REG - Tower Resources PLC - Placing, Intended Open Offer and Prelim Results <Origin Href="QuoteRef">TOWR.L</Origin> - Part 2
30/06/2017 14:00
- Part 2: For the preceding part double click ID:nRSd7752Ja
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 £1, 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
Loans to subsidiary undertakings Shares in subsidiary 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 Proportion of voting rights held Nature of business
incorporation shares held
2016 2016 2016 2015 2015
Tower Resources Cameroon Limited 1 England & Wales Ordinary 100% 100% Holding company
Tower Resources Cameroon SA 2 Cameroon Ordinary 100% 100% Oil and gas exploration
Rift Petroleum Holdings Limited 1 Isle of Man Ordinary 100% 100% Holding company
Rift Petroleum Limited 3 Zambia Ordinary 100% 100% Oil and gas exploration
Rift Petroleum Limited 3 Isle of Man Ordinary 100% 100% Oil and gas exploration
Tower Resources (Kenya) Limited 1 England & Wales Ordinary 100% 100% Oil and gas exploration
Tower Resources (Namibia) Limited 1 England & Wales Ordinary 100% 100% Holding company
Tower Resources Namibia Limited 4 British Virgin Islands Ordinary 100% 100% Oil and gas exploration
Wilton Petroleum Limited 5/1 England & Wales Ordinary 100% 100% Oil and gas 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 £843k 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 £903k. 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 £843k while the Company's claim for reimbursement
of £903k 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 £843k is subject to
legal interpretation, whereas the strength of the Company's claim of £903k
against HMRC is not.
Nevertheless, taking into account the uncertainty regarding the appeal on the
withholding of the original receivable and the assessment of £843k, and the
alternative reimbursement due of £903k, the Company has therefore reduced the
net receivable within the accounts to £60k ($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 £0.01 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 rate Non-interest bearing Floating interest rate Non-interest bearing
$ $ $ $
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 £0.01 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 £1, 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 31st 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
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