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) Dow Jones Newswires

June 07, 2021 02:00 ET (06:00 GMT)

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