------------- ------------- ----------------- ---------------- --------------------
(1) Held directly by the Company, Tower
Resources plc
(2) Held directly or indirectly through
Tower Resources Cameroon Limited
(3) Held directly or indirectly through
Rift Petroleum Holdings Limited
(4) Held directly or indirectly through Tower Resources
(Namibia) Holdings Limited
(5) Liquidated on 10 May 2021
14. Trade and other receivables
Group Company
2020 2019 2020 2019
$ $ $ $
----------------------------- ------ ------- ------ -------
Trade and other receivables 8,805 53,448 8,803 53,446
----------------------------- ------ ------- ------ -------
15. Trade and other payables
Group Company
2020 2019 2020 2019
$ $ $ $
------------------------------------ ---------- ---------- ---------- ----------
Trade and other payables 1,763,182 1,398,597 1,386,925 1,150,226
Accruals 2,032,929 417,123 57,504 45,686
Loans from subsidiary undertakings - - - 6,617,600
3,796,111 1,815,720 1,444,429 7,813,512
------------------------------------ ---------- ---------- ---------- ----------
The future ability of the Group to recover UK VAT is currently
the subject of a dispute with HMRC. On 8 July 2019 the Company
received a judgement in its favour from the First-Tier Tribunal
(Tax Chamber) and a further judgement dated 20 May 2021 from the
Upper-Tier Tribunal, which dismissed HMRC's appeal against the 8
July 2019 judgement. Whilst the Group believes that it has complied
in all material respects with UK VAT legislation, and now has the
benefit of the First-Tier Tribunal and the Upper-Tier Tribunal
judgements in its favour, there remains a possibility that HMRC
could appeal further, to the Court of Appeal or ultimately the
House of Lords. Any appeal by HMRC should be filed within a month
of the 20 May 2021 judgement. If the Group ultimately fails in its
dispute with HMRC, it will be deregistered for VAT and unable to
recover the VAT charged to it by UK suppliers. This would increase
the UK element of its cost base accordingly. The Directors have
made the judgement that the certainty over the Group's continued UK
VAT registration status cannot be guaranteed until all appeals are
exhausted, and have therefore provided against the VAT payables in
note 15. Included within trade and other payables are amounts
totalling $1.2 million / GBP903k (2019: $1.2 million / GBP903k)
with respect to UK VAT payable.
On 10 May 2021 the solvent liquidation of Wilton Petroleum
Limited was completed and amounts totalling $6.6 million (2019:
$nil million) owing to it from Tower Resources plc were fully
written-back within their books.
Group creditor payment days are approximately 29 days (2019: 37
days).
16. Borrowings
Total borrowings for the Group and Company are noted below:
Group Company
2020 2019 2020 2019
$ $ $ $
-------------------------------------------- ---------- -------- ---------- --------
Principal balance at beginning of period 770,480 750,000 770,480 750,000
Amounts drawn down during the period 561,742 20,480 561,742 20,480
Currency revaluations at year end 6,504 - 6,504 -
-------------------------------------------- ---------- -------- ---------- --------
Principal balance at end of period 1,338,726 770,480 1,338,726 770,480
Financing costs at beginning of year 70,010 - 70,010 -
Changes to financing costs during the year (3,013) - (3,013) -
Interest expense 152,372 70,010 152,372 70,010
Interest paid (226,382) - (226,382) -
Currency revaluations at year end (13) - (13) -
-------------------------------------------- ---------- -------- ---------- --------
Financing costs at the end of the year (7,026) 70,010 (7,026) 70,010
Carrying amount at end of period 1,331,700 840,490 1,331,700 840,490
-------------------------------------------- ---------- -------- ---------- --------
Current 1,262,937 840,490 1,262,937 840,490
Non-current 68,763 - 68,763 -
PRINCIPAL REPAYMENT DATES Group Company
2020 2019 2020 2019
$ $ $ $
-------------------------------------------- ---------- -------- ---------- --------
Due within 1 year 1,270,960 840,490 1,270,960 840,490
Due within years 2-5 55,010 - 55,010 -
Due in more than 5 years 5,730 - 5,730 -
1,331,700 840,490 1,331,700 840,490
-------------------------------------------- ---------- -------- ---------- --------
During the year the Group and Company entered into facilities
totalling $562k (2019: $770k).
On 26 May 2020, the Company entered into a Business Bounceback
Loan from its principal banker, Barclays Bank plc totalling $62k
(GBP50k). The loan term is six years and there are no fees or
interest repayments due within the first 12-month period. The final
repayment on the loan will be made on 26 May 2026, although the
Company does have the option to repay the loan earlier if it so
chooses. The loan is unsecured. During the year the Company
recognised interest charges totalling $1k (2019: $nil) and made no
repayments (2019: $nil).
On 1 September 2020, the Company entered into a 6 month $500k
loan facility with Shard Merchant Capital Ltd. The terms of the
Shard Facility include the issue of 31,446,541 attached three-year
warrants at a strike price of 0.6 pence and 5,761,198 shares to
pre-pay interest charged at 12% per annum. The loan is secured by a
fixed and floating charge over the Company's assets in favour of
Shard Merchant Capital Ltd. The carrying amount of the Shard
Merchant Capital Ltd facility includes transaction costs of $35k
(net of accretion). During the year the Company recognised interest
charges totalling $43k (2019: $nil) and made repayments totalling
$30k (2019: $nil).
On 1 September 2020, the Pegasus Petroleum Limited loan
facility, to which Jeremy Asher is a controlling party, was
extended by 6 months to 28 February 2021. As part of the extension
agreement, all accrued interest to 28 February 2021 was prepaid and
settled by the issue of 43,616,169 shares. 47,169,811 warrants with
a strike price of 0.6 pence per share were issued as settlement of
the 6-month extension itself. Subsequent to this on 4 March 2021
the facility was again extended to November 2021 (see note 24).
17. Share capital
2020 2019
$ $
--------------------------------------------------------------- ----------- -----------
Authorised, called up, allotted and fully paid
1,325,296,032 (2019: 1,104,605,208) ordinary shares of 0.001p 18,254,040 18,251,117
---------------------------------------------------------------- ----------- -----------
At Company AGM, held on 6 July 2020, it was resolved by
shareholders that the 163,370,833,248 Deferred Shares and
56,515,033,595 B Deferred Shares in issue be cancelled. These
shares carried no entitlement to receive dividends, participate in
any way in the income or profits of the company and carried no
entitlement to receive notice of, attend, speak or vote at any
general meeting of the Company.
The share capital issues during 2020 are summarised as
follows:
Number of shares Share capital at nominal value Share premium
$ $
----------------------------------------------- ----------------- ------------------------------- --------------
At 1 January 2020 1,104,605,208 18,251,117 144,294,128
Shares issued for cash 171,741,322 2,265 856,595
Shares issued on settlement of third party
fees 5,333,333 70 26,150
Shares issued in settlement of loan interest 43,616,169 588 225,568
Share issue costs - - (58,995)
At 31 December 2020 1,325,296,032 18,254,040 145,343,446
------------------------------------------------ ----------------- ------------------------------- --------------
In March 2020, the Company issued 5,333,333 shares to Turner
Pope Investments (TPI) Limited as part settlement of fundraising
commissions owed to them for the placing for cash of 133,333,333 at
0.375 pence per shares at that same date.
In September 2020, the Company issued 5,761,198 shares to Shard
Merchant Capital Ltd and 37,854,971 to Pegasus Petroleum Limited in
settlement of interest due on their respective facility loan
accounts.
In September 2020, the Company placed 38,407,989 shares for cash
at 0.393 pence per share.
In June 2019 the Company subdivided and re-designated its
existing share capital and amended its articles of association, in
order to achieve a reduction in the par value of each Existing
Ordinary Share from GBP0.01 to GBP0.00001 per share.
18. Reserves
Reserves within equity are as follows:
Share capital
Amounts subscribed for share capital at nominal value.
Share premium account
The share premium account represents the amounts received by the
Company on the issue of its shares which were in excess of the
nominal value of the shares.
Retained losses
Cumulative net gains and losses recognised in the Statement of
Comprehensive Income less any amounts reflected directly in other
reserves.
19. Financial instruments
Capital risk management and liquidity risk
Capital structure of the Group and Company consists of cash and
cash equivalents held for working capital purposes and equity
attributable to the equity holders of the Parent, comprising issued
capital, reserves and retained losses as disclosed in the Statement
of Changes in Equity. The Group and Company uses cash flow models
and budgets, which are regularly updated, to monitor liquidity
risk.
Significant accounting policies
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each material class of financial asset,
financial liability and equity instrument are disclosed in note 1
to the financial statements.
Due to the short-term nature of these assets and liabilities
such values approximate their fair values at 31 December 2020 and
31 December 2019.
Carrying amount / fair value
2020 2019
Group $ $
-------------------------------------------------------- ------------- ----------------
Financial assets (classified as loans and receivables)
Cash and cash equivalents 10,054 38,662
Trade and other receivables 8,805 53,448
Total financial assets 18,859 92,110
--------------------------------------------------------- ------------- ----------------
Financial liabilities at amortised cost
Trade and other payables 3,796,111 1,815,720
Bridging loan facility 1,331,700 840,490
Total financial liabilities 5,127,811 2,656,210
--------------------------------------------------------- ------------- ----------------
Carrying amount / fair value
2020 2019
Company $ restated (1) $
-------------------------------------------------------- ------------- ----------------
Financial assets (classified as loans and receivables)
Cash and cash equivalents 7,236 12,055
Trade and other receivables 8,803 53,446
Loans to subsidiary undertakings 15,330,437 14,028,116
Total financial assets 15,346,476 14,093,617
--------------------------------------------------------- ------------- ----------------
Financial liabilities at amortised cost
Loans from subsidiary undertaking - 6,617,600
Borrowings 1,331,700 840,490
Total financial liabilities 1,331,700 7,458,090
--------------------------------------------------------- ------------- ----------------
(1) Restated amounts relate to the impairment of loan interest
charged to Tower Resources Namibia Limited prior to the company's
dissolution in November 2019. See note 24.
Financial risk management objectives
The Group's and Company's objective and policy is to use
financial instruments to manage the risk profile of its underlying
operations. The Group continually monitors financial risk including
oil and gas price risk, interest rate risk, equity price risk,
currency translation risk and liquidity risk and takes appropriate
measures to ensure such risks are managed in a controlled manner
including, where appropriate, through the use of financial
derivatives. The Group and Company does not enter into or trade
financial instruments, including derivative financial instruments,
for speculative purposes.
Interest rate risk management
The Group and Company borrowings carry a fixed interest rate of
1% per month and are therefore not exposed to any sensitivity
risk.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the
exposure to interest rates at the reporting date and assuming the
amount of the balances at the reporting date were outstanding for
the whole year.
A 100-basis point change represents management's estimate of a
possible change in interest rates at the reporting date. If
interest rates had been 100 basis points higher and all other
variables were held constant the Group's profits and equity would
be impacted as follows:
Group Company
Increase Increase
2020 2019 2020 2019
$ $ $ $
--------------------------- -------- -------- -------- --------
Cash and cash equivalents 402 4,869 243 4,646
Borrowings (9,599) (5,137) (9,599) (5,137)
--------------------------- -------- -------- -------- --------
(9,197) (268) (9,356) (491)
--------------------------- -------- -------- -------- --------
The Group's exposure to interest rate risk, which is the risk
that a financial instrument's value will fluctuate as a result of
changes in market interest rates on classes of financial assets and
financial liabilities, was as follows:
2020 2020 2019 2019
Floating interest Non-interest bearing Floating interest rate Non-interest bearing
rate
$ $ $ $
---------------------- --------------------- ----------------------- ---------------------
Cash and cash
equivalents 7,795 2,579 35,626 3,036
----------------------- ---------------------- --------------------- ----------------------- ---------------------
Foreign currency risk
The Group's and Company's reporting currency is the US dollar,
being the currency in which the majority of the Group's revenue and
expenditure is transacted. The US dollar is the functional currency
of the Company and the majority of its subsidiaries. Less material
elements of its management, services and treasury functions are
transacted in pounds sterling. The majority of balances are held in
US dollars with transfers to pounds sterling and other local
currencies, as required to meet local needs. The Group does not
enter into derivative transactions to manage its foreign currency
translation or transaction risk as it does not believe such risks
are material.
At the year-end the Group and Company maintained the following
cash reserves:
Group Company
2020 2019 2020 2019
Cash and cash equivalents $ $ $ $
------- ------- ------ -------
Cash and cash equivalents held in US$ 255 - 255 100
Cash and cash equivalents held in GBP 9,095 13,954 6,981 11,470
Cash and cash equivalents held in XAF 559 23,571 - -
Cash and cash equivalents held in other currencies 145 1,137 - 485
---------------------------------------------------- ------- ------- ------
10,054 38,662 7,236 12,055
---------------------------------------------------- ------- ------- ------ -------
Credit risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group or Company. The Group and Company reviews the credit risk of
the entities that it sells its products to or that it enters into
contractual arrangements with and will obtain guarantees and
commercial letters of credit as may be considered necessary where
risks are significant to the Group or Company.
The Group has cash and cash equivalents of $10,054 as at 31
December 2020 (2019: $38,662). The cash and cash equivalents are
held with financial institutions which are rated below. Wherever
possible ratings are provided by Fitch Ratings, however, where no
rating was available from either Fitch Ratings or either of the
other major international credit rating agencies such as Standard
& Poors or Moodys, the bank's local credit rating was used:
Group Company
2020 2019 2020 2019
Cash and cash equivalents Rating $ $ $ $
--------------------------- ----------- ------- ------- ------ -------
Barclays Bank plc A+ 7,236 12,055 7,236 12,055
Royal Bank of Scotland A 2,259 3,036 - -
First Afriland Bank No rating 414 23,530 - -
BGFI Bank A+ 145 41 - -
--------------------------- -----------
10,054 38,662 7,236 12,055
--------------------------------------- ------- ------- ------ -------
20. Share-based payments
2020 2019
$ $
-------- ----------
In the statement of comprehensive income the Group recognised the following charge with
respect
to its share-based payments 528,029 1,134,716
---------------------------------------------------------------------------------------------- -------- ----------
The share-based payments include the cost of warrants issued in
respect of the company's equity financings and bridging loan, and
also share-based payments for a number of services to the Group's
various contractors and brokers and payments in lieu of Director
fees.
During the year, no shares were awarded under the Chief
Executive's Share Incentive Plan (2019: 15 million shares valued at
$142,266).
Options
Details of share options outstanding at 31 December 2020 are as
follows:
Number in issue
------------------------- ----------------
At 1 January 2020 71,601,400
Lapsed during the year (48,600)
Awarded during the year 86,000,000
At 31 December 2020 157,552,800
--------------------------- ----------------
Date of grant Number in issue (1) Option price (pence) Latest exercise date
--------------- -------------------- --------------------- ---------------------
16 Mar 2016 52,800 47.5 16 Mar 2021
26 Oct 2016 1,500,000 2.3 25 Oct 2021
24 Jan 2019 70,000,000 1.250 24 Jan 2024
18 Dec 2020 86,000,000 0.450 18 Dec 2025
157,552,800
--------------- -------------------- --------------------- ---------------------
(1) These options vest in the beneficiaries in equal tranches on
the first, second and third anniversaries of grant.
The following Directors held interests, directly or indirectly,
in share options at the year-end:
2020 2019
No. No.
------------------------------------------ ------------ -----------
Jeremy Asher (via Pegasus Petroleum Ltd) 120,000,000 60,000,000
Total 120,000,000 60,000,000
------------------------------------------- ------------ -----------
Warrants
Details of warrants outstanding at 31 December 2020 are as
follows:
Number in issue
------------------------ ---------------
At 1 January 2020 444,284,489
Awarded during the year 176,159,846
At 31 December 2020 620,444,335
-------------------------- ---------------
Date of grant Number in issue Warrant price (pence) Latest exercise date
--------------- ---------------- ---------------------- ---------------------
09 Nov 2017 31,853,761 1.000 09 Nov 2022
01 Jan 2018 2,542,372 1.000 01 Jan 2023
01 Apr 2018 2,083,333 1.500 01 Apr 2023
01 Jul 2018 2,272,726 1.780 30 Jun 2023
01 Oct 2018 4,687,500 1.575 30 Sep 2023
24 Jan 2019 112,211,999 1.250 23 Jan 2024
16 Apr 2019 90,000,000 1.000 14 Apr 2024
30 Jun 2019 4,285,714 1.000 28 Jun 2024
30 Jul 2019 3,000,000 1.000 28 Jul 2024
15 Oct 2019 191,347,084 1.000 13 Oct 2024
31 Mar 2020 49,816,850 0.200 30 Mar 2025
29 Jun 2020 19,719,338 0.350 28 Jun 2025
28 Aug 2020 78,616,352 0.600 28 Aug 2023
01 Oct 2020 10,960,907 0.390 30 Sep 2025
01 Dec 2020 4,930,083 0.375 30 Nov 2025
31 Dec 2020 12,116,316 0.450 30 Dec 2025
620,444,335
--------------- ---------------- ---------------------- ---------------------
The following table shows the interests of the Directors in the
share warrants in issue:
2020 2019
No. No.
------------------------------------------------------- ------------ ------------
Jeremy Asher (directly and via Pegasus Petroleum Ltd) 258,277,029 166,376,171
Paula Brancato 5,769,306 -
Mark Enfield 3,925,458 -
Peter Taylor (retired 31 December 2020) - 22,276,628
Total 267,971,793 188,652,799
-------------------------------------------------------- ------------ ------------
The weighted average exercise price of the share warrants was
0.89p (2018: 1.22p) with a weighted average contractual life of 3.4
years (2018: 4.0 years). At 31 December 2020 and 2019 all warrants
had fully vested.
In its Statement of Comprehensive Income, the Company recognised
share-based payment charges of $236k (2019: $801k).
In compliance with the requirements of IFRS 2 on share-based
payments, the fair value of options or warrants granted during the
year is calculated using the Black Scholes option pricing model.
For this purpose, the volatility applied in calculating the above
charge varied between 20% and 143% (2018: 20% and 143%), depending
upon the date of grant, and the risk-free interest rate was 0.25%
(2019: 0.5%) and the Dividend Yield was nil% for 2019 and 2018.
The Company's share price ranged between 0.2p and 0.7p (2019:
0.3p and 1.0p) during the year. The closing price on 31 December
2020 was 0.4p per share (2019; 0.4p). The weighted average exercise
price of the share options was 0.8p (2019: 1.2p) with a weighted
average contractual life of 4.0 years (2019: 4.0 years). The total
number of options vested at the end of the year was 3.3 million
(2019: 1.6 million).
21. Related party transactions
The key management of the Group comprises the Directors of the
Company. Except as disclosed, there are no transactions with the
Directors other than their remuneration and interests in shares,
share options and warrants. As noted in the Directors' Report,
Pegasus Petroleum Ltd ("Pegasus"), a company owned and controlled
by Jeremy Asher, received $257,155 (2019: $448,666) in fees for
management services, and provided initially 50% and subsequently
100% of the loan facility set out in note 16. Further information
on Directors' remuneration is detailed in the Directors' Report and
their total remuneration in each of the categories specified in IAS
24 'Related Party Disclosures' is shown below:
Group Company
2020 2019 2020 2019
$ $ $ restated(4) $
-------------------------------------------------------------------- ---------- ---------- -------- --------------
Short-term employee benefits - 130,337 - 130,337
Fees charged by companies associated with Jeremy Asher (1) 257,155 448,666 - -
Interest charged on borrowings by companies associated with Jeremy
Asher (1) 108,456 70,010 108,456 70,010
Share-based payments (2) 399,400 556,178 263,613 556,178
Share incentive scheme awards (3) - 142,266 - -
Finance interest on intercompany loan accounts 234,652 - 234,652 70,299
Fees charged with respect to the provision of strategic advice and
support by the parent 170,049 - 170,049 198,768
1,169,712 1,347,457 776,770 1,025,592
-------------------------------------------------------------------- ---------- ---------- -------- --------------
(1) Charged by Pegasus Petroleum Limited ("Pegasus"), a company
registered in the Channel Islands, to Rift Petroleum Holdings
Limited, a wholly owned subsidiary of Tower Resources plc and
registered in the Isle of Man. Pegasus Petroleum Limited
("Pegasus") is owned and controlled by a family trust of which
Jeremy Asher is the settlor and lifetime beneficiary. Included in
the Group's operating loss is an amount of $257,155 (2019:
$253,555) paid to Pegasus in respect of charges for management
services received during 2020 plus $nil (2019: $195,111) of fees
with respect to performance uplift charges relating to 2019.
(2) Includes $nil (2019: $174,202) of charges for warrants
issued with respect to shares subscribed for by Mr Asher during
equity placings in January and October 2019, and $163,103 (2019:
$166,481) of charges for share warrants arising from the issue and
extension of the loan facility made to Tower Resources plc by
Pegasus in 2019; also includes $236,297 (2019: $85,153) in respect
of Director warrants issued in lieu of fees to Directors.
The warrants issued to Pegasus and Mr Asher were on identical
terms to those issued to third parties participating in the loan
facility and share subscriptions.
(3) Share incentive plan award to Jeremy Asher for 15 million
shares on 24 January 2019.
(4) Restated amounts relate to the impairment of loan interest
charged to Tower Resources Namibia Limited prior to the company's
dissolution in November 2019. See note 24.
22. Control
The Company is under the control of its shareholders and not any
one party.
23. Leases and capital commitments
The Group is committed to funding the following exploration
expenditure commitments as at 31 December 2020:
Country Interest 2021 2022 onwards
------------------------------------------ -------------- --------- -------------- --------------
Cameroon Thali (1) Cameroon 100% $3.53 million -
South Africa Algoa-Gamtoos (2) South Africa 50% $1.23 million $2.50 million
Namibia Blocks 1910A, 1911 and 1912B (3) Namibia 80% - $4.50 million
Zambia Blocks 40 and 41 (4) Zambia 100% - -
$4.76 million $7.00 million
--------------------------------------------------------- --------- -------------- --------------
(1) Force majeure notified 30 March 2020
(2) 2 years to 16 November 2022
(3) First period expiration 5 November 2022
(4) Discussions as to licence status ongoing, no current
commitments during hiatus period
24. Restatement of intercompany loan interest charges to Tower Resources Namibia Limited
The Company has intercompany loan funding agreements with all of
its operating subsidiaries as it currently provides to them the
sole source of funding for exploration and appraisal
operations.
During 2019 interest amounts totalling $782,903 were charged to
Tower Resources Namibia Limited, a company registered in the
British Virgin Islands, with respect to loan funding it had
received totalling $42.3 million to fund its share of the
Welwitschia-1 offshore exploration well drilled in 2014. Tower
Resources Namibia Limited was dissolved in November 2019 and prior
to this date all loan interest charged during 2019 should have been
fully provided against as the subsidiary no longer had the means to
repay it on-demand. During the year-ended 31 December 2019, the
Company charged its operating subsidiaries, including Tower
Resources Namibia Limited, loan interest totalling $853k.
25. Subsequent events
14 January 2021: Announcement of a placing for cash to raise
GBP1.25 million via 384,615,384 new ordinary shares of 0.001p each
at a price of 0.325 pence per share. Each placee received one
warrant exercisable for two years at 0.65 pence per share for every
3 shares subscribed. The funding was to repay the short-term Shard
Merchant Capital borrowing of $500,000, to contribute towards the
cost of the seismic reprocessing and interpretation being
undertaken by the Company's partner and license operator, NewAge
Energy Algoa (Pty) Ltd in respect of the Algoa-Gamtoos license in
South Africa, maintenance expenditure in Cameroon to maintain the
long-lead items inventory ready for the commencement of drilling
and testing of the NJOM-3 well on the Thali license and general
working capital purposes.
27 January 2021: Announcement that the Company had issued shares
in lieu of fees to EPI Group which provides geological and
geophysical services to the Company under a strategic relationship
that has been in place since 2015.
8 February 2021: Announcement that Rift Petroleum Ltd had
received updated resource estimates from its 50% partner and
license Operator, New Age Energy Algoa (Pty) Ltd following
interpretation of the reprocessing of additional 2D seismic data
covering the Algoa-Gamtoos license, offshore South Africa.
The reprocessing work encompassed 4,500 line kms of 2D seismic
data incorporating both data already owned by the partners and also
further data acquired from the Petroleum Authority of South Africa.
The resulting seismic dataset shows an overall improvement in
bandwidth, de-noise and imaging. Structural imaging is
substantially sharper than in the previous vintage dataset. The
impact on what can be seen in the Deepwater section of the license
is especially pronounced, allowing the New Age Energy Algoa (Pty)
Ltd to identify a deeper level slope and three separate reservoir
targets; a shallow section which was previously identified, whose
size is now estimated to be slightly larger, to which is ascribed
470 million boe Pmean recoverable resources (unrisked); a deeper
slope section which was not previously identified to which is
ascribed 231 million boe Pmean recoverable resources (unrisked);
and a basin floor fan section which was not previously identified
to which is ascribed 710 million boe Pmean recoverable resources
(unrisked);
4 March 2021: Announcement of a further extension of the Pegasus
Petroleum Limited borrowing facility. Pegasus Petroleum Limited
whose ultimate beneficial owner is the Company's Chairman and CEO,
Jeremy Asher, and was originally provided to the Company as a
bridging loan announced on 16 April 2019. The facility has now been
extended to the end of November 2021, though the Company hopes to
repay the Facility by 15 July 2021, in which case the cost of the
extension will reflect the earlier repayment.
10 May 2021: The completion of the solvent liquidation of the
wholly owned subsidiary, Wilton Petroleum Limited. At the date of
the liquidation, the Company recognised a gain on disposal of $1.3
million, being the net of amounts due to the subsidiary written
back on disposal of $6.6 million and the write-off of the carrying
amount of $5.3 million.
19 May 2021: Announcement that the wholly owned subsidiary of
the Company, Tower Resources Cameroon SA, has now received formal
confirmation from the Minister of Mines, Industry and Technological
Development of the details of the formal extension of the First
Exploration Period of the PSC. Tower Resources Cameroon SA declared
Force Majeure in March 2020 in respect of the First Exploration
Period of the PSC, in light of the restrictions required to combat
the Covid-19 pandemic, and on 31 March 2021 the Company announced
that the President of the Republic had also approved a formal
extension of the First Exploration Period. The formal "arrête" from
Minister of Mines, Industry and Technological Development extends
the First Exploration Period to 11 May 2022. The formal extension
allows the Company to proceed with finalising a schedule for
drilling and testing the NJOM-3 well.
21 May 2021: Announcement that the Company had received a
favourable ruling from the Upper-Tier Tax Tribunal upholding the
First-Tier Tax Tribunal's decision in the Company's favour on 8
July 2019 and dismissing HMRC's appeal against the First-Tier Tax
Tribunal's decision. The First-Tier Tax Tribunal's decision, which
was announced by the Company on 9 July 2019, allowed the Company's
appeal against HMRC's 2016 decisions to deny it credit for input
VAT. The Upper-Tier Tax Tribunal's decision dated 20 May 2021
affirms the FTT Decision, but remains subject to further appeal by
HMRC to the Court of Appeal. Any such appeal application should be
made within one month. The Company has fully provided for
assessments previously issued by HMRC and will continue to do so
until final resolution of the matter.
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END
FR EAXKLEEXFEFA
(END) Dow Jones Newswires
June 07, 2021 02:00 ET (06:00 GMT)
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