TIDMTRP
RNS Number : 7752J
Tower Resources PLC
30 June 2017
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO
OR FROM THE UNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OF SOUTH
AFRICA, THE REPUBLIC OF IRELAND OR JAPAN OR ANY OTHER JURISDICTION
WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE RELEVANT SECURITIES
LAWS OF SUCH JURISDICTION.
This announcement does not constitute a prospectus or offering
memorandum or an offer in respect of any securities and is not
intended to provide the basis for any decision in respect of Tower
Resources PLC or other evaluation of any securities of Tower
Resources PLC or any other entity and should not be considered as a
recommendation that any investor should subscribe for or purchase
any such securities.
30 June 2017
Tower Resources plc
Proposed Placing for up to GBP180,000 and Intended Open
Offer
Preliminary Results to 31 December 2016
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)),
the AIM listed Africa focussed oil and gas exploration company
announces today its intention to raise gross proceeds of
approximately GBP180,000, through a non-brokered subscription for
approximately 18 million new Ordinary Shares (the "Placing Shares")
at a placing price of 1.0 pence per Ordinary share (the "Placing
Price") (the "Placing").
Further to the Company's announcement of 12 May 2017, Tower's
shares are currently suspended from trading on the AIM Market due
to significant uncertainty in relation to its financial position.
Whilst the Placing will provide the Company with some financial
headroom within which to continue to pursue a transaction in
relation to its Thali asset, it is currently anticipated that the
Company's shares will remain suspended from trading until such time
as there is greater certainty regards to Tower's future
prospects.
The Directors continue to believe that there is significant
value in the Company's assets including its Thali asset and remain
confident that a transaction in relation to that asset that would
release funding for the Company's short term requirements can be
achieved in due course. As a result, certain directors have
indicated an intention to participate in the Placing at a level
that would constitute a related party transaction under AIM Rule
13. Notwithstanding the continued suspension of the Company's
shares, Tower believes that existing shareholders should be
provided with the opportunity to subscribe for Ordinary Shares at
the Placing Price and therefore the Company also intends to make an
Open Offer to all qualifying UK shareholders shortly following
Admission to raise up to GBP180,000 (the "Open Offer") at the
Placing Price. The Placing is not conditional upon the Open Offer.
A circular concerning the Open Offer and Notice of AGM will shortly
be sent to Shareholders and will also be made available on the
Company's website www.towerresources.co.uk.
It is expected that Admission of the Placing Shares will become
effective and that dealings will commence in the Placing Shares by
8.00 a.m. on 5 July 2017.
The Company also announces its Preliminary results for the
period to 31 December 2016.
The 2016 Annual Report is available on the Company's website and
is being printed and is expected to be posted to shareholders
shortly.
CHAIRMAN'S STATEMENT
2016 was a tough year for Tower Resources plc ("Tower" or the
"Company"), in which we had to contend with both a difficult market
for the E&P sector and also a difficult market for the services
sector. Earlier in the year, we had believed that the weakness of
demand for key services, notably seismic acquisition, would at
least make it easier and cheaper to execute and finance our work
programs, but as things grew worse we found that there were no
longer vessels available in our geography between assignments, and
contractors could no longer help finance activity, because there
were so few assignments and several service companies were
themselves facing great financial pressure.
Even so, we have managed our way to this point, reduced our
costs, and are now working through a number of options for funding
our remaining license commitments, notably in Cameroon where we
remain extremely keen on the Thali project.
Following the publication of our 2015 Annual Report, we had
planned to execute 3D seismic acquisition on Thali during the
second half of 2016, under a proposed agreement with one of the
seismic services firms which would have granted them a 20% share of
the license. By now, we had hoped to be farming out an interest to
drill the commitment well based on a more detailed evaluation of
the reservoirs already identified by the earlier wells and seismic.
But this proved impossible for our intended seismic partner to
deliver, despite their best intentions. Since that time we have
been working closely with alternative partners for the license, and
with the Société Nationale des Hydrocarbures ("SNH") in Cameroon
who have been supportive and flexible throughout. It was in this
context that we made a placing and open offer of shares to raise
GBP1.6 million in September and October, and at the time we said
that we would work on alternative options for financing our
Cameroon work program, and we would also cut our costs as far as we
could while continuing to manage this process and our other
licenses.
At the end of October, we announced a reduction in the size of
the board to three people including myself, Peter Taylor and Graeme
Thomson, and that I would take over the role of CEO as well as
Chairman, while Graeme would become a non-executive director. Nigel
Quinton also relinquished his role as Exploration Director, to make
himself available to us as a consultant on an as-needed basis.
Since the year-end we have also terminated our other non-director
employment agreements in the UK, retaining the services of some but
not all of our staff on a part-time basis. This has allowed us to
reduce our costs by some GBP1 million per year, to a level that is
more appropriate to our reduced level of activity and easier to
fund.
Although our activity level is lower than it was in 2013-15, we
have nevertheless still been busy, notably in Cameroon where we
have been considering a variety of options for the work program
itself with SNH, and for financing it with various potential
partners. As previously announced we also negotiated the conversion
of our SADR working interests into over-riding royalty interests, a
deal which was completed shortly after the year-end, in order to
ensure that we would not need to inject further capital into those
interests going forward. We also applied for a further license in
Cameroon (an application which is pending), although we consciously
did not push to move this forward given the difficult financing
environment.
During the last quarter of 2016 and the first quarter of 2017 we
spoke with many parties about Thali, and in Q2 2017 we settled on a
proposed transaction which would have funded the remaining work
program and provided us with a significant recovery of back costs
while retaining an on-going interest. Unfortunately our
counter-party was then unable to continue with that transaction or
to make the payment on account that the proposed transaction had
envisaged, which led to our announcement in May 2017. The Board
felt that this was a sufficiently major event and created
sufficient uncertainty that trading in the Company's shares should
be suspended until the Company's position was clearer, which
remains the position today.
We have a number of options going forward, some of which
include:
-- Moving forward with a similar back-cost/royalty transaction
to the one we were planning to do in May
-- Agreeing a more conventional farm-out transaction
-- Adjusting the work program in consultation with SNH, and
financing the adjusted work program ourselves
A satisfactory transaction involving a significant recovery of
back costs could fully address our short term funding needs, since
our work commitments on our other licenses are low and we have
reduced costs so much. For this reason we have been reluctant to
ask shareholders for more cash when the stock price is already low
compared to the potential value of our assets. But we have reached
the point where we need to make at least a modest replenishment of
working capital, having already outlasted the "runway" which we
envisaged at the time of our 2016 placing. We are still seeking
only a modest amount of funds at this stage, GBP180,000 through the
initial placing, to minimise unnecessary dilution to shareholders
who may be unwilling or unable to participate, as a transaction
relating to Cameroon will likely eliminate the need for further
short term funding.
This is why, at the time of writing, we are conducting the
unusual process of preparing a Placing, while trading in our shares
remains suspended. The uncertainty regarding the Company's future
position is great, despite the several parallel commercial
discussions we are pursuing with third parties. We are not
disclosing the details of those parties or discussions publicly
because the discussions themselves are confidential, and also it is
not in shareholders' interests for us to do so; but in any event,
until we make a binding agreement with one of these parties it is
impossible to know whether a final conclusion will be reached,
which could result in a significant change in investor perceptions
whether positive or negative. Therefore, we anticipate that our
shares will remain suspended until this uncertainty is
substantially reduced. We have agreed to make the Placing at a very
low price reflecting this large uncertainty, and to make an Open
Offer equal in size to the Placing, to allow all shareholders who
wish to do so to participate on the same terms as those directors
and shareholders who have already participated in the Placing
recognising the inherent risks that an investment in the Company at
this time would entail.
The proceeds of the Placing and the Open Offer are expected to
see us through the coming months given our much lower expenses: how
far will depend on the Open Offer uptake and the discussions with
SNH, but as our accounts explain, we are aware that we will also
need either to complete a financing transaction regarding one of
our assets or to raise additional finance at the corporate level
within the next few months to see us past the current calendar year
end. However, the Directors remain confident that this can be done.
We place great value on the Company's Cameroon assets, and a number
of third parties appear to share our view of them. Peter Taylor and
I have both agreed to support the Placing, with Graeme Thomson
electing not to participate in the Placing so he is able to help
provide an independent opinion on the related party element of this
transaction as required by the AIM Rules.
I hope that next year's Annual Report will focus more on future
plans and developments, and less on the industry woes and our own
costs and financing, and I do believe that the E&P sector will
recover in due course. We want our shareholders to be able to
benefit from that recovery when it comes.
Jeremy Asher
Chairman and Chief Executive
30 June 2017
STRATEGIC REPORT: SUMMARY AND OPERATIONAL REVIEW
Last year, in our 2015 report, we explained our strategic shift
of 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 had not
and have not abandoned high risk/reward exploration altogether: we
still have our licenses in Zambia and South Africa, for example,
and we still have new licenses under discussion in Namibia. The
Thali PSC also has a high reward upside in the deeper zones, which
have not yet been tested by past drilling, as Exxon's Zafira
discovery to the South-West of our block has demonstrated. We
continue to believe that all of our assets are attractive and
valuable. But our strategy is to shift the balance of our
investment, and to make the focus of our new investment the lower
risk opportunities like Thali, or other appraisal and development
opportunities, which still offer good rewards during this phase of
the market cycle.
In practice, this strategy requires finding external finance at
the asset level for our existing exploration commitments wherever
possible, which is why we took the decision to convert our working
interest in the SADR to a royalty interest. Although Thali is not a
pure exploration project like Zambia, we have been seeking to farm
out Thali to minimise our funding requirements and free up cash. We
have been open to different types of structures for investment in
Thali going forward, including both working interest and royalty
structures. Our financial strategy continues, for the time being,
to focus on funding existing commitments at the asset level given
the weak level of AIM investor interest in exploration, but this is
of course subject to change as the market itself changes.
As an operator, as we are in Cameroon and Zambia, we believe
that the scale of local operations is also important to create
savings and synergies 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 oneself
is the most obvious way to achieve such synergies (where they can
be found) to the benefit of one's host nation, one's partners, and
one's investors alike. To this end, we are continuing to discuss a
further PSC in Cameroon even while we are looking to finance our
existing one - but only, of course, if we can also secure
appropriate external financing for such a PSC.
Once we have secured financing for our existing commitments, we
intend to turn our attention to new commitments, and to focus on
new opportunities that have clearly defined investment requirements
and a low-risk path to cash flow, for which we believe there is
still investor appetite on AIM. But we believe that we need to
address our existing work commitments first or together with any
such new opportunities.
Keeping overhead costs appropriately low, and managing operating
costs well, are always important, but especially so in this phase
of the market, when it may take longer than usual to develop
assets, with less investment capital available. We have always
sought to keep fixed costs down, and total costs flexible, through
outsourcing a number of important functions such as our G&G
relationship with PDF, and over the past eight months we have
reduced our central costs substantially, as promised at the time of
the 2016 placing.
On an operational level, activity has been low in both Zambia
and South Africa since our last update, following the conclusion of
the last phases of our work programs, but in Cameroon we have been
working hard with SNH on different options for completing the
current phase of our existing work program, including a well on
Thali.
DIRECTORS' REPORT
The Directors present the Report and Financial Statements on the
affairs of Tower and its subsidiaries, together with the financial
statements and Auditors' Report for the year-ended 31 December
2016.
Principal activity and business review
The principal activity of the Group and Company throughout the
year remained the exploration for oil and gas in Africa. The
significant developments during 2016, and more recently, the other
activities of the Group, as well as the future strategy and
prospects for the Group, are reviewed in detail in the Chairman and
Chief Executive's Statement and the Strategic Report section of
this report.
The Group operates through overseas branches and subsidiary
undertakings as appropriate to the fiscal environment. Subsidiary
undertakings of the Group are set out in note 13 to the financial
statements.
Results and dividends
The Group loss for the financial year was $23.3 million (2015:
$9.8 million). This leaves an accumulated Group retained loss of
$134.1 million (2015: $111.1 million) to be carried forward. Full
analysis of the movements in the Group's reserves are provided in
the Consolidated Statement of Changes in Equity. The Directors do
not recommend the payment of a dividend (2015: $nil).
Going concern
The Directors applied for suspension of trading in the Company's
shares on AIM on 12 May 2017 pending clarification of its financial
circumstances and have undertaken a number of cost reductions
across the Group. As at 28 June 2017 the Group had GBP55k of cash
reserves and expected to execute a private placing raising GBP180k
on 30 June 2017 prior to issuing an open offer to the shareholders
to raise additional finance. The Group will need to raise further
funds in addition to these two share issues prior to 30 September
2017, or to agree a farm out or other transaction involving one or
more of the Group's licences, in order to meet its liabilities as
they fall due. The Directors believe that they will need to raise
funds of approximately GBP2.0m in total over the coming twelve
months (mainly to fund obligations in respect of the Thali license)
and consider that there are a number of options available to them
either through capital markets, farm-outs or asset disposals and
are confident that these will be concluded satisfactorily within
the necessary timeframes. The Directors do not therefore intend to
cease trading nor do they believe that there is no realistic
alternative to doing so. The financial statements have therefore
been prepared on a going concern basis.
However, there can be no guarantee that the required funds may
be raised or transactions completed within the necessary
timeframes. Consequently a material uncertainty exists that may
cast significant doubt on the Group's ability to continue to
operate and to meet its commitments and discharge its liabilities
in the normal course of business for a period of not less than
twelve months from the date of this report. The financial
statements do not include the adjustments that would result if the
Group were unable to continue in operation such as the impairment
of the exploration assets.
Capital structure
Details of the issued share capital, together with details of
the movements in the Company's issued share capital during the
year, are shown in note 17 to the financial statements. The Company
has one class of ordinary share, which carries no right to fixed
income. Each share carries the right to one vote at general
meetings of the Company.
There are no specific restrictions on the size of a holding nor
on the transfer of shares, which are both governed by the general
provisions of the Articles of Association and prevailing
legislation. The Directors are not aware of any agreements between
holders of the Company's shares that may result in restrictions on
the transfer of securities or on voting rights. Details of the
employee share schemes are set out in note 21. No person has any
special rights of control over the Company's share capital and all
issued shares are fully paid.
Contacts
Tower Resources plc
Jeremy Asher (Chairman and CEO)
Andrew Matharu (VP - Corporate Affairs)
+44 20 7253 6639
Peel Hunt LLP (Nominated Adviser and Broker)
Richard Crichton/Ross Allister
+44 20 7418 8900
Regulatory
The Market Abuse Regulation EU 596/2014 ("MAR") became effective
from 3 July 2016. Market soundings, as defined in MAR, were
undertaken by the Company in respect of the Placing with the result
that certain persons became aware of inside information, as
permitted by MAR. That inside information is set out in this
announcement and has been disclosed as soon as possible in
accordance with paragraph 7 of article 17 of MAR. Therefore, those
persons that received inside information in a market sounding are
no longer in possession of inside information relating to the
Company and its securities.
Note regarding forward-looking statements:
This announcement contains certain forward looking statements
relating to the Company's future prospects, developments and
business strategies. Forward looking statements are identified by
their use of terms and phrases such as "targets" "estimates",
"envisages", "believes", "expects", "aims", "intends", "plans",
"will", "may", "anticipates", "would", "could" or similar
expressions or the negative of those, variations or comparable
expressions, including references to assumptions.
The forward looking statements in this announcement are based on
current expectations and are subject to risks and uncertainties
which could cause actual results to differ materially from those
expressed or implied by those statements. These forward looking
statements relate only to the position as at the date of this
announcement. Neither the Directors nor the Company undertake any
obligation to update forward looking statements, other than as
required by the AIM Rules for Companies or by the rules of any
other applicable securities regulatory authority, whether as a
result of the information, future events or otherwise. You are
advised to read this announcement and the information incorporated
by reference herein, in its entirety. The events described in the
forward-looking statements made in this announcement may not
occur.
Neither the content of the Company's website (or any other
website) nor any website accessible by hyperlinks on the Company's
website (or any other website) is incorporated in, or forms part
of, this announcement.
Any person receiving this announcement is advised to exercise
caution in relation to the Placing. If in any doubt about any of
the contents of this announcement, independent professional advice
should be obtained.
This summary should be read in conjunction with the full text of
the announcement which follows.
IMPORTANT NOTICE
This announcement does not constitute or form part of any offer
or invitation to purchase, or otherwise acquire, subscribe for,
sell, otherwise dispose of or issue, or any solicitation of any
offer to sell, otherwise dispose of, issue, purchase, otherwise
acquire or subscribe for, any security in the capital of the
Company in any jurisdiction.
The information contained in this announcement is not to be
released, published, distributed or transmitted by any means or
media, directly or indirectly, in whole or in part, in or into the
United States or to any US Person. This announcement does not
constitute an offer to sell, or a solicitation of an offer to buy,
securities in the United States or to any US Person. Securities may
not be offered or sold in the United States absent: (i)
registration under the Securities Act; or (ii) an available
exemption from registration under the Securities Act. The
securities mentioned herein have not been, and will not be,
registered under the Securities Act and will not be offered to the
public in the United States.
This announcement does not constitute an offer to buy or to
subscribe for, or the solicitation of an offer to buy or subscribe
for, Ordinary Shares in the capital of the Company or any other
security in any jurisdiction in which such offer or solicitation is
unlawful. The securities mentioned herein have not been, and the
Ordinary Shares will not be, qualified for sale under the laws of
any of Canada, Australia, the Republic of South Africa or Japan and
may not be offered or sold in Canada, Australia, the Republic of
South Africa or Japan or to any national, resident or citizen of
Canada, Australia, the Republic of South Africa or Japan. Neither
this announcement nor any copy of it may be sent to or taken into
the United States, Canada, Australia, the Republic of South Africa
or Japan. In addition, the securities to which this announcement
relates must not be marketed into any jurisdiction where to do so
would be unlawful.
This announcement has been issued by and is the sole
responsibility of the Company.
DETAILS OF THE PROPOSED PLACING AND INTED OPEN OFFER
The Company proposes to place 18,000,000 new Ordinary Shares
(the "Placing Shares") with certain investors including some of our
shareholders and Directors at the Placing Price to raise gross
proceeds of approximately GBP180,000. The Placing Price represents
a discount of approximately 58 per cent. to the closing mid-market
price of 2.38 pence per Ordinary Share on 11 May 2017 being the day
prior to the date the Company applied to have its Ordinary shares
suspended from trading on AIM pending clarification of its
financial circumstances.
The Placing Shares will total approximately 18,000,000 million
new Ordinary Shares and represent 14.7% of the enlarged share
capital of the Company.
The Placing Shares, when issued, will rank pari passu in all
respects with the Existing Issued Ordinary Share Capital.
The Board is grateful for the continued support received from
Shareholders and has therefore decided to offer all Shareholders
the opportunity to participate in a further issue of new equity in
the Company by making an Open Offer to all UK Shareholders at the
Placing Price. The Board proposes to raise up to GBP180,000 through
the Open Offer.
Further details of the Open Offer including the Excess
Application Facility will be set out in a circular and a notice of
AGM which will be sent to shareholders in due course.
BACKGROUND TO AND REASONS FOR THE PLACING AND OPEN OFFER
For the reasons explained in the Chairman's statement, the
Company is conducting the unusual process of preparing a Placing
while trading in its shares remains suspended. The uncertainty
regarding the Company's future position is great, despite the
several parallel commercial discussions it is pursuing with third
parties. The Company is not disclosing the details of those parties
or discussions publicly because the discussions themselves are
confidential, and also it is not in shareholders' interests for us
to do so; but in any event, until the Company makes a binding
agreement with one of these parties it is impossible to know
whether a final conclusion will be reached, which could result in a
significant change in investor perceptions whether positive or
negative.
Therefore, the Company anticipates that its shares will remain
suspended until this uncertainty is substantially reduced. The
Company has agreed to make the Placing at a very low price
reflecting this large uncertainty, and to make an Open Offer equal
in size to the Placing, to allow all shareholders who wish to do so
to participate on the same terms as those directors and
shareholders who have already participated in the Placing
recognising the inherent risks that an investment in the Company at
this time would entail.
The proceeds of the Placing and the Open Offer are expected to
see the Company through the coming months given its much lower
expenses: how far will depend on the Open Offer uptake and the
discussions with SNH, but as the Company's accounts explain, the
Directors are aware that they will also need either to complete a
financing transaction regarding one of the Company's assets or to
raise additional finance at the corporate level within the next few
months to see the Company past the current calendar year end.
However, the Directors remain confident that this can be done.
The Directors nevertheless wish to draw attention to the going
concern qualification in the Directors' report and in the accounts
and to reiterate the inherent risks that investment in the Company
at this time entails, as noted above.
PRELIMINARY RESULTS FOR THE TWELVE MONTHS TO 31 DECEMBER
2016
Highlights:
-- Focus on farm-out of Thali PSC, located in the prolific Rio Del Rey basin, Cameroon
-- Reduction in cost base and Board size for reduced near-term commitments
-- Placing and Open Offer in September 2016 to raise gross
GBP1.03 million and GBP0.56 million, respectively
-- Exit from ultra deep-water SW Orange Basin TCP, offshore South Africa
-- Share Capital Reorganisation resulting in a 250-for-1 share consolidation
-- Cash balance at year-end of US$0.8 million (2015: US$3.5 million)
-- Placing of GBP180,000 to be followed by an Open Offer for working capital purposes
PRELIMINARY RESULTS FOR THE YEARED 31 DECEMBER 2016
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December 2016 31 December 2015
(audited) (audited)
Note $ $
------------------------------------------------------------ ----- ----------------- -----------------
Revenue - -
Cost of sales - -
------------------------------------------------------------ ----- ----------------- -----------------
Gross profit - -
Other administrative expenses (2,805,810) (2,666,908)
Pre-licence expenditures (559,613) (2,989,213)
Reversal / impairment of exploration and evaluation assets 12 (19,916,390) (4,127,023)
------------------------------------------------------------ ----- ----------------- -----------------
Total administrative expenses (23,281,813) (9,783,144)
------------------------------------------------------------ ----- ----------------- -----------------
Group operating loss 4 (23,281,813) (9,783,144)
Finance income 2,064 1,630
Finance expense 6 (8,223) (10,655)
------------------------------------------------------------ ----- ----------------- -----------------
Loss for the year before taxation (23,287,972) (9,792,169)
Taxation 7 - -
------------------------------------------------------------ ----- ----------------- -----------------
Loss for the year after taxation (23,287,972) (9,792,169)
------------------------------------------------------------ ----- ----------------- -----------------
Other comprehensive income - -
------------------------------------------------------------ ----- ----------------- -----------------
Total comprehensive expense for the year (23,287,972) (9,792,169)
------------------------------------------------------------ ----- ----------------- -----------------
Basic loss per share (USc) 10 (48.59c) (48.39c)
------------------------------------------------------------ ----- ----------------- -----------------
Diluted loss per share (USc) 10 (48.59c) (48.39c)
------------------------------------------------------------ ----- ----------------- -----------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 2016 31 December 2015
(audited) (audited)
Note $ $
----------------------------------- ----- ----------------- -----------------
Non-current assets
Property, plant and equipment 11 55,331 72,226
Exploration and evaluation assets 12 20,464,971 36,982,467
----------------------------------- ----- ----------------- -----------------
20,520,302 37,054,693
----------------------------------- ----- ----------------- -----------------
Current assets
Trade and other receivables 14 544,191 2,202,055
Cash and cash equivalents 788,280 3,494,083
----------------------------------- ----- ----------------- -----------------
1,332,471 5,696,138
----------------------------------- ----- ----------------- -----------------
Total assets 21,852,773 42,750,831
----------------------------------- ----- ----------------- -----------------
Current liabilities
Trade and other payables 15 1,386,163 1,576,165
----------------------------------- ----- ----------------- -----------------
Total liabilities 1,386,163 1,576,165
----------------------------------- ----- ----------------- -----------------
Net assets 20,466,610 41,174,666
----------------------------------- ----- ----------------- -----------------
Equity
Share capital 17 12,016,201 11,024,090
Share premium 17 142,577,202 141,289,445
Retained losses 18 (134,126,793) (111,138,869)
----------------------------------- ----- ----------------- -----------------
Total shareholders' equity 20,466,610 41,174,666
----------------------------------- ----- ----------------- -----------------
The financial statements of Tower Resources plc, registered
number 05305345 were approved by the Board of Directors and
authorised for issue on 30 June 2017.
Signed on behalf of the Board of Directors
Jeremy Asher
Chairman and Chief Executive
30 June 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share (1) Share-based Retained Total
capital premium payments losses
reserve
$ $ $ $ $
At 1 January 2015 6,346,538 137,554,592 3,576,682 (107,273,954) 40,203,858
------------------------------------------ ----------- ------------ ---------------- -------------- -------------
Shares issued for cash net of costs 4,545,837 3,513,822 - - 8,059,659
Shares issued on settlement of third
party fees 131,715 221,031 - - 352,746
Total comprehensive income for the period - - 2,350,572 (9,792,169) (7,441,597)
At 31 December 2015 11,024,090 141,289,445 5,927,254 (117,066,123) 41,174,666
------------------------------------------ ----------- ------------ ---------------- -------------- -------------
Shares issued for cash net of costs 916,011 1,145,014 - - 2,061,025
Shares issued on settlement of third
party fees 76,100 142,744 - - 218,844
Total comprehensive income for the period - - 300,047 (23,287,971) (22,987,924)
At 30 June 2016 12,016,201 142,577,203 6,227,301 (140,354,094) 20,466,611
------------------------------------------ ----------- ------------ ---------------- -------------- -------------
(1) The share-based payment reserve has been included within the
retained loss reserve and is a non-distributable reserve.
CONSOLIDATED STATEMENT OF CASH FLOWS
31 December 2016 31 December 2015
(audited) (audited)
Note $ $
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash outflow from operating activities
Group operating loss for the period (23,281,813) (9,783,144)
Depreciation of property, plant and equipment 11 17,152 9,243
Share-based payments 21 300,048 2,350,572
Impairment of intangible exploration and evaluation assets 12 19,916,393 4,127,023
----------------------------------------------------------------------- ----- ----------------- -----------------
Operating cash flow before changes in working capital (3,048,220) (3,296,306)
increase in receivables and prepayments 1,657,864 111,659
Decrease in trade and other payables (190,002) (2,482,280)
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash used in operations (1,580,358) (5,666,927)
Interest received 2,064 1,630
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash used in operating activities (1,578,294) (5,665,297)
----------------------------------------------------------------------- ----- ----------------- -----------------
Investing activities
Exploration and evaluation costs 12 (3,398,897) (7,105,345)
Purchase of property, plant and equipment 11 (257) (78,858)
----------------------------------------------------------------------- ----- ----------------- -----------------
Net cash used in investing activities (3,399,154) (7,184,203)
----------------------------------------------------------------------- ----- ----------------- -----------------
Financing activities
Cash proceeds from issue of ordinary share capital net of issue costs 17 2,279,868 8,412,405
Finance costs 6 (8,223) (10,655)
----------------------------------------------------------------------- ----- ----------------- -----------------
Net cash from financing activities 2,271,645 8,401,750
----------------------------------------------------------------------- ----- ----------------- -----------------
Decrease in cash and cash equivalents (2,705,803) (4,447,750)
Cash and cash equivalents at beginning of year 3,494,083 7,941,833
----------------------------------------------------------------------- ----- ----------------- -----------------
Cash and cash equivalents at end of year 788,280 3,494,083
----------------------------------------------------------------------- ----- ----------------- -----------------
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 127 Cheapside, London, EC2V 6BT. 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.
b) Basis of accounting and adoption of new and revised standards
i New and amended standards adopted by the Group:
The following new standards and amendments to standards are
mandatory for the first time for the Group for the financial year
beginning 1 January 2016. Except as noted, the implementation of
these standards did not have a material effect on the Group.
Standard Effective Impact on initial
date application
-------------------- ---------- ------------------
IAS 1 1 January No impact
2016
-------------------- ---------- ------------------
IAS 16 and IAS 38 1 January No impact
2016
-------------------- ---------- ------------------
IAS 27 1 January No impact
2016
-------------------- ---------- ------------------
IFRS 11 1 January No impact
2016
-------------------- ---------- ------------------
Annual Improvements 1 January No impact
to IFRSs 2016
-------------------- ---------- ------------------
No other IFRS issued and adopted but not yet effective are
expected to have a material impact on the Group's financial
statements.
ii Standards, amendments and interpretations, which are
effective for reporting periods beginning after the date of these
financial statements which have not been adopted early:
Standard Description Effective
date
-------------------- --------------------------------- ----------
IFRS 10, Investments in Associates 1 January
and IAS and Joint Ventures (Amendments) 2016
28(1)
-------------------- --------------------------------- ----------
IFRS 10, Investment Entities (Amendments) 1 January
12 and IAS 2016
28(1)
-------------------- --------------------------------- ----------
IFRS 9(1) Financial Instruments 1 January
2018
-------------------- --------------------------------- ----------
IFRS 15(1) Revenue from Contract with 1 January
Customers 2018
-------------------- --------------------------------- ----------
Annual Improvements (2014-2016 Cycle) 1 January
to IFRSs(1) 2017
-------------------- --------------------------------- ----------
(1) Not yet endorsed by the EU
The Directors have not fully assessed the impact of all
standards but do not expect them to have a material impact.
c) Going concern
The Directors applied for suspension of trading in the Company's
shares on AIM on 12 May 2017 pending clarification of its financial
circumstances and have undertaken a number of cost reductions
across the Group. As at 28 June 2017 the Group had GBP55k of cash
reserves and expected to execute a private placing raising GBP180k
on 30 June 2017 prior to issuing an open offer to the shareholders
to raise additional finance. The Group will need to raise further
funds in addition to these two share issues prior to 30 September
2017, or to agree a farm out or other transaction involving one or
more of the Group's licences, in order to meet its liabilities as
they fall due. The Directors believe that they will need to raise
funds of approximately GBP2.0m in total over the coming twelve
months (mainly to fund obligations in respect of the Thali license)
and consider that there are a number of options available to them
either through capital markets, farm-outs or asset disposals and
are confident that these will be concluded satisfactorily within
the necessary timeframes. The Directors do not therefore intend to
cease trading nor do they believe that there is no realistic
alternative to doing so. The financial statements have therefore
been prepared on a going concern basis.
However, there can be no guarantee that the required funds may
be raised or transactions completed within the necessary
timeframes. Consequently a material uncertainty exists that may
cast significant doubt on the Group's ability to continue to
operate and to meet its commitments and discharge its liabilities
in the normal course of business for a period of not less than
twelve months from the date of this report. The financial
statements do not include the adjustments that would result if the
Group was unable to continue in operation such as the impairment of
the exploration assets.
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 written off 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 provision 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
2016 was GBP1 / $1.2336 (2015: GBP1 / $1.4802).
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. Provisions 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.
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 and has been appealed to the
Tribunal for determination. Whilst the Group believes that it has
complied in all material respects with UK VAT legislation, there
can be no certainty that it will be successful in its legal appeal
against HMRC's decision to withhold future amounts claimed from
them. If the Group fails in its appeal against HMRCs decision, 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, and have therefore provided against the VAT
receivables in note 14.
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 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
either by using the Black Scholes model or by reference to the
value of the fees or remuneration settled by way of granting of
warrants. Details of share-based payment transactions are included
in note 21
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 2015.
Africa Head Office Total
2016 2015 2016 2015 2016 2015
$ $ $ $ $ $
--------------------------------------- ------------ ----------- ---------- ---------- ------------ ------------
Administrative expenses (1) 19,308,568 4,435,726 3,096,433 (1,612) 22,405,001 4,434,114
Pre-licence expenditures - 33,923 559,613 2,955,290 559,613 2,989,213
Share-based payment charges - - 300,047 2,350,574 300,047 2,350,574
Depreciation of property, plant and
equipment - - 17,152 9,243 17,152 9,243
Interest income (1,849) - (215) (1,630) (2,064) (1,630)
Financing costs 3,293 4,938 4,930 5,717 8,223 10,655
Loss by reportable segment 19,310,012 4,474,587 3,977,960 5,317,582 23,287,972 9,792,169
Total assets by reportable segment (2
/ 3) 20,883,326 38,372,368 969,447 4,378,463 21,852,773 42,750,831
--------------------------------------- ------------ ----------- ---------- ---------- ------------ ------------
Total liabilities by reportable
segment (4) (1,049,436) (957,201) (336,727) (618,964) (1,386,163) (1,576,165)
--------------------------------------- ------------ ----------- ---------- ---------- ------------ ------------
(1) Administrative expenses include $19.9 million (2015: $4.1
million) of intangible exploration and evaluation asset impairments
in relation to the Africa segment.
(2) Included within total assets of $21.8 million (2015: $42.8
million) are $5.2 million (2015: $2.7 million) Cameroon, $2.8
million (2015: $2.6 million) Zambia, $12.4 million (2015: $31.1
million) South Africa and $nil (2015: $484k) SADR.
(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
2016 2015
$ $
------------------------------------------------------------------------------------ ----------- ----------
Share-based payment charges 300,047 2,350,574
Staff costs 1,760,710 2,133,045
Rental of properties 74,022 86,262
Loss on foreign currencies 246,999 243,833
Depreciation of property, plant and equipment 17,152 9,243
Impairment of exploration and evaluation assets 19,916,391 4,127,023
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 55,947 55,709
Fees payable to the Group's auditors for non-audit assurance services 16,951 35,494
Total audit fees 72,898 91,203
--------------------------------------------------------------------------------------- ----------- ----------
During the year the Company impaired assets totalling $19.9
million (2015: $4.1 million) in accordance with IAS 36 "Impairment
of Assets" in South Africa, SADR, Namibia and Kenya. Full details
of the impairment are provided in note 12.
5. Employee information
The average monthly number of employees of the Group (including
Directors) was:
2016 2015
Head office 5 6
Africa 1 1
--------------- ----- -----
6 7
------------- ----- -----
Group employee costs during the year (including executive
Directors) amounted to:
2016 2015
$ $
----------------------------- ---------- ----------
Wages and salaries 1,576,909 1,892,727
Social security costs 183,801 240,318
Share-based payment charges 300,047 2,350,574
2,060,757 4,483,619
----------------------------- ---------- ----------
No bonuses were paid to Directors or employees during the
year.
Key management personnel include executive and non-executive
Directors whose remuneration, including non-cash share-based
payment charges of $172k (2015: $1.4 million), was $1.0 million
(2015: $2.5 million); see Directors' Report for additional
detail.
A portion of the Group's staff costs and associated overheads
are expensed as pre-licence expenditure or capitalised where they
are directly attributable to on-going capital projects. In 2016
this portion amounted to $982k million (2015: $3.8 million).
6. Finance costs
During the period covered by these financial statements the
Group incurred costs of $8k (2015: $11k). The Company incurred
costs of $5k (2015: $6k).
7. Taxation
2016 2015
$ $
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 23,287,972 9,792,169
Tax at the UK Corporation tax rate of 20.25% (2014: 21.5%) (4,657,594) (1,982,915)
Tax effects of:
Expenses not deductible for tax purposes 3,850,739 1,137,233
Tax losses carried forward not recognised as a deferred tax asset 806,855 845,682
Current tax charge - -
------------------------------------------------------------------------------------ ------------ ------------
8. Deferred tax
At the reporting date the Group had an unrecognised deferred tax
asset of $3.2 million (2015: $2.8 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 2016 the Parent Company incurred
a loss of $24.2 million (2015: $8.5 million) including the
financing costs of $5k (2015: $6k) referred to in note 6, the
share-based payments charge of $300k (2015: $2.4 million) and a
provision for the impairment of advances to its South African,
Namibian, Kenyan, SADR and Ugandan operating subsidiaries of $20.0
million (2015: $6.6 million). The Company charged finance interest
on intercompany loan accounts of $777k (2015: $728k) and fees with
respect to the provision of strategic advice and support of $100k
(2015: $160k). 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
Basic & Diluted
2016 2015
$ $
--------------------------------------------------------------------- ----------- -----------
Loss for the year 23,287,972 9,792,169
Weighted average number of ordinary shares in issue during the year 47,930,538 20,234,326
Dilutive effect of share options outstanding - -
Fully diluted average number of ordinary shares during the year 47,930,538 20,234,326
Loss per share (USc) 48.59c 48.39c
---------------------------------------------------------------------- ----------- -----------
The diluted weighted average number of shares in issue and to be
issued is 47,930,538 (2015: 20,305,484). 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.
11. Property, plant and equipment
Group Company
Year-ended 31 December 2016 $ $
Cost
At 1 January 2016 325,928 91,419
Additions during the year 257 257
At 31 December 2016 326,185 91,676
------------------------------ -------- --------
Depreciation
At 1 January 2016 253,702 19,193
Charge for the year 17,152 17,152
At 31 December 2016 270,854 36,345
------------------------------ -------- --------
Net book value
At 31 December 2016 55,331 55,331
At 31 December 2015 72,226 72,226
------------------------------ -------- --------
Group Company
Year-ended 31 December 2015 $ $
Cost
At 1 January 2015 247,070 12,561
Additions during the year 78,858 78,858
Disposals during the year - -
At 31 December 2015 325,928 91,419
------------------------------ -------- --------
Depreciation
At 1 January 2015 244,459 9,950
Eliminated on disposal - -
Charge for the year 9,243 9,243
At 31 December 2015 253,702 19,193
------------------------------ -------- --------
Net book value
At 31 December 2015 72,226 72,226
At 31 December 2014 2,611 2,611
------------------------------ -------- --------
12. Intangible Exploration and Evaluation (E&E) assets
Exploration and evaluation assets Goodwill Total
Year-ended 31 December 2016 $ $ $
---------------------------------- ------------ --------------
Cost
At 1 January 2016 121,285,504 8,023,292 129,308,796
Additions during the year 3,398,897 - 3,398,897
At 31 December 2016 124,684,401 8,023,292 132,707,693
----------------------------- ---------------------------------- ------------ --------------
Amortisation and impairment
At 1 January 2016 (84,346,827) (7,979,502) (92,326,329)
Impairment during the year (19,872,603) (43,790) (19,916,393)
At 31 December 2016 (104,219,430) (8,023,292) (112,242,722)
----------------------------- ---------------------------------- ------------ --------------
Net book value
At 31 December 2016 20,464,971 - 20,464,971
At 31 December 2015 36,938,677 43,790 36,982,467
----------------------------- ---------------------------------- ------------ --------------
Exploration and evaluation assets Goodwill Total
Year-ended 31 December 2015 $ $ $
---------------------------------- ------------ -------------
Cost
At 1 January 2015 114,180,159 8,023,292 122,203,451
Additions during the year 7,105,345 - 7,105,345
At 31 December 2015 121,285,504 8,023,292 129,308,796
----------------------------- ---------------------------------- ------------ -------------
Amortisation and impairment
At 1 January 2015 (80,219,804) (7,979,502) (88,199,306)
Impairment during the year (4,127,023) - (4,127,023)
At 31 December 2015 (84,346,827) (7,979,502) (92,326,329)
----------------------------- ---------------------------------- ------------ -------------
Net book value
At 31 December 2015 36,938,677 43,790 36,982,467
At 31 December 2014 33,960,355 43,790 34,004,145
----------------------------- ---------------------------------- ------------ -------------
During the year the Group capitalised amounts totalling $3.4
million (2015: $7.1 million) with respect to the following
assets:
2016 2015
$ $
-------------- ---------- ----------
Cameroon 2,501,202 2,734,669
Namibia (8,000) 751,024
Kenya (84,775) 2,508,790
Zambia 145,420 1,302,488
South Africa 812,338 (294,504)
SADR 32,712 102,878
Total 3,398,897 7,105,345
-------------- ---------- ----------
The Group impaired amounts totalling $19.9 million (2015: $4.1
million) in accordance with IAS 36 "Impairment of Assets":
2016 2015
$ $
-------------- ----------- ----------
Namiba (8,000) 751,024
Kenya (84,775) 2,508,790
South Africa 19,492,094 867,209
SADR 517,074 -
Total 19,916,393 4,127,023
-------------- ----------- ----------
In accordance with the Group's accounting policies and IFRS 6
the Directors' have reviewed each of the exploration license areas
for indications of impairment. Having done so, based on the
financial constraints on the Group, and specific issues associated
with each license it was concluded that a full impairment review
was necessary in each case.
The Group subsequently conducted an impairment review in
accordance with the provisions of IAS 36. This is inherently an
extremely judgmental exercise because it requires the Directors to
place a value on exploration projects that by definition are not in
the development stage and are not therefore cash generating
units.
In Cameroon a small in-country office staffed with local
professionals has been established in Douala. Tower completed the
lengthy ESIA (Environmental and Social Impact Assessment) and
successfully applied for and was granted a Certificate of
Environmental Conformity (CEC) by the Cameroon Ministry of
Environment permitting the acquisition of seismic over the Thali
Block and also received necessary equipment import permits.
The Directors have not provided for any impairment of the
Company's investment in the Thali license, because potential
transactions discussed with third parties support the Directors'
view that the current carrying value is recoverable.
In South Africa on 16 February 2016 Tower announced that its
wholly-owned subsidiary, Rift Petroleum Limited ("Rift") and its
partner, New African Global Energy SA (Pty) Ltd, agreed not to
proceed with an application to convert the deep-water frontier SW
Orange Basin Technical Co-operation Permit (TCP) into an
exploration right. Consequently, New Age part-reimbursed Rift the
sum of US$400k, which was paid by Rift as part of its original
farm-in agreement in 2013, which was also terminated.
There are currently ongoing regulatory changes in South Africa
affecting the exploration industry and this has led to a reduction
in activity by Companies such as Tower whilst these matters are
resolved. Currently the Directors consider that despite this
uncertainty, once concluded the project will still be viable. If
this does not prove to be the case it is likely that exploration
would cease and the full cost of exploration impaired.
The investment in South Africa includes a fair-value adjustment
which represented an up-lift on the consideration paid at that time
to the vendors of Rift Petroleum Holdings Limited ("Rift"), based
on the value at that time of the Tower shares that they received in
exchange for those of Rift. As market conditions have materially
deteriorated in the intervening period, it was not felt that
carrying the uplift forward adhered to the spirit of IAS 36, albeit
that a full write-off of all carrying amounts was equally
unwarranted given the potential prospectivity of the acreage and
the interest shown in it by third parties.
The Directors are satisfied that in accordance with IAS 36, the
impaired carrying value is equal to the assessed value in use. This
view is also based on the market value of other South African
offshore exploration blocks to the extent this can be determined or
inferred from company market values and other transactions.
In the case of the Group's Zambian license, the Directors are
waiting for the current review of the country's petroleum law to be
completed before the value of the license can be tested in the
market. Tower have submitted a proposal to the Oil Minister to vary
the work programme on the existing license and are awaiting
approval of that before proceeding. Whilst there is clearly
uncertainty the Directors consider based on evidence available on
the project that it is worth continuing with the exploration and
based on evidence of other interested parties in license blocks
similar to that held by Tower that the value of the exploration
license is equal to its book value.
In SADR, the Company announced on 25 January 2017 the completion
of the sale of its wholly owned subsidiary, Comet Petroleum
Limited, to Red Rio Petroleum Ltd for a cash consideration of GBP1,
future contingent payments and an over-riding royalty interest of
ten per cent over future production revenue from Comet's assets in
SADR. Following this disposal and due to the uncertainty over the
precise timing and amount of future royalty cash flows, the
decision was made to fully impair the carrying value at 31 December
2016.
The valuations assessed by the Directors have been made on the
assumption that sufficient funds will be raised either through
share issues, farm outs or disposals to meet the license
commitments. A failure to obtain such funds would impact upon the
going concern nature of the business as set out in note 1 c) and
would also lead to an impairment of the exploration assets.
13. Investment in subsidiaries
Shares in subsidiary
Loans to subsidiary undertakings undertakings Total
Company $ $ $
Cost
At 1 January 2016 102,931,161 45,608,267 148,539,428
Net advances during the year 2,699,559 - 2,699,559
Re-classified as non-current
liabilities (note 16) 117,568 - 117,568
At 31 December 2016 105,748,288 45,608,267 151,356,555
--------------------------------- --------------------------------- -------------------------------- --------------
Provision for impairment -
At 1 January 2016 (95,695,275) (7,994,610) (103,689,885)
Provision for impairment (1,193,853) (20,002,908) (21,196,761)
At 31 December 2016 (96,889,128) (27,997,518) (124,886,646)
--------------------------------- --------------------------------- -------------------------------- --------------
Net book value -
At 31 December 2016 8,859,160 17,610,749 26,469,909
At 31 December 2015 7,235,886 37,613,657 44,849,543
--------------------------------- --------------------------------- -------------------------------- --------------
Included within loans made to subsidiary undertakings during the
year of $2.7 million are amounts of $1.8 million Cameroon, $210k
Zambia, $263k South Africa, and $396k Namibia. Included within the
$2.7 million is interest on intercompany loans of $777k. At 31
December 2016 loans in relation to SADR were forgiven prior the
disposal of Comet Petroleum Limited to Red Rio Petroleum
Limited.
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
2016 2016 2016 2015 2015
-------------------- --------------------- ------------- ----------------- ---------------- -------------------
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
(Kenya) Limited Oil and gas
(1) England & Wales Ordinary 100% 100% exploration
Tower Resources
(Namibia) Limited
(1) England & Wales Ordinary 100% 100% Holding company
Tower Resources
Namibia Limited British Virgin Oil and gas
(4) Islands Ordinary 100% 100% exploration
Wilton Petroleum Oil and gas
Limited (5/1) England & Wales Ordinary 100% 100% exploration
Tower Resources
((UK) Limited (1) England & Wales Ordinary 100% 100% Holding company
-------------------- --------------------- ------------- ----------------- ---------------- -------------------
(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) Limited
(5) In liquidation
14. Trade and other receivables
Group Company
2016 2015 2016 2015
$ $ $ $
----------------------------- -------- ---------- -------- --------
Trade and other receivables 544,191 2,202,055 144,189 976,068
------------------------------ -------- ---------- -------- --------
Included within both Group and Company accounts are amounts
totalling $74k (2015: $907k) with respect to UK VAT receivable. At
31 December 2015, these amounts had been withheld pending the
completion of a review that was incomplete at the time the 2015
financial statements were signed. At that time the company had
received independent third party advice confirming the validity of
the Company's UK VAT position.
As noted in the interim report and accounts 2016, HMRC
subsequently issued further assessments totalling GBP843k excluding
interest and penalties. This was appealed and referred to the
first-tier tribunal, a hearing date for which has not yet been
confirmed.
As also noted in the interim report and accounts 2016, the
Company had also identified that certain suppliers had incorrectly
charged UK VAT on their fees to the Company. VAT incorrectly
charged to the Company totalled GBP903k. The suppliers concerned
had filed letters disclosing this error with HMRC and sought
reimbursement. The legal benefit and the handling of these claims
have now been assigned to the Company, which is engaged in a
continuing dialogue with HMRC about these claims and HMRC's earlier
assessments. HMRC has agreed not to pursue its claim for GBP843k
while the Company's claim for reimbursement of GBP903k remains
outstanding.
The Company firmly believes that it has complied in all material
respects with UK VAT legislation. Based on discussions with its
advisors, the Company understands that the strength of HMRC's claim
over the GBP843k is subject to legal interpretation, whereas the
strength of the Company's claim of GBP903k against HMRC is not.
Nevertheless, taking into account the uncertainty regarding the
appeal on the withholding of the original receivable and the
assessment of GBP843k, and the alternative reimbursement due of
GBP903k, the Company has therefore reduced the net receivable
within the accounts to GBP60k ($74k) to reflect only the
reimbursement due, and has also made a full provision for the HMRC
assessment. The difference has been charged to the Income
Statement.
Also included within Group receivables is an amount of $400k
(2015: $500k) following the decision by Tower's wholly-owned
subsidiary, Rift Petroleum Limited and its partner, New African
Global Energy SA (Pty) Ltd ("New Age") not to proceed with an
application to convert the TCP for the Orange Basin
ultra-deep-water frontier area in South Africa into an exploration
right in February 2016. Accordingly, New Age were required to
reimburse Rift the sum of $500k, which was paid by Rift as part of
its original farm-in agreement in 2013. At 31 December 2016 $100k
had been received by the Group from New Age.
15. Trade and other payables
Group Company
2016 2015 2016 2015
$ $ $ $
-------------------------- ---------- ---------- -------- --------
Trade and other payables 222,207 1,407,354 172,771 450,153
Accruals 1,163,956 168,811 163,956 168,811
1,386,163 1,576,165 336,727 618,964
-------------------------- ---------- ---------- -------- --------
Group creditor payment days are approximately 35 days (2014: 35
days).
16. Non-current liabilities
Group Company
2016 2015 2016 2015
$ $ $ $
---------------------------------- ------ ------ ---------- ----------
Loan from subsidiary undertaking - - 6,636,019 6,518,451
----------------------------------- ------ ----- ---------- ----------
Non-current liabilities represent a loan from Wilton Petroleum
Limited, a wholly owned subsidiary, to the Company.
17. Share capital
2016 2015
$ $
-------------------------------------------------------- ----------- -----------
Authorised, called up, allotted and fully paid
104,128,588 (2015: 27,228,472) ordinary shares of 1.0p 12,016,201 11,024,090
---------------------------------------------------------- ----------- -----------
Following the passing of the Share Capital Reorganisation
resolutions at the Company's AGM on 6 April 2016 every 250 existing
ordinary shares of 0.1p each that were in issue at that date, were
consolidated into one new ordinary share of GBP0.01 each. Other
than the change in nominal value, the New Ordinary Shares arising
on implementation of the share consolidation had the same rights as
the existing ordinary shares, including voting and other rights.
All existing options and warrants were also consolidated on the
same 250-to-1 basis. All shareholders and option holders retain the
same percentage interest in the Company post consolidation as
previously held.
The share capital issues during 2016 are summarised as
follows:
Number of shares Share capital at nominal value Share premium
$ $
--------------------------------------- ----------------- ------------------------------- --------------
At 1 January 2016 (pre-consolidation) 6,807,118,052 11,024,090 141,289,444
Shares consolidation (6,779,889,580) - -
At 1 January 2016 (restated) 27,228,472 11,024,090 141,289,444
Shares issued for cash 70,913,919 916,011 1,145,014
Shares issued in lieu of fees payable 5,986,197 76,100 287,124
Share issue costs - - (144,379)
At 31 December 2016 104,128,588 12,016,201 142,577,203
----------------------------------------- ----------------- ------------------------------- --------------
The shares issued in lieu of fees payable were issued quarterly
and valued at the average market price for the quarter in which the
services were provided.
On 7 March 2016, it was announced that at the Company's AGM a
capital reorganisation would be proposed to restructure and
consolidate the Company's shares so that for each 250 shares
currently held shareholders will receive one new share. The main
purpose of this exercise was to reduce the volatility of the
Company's share price and to be able to issue shares for existing
contractual arrangements, as the market price at that time was
below the nominal value. Following the passing of the Share Capital
Reorganisation resolutions on 6 April 2016, every 250 existing
ordinary shares of 0.1p each were consolidated into one new
ordinary share of 1.0p each. Following the share capital
reorganisation the Company's issued share capital comprised of
27,228,472 Ordinary Shares.
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 2016 and
31 December 2015.
Carrying amount / fair value
2016 2015
Group $ $
-------------------------------------------------------- ----------------------------- -----------
Financial assets (classified as loans and receivables)
Cash and cash equivalents 788,280 3,494,083
Trade and other receivables 544,191 2,202,055
Total financial assets 1,332,471 5,696,138
----------------------------------------------------------- ----------------------------- -----------
Financial liabilities at amortised cost
Trade and other payables 1,386,163 1,576,165
----------------------------------------------------------- ----------------------------- -----------
Total financial liabilities 1,386,163 1,576,165
----------------------------------------------------------- ----------------------------- -----------
Carrying amount / fair value
2016 2015
Company $ $
-------------------------------------------------------- ----------------------------- -----------
Financial assets (classified as loans and receivables)
Cash and cash equivalents 769,927 3,330,169
Trade and other receivables 144,189 976,068
Loans to subsidiary undertakings 8,859,160 7,235,887
Total financial assets 9,773,276 11,542,124
----------------------------------------------------------- ----------------------------- -----------
Financial liabilities at amortised cost
Trade and other payables 336,727 618,964
Loans from subsidiary undertaking 6,636,019 6,518,451
----------------------------------------------------------- ----------------------------- -----------
Total financial liabilities 6,972,746 7,137,415
----------------------------------------------------------- ----------------------------- -----------
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 does not have any outstanding borrowings
and hence, the Group and Company is only exposed to interest rate
risk on its short term cash deposits.
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
2016 2015 2016 2015
$ $ $ $
--------------------------- ------- ------- --------- -------
Cash and cash equivalents 22,511 27,387 21,375 25,934
---------------------------- ------- ------- --------- -------
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:
2016 2015
Floating interest Non-interest bearing Floating interest Non-interest bearing
rate rate
$ $ $ $
--------------------- --------------------- ---------------------- ---------------------
Cash and cash
equivalents 780,339 7,941 3,335,169 158,914
----------------------- --------------------- --------------------- ---------------------- ---------------------
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.
At the year-end the Group and Company maintained the following
cash reserves:
Group Company
2016 2015 2016 2015
Cash and cash equivalents $ $ $ $
-------- ---------- -------- ----------
Cash and cash equivalents held in US$ 26,439 452,953 20,427 439,072
Cash and cash equivalents held in GBP 748,551 3,026,087 748,551 2,891,097
Cash and cash equivalents held in other currencies 13,290 15,043 949 -
----------------------------------------------------- -------- ---------- -------- ----------
788,280 3,494,083 769,927 3,330,169
---------------------------------------------------- -------- ---------- -------- ----------
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.
20. Operating leases and capital commitments
Group Company
2016 2015 2016 2015
$ $ $ $
------- ------- -------- -------
Minimum lease payments under operating leases recognised as an expense during
the year 74,022 41,001 74,022 41,001
------------------------------------------------------------------------------- ------- ------- -------- -------
At the reporting date outstanding commitments for minimum
operating lease payments fall due as follows:
Group Company
2016 2015 2016 2015
$ $ $ $
----------------------------------- -------- -------- -------- --------
Within one year 69,620 77,938 69,620 77,938
In second to fifth year inclusive 176,815 275,881 176,815 275,881
------------------------------------ -------- -------- -------- --------
246,434 353,819 246,434 353,819
----------------------------------- -------- -------- -------- --------
Operating lease commitments represent payments made for by the
Group for its office properties.
The Group is committed to funding the following exploration
expenditure commitments as at 31 December 2016:
Country Interest Net commitment 2017 Net commitment 2018 onwards
Algoa-Gamtoos (1) South Africa 50% $- million $2.1 million
Thali (2) Cameroon 100% $- million $10.8 million
Block 40 & 41 Zambia 100% $- million tbd
$- million $12.9 million
--------------------------------------------------- --------- -------------------- ----------------------------
(1) 2 years from signature of agreement to next
phase tbd.
(2) 3 years to 14 September 2018.
(3) 1 year from signature of agreement to next phase
tbd
21. Share-based payments
Options
Following the passing of the Share Capital Reorganisation
resolutions at the Company's AGM on 6 April 2016 every 250 existing
ordinary shares of 0.1p each that were in issue at that date, were
consolidated into one new ordinary share of GBP0.01 each. Other
than the change in nominal value, the New Ordinary Shares arising
on implementation of the share consolidation had the same rights as
the existing ordinary shares, including voting and other rights.
All options and warrants in issue at that date were also
consolidated on the same basis.
Details of share options outstanding at 31 December 2016 are as
follows:
Number in issue
--------------------------------------- ----------------
At 1 January 2016 (pre-consolidation) 198,700,000
Shares consolidation (197,905,200)
At 1 January 2016 (restated) 794,800
Granted during the year 2,037,600
Lapsed / forfeited during the year (33,334)
At 31 December 2016 2,799,066
----------------------------------------- ----------------
Date of grant Number in issue Option price (pence) Latest exercise date
--------------- ---------------- ---- --------------------- ---------------------
27 Dec 14 313,466 (1) 1.750 27 Dec 19
09 Dec 15 471,600 (1) 0.475 09 Dec 20
16 Mar 16 514,000 (1) 0.475 16 Mar 21
26 Oct 16 1,500,000 (1) 0.023 25 Oct 21
(1) These options vest in the beneficiaries in equal tranches on
the first, second and third anniversaries of grant.
The following table shows the interests of the Directors in the
share options in issue:
2016 2015
No. No.
---------------- -------- --------
Graeme Thomson 398,001 272,000
Nigel Quinton - 168,000
Total 398,001 440,000
----------------- -------- --------
Warrants
Details of warrants outstanding at 31 December 2016 are as
follows:
Number in issue
--------------------------------------- ----------------
At 1 January 2016 (pre-consolidation) 35,944,363
Shares consolidation (35,800,596)
At 1 January 2016 (restated) 143,767
Lapsed during the year (6,865)
At 31 December 2016 280,669
----------------------------------------- ----------------
These warrants vest in the beneficiaries on the first
anniversary of grant.
The following table shows the interests of the Directors in the
share warrants in issue:
2016 2015
No. No.
---------------- ------- --------
Jeremy Asher 38,770 39,646
Graeme Thomson 23,992 23,992
Nigel Quinton - 18,159
Peter Blakey - 25,453
Philip Swatman - 7,997
Peter Taylor 23,992 25,453
Total 86,754 140,700
----------------- ------- --------
The weighted average exercise price of the share warrants was
452.5p (2015: 498.0p) pence with a weighted average contractual
life of 1.2 years (2015: 2.2 years). At 31 December 2016 and 2015
all warrants had fully vested.
In its Statement of Comprehensive Income the Company recognised
share-based payment charges of $300k (2015: $2.4 million)
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 82% and 143% (2015: 82% and 143%), depending
upon the date of grant, and the risk free interest rate was 0.50%
and the Dividend Yield was 0% for 2015 and 2016.
The Company's share price ranged between 2.1p and 28.8p (2015:
22.5p and 175.0p) during the year. The closing price on 31 December
2016 was 2.1p per share. The weighted average exercise price of the
share options was 38.0p (2015: 97.5p) with a weighted average
contractual life of 4.38 years (2015: 4.57 years). The total number
of options vested at the end of the year was 209k (2015: 104k).
22. Related party transactions
TM Services Limited ("TM") is controlled by two Directors of the
Company, Mr. Peter Blakey and Mr. Peter Taylor. Included in the
Group's operating loss is an amount of $nil (2015: $79k) paid to TM
in respect of charges for office accommodation and administration
assistance which ceased in July 2015. The key management of the
Group comprises the Directors of the Company. There are no
transactions with the Directors other than their remuneration and
interests in shares, share options and share warrants. 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
2016 2015 2016 2015
$ $ $ $
------------------------------------------------------------------- ---------- ---------- ---------- ----------
Short-term employee benefits 860,378 1,095,963 860,378 1,095,963
Share-based payments 172,337 1,381,623 172,337 1,381,623
Finance interest on intercompany loan accounts - 777,059 728,184 728,184
Fees charged with respect to the provision of strategic advice and
support - 99,830 159,666 159,666
--------------------------------------------------------------------
1,032,715 3,354,475 1,920,565 3,365,436
------------------------------------------------------------------- ---------- ---------- ---------- ----------
23. Control
The Company is under the control of its shareholders and not any
one party.
24. Subsequent events
On 25 January 2017, Tower announced the completion of the sale
of its wholly owned subsidiary, Comet Petroleum Limited, to Red Rio
Petroleum Ltd for a cash consideration of GBP1, future contingent
payments and an over-riding royalty interest of ten per cent over
future production revenue from Comet's assets in SADR.
Since the 31(st) December 2016, as noted in Note 13, Wilton
Petroleum Ltd is being liquidated.
On 12 May 2017, Tower announced that it had applied for the
suspension of trading in the Company's ordinary shares on AIM
pending clarification of its financial circumstances and further
updates on the Company's farm-out discussions in relation to the
Thali asset.
PROFESSIONAL ADVISERS
Nominated Adviser and Broker:
Peel Hunt LLP
Moor House,
120 London Wall,
London EC2Y 5ET
Solicitors:
Watson Farley & Williams LLP
15 Appold Street,
London EC2Y
Group Auditors:
UHY Hacker Young LLP
4 Thomas More Square,
London E1W 1YW
Registrars:
Capita IRG
Bourne House,
34 Beckenham Road,
Beckenham,
Kent BR3 4TU
Bankers:
Barclays Bank plc
Level 27
One Churchill Place
London E14 5HP
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCBDGDLUSXBGRG
(END) Dow Jones Newswires
June 30, 2017 08:55 ET (12:55 GMT)
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