Preliminary Results to 31 December 2020

RNS Number : 9467A

Tower Resources PLC

07 June 2021

7 June 2021

Tower Resources plc

Preliminary Results to 31 December 2020

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM listed oil and gas company with its focus on Africa, announces its preliminary results for the 12 months ended 31 December 2020.

Highlights:

· Thali PSC $2.2 million (2019: $3.9 million) exploration and evaluation expenditure;

· Algoa-Gamtoos TCP $440k (2019: $537k). Second renewal phase approved by PASA effective 17 November 2020;

· Administrative costs net of impairments and share-based payment charges reduced significantly to $237k (2019: $987k);

· Cash balance at year-end of $10k (2019: $39k);

· Award of extension to the Initial Exploration Period of the Thali PSC to 15 September 2020;

· Completion of NJOM-3 appraisal well site survey by the Geoquip Marine survey vessel MV investigator;

· Cameroon Reserves Report update reconfirming gross mean contingent resources of 18 MMbbls of oil across the proven Njonji-1 and Njonji-2 fault blocks, with an NPV10 of the Best Estimate Contingent Resources of $119 million using the March 10^th 2020 Brent Forward Curve, and an EMV10 of $91 million;

· Completion of placing and subscription to raise £500k at placing and subscription price of 0.375 pence per share;

· Notification to the Government of Cameroon of an event of Force Majeure in respect of the Covid-19 pandemic, affecting the timing for completion of the Group's work programme in the Initial Exploration Period of the Group's Thali Production Sharing Contract;

· Appointment of Paula Brancato and Dr Mark Enfield to the board as Non-Executive Directors.

Post-reporting period events:

· 14 January 2021: Placing of 384,615,384 shares to raise £1.25 million at 0.325p per share;

· 27 January 2021: Issue of 20,000,000 shares to EPI Group in lieu of £65,000 of fees

· 8 February 2021: Algoa Gamtoos Operator resource upgrade following reprocessing of subsurface data;

· 4 March 2021: Extension of Pegasus loan facility to November 2021;

· 10 May 2021: Solvent liquidation of the wholly owned subsidiary, Wilton Petroleum Limited

· 19 May 2021: Extension to the First Exploration Period of the Thali PSC to 11 May 2022;

· 21 May 2021: FTT VAT decision in the Company's favour is upheld by the UTTC

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this announcement via Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

Contacts

Tower Resources plc	+44 20 7157 9625
Jeremy Asher Chairman and CEO
Andrew Matharu VP - Corporate Affairs

SP Angel Corporate Finance LLP Nominated Adviser and Joint Broker Stuart Gledhill Caroline Rowe	+ 44 20 3470 0470
ETX Capital Joint Broker Elliot Hance	+ 44 20 7392 1436

Turner Pope Investments (TPI) Limited Joint Broker Andy Thacker Zoe Alexander	+ 44 20 3657 0050
Panmure Gordon (UK) Limited Joint Broker Nick Lovering Hugh Rich	+ 44 20 7886 2500

CHAIRMAN AND CHIEF EXECUTIVE'S STATEMENT

2020 has been an extremely challenging year, however we have made significant progress since our 2019 annual report was issued, and we are expecting to achieve much more tangible results over the year ahead.

A year ago the full scale of the COVID-19 pandemic had become apparent, and any hopes that the consequences would be short-lived had been dashed. Oil prices had fallen to around $40 per barrel, although they had recovered from an even lower trough that had included a brief but exciting period of negative prices for WTI on Nymex. At the time I pointed out that forward prices were still above $50 per barrel, and that there was potential for supply to be tighter in the future, given the under-investment that was taking place in our sector.

As I write this, Brent prices are once again around $70 per barrel, as they were in early 2020, and forward prices in 2025 are close to $60 per barrel. As usual, the forward prices have been less volatile than the price for nearby months; but the overall prognosis for oil prices has improved and, despite the understandable concerns about the long-term sustainability of the sector, there is a growing realisation that the industry still needs short-cycle, low-cost projects to sustain oil production over the next few years, as well as long term gas production. This is especially true in Africa.

This realisation is reflected in the continued interest within the industry, including among the Major oil companies, in exploration of the offshore frontiers of Namibia and South Africa. It is also reflected more specifically in the work that a number of companies have been doing in the data room for our joint-venture license in South Africa, where the partnership (operated by NewAge) has made considerable progress in identifying and quantifying the potential reservoir targets in the Deep-water (Outeniqua Basin) section of the block, which adjoins both Total's Blocks 11B/12B to the West and Shell's blocks to the East.

It is also reflected in the effort that a number of companies have put into due diligence work on our Thali farm-out process, which we hope will be completed soon, now that the license extension itself has been clarified. We are working on the NJOM-3 well preparation, although we remain cautious about the timetable for both this and the farm-out process given the continuing uncertainties over the COVID-19 pandemic and the spread of new variants. We are however confident that if the environment remains as it is currently, then a combination of good planning and wider vaccination will allow us to proceed with this crucial well in 2021.

During the latter part of 2020, David Thomas retired from Tower's board of directors, and Paula Brancato joined the board and took over the chair of our Audit Committee, and I was able to thank David and welcome Paula in our Interim Results statement in September 2020. At the end of November 2020 Peter Taylor retired from the board, and Mark Enfield joined. Peter, together with his partner Peter Blakey, was one of the founders of Tower Resources as an oil and gas company, in 2006, and he has a long and successful history in the sector. His presence and wisdom in the boardroom will be missed, but we know we can continue to call on his advice at any time. Mark Enfield, who founded the geoscience business PDF, which is now the geosciences unit of EPI, will bring both great experience of our sector and also great technical expertise to the board, as well as intimate knowledge of the Company's areas of focus in Africa.

We are looking forward to continued and, I hope, accelerating progress over the balance of 2021.

STRATEGIC REPORT

Our strategy remains to shift our near-term focus towards lower risk exploration and development within proven basins, best characterised by our 2015 signature of the Thali PSC in the Rio Del Rey basin, offshore Cameroon. We remain selective in our exposure to high risk/reward exploration: we have a highly prospective license in South Africa, and we have a license in Namibia, covering blocks that we know well from our previous license there. These are supportive jurisdictions with competitive fiscal terms, and a number of other companies are now investing in these areas. The Thali Production Sharing Contract ("PSC") also has a high-reward exploration upside in the deeper formations, which have not yet been tested by historical drilling. We continue to believe that all of our assets are attractive and valuable. However, our near-term strategy is to focus our current investment on the lower risk, earlier reward opportunities in Thali during this phase of the market cycle, before pursuing the other higher risk opportunities.

This strategy requires finding external finance at the asset level for our existing exploration commitments wherever possible, which is why we took the decision some time ago to convert our working interest in the SADR to a royalty interest, and why we continue to support our partner and operator, NewAge Energy Algoa (Pty) Ltd (50%), in seeking a farm-in partner for our Algoa-Gamtoos block in South Africa. Our financial strategy remains to explore asset-level financing even for assets that we could also finance with our own equity, balancing risk to achieve the most economic overall financing for each asset and the best value for shareholders.

As an operator, we believe that the scale of local operations is also important to create synergies and efficiencies across blocks in the same basin. To some extent, this can be achieved and reinforced through good relations with other local operators, but controlling multiple blocks directly is the most obvious way to achieve such synergies (where they can be found) to the benefit of all stakeholders. To this end, we are continuing to explore the possibility of a further PSC in Cameroon in the future, even while undertaking development of our existing one.

Keeping overhead costs appropriately low, and managing operating costs well, are always important, but especially so in this phase of the market cycle. We have always sought to keep fixed costs down, and total costs flexible, through outsourcing important functions such as our technical-subsurface relationship with the EPI Group, and we have reduced our corporate costs substantially since 2016, as our last few years' financial figures confirm.

Finally, our strategy is to enable and to support the wider strategic plans of each of the countries in which we operate, to increase power generation from cleaner sources, including both renewables and natural gas, both to aid economic development and to displace less efficient diesel and fuel-oil based power generation, and to reduce imports of liquid fuels by increasing local production where possible. These countries' strategic plans depend critically on the continued development of local oil and gas production in the near term, in order to meet the national goals which have been set for the next decade.

OPERATIONAL REVIEW

On an operational level, we conducted a site survey over the NJOM-3 well location in Cameroon in the first two months of 2020, but have since been restricted in what we can do by the COVID-19 pandemic.

In Cameroon, we notified the Ministry ("MINMIDT") of a state of Force Majeure in March, and during the balance of 2020 we were mainly restricted to planning activity. We acquired explosives for well perforation, as our intended supplier was planning to stop holding stocks in country, which might have created additional lead time issues once we are ready to move forward with the NJOM-3 well, and we have kept the rest of our inventory of long-lead items safely stored at our operational base in Douala. A considerable body of work has been undertaken to assure the timely, safe and cost effective delivery of the well within currently anticipated Covid-19 restrictions. Our well design and test design for NJOM-3 remain unchanged, but we have also used this period to develop further our thinking for the rest of the Phase 1 development of the Njonji structure assuming a satisfactory NJOM-3 well test.

We received an updated Reserves and Resources Valuation report from Oilfield International Ltd ("OIL") in March 2020, after the initial collapse in crude oil prices which was reflected in the report, and the executive summary is available on our website. It is worth noting that the current oil price environment is significantly better than in March 2020 and closer to the environment when the original 2018 OIL report was prepared. A comparison of the two reports is useful to illustrate the robustness of the project economics to different oil price environments.

In March 2021 we were notified that the President of the Republic of Cameroon had authorised a further formal extension of the First Exploration Period of the Thali PSC, and in May we received a formal notification from MINMIDT of the extension to 11 May 2022.

In Namibia, we have prepared an initial plan of desk work based on existing data to improve our understanding of the sub-surface while we wait for further third party data to become available, as a precursor to planning our own data acquisition. We expect to review and approve this plan of work with our partners in the coming months, with the expectation that this work will commence over the balance of 2021.

In South Africa, our Algoa Gamtoos block is immediately to the East of Total's block 11B/12B where it made its recent Brulpadda and Luiperd discoveries. During 2020 our co-venturer and operator NewAge reprocessed 4,500 line kms of 2D seismic data incorporating both data already owned by the partners and also further data acquired from the Petroleum Authority of South Africa ("PASA") including tie lines from Brulpadda to the Algoa-Gamtoos area, together with two post-stack merged 3D seismic surveys in the Algoa Basin. The work was undertaken by PGS and the focus was on creating a time and phase matched dataset covering the Gamtoos Basin and the Deep-water (Outeniqua basin) section of the license area.

The resulting seismic dataset was much improved and allowed NewAge to identify a deeper level slope and three separate reservoir targets in the Deep-water Outeniqua Basin section of the block, with unrisked mean expected recoverable resources of 1.4 billion barrels of oil equivalent. Details of this work were announced on 8 February 2021.

In November 2020, the Algoa Gamtoos partners agreed with PASA to enter the Second Exploration period of the Algoa Gamtoos license, which runs for two years and includes a commitment to acquire and process a further 300 km² of 3D seismic data in the license area.

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		31 December 2020 (audited)	31 December 2019 (audited)
	Note	$	$
Revenue		-	-
Cost of sales		-	-
Gross profit		-	-
Administrative expenses		(930,357)	(2,240,313)
Impairment of exploration and evaluation assets	12	-	-
Administrative expenses		(930,357)	(2,240,313)
Group operating loss	4	(930,357)	(2,240,313)
Finance income		(255)	703
Finance expense	6	(430,124)	(421,973)
Loss for the year before taxation		(1,360,736)	(2,661,583)
Taxation	7	-	-
Loss for the year after taxation		(1,360,736)	(2,661,583)
Other comprehensive income		-	-
Total comprehensive expense for the year		(1,360,736)	(2,661,583)

Basic loss per share (USc)	10	(0.11c)	(0.40c)
Diluted loss per share (USc)	10	(0.11c)	(0.40c)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		31 December 2020 (audited)	31 December 2019 (audited)
	Note	$	$
Non-current assets
Exploration and evaluation assets	12	27,080,202	24,315,816
		27,080,202	24,315,816
Current assets
Trade and other receivables	14	8,805	53,448
Cash and cash equivalents		10,054	38,662
		18,859	92,110
Total assets		27,099,061	24,407,926
Current liabilities
Trade and other payables	15	3,796,111	1,815,720
Borrowings	16	1,262,937	840,490
		5,059,048	2,656,210
Non-current liabilities
Borrowings		68,763	-
Total liabilities		5,127,811	2,656,210
Net assets		21,971,250	21,751,716
Equity
Share capital	17	18,254,040	18,251,117
Share premium	17	145,343,446	144,294,128
Retained losses	18	(141,626,236)	(140,793,529)
Total shareholders' equity		21,971,250	21,751,716

The financial statements of Tower Resources plc, registered number 05305345 were approved by the Board of Directors and authorised for issue on 4 June 2021.

Signed on behalf of the Board of Directors

Jeremy Asher - Chairman and Chief Executive

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	¹ Share-based payments reserve	Retained losses	Total
	$	$	$	$	$
At 1 January 2019	15,599,626	142,376,317	6,524,592	(145,791,254)	18,709,281
Shares issued for cash	2,411,297	1,890,659	-	-	4,301,956
Shares issued on settlement of third-party fees	240,194	255,415	-	-	495,609
Share issue costs	-	(228,263)	-	-	(228,263)
Share-based payment charge for the year	-	-	1,134,716	-	1,134,716
Total comprehensive expense for the year	-	-	-	(2,661,583)	(2,661,583)
At 31 December 2019	18,251,117	144,294,128	7,659,308	(148,452,837)	21,751,716
Shares issued for cash	2,265	856,595			858,860
Shares issued on settlement of third-party fees	70	26,150	-	-	26,220
Shares issued in settlement of loan interest	588	225,568	-	-	226,156
Share issue costs	-	(58,995)			(58,995)
Share-based payment charge for the year	-	-	528,029	-	528,029
Total comprehensive expense for the year	-	-	-	(1,360,736)	(1,360,736)
At 31 December 2020	18,254,040	145,343,446	8,187,337	(149,813,573)	21,971,250

¹ The share-based payment reserve has been included within the retained loss reserve on the consolidated statement of financial position and is a non-distributable reserve.

CONSOLIDATED STATEMENT OF CASH FLOWS

		31 December 2020 (audited)	31 December 2019 (audited)
	Note	$	$
Cash outflow from operating activities
Group operating loss for the year		(930,357)	(2,240,313)
Depreciation of property, plant and equipment	11	-	-
Share-based payments	20	264,416	801,755
Shares issued on settlement of third-party fees		26,220	495,609
Impairment of intangible exploration and evaluation assets	12	-	-
Loss on disposal of of property, plant and equipment	11	-	-
Operating cash flow before changes in working capital		(639,721)	(942,949)
Decrease / (increase) in receivables and prepayments		44,643	(29,469)
Increase in trade and other payables		1,980,391	523,228
Cash from / (used in) operations		1,385,313	(449,190)
Interest (paid) / received		(255)	703
Cash from / (used in) operating activities		1,385,058	(448,487)
Investing activities
Exploration and evaluation costs	12	(2,764,386)	(4,669,417)
Net cash used in investing activities		(2,764,386)	(4,669,417)
Financing activities
Proceeds from loan facilities	16	561,742	770,480
Cash proceeds from issue of ordinary share capital net of issue costs	17	799,865	4,073,693
Interest paid	16	(226)	-
Finance costs	6	(10,661)	(19,002)
Net cash from financing activities		1,350,720	4,825,171
Decrease in cash and cash equivalents		(28,608)	(292,733)
Cash and cash equivalents at beginning of year		38,662	331,395
Cash and cash equivalents at end of year		10,054	38,662

COMPANY STATEMENT OF FINANCIAL POSITION

		31 December 2020 (audited)	31 December 2019 (audited) (restated) ¹
	Note	$	$
Non-current assets
Property, plant and equipment	11	-	-
Loans to subsidiary undertakings	13	15,330,438	14,028,116
Investments in subsidiary undertakings	13	12,307,766	17,610,749
		27,770,722	31,638,865
Current assets
Trade and other receivables	14	8,803	53,446
Cash and cash equivalents		7,236	12,055
		16,039	65,501
Total assets		27,786,761	31,704,366
Current liabilities
Trade and other payables	15	1,444,429	1,195,912
Borrowings	16	1,262,937	840,490
Loan from subsidiary undertaking	15	-	6,617,600
		2,707,366	8,654,002
Non-current liabilities
Borrowings		68,763	-
Total liabilities		2,707,366	8,654,002
Net assets		24,878,114	23,050,364
Equity
Share capital	17	18,254,040	18,251,117
Share premium	17	145,343,446	144,294,128
Retained losses	18	(138,719,372	(139,494,881)
Total shareholders' equity		24,878,114	23,050,364

¹ Restated amounts relate to the impairment of loan interest charged to Tower Resources Namibia Limited prior to that company's dissolution in November 2019. See note 24.

In accordance with the provisions of Section 408 of the Companies Act 2006, the Company has not presented a statement of comprehensive income and for the year-ended 31 December 2020 the Company made a profit of $380k (2019: $2.3 million restated)

The financial statements of Tower Resources plc, registered number 05305345 were approved by the Board of Directors and authorised for issue on 4 June 2021.

Signed on behalf of the Board of Directors

Jeremy Asher - Chairman and Chief Executive

COMPANY STATEMENT OF CHANGES IN EQUITY

	Share capital	Share premium	¹Share-based payments reserve	Retained losses (restated)²	Total
	$	$	$	$	$
At 1 January 2019	15,599,626	142,376,317	6,524,592	(144,814,714)	19,685,821
Shares issued for cash	2,411,297	1,890,659	-	-	4,301,956
Shares issued on settlement of third-party fees	240,194	255,415	-	-	495,609
Share issue costs	-	(228,263)	-	-	(228,263)
Share option charge for the year	-	-	1,134,716	-	1,134,716
Total comprehensive expense for the year	-	-	-	(1,556,572)	(1,556,572)
At 31 December 2019	18,251,117	144,294,128	7,659,308	(146,371,286)	23,833,267
Restatement (see note 24)	-	-	-	(782,903)	(782,903)
At 31 December 2019 (restated)	18,251,117	144,294,128	7,659,308	(147,154,189)	23,050,364
Shares issued for cash	2,265	856,595	-	-	858,860
Shares issued on settlement of third-party fees	70	26,150	-	-	26,220
Shares issued in settlement of loan interest	588	225,568	-	-	226,156
Share issue costs	-	(58,995)	-	-	(58,995)
Share option charge for the year	-	-	528,029	-	528,029
Total comprehensive expense for the year	-	-	-	247,480	247,480
At 31 December 2020	18,254,040	145,343,446	8,187,337	(146,906,709)	24,878,114

¹ The share-based payment reserve has been included within the retained loss reserve on the Company statement of financial position and is a non-distributable reserve.

² Restated amounts relate to the impairment of loan interest charged to Tower Resources Namibia Limited prior to that company's dissolution in November 2019. See note 24.

COMPANY STATEMENT OF CASH FLOWS

		31 December 2020 (audited)	31 December 2019 (audited) (restated) ¹
	Note	$	$
Cash outflow from operating activities
Operating profit / (loss) for the year		444,590	(1,989,535)
Share-based payments	20	264,416	801,755
Shares issued on settlement of third-party fees		26,220	-
Impairment of loans due from subsidiaries	13	-	135,879
Operating cash flow before changes in working capital		735,226	(1,051,901)
Increase / (decrease) in receivables and prepayments		44,643	(29,469)
Increase / decrease in trade and other payables		248,517	(96,223)
Cash from / (used in) operations		1,028,386	(1,177,593)
Interest received		232,897	853,905
Cash from / (used in) operating activities		1,261,283	(323,688)
Investing activities
Loans granted to subsidiary undertakings	13	(7,919,922)	(5,310,120)
Impairment of subsidiary undertaking	13	5,302,983	-
Net cash used in investing activities		(2,749,456)	(5,310,120)
Financing activities
Proceeds from loan facilities	16	561,742	770,480
Cash proceeds from issue of ordinary share capital net of issue costs	17	799,865	4,569,302
Interest paid	16	(226)	-
Finance costs	6	(10,544)	(17,971)
Net cash from financing activities		1,350,837	5,321,811
Decrease in cash and cash equivalents		(4,819)	(311,997)
Cash and cash equivalents at beginning of year		12,055	324,052
Cash and cash equivalents at end of year		7,236	12,055

¹ Restated amounts relate to the impairment of loan interest charged to Tower Resources Namibia Limited prior to that company's dissolution in November 2019. See note 24.

NOTES TO THE FINANCIAL STATEMENTS

1. Accounting policies

a) General information

Tower Resources plc is a public company incorporated in the United Kingdom under the UK Companies Act. The address of the registered office is 140 Buckingham Palace Road, London, SW1W 9SA. The Company and the Group are engaged in the exploration for oil and gas.

These financial statements are presented in US dollars as this is the currency in which the majority of the Group's expenditures are transacted and the functional currency of the Company and have been prepared in accordance with International Financial Reporting Standards ("IFRS") and Interpretations ("IFRIC") as adopted by the EU.

b) Basis of accounting and adoption of new and revised standards

Changes in accounting policies

A number of new standards are effective from 1 January 2020 but they do not have material effect on the Group's financial statements.

New and amended standards

The following amended standards and interpretation are effective for financial years commencing on or after 1 January 2021. The Group does not intend to adopt the standards below, before their mandatory application date.

Standard	Description	Effective date	EU Endorsement Status	UK Endorsement Status
IFRS 9, IAS 39 and IFRS 7 (Amendments)	Interest Rate Benchmark Reform.	1 January 2021	Endorsed	Given these amendments were endorsed by the EU before 31 December 2020 they are part of the EU-IFRS as it stands at 31 December 2020 and therefore are UK endorsed. UK effective date 1 January 2021.
IAS 1 (Amendments)	Presentation of financial statements' on classification of liabilities.	1 January 2021	Endorsed
IFRS 17	Insurance Contracts.	1 January 2022	Endorsed

Future accounting pronouncements

The Company intends to adopt the above listed standards and interpretations in its financial statements for the annual period beginning 1 January 2021. The Company does not expect the interpretation to have a material impact on the financial statements.

c) Going concern

The Group will need to complete its agreed farm-out and/or another asset-level transaction within the next 9 months, or otherwise raise further funds, in order to meet its liabilities as they fall due, particularly with respect to the forthcoming drilling programme in Cameroon. The Directors believe that there are a number of options available to them through either, or a combination of, capital markets, farm-outs or asset disposals with respect to raising these funds. There can, however, be no guarantee that the required funds may be raised or transactions completed within the necessary timeframes which raises uncertainty as to the application of going concern in these accounts. Having assessed the risks attached to these uncertainties on a probabilistic basis, the Directors are confident that they can raise sufficient finance in a timely manner and therefore believe that the application of going concern is both appropriate and correct.

d) Basis of consolidation

The consolidated financial statements incorporate the accounts of the Company and its subsidiaries and have been prepared by using the principles of acquisition accounting ("the purchase method") which includes the results of the subsidiaries from their date of acquisition. Intra-group sales, profits and balances are eliminated fully on consolidation.

The results of subsidiaries acquired or disposed of are included in the consolidated statement of comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

As a Consolidated Statement of Comprehensive Income is published, a separate Statement of Comprehensive Income for the Parent Company has not been published in accordance with section 408 of the Companies Act 2006.

e) Goodwill

Goodwill is the difference between the amount paid on acquisition of subsidiary undertakings and the aggregate fair value of their net assets, of which oil and gas exploration expenditure is the primary asset. Goodwill is capitalised as an intangible asset and in accordance with IFRS3 'Business Combinations' is not amortised but tested for impairment annually and when there are indications that its carrying value is not recoverable. Goodwill is shown at cost less any provision for impairment in value. If a subsidiary undertaking is sold, any unimpaired goodwill arising on its acquisition is reflected in the calculation of any profit or loss on sale.

f) Jointly controlled operations

Jointly controlled operations are arrangements in which the Group holds an interest on a long-term basis which are jointly controlled by the Group and one or more ventures under a contractual arrangement. The Group's exploration, development and production activities are sometimes conducted jointly with other companies in this way. Since these arrangements do not constitute entities in their own right, the consolidated financial statements reflect the relevant proportion of costs, revenues, assets and liabilities applicable to the Group's interests.

g) Oil and Gas Exploration and Evaluation Expenditure

Costs incurred before the acquisition of a license or permit to explore an area are expensed to the income statement.

All exploration and evaluation costs incurred following a license or permit to explore being obtained or acquired on the acquisition of a subsidiary are capitalised in respect of each identifiable project area. These costs are classified as intangible assets and are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves (successful efforts).

Costs incurred by Directors' and employees of the parent Company on the exploration activities are recharged to the subsidiaries and capitalised as exploration assets accordingly.

Other costs are expensed unless commercial reserves have been established or the determination process has not been completed. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences the accumulated costs for the relevant area of interest are transferred from intangible assets to tangible assets as 'Developed Oil and Gas Assets' and amortised over the life of the area according to the rate of depletion of the economically recoverable costs.

h) Impairment of Oil and Gas Exploration and Evaluation assets

The carrying value of unevaluated areas is assessed when there has been an indication that impairment in value may have occurred. The impairment of unevaluated prospects is assessed based on the Directors' intention with regard to future exploration and development of individual significant areas and the ability to obtain funds to finance such exploration and development.

i) Decommissioning costs

Where a material liability for the removal of production facilities and site restoration at the end of the field life exists, a provision for decommissioning is made. The amount recognised is the present value of estimated future expenditure determined in accordance with local conditions and requirements. An asset of an amount equivalent to the provision is also created and depreciated on a unit of production basis. Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and the associated asset.

j) Property, plant and equipment

Property, plant and equipment is stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life as follows:

Computers and equipment, fixtures, fittings and equipment: straight line over 4 years

Leasehold and office refurbishment costs: over duration of lease

The assets' residual values and useful lives are reviewed and adjusted if necessary, at each year-end. Profits or losses on disposals of plant and equipment are determined by comparing the sale proceeds with the carrying amount and are included in the statement of comprehensive income. Items are reviewed for impairment if and when events indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset's net selling price and value in use.

k) Investments

The Parent Company's investments in subsidiary companies are stated at cost less any expected credit loss for impairment and are shown in the Company's Statement of Financial Position.

l) Share-based payments

The Company makes share-based payments to certain Directors, employees and consultants by the issue of share options or warrants. The fair value of these payments is calculated either using the Black Scholes option pricing model or by reference to the fair value of the remuneration settled by way of the grant of such options or warrants. The expense is recognised on a straight-line basis over the period from the date of award to the date of vesting, based on the Company's best estimate of shares that will eventually vest.

m) Foreign currency translation

i Functional and presentational currency

Items included in the financial statements are shown in the currency of the primary economic environment in which the Company operates ("the functional currency") which is considered by the Directors to be the U.S Dollar. The exchange rate at 31 December 2020 was £1 / $1.3649 (2019: £1 / $1.3204).

ii Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

Transactions in the accounts of individual Group companies are recorded at the rate of exchange ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at the year-end. All differences are taken to the statement of comprehensive income.

n) Taxation

i Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the statement of comprehensive income because it excludes items of income or expense that are taxable or deductible on other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

ii Deferred taxation

Deferred income taxes are provided in full, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income taxes are determined using tax rates that have been enacted or substantially enacted and are expected to apply when the related deferred income tax asset is realised or the related deferred income tax liability is settled.

The principal temporary differences arise from depreciation or amortisation charged on assets and tax losses carried forward. Deferred tax assets relating to the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

o) Financial instruments

The Group's Financial Instruments comprise of cash and cash equivalents, loans and receivables. There are no other categories of financial instrument.

i Cash and cash equivalents

Cash and cash equivalents are carried at cost and comprise cash in hand, cash at bank, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less.

ii Receivables

Receivables are measured at amortised cost unless the time value of money is immaterial. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the assets' carrying amount and the recoverable amount. Expected credit losses for impairment of receivables are included in the statement of comprehensive income.

iii Payables

Payables are recognised initially at fair values and subsequently measured at amortised cost using the effective interest method.

p) Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the asset of the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs.

q) Share capital

Ordinary shares are classified as equity. Proceeds received from the issue of ordinary shares above the nominal value are classified as Share Premium. Costs directly attributable to the issue of new shares are shown in equity as a deduction from the Share Premium account.

r) Provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group would be required to settle that obligation. Provisions are measured at the managements' best estimate of the expenditure required to settle the obligation at the reporting date and are discounted to present value where the effect is material.

s) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision makers. The chief operating decision makers have been identified as the executive Board members.

t) Leases

The Group do not have any leases with a term of 12-months or more that contain an option to purchase or where the underlying asset has anything other than a low value and has elected for exemption to the reporting requirements of IFRS 16 (Leases).

2. Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with International Financial Reporting Standards requires the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Although these estimates are based on managements' best knowledge of current events and actions, actual results ultimately may differ from those estimates. IFRS also require management to exercise its judgement in the process of applying the Group's accounting policies.

The prime areas involving a higher degree of judgement or complexity, where assumptions and estimates are significant to the financial statements, are as follows:

Recoverability of inter-company balances

Determining whether inter-company balances are impaired requires an estimation of whether there are any indications that their carrying values are not recoverable details of which are included in note 13.

Impairment of capitalised exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether it successfully recovers the related exploration and evaluation asset through sale. Factors which could impact the future recoverability include the level of proved, probable and inferred resources, future technological changes which could impact the cost of drilling and extraction, future legal changes (including changes to environmental restoration obligations), changes to commodity prices and licence renewal dates and commitments.

To the extent that capitalised exploration and evaluation expenditure is determined to be irrecoverable in the future, this will reduce profits and net assets in the period in which this determination is made. In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage which permits reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent that it is determined in the future that this capitalised expenditure should be written off, this will reduce profits and net assets in the period in which this determination is made. Details of impairments of capitalised exploration and evaluation expenditure are included in note 12.

VAT receivable

The future ability of the Group to recover UK VAT is currently the subject of a dispute with HMRC. On 8 July 2019 the Company received a judgement in its favour from the First-Tier Tribunal (Tax Chamber) and a further judgement dated 20 May 2021 from the Upper-Tier Tribunal, which dismissed HMRC's appeal against the 8 July 2019 judgement. Whilst the Group believes that it has complied in all material respects with UK VAT legislation, and now has the benefit of the First-Tier Tribunal and the Upper-Tier Tribunal judgements in its favour, there remains a possibility that HMRC could appeal further, to the Court of Appeal or ultimately the House of Lords. Any appeal by HMRC should be filed within a month of the 20 May 2021 judgement. If the Group ultimately fails in its dispute with HMRC, it will be deregistered for VAT and unable to recover the VAT charged to it by UK suppliers. This would increase the UK element of its cost base accordingly. The Directors have made the judgement that the certainty over the Group's continued UK VAT registration status cannot be guaranteed until all appeals are exhausted, and have therefore provided against the VAT payables in note 15.

Capital markets / going concern

The Group relies on the UK equities market and the market for equity participations in oil and gas exploration assets in order to raise the funds required to operate as a listed entity and complete the respective work programmes for its oil and gas exploration assets. From time to time, and especially in light of the present Covid-19 pandemic, general economic and market conditions may deteriorate to a point where it is not possible to raise equity finance to fund exploration projects, nor debt to develop projects.

Additional financing may therefore not be available to the Group restricting the scope of operations, risking both its long-term expansion programme, its obligations under contracts which may be withdrawn or terminated for non-compliance and ultimately the financial stability of the Group to continue as a going concern.

Please see note 1 (c) for a more detailed discussion of going concern matters.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using the Black Scholes model and by reference to the value of the fees or remuneration settled by way of granting of warrants. The determination of fair value using the Black Scholes methodology is based on the input parameters chosen and will therefore contain an element of judgement and uncertainty. Details of share-based payment transactions are included in note 20.

3. Operating segments

The Group has two reportable operating segments: Africa and Head Office. Non-current assets and operating liabilities are located in Africa, whilst the majority of current assets are carried at Head Office. The Group has not yet commenced production and therefore has no revenue. Each reportable segment adopts the same accounting policies. In compliance with IFRS 8 'Operating Segments' the following table reconciles the operational loss and the assets and liabilities of each reportable segment with the consolidated figures presented in these Financial Statements, together with comparative figures for the year-ended 31 December 2020.

	Africa		Head Office		Total
	2020	2019	2020	2019	2020	2019
	$	$	$	$	$	$
Administrative expenses ¹	111,635	(187,893)	(805,452)	(1,249,856)	(693,817)	(1,437,749)
Pre-licence expenditures	-	-	(243)	(810)	(243)	(810)
Share-based payment charges	-	-	(236,297)	(801,754)	(236,297)	(801,754)
Interest income	(416)	-	161	703	(255)	703
Financing costs	(117)	(1,031)	(430,007)	(420,942)	(430,124)	(421,973)
Gain / (loss) on disposal of subsidiary undertaking	1,314,617	-	(1,314,617)	-	-	-
Loss by reportable segment	1,425,719	(188,924)	(2,786,455)	(2,472,659)	(1,360,736)	(2,661,583)
Total assets by reportable segment ^{2 / 3}	27,083,022	24,342,425	16,039	65,501	27,099,061	24,407,926
Total liabilities by reportable segment ⁴	(2,351,684)	(619,810)	(2,776,127)	(2,036,400)	(5,127,811)	(2,656,210)

¹ Administrative expenses include $nil (2019: $65k) of intangible exploration and evaluation asset impairments in relation to the Africa segment.

² Included within total assets of $27.0 million (2019: $24.4 million) are $13.0 million Cameroon (2019: $10.8 million), $320k Namibia (2019: $229k) and $13.7 million South Africa (2019: $13.3 million).

³ Carrying amounts of segment assets exclude investments in subsidiaries.

⁴ Carrying amounts of segment liabilities exclude intra-group financing.

4. Loss from operations

Loss from operations is stated after charging/(crediting):	Total
	2020	2019
	$	$
Share-based payment charges included within staff costs	236,297	801,754
Share-based payment charges included within intangible exploration assets	7,485	-
Share-based payment charges included within professional costs	20,632	-
Share-based payment charges included within finance costs	263,613	332,961
Staff costs	2,203	328,221
Gain / (loss) on foreign currencies	164,951	118,906

An analysis of auditor's remuneration is as follows:
Fees payable to the Group's auditors for the audit of the Group and subsidiary annual accounts	39,329	33,054
Fees payable to the Group's auditors for non-audit assurance services	9,884	1,749
Total audit fees	49,213	34,803

5. Employee information

The average monthly number of employees of the Group (including Directors) was:

	2020	2019
Head office	4	4
Africa	3	3
	7	7

Group employee costs during the year (including executive Directors) amounted to:

	2020	2019
	$	$
Wages and salaries	2,060	315,343
Social security costs	143	12,878
Share-based payment charges	236,297	468,793
	238,500	797,014

During 2020, no awards were made under the Group share incentive scheme.

During 2019, Jeremy Asher received an award of 15 million shares under the Group share incentive scheme, a charge for which was been recognised within the Group income statement of $142,266.

Key management personnel include the executive and non-executive Directors whose remuneration, including non-cash share-based payment charges of $399k (2019: $339k), was $399k (2019: $462k); see Directors' Report for additional detail. During the year $244k (2019: $206k) of the full-year share-based payment charge of $528k (2019: $801k) related to employees and their remuneration as employees.

The highest paid Director was Jeremy Asher $305k (2019: $350k).

6. Finance costs

During the period covered by these financial statements the Group incurred costs of $430k (2019: $422k). Included within these charges is share-based payment costs of $264k (2019: $333k) relating to warrants issued on drawdown and extension of the bridging loan facility and the settlement of interest due. The Company incurred finance costs of $430k (2019: $420k).

7. Taxation

	2020	2019
	$	$
Current tax
UK Corporation tax	-	-
Total current tax charge	-	-
The tax charge for the period can be reconciled to the loss for the year as follows:
Group loss before tax	1,360,733	2,661,584
Tax at the UK Corporation tax rate of 19% (2019: 19%)	(258,540)	(505,701)
Tax effects of:
Expenses not deductible for tax purposes	44,896	152,333
Tax losses carried forward not recognised as a deferred tax asset	213,644	353,368
Current tax charge	-	-

8. Deferred tax

At the reporting date the Group had an unrecognised deferred tax asset of $4.3 million (2019: $4.0 million) relating to unused tax losses. No deferred tax asset has been recognised due to the uncertainty of future profit streams against which these losses could be utilised.

9. Parent company income statement

For the year-ended 31 December 2020 the Parent Company made a loss of $247k (2019: loss of $2.3 million after restated finance costs of $783k, see note 24) including financing costs of $430k (2019: $362k restated) and gains on impairment of subsidiary undertaking (Wilton Petroleum Limited) following the completion of its solvent liquidation on 10 May 2021 of $1.3 million (see note 15). Included within finance costs are $264k of share-based payments with respect to warrants issued to the lenders (2019: $333k) referred to in note 6, the share-based payments charge of $528k (2019: $801k) and impairment expected credit losses against the investments in its operating subsidiaries and intercompany loans to them of $nil (2019: $136k million). The Company charged finance interest on intercompany loan accounts of $233k (2019: $70k after restated finance costs of $783k, see note 24) and fees with respect to the provision of strategic advice and support of $39k (2019: $198k). In accordance with the provisions of Section 408 of the Companies Act 2006, the Parent Company has not presented a statement of comprehensive income.

10. Loss per share

The diluted weighted average number of shares in issue and to be issued as at 31 December 2020 is 1,244,247,074 (2019: 671,779,970). The diluted loss per share has been kept the same as the basic loss per share because the conversion of share options and share warrants would decrease the basic loss per share and is thus anti-dilutive. The number of anti-dilutive shares that have been excluded from the computation of loss per share is 32,615,562 (2019: 1,296).

	Basic & Diluted
	2020	2019
	$	$
Loss for the year	(1,360,736)	(2,661,583)
Weighted average number of ordinary shares in issue during the year	1,244,247,074	671,779,970
Dilutive effect of share options outstanding	-	-
Fully diluted average number of ordinary shares during the year	1,244,247,074	671,779,970
Loss per share (USc)	(0.11c)	(0.40c)

11. Property, plant and equipment

	Group	Company
Year-ended 31 December 2020	$	$
Cost
At 1 January and 31 December 2020	1,046	1,046
Depreciation
At 1 January and 31 December 2020	1,046	1,046
Net book value
At 31 December 2019 and 2020	-	-

	Group	Company
Year-ended 31 December 2019	$	$
Cost
At 1 January 2019	3,368	3,368
Eliminated on disposal	(2,322)	(2,322)
At 31 December 2019	1,046	1,046
Depreciation
At 1 January 2019	2,428	2,428
Eliminated on disposal	(1,931)	(1,931)
Charge for the year	549	549
At 31 December 2019	1,046	1,046
Net book value
At 31 December 2019 and 2019	-	-

12. Intangible Exploration and Evaluation (E&E) assets

	Exploration and evaluation assets	Goodwill	Total
Year-ended 31 December 2020	$	$	$
Cost
At 1 January 2020	96,324,278	8,023,292	104,347,570
Additions during the year	2,764,386	-	2,764,386
At 31 December 2020	99,088,664	8,023,292	107,111,956
Amortisation and impairment
At 1 January 2020	(72,008,462)	(8,023,292)	(80,031,754)
Impairment during the year	-	-	-
At 31 December 2020	(72,008,462)	(8,023,292)	(80,031,754)
Net book value
At 31 December 2020	27,080,202	-	27,080,202
At 31 December 2019	24,315,816	-	24,315,816

	Exploration and evaluation assets	Goodwill	Total
Year-ended 31 December 2019	$	$	$
Cost
At 1 January 2019	91,654,861	8,023,292	99,678,153
Additions during the year	4,669,417	-	4,669,417
At 31 December 2019	96,324,278	8,023,292	104,347,570
Amortisation and impairment
At 1 January 2019	(72,008,462)	(8,023,292)	(80,031,754)
At 31 December 2019	(72,008,462)	(8,023,292)	(80,031,754)
Net book value
At 31 December 2019	24,315,816	-	24,315,816
At 31 December 2018	19,646,399	-	19,646,399

During the year the Group capitalised amounts totalling $2.7 million (2019: $4.7 million) with respect to the following assets:

	2020	2019
	$	$
Cameroon	2,233,492	3,908,484
Namibia	91,338	223,962
South Africa	439,556	536,971
Total	2,764,386	4,669,417

In Cameroon the $2.2 million comprised ongoing NJOM-3 appraisal drilling preparation costs plus the capitalised cost of operating the local office in Douala.

In South Africa, Rift Petroleum Limited, Tower's wholly owned subsidiary continues its efforts to seek a farm-in partner and completed the reprocessing of existing sub-surface data, further corroborating management's view of the prospectivity of the Algoa-Gamtoos block which was led by the operator of the licence New African Global Energy SA (Pty) Ltd.

In Namibia, the Group made various licence commitment payments to the Government of the Republic of Namibia, and will be looking to confirm a commitment work program for phase one by the end of 2021.

In accordance with the Group's accounting policies and IFRS 6 'Exploration for and Evaluation of Mineral Resources' the Directors' have reviewed each of the exploration license areas for indications of impairment. Having done so, it was concluded that a full impairment review was not required on the Cameroon, South Africa or Namibian licences, however, in-line with the treatment adopted at 31 December 2018, full ongoing impairment of the Zambian licences is still considered appropriate at this time.

The Directors have not provided for any impairment of the Group's investment in the Thali license, because potential transactions and funding discussions with third parties support the Directors' view that the current carrying value is recoverable. Furthermore, the operating company, Tower Resources Cameroon SA, notified the Government of the Republic of Cameroon on 31 March 2020 of a state of force majeure with respect to difficulties and delays experienced by the ongoing COVID-19 outbreak. On 19 May 2021, the Company subsequently received formal confirmation from the Minister of Mines, Industry and Technological Development ("MINMIDT") of the details of the formal extension of the First Exploration Period of the PSC. On 31 March 2021 the Company announced that the President of the Republic had also approved a formal extension of the First Exploration Period. The formal "arrête" from MINMIDT extends the First Exploration Period to 11 May 2022.

In South Africa, Tower's wholly-owned subsidiary Rift Petroleum Limited and its partner, New African Global Energy SA (Pty) Ltd, received formal notification of the award of the next Technical Cooperation Permit ("TCP") phase in November 2020. This phase will expire on 16 November 2022, the net commitment for which is approximately $2.5 million to Tower for 2021 and beyond and is disclosed in note 23.

In the case of the Group's Zambian license, the Directors continue to await the review of the country's petroleum law and have not yet agreed with the Government of Zambia the next phase of work, if any, in respect of Blocks 40 and 41. This uncertainty has led the Directors to fully impair these assets in accordance with IAS 36 "Impairment of Assets" due to the lack of clarity regarding both future work programme and the fiscal terms.

In Namibia, the Company's investment in the current license is currently just $320k (2019: 229k), which appears well supported by the valuations implied by recent transactions in the region, allowing for the early stage of the evaluation and appraisal process. Furthermore, the Directors continue to believe firmly that the relatively modest amounts of expenditure incurred on acquiring and securing tenure to the licence is fully supported by their initial view of its prospectivity based on the information that is currently available.

13. Investment in subsidiaries

	Loans to subsidiary undertakings (restated)¹	Shares in subsidiary undertakings	Total
Company	$	$	$
Cost
At 1 January 2020 (restated)	78,890,242	37,519,722	116,409,964
Net advances during the year	1,302,321	-	1,302,321
Impairments during the year ²	-	(5,302,983)	(5,302,983)
At 31 December 2020	80,192,563	32,216,739	112,409,302
Provision for impairment			-
At 1 January 2020	(64,862,126)	(19,908,973)	(84,771,099)
At 31 December 2020	(64,862,126)	(19,908,973)	(84,771,099)
Net book value			-
At 31 December 2020	15,330,437	12,307,766	27,638,203
At 31 December 2019	14,028,116	17,610,749	31,638,865

¹ Restated amounts relate to the impairment of loan interest charged to Tower Resources Namibia Limited prior to that company's dissolution in November 2019. See note 24.

² On 10 May 2021 Wilton Petroleum Limited completed its solvent liquidation and the cost of the investment in that subsidiary was fully impaired at the year-end.

Included within loans made to subsidiary undertakings during the year of $1.3 million (2019: 4.5 million restated) are amounts of $1.0 million Cameroon (2019: $3.5 million), $25k South Africa (2019: $250k), $256k Rift Petroleum Holdings (2019: $950k) and $15k (2019: ($220k) restated) Namibia.

Loans made by the parent company to subsidiary undertakings are interest-bearing in accordance with loan agreements made in 2015, and are repayable to the parent company on demand.

The subsidiary undertakings at the year-end are as follows (these undertakings are included in the Group accounts):

	Country of	Class of	Proportion of voting rights held		Nature of business
	incorporation	shares held	Proportion of voting rights held		Nature of business
	2020	2020	2020	2019	2020
Tower Resources Cameroon Limited ¹	England & Wales	Ordinary	100%	100%	Holding company
Tower Resources 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 (Namibia) Holdings Limited ¹	England & Wales	Ordinary	100%	100%	Holding company
Tower Resources (Namibia) Limited ⁴	England & Wales	Ordinary	100%	100%	Oil and gas exploration
Wilton Petroleum Limited ^1/5	England & Wales	Ordinary	100%	100%	Oil and gas exploration
¹ Held directly by the Company, Tower Resources plc
² Held directly or indirectly through Tower Resources Cameroon Limited
³ Held directly or indirectly through Rift Petroleum Holdings Limited
⁴ Held directly or indirectly through Tower Resources (Namibia) Holdings Limited
⁵ Liquidated on 10 May 2021

14. Trade and other receivables

	Group		Company
	2020	2019	2020	2019
	$	$	$	$
Trade and other receivables	8,805	53,448	8,803	53,446

15. Trade and other payables

	Group		Company
	2020	2019	2020	2019
	$	$	$	$
Trade and other payables	1,763,182	1,398,597	1,386,925	1,150,226
Accruals	2,032,929	417,123	57,504	45,686
Loans from subsidiary undertakings	-	-	-	6,617,600
	3,796,111	1,815,720	1,444,429	7,813,512

On 10 May 2021 the solvent liquidation of Wilton Petroleum Limited was completed and amounts totalling $6.6 million (2019: $nil million) owing to it from Tower Resources plc were fully written-back within their books.

Group creditor payment days are approximately 29 days (2019: 37 days).

16. Borrowings

Total borrowings for the Group and Company are noted below:

	Group		Company
	2020	2019	2020	2019
	$	$	$	$
Principal balance at beginning of period	770,480	750,000	770,480	750,000
Amounts drawn down during the period	561,742	20,480	561,742	20,480
Currency revaluations at year end	6,504	-	6,504	-
Principal balance at end of period	1,338,726	770,480	1,338,726	770,480

Financing costs at beginning of year	70,010	-	70,010	-
Changes to financing costs during the year	(3,013)	-	(3,013)	-
Interest expense	152,372	70,010	152,372	70,010
Interest paid	(226,382)	-	(226,382)	-
Currency revaluations at year end	(13)	-	(13)	-
Financing costs at the end of the year	(7,026)	70,010	(7,026)	70,010

Carrying amount at end of period	1,331,700	840,490	1,331,700	840,490
Current	1,262,937	840,490	1,262,937	840,490
Non-current	68,763	-	68,763	-

PRINCIPAL REPAYMENT DATES	Group		Company
	2020	2019	2020	2019
	$	$	$	$
Due within 1 year	1,270,960	840,490	1,270,960	840,490
Due within years 2-5	55,010	-	55,010	-
Due in more than 5 years	5,730	-	5,730	-
	1,331,700	840,490	1,331,700	840,490

During the year the Group and Company entered into facilities totalling $562k (2019: $770k).

On 26 May 2020, the Company entered into a Business Bounceback Loan from its principal banker, Barclays Bank plc totalling $62k (£50k). The loan term is six years and there are no fees or interest repayments due within the first 12-month period. The final repayment on the loan will be made on 26 May 2026, although the Company does have the option to repay the loan earlier if it so chooses. The loan is unsecured. During the year the Company recognised interest charges totalling $1k (2019: $nil) and made no repayments (2019: $nil).

On 1 September 2020, the Company entered into a 6 month $500k loan facility with Shard Merchant Capital Ltd. The terms of the Shard Facility include the issue of 31,446,541 attached three-year warrants at a strike price of 0.6 pence and 5,761,198 shares to pre-pay interest charged at 12% per annum. The loan is secured by a fixed and floating charge over the Company's assets in favour of Shard Merchant Capital Ltd. The carrying amount of the Shard Merchant Capital Ltd facility includes transaction costs of $35k (net of accretion). During the year the Company recognised interest charges totalling $43k (2019: $nil) and made repayments totalling $30k (2019: $nil).

On 1 September 2020, the Pegasus Petroleum Limited loan facility, to which Jeremy Asher is a controlling party, was extended by 6 months to 28 February 2021. As part of the extension agreement, all accrued interest to 28 February 2021 was prepaid and settled by the issue of 43,616,169 shares. 47,169,811 warrants with a strike price of 0.6 pence per share were issued as settlement of the 6-month extension itself. Subsequent to this on 4 March 2021 the facility was again extended to November 2021 (see note 24).

17. Share capital

	2020	2019
	$	$
Authorised, called up, allotted and fully paid
1,325,296,032 (2019: 1,104,605,208) ordinary shares of 0.001p	18,254,040	18,251,117

At Company AGM, held on 6 July 2020, it was resolved by shareholders that the 163,370,833,248 Deferred Shares and 56,515,033,595 B Deferred Shares in issue be cancelled. These shares carried no entitlement to receive dividends, participate in any way in the income or profits of the company and carried no entitlement to receive notice of, attend, speak or vote at any general meeting of the Company.

The share capital issues during 2020 are summarised as follows:

	Number of shares	Share capital at nominal value	Share premium
		$	$
At 1 January 2020	1,104,605,208	18,251,117	144,294,128
Shares issued for cash	171,741,322	2,265	856,595
Shares issued on settlement of third party fees	5,333,333	70	26,150
Shares issued in settlement of loan interest	43,616,169	588	225,568
Share issue costs	-	-	(58,995)
At 31 December 2020	1,325,296,032	18,254,040	145,343,446

In March 2020, the Company issued 5,333,333 shares to Turner Pope Investments (TPI) Limited as part settlement of fundraising commissions owed to them for the placing for cash of 133,333,333 at 0.375 pence per shares at that same date.

In September 2020, the Company issued 5,761,198 shares to Shard Merchant Capital Ltd and 37,854,971 to Pegasus Petroleum Limited in settlement of interest due on their respective facility loan accounts.

In September 2020, the Company placed 38,407,989 shares for cash at 0.393 pence per share.

In June 2019 the Company subdivided and re-designated its existing share capital and amended its articles of association, in order to achieve a reduction in the par value of each Existing Ordinary Share from £0.01 to £0.00001 per share.

18. Reserves

Reserves within equity are as follows:

Share capital

Amounts subscribed for share capital at nominal value.

Share premium account

The share premium account represents the amounts received by the Company on the issue of its shares which were in excess of the nominal value of the shares.

Retained losses

Cumulative net gains and losses recognised in the Statement of Comprehensive Income less any amounts reflected directly in other reserves.

19. Financial instruments

Capital risk management and liquidity risk

Capital structure of the Group and Company consists of cash and cash equivalents held for working capital purposes and equity attributable to the equity holders of the Parent, comprising issued capital, reserves and retained losses as disclosed in the Statement of Changes in Equity. The Group and Company uses cash flow models and budgets, which are regularly updated, to monitor liquidity risk.

Significant accounting policies

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each material class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements.

Due to the short-term nature of these assets and liabilities such values approximate their fair values at 31 December 2020 and 31 December 2019.

	Carrying amount / fair value
	2020	2019
Group	$	$
Financial assets (classified as loans and receivables)
Cash and cash equivalents	10,054	38,662
Trade and other receivables	8,805	53,448
Total financial assets	18,859	92,110
Financial liabilities at amortised cost
Trade and other payables	3,796,111	1,815,720
Bridging loan facility	1,331,700	840,490
Total financial liabilities	5,127,811	2,656,210

	Carrying amount / fair value
	2020	2019
Company	$	restated¹ $
Financial assets (classified as loans and receivables)
Cash and cash equivalents	7,236	12,055
Trade and other receivables	8,803	53,446
Loans to subsidiary undertakings	15,330,437	14,028,116
Total financial assets	15,346,476	14,093,617
Financial liabilities at amortised cost
Loans from subsidiary undertaking	-	6,617,600
Borrowings	1,331,700	840,490
Total financial liabilities	1,331,700	7,458,090

¹ Restated amounts relate to the impairment of loan interest charged to Tower Resources Namibia Limited prior to the company's dissolution in November 2019. See note 24.

Financial risk management objectives

The Group's and Company's objective and policy is to use financial instruments to manage the risk profile of its underlying operations. The Group continually monitors financial risk including oil and gas price risk, interest rate risk, equity price risk, currency translation risk and liquidity risk and takes appropriate measures to ensure such risks are managed in a controlled manner including, where appropriate, through the use of financial derivatives.The Group and Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Interest rate risk management

The Group and Company borrowings carry a fixed interest rate of 1% per month and are therefore not exposed to any sensitivity risk.

Interest rate sensitivity analysis

The sensitivity analysis below has been determined based on the exposure to interest rates at the reporting date and assuming the amount of the balances at the reporting date were outstanding for the whole year.

A 100-basis point change represents management's estimate of a possible change in interest rates at the reporting date. If interest rates had been 100 basis points higher and all other variables were held constant the Group's profits and equity would be impacted as follows:

	Group		Company
	Increase		Increase
	2020	2019	2020	2019
	$	$	$	$
Cash and cash equivalents	402	4,869	243	4,646
Borrowings	(9,599)	(5,137)	(9,599)	(5,137)
	(9,197)	(268)	(9,356)	(491)

The Group's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates on classes of financial assets and financial liabilities, was as follows:

	2020	2020	2019	2019
	Floating interest rate	Non-interest bearing	Floating interest rate	Non-interest bearing
	$	$	$	$
Cash and cash equivalents	7,795	2,579	35,626	3,036

Foreign currency risk

The Group's and Company's reporting currency is the US dollar, being the currency in which the majority of the Group's revenue and expenditure is transacted. The US dollar is the functional currency of the Company and the majority of its subsidiaries. Less material elements of its management, services and treasury functions are transacted in pounds sterling. The majority of balances are held in US dollars with transfers to pounds sterling and other local currencies, as required to meet local needs. The Group does not enter into derivative transactions to manage its foreign currency translation or transaction risk as it does not believe such risks are material.

At the year-end the Group and Company maintained the following cash reserves:

	Group		Company
	2020	2019	2020	2019
Cash and cash equivalents	$	$	$	$
Cash and cash equivalents held in US$	255	-	255	100
Cash and cash equivalents held in GBP	9,095	13,954	6,981	11,470
Cash and cash equivalents held in XAF	559	23,571	-	-
Cash and cash equivalents held in other currencies	145	1,137	-	485
	10,054	38,662	7,236	12,055

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group or Company. The Group and Company reviews the credit risk of the entities that it sells its products to or that it enters into contractual arrangements with and will obtain guarantees and commercial letters of credit as may be considered necessary where risks are significant to the Group or Company.

The Group has cash and cash equivalents of $10,054 as at 31 December 2020 (2019: $38,662). The cash and cash equivalents are held with financial institutions which are rated below. Wherever possible ratings are provided by Fitch Ratings, however, where no rating was available from either Fitch Ratings or either of the other major international credit rating agencies such as Standard & Poors or Moodys, the bank's local credit rating was used:

		Group		Company
		2020	2019	2020	2019
Cash and cash equivalents	Rating	$	$	$	$
Barclays Bank plc	A+	7,236	12,055	7,236	12,055
Royal Bank of Scotland	A	2,259	3,036	-	-
First Afriland Bank	No rating	414	23,530	-	-
BGFI Bank	A+	145	41	-	-
		10,054	38,662	7,236	12,055

20. Share-based payments

	2020	2019
	$	$
In the statement of comprehensive income the Group recognised the following charge with respect to its share-based payments	528,029	1,134,716

The share-based payments include the cost of warrants issued in respect of the company's equity financings and bridging loan, and also share-based payments for a number of services to the Group's various contractors and brokers and payments in lieu of Director fees.

During the year, no shares were awarded under the Chief Executive's Share Incentive Plan (2019: 15 million shares valued at $142,266).

Options

Details of share options outstanding at 31 December 2020 are as follows:

			Number in issue
At 1 January 2020			71,601,400
Lapsed during the year			(48,600)
Awarded during the year			86,000,000
At 31 December 2020			157,552,800

Date of grant	Number in issue ¹	Option price (pence)	Latest exercise date
16 Mar 2016	52,800	47.5	16 Mar 2021
26 Oct 2016	1,500,000	2.3	25 Oct 2021
24 Jan 2019	70,000,000	1.250	24 Jan 2024
18 Dec 2020	86,000,000	0.450	18 Dec 2025
	157,552,800

¹These options vest in the beneficiaries in equal tranches on the first, second and third anniversaries of grant.

The following Directors held interests, directly or indirectly, in share options at the year-end:

	2020	2019
	No.	No.
Jeremy Asher (via Pegasus Petroleum Ltd)	120,000,000	60,000,000
Total	120,000,000	60,000,000

Warrants

Details of warrants outstanding at 31 December 2020 are as follows:

			Number in issue
At 1 January 2020			444,284,489
Awarded during the year			176,159,846
At 31 December 2020			620,444,335

Date of grant	Number in issue	Warrant price (pence)	Latest exercise date
09 Nov 2017	31,853,761	1.000	09 Nov 2022
01 Jan 2018	2,542,372	1.000	01 Jan 2023
01 Apr 2018	2,083,333	1.500	01 Apr 2023
01 Jul 2018	2,272,726	1.780	30 Jun 2023
01 Oct 2018	4,687,500	1.575	30 Sep 2023
24 Jan 2019	112,211,999	1.250	23 Jan 2024
16 Apr 2019	90,000,000	1.000	14 Apr 2024
30 Jun 2019	4,285,714	1.000	28 Jun 2024
30 Jul 2019	3,000,000	1.000	28 Jul 2024
15 Oct 2019	191,347,084	1.000	13 Oct 2024
31 Mar 2020	49,816,850	0.200	30 Mar 2025
29 Jun 2020	19,719,338	0.350	28 Jun 2025
28 Aug 2020	78,616,352	0.600	28 Aug 2023
01 Oct 2020	10,960,907	0.390	30 Sep 2025
01 Dec 2020	4,930,083	0.375	30 Nov 2025
31 Dec 2020	12,116,316	0.450	30 Dec 2025
	620,444,335

The following table shows the interests of the Directors in the share warrants in issue:

	2020	2019
	No.	No.
Jeremy Asher (directly and via Pegasus Petroleum Ltd)	258,277,029	166,376,171
Paula Brancato	5,769,306	-
Mark Enfield	3,925,458	-
Peter Taylor (retired 31 December 2020)	-	22,276,628
Total	267,971,793	188,652,799

The weighted average exercise price of the share warrants was 0.89p (2018: 1.22p) with a weighted average contractual life of 3.4 years (2018: 4.0 years). At 31 December 2020 and 2019 all warrants had fully vested.

In its Statement of Comprehensive Income, the Company recognised share-based payment charges of $236k (2019: $801k).

In compliance with the requirements of IFRS 2 on share-based payments, the fair value of options or warrants granted during the year is calculated using the Black Scholes option pricing model. For this purpose, the volatility applied in calculating the above charge varied between 20% and 143% (2018: 20% and 143%), depending upon the date of grant, and the risk-free interest rate was 0.25% (2019: 0.5%) and the Dividend Yield was nil% for 2019 and 2018.

The Company's share price ranged between 0.2p and 0.7p (2019: 0.3p and 1.0p) during the year. The closing price on 31 December 2020 was 0.4p per share (2019; 0.4p). The weighted average exercise price of the share options was 0.8p (2019: 1.2p) with a weighted average contractual life of 4.0 years (2019: 4.0 years). The total number of options vested at the end of the year was 3.3 million (2019: 1.6 million).

21. Related party transactions

The key management of the Group comprises the Directors of the Company. Except as disclosed, there are no transactions with the Directors other than their remuneration and interests in shares, share options and warrants. As noted in the Directors' Report, Pegasus Petroleum Ltd ("Pegasus"), a company owned and controlled by Jeremy Asher, received $257,155 (2019: $448,666) in fees for management services, and provided initially 50% and subsequently 100% of the loan facility set out in note 16. Further information on Directors' remuneration is detailed in the Directors' Report and their total remuneration in each of the categories specified in IAS 24 'Related Party Disclosures' is shown below:

	Group		Company
	2020	2019	2020	2019
	$	$	$	restated⁴ $
Short-term employee benefits	-	130,337	-	130,337
Fees charged by companies associated with Jeremy Asher ¹	257,155	448,666	-	-
Interest charged on borrowings by companies associated with Jeremy Asher ¹	108,456	70,010	108,456	70,010
Share-based payments ²	399,400	556,178	263,613	556,178
Share incentive scheme awards ³	-	142,266	-	-
Finance interest on intercompany loan accounts	234,652	-	234,652	70,299
Fees charged with respect to the provision of strategic advice and support by the parent	170,049	-	170,049	198,768
	1,169,712	1,347,457	776,770	1,025,592

¹Charged by Pegasus Petroleum Limited ("Pegasus"), a company registered in the Channel Islands, to Rift Petroleum Holdings Limited, a wholly owned subsidiary of Tower Resources plc and registered in the Isle of Man. Pegasus Petroleum Limited ("Pegasus") is owned and controlled by a family trust of which Jeremy Asher is the settlor and lifetime beneficiary. Included in the Group's operating loss is an amount of $257,155 (2019: $253,555) paid to Pegasus in respect of charges for management services received during 2020 plus $nil (2019: $195,111) of fees with respect to performance uplift charges relating to 2019.

² Includes $nil (2019: $174,202) of charges for warrants issued with respect to shares subscribed for by Mr Asher during equity placings in January and October 2019, and $163,103 (2019: $166,481) of charges for share warrants arising from the issue and extension of the loan facility made to Tower Resources plc by Pegasus in 2019; also includes $236,297 (2019: $85,153) in respect of Director warrants issued in lieu of fees to Directors.

The warrants issued to Pegasus and Mr Asher were on identical terms to those issued to third parties participating in the loan facility and share subscriptions.

³ Share incentive plan award to Jeremy Asher for 15 million shares on 24 January 2019.

⁴ Restated amounts relate to the impairment of loan interest charged to Tower Resources Namibia Limited prior to the company's dissolution in November 2019. See note 24.

22. Control

The Company is under the control of its shareholders and not any one party.

23. Leases and capital commitments

The Group is committed to funding the following exploration expenditure commitments as at 31 December 2020:

	Country	Interest	2021	2022 onwards
Cameroon Thali ¹	Cameroon	100%	$3.53 million	-
South Africa Algoa-Gamtoos ²	South Africa	50%	$1.23 million	$2.50 million
Namibia Blocks 1910A, 1911 and 1912B ³	Namibia	80%	-	$4.50 million
Zambia Blocks 40 and 41 ⁴	Zambia	100%	-	-
			$4.76 million	$7.00 million

¹ Force majeure notified 30 March 2020

² 2 years to 16 November 2022

³ First period expiration 5 November 2022

⁴ Discussions as to licence status ongoing, no current commitments during hiatus period

24. Restatement of intercompany loan interest charges to Tower Resources Namibia Limited

The Company has intercompany loan funding agreements with all of its operating subsidiaries as it currently provides to them the sole source of funding for exploration and appraisal operations.

During 2019 interest amounts totalling $782,903 were charged to Tower Resources Namibia Limited, a company registered in the British Virgin Islands, with respect to loan funding it had received totalling $42.3 million to fund its share of the Welwitschia-1 offshore exploration well drilled in 2014. Tower Resources Namibia Limited was dissolved in November 2019 and prior to this date all loan interest charged during 2019 should have been fully provided against as the subsidiary no longer had the means to repay it on-demand. During the year-ended 31 December 2019, the Company charged its operating subsidiaries, including Tower Resources Namibia Limited, loan interest totalling $853k.

25. Subsequent events

14 January 2021: Announcement of a placing for cash to raise £1.25 million via 384,615,384 new ordinary shares of 0.001p each at a price of 0.325 pence per share. Each placee received one warrant exercisable for two years at 0.65 pence per share for every 3 shares subscribed. The funding was to repay the short-term Shard Merchant Capital borrowing of $500,000, to contribute towards the cost of the seismic reprocessing and interpretation being undertaken by the Company's partner and license operator, NewAge Energy Algoa (Pty) Ltd in respect of the Algoa-Gamtoos license in South Africa, maintenance expenditure in Cameroon to maintain the long-lead items inventory ready for the commencement of drilling and testing of the NJOM-3 well on the Thali license and general working capital purposes.

27 January 2021: Announcement that the Company had issued shares in lieu of fees to EPI Group which provides geological and geophysical services to the Company under a strategic relationship that has been in place since 2015.

8 February 2021: Announcement that Rift Petroleum Ltd had received updated resource estimates from its 50% partner and license Operator, New Age Energy Algoa (Pty) Ltd following interpretation of the reprocessing of additional 2D seismic data covering the Algoa-Gamtoos license, offshore South Africa.

The reprocessing work encompassed 4,500 line kms of 2D seismic data incorporating both data already owned by the partners and also further data acquired from the Petroleum Authority of South Africa. The resulting seismic dataset shows an overall improvement in bandwidth, de-noise and imaging. Structural imaging is substantially sharper than in the previous vintage dataset. The impact on what can be seen in the Deepwater section of the license is especially pronounced, allowing the New Age Energy Algoa (Pty) Ltd to identify a deeper level slope and three separate reservoir targets; a shallow section which was previously identified, whose size is now estimated to be slightly larger, to which is ascribed 470 million boe Pmean recoverable resources (unrisked); a deeper slope section which was not previously identified to which is ascribed 231 million boe Pmean recoverable resources (unrisked); and a basin floor fan section which was not previously identified to which is ascribed 710 million boe Pmean recoverable resources (unrisked);

4 March 2021: Announcement of a further extension of the Pegasus Petroleum Limited borrowing facility. Pegasus Petroleum Limited whose ultimate beneficial owner is the Company's Chairman and CEO, Jeremy Asher, and was originally provided to the Company as a bridging loan announced on 16 April 2019. The facility has now been extended to the end of November 2021, though the Company hopes to repay the Facility by 15 July 2021, in which case the cost of the extension will reflect the earlier repayment.

10 May 2021: The completion of the solvent liquidation of the wholly owned subsidiary, Wilton Petroleum Limited. At the date of the liquidation, the Company recognised a gain on disposal of $1.3 million, being the net of amounts due to the subsidiary written back on disposal of $6.6 million and the write-off of the carrying amount of $5.3 million.

19 May 2021: Announcement that the wholly owned subsidiary of the Company, Tower Resources Cameroon SA, has now received formal confirmation from the Minister of Mines, Industry and Technological Development of the details of the formal extension of the First Exploration Period of the PSC. Tower Resources Cameroon SA declared Force Majeure in March 2020 in respect of the First Exploration Period of the PSC, in light of the restrictions required to combat the Covid-19 pandemic, and on 31 March 2021 the Company announced that the President of the Republic had also approved a formal extension of the First Exploration Period. The formal "arrête" from Minister of Mines, Industry and Technological Development extends the First Exploration Period to 11 May 2022. The formal extension allows the Company to proceed with finalising a schedule for drilling and testing the NJOM-3 well.

21 May 2021: Announcement that the Company had received a favourable ruling from the Upper-Tier Tax Tribunal upholding the First-Tier Tax Tribunal's decision in the Company's favour on 8 July 2019 and dismissing HMRC's appeal against the First-Tier Tax Tribunal's decision. The First-Tier Tax Tribunal's decision, which was announced by the Company on 9 July 2019, allowed the Company's appeal against HMRC's 2016 decisions to deny it credit for input VAT. The Upper-Tier Tax Tribunal's decision dated 20 May 2021 affirms the FTT Decision, but remains subject to further appeal by HMRC to the Court of Appeal. Any such appeal application should be made within one month. The Company has fully provided for assessments previously issued by HMRC and will continue to do so until final resolution of the matter.

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