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Sirius Petroleum plc

Annual Report andFinancial Statements

for the year ended 31 December 2016

ContentsFOR THE YEAR ENDED 30 SEPTEMBER 2008


1

2 Corporate Advisers

3 Chairman’s & CEO’s Statement

6 Strategic Report

8 Report of the Directors

11 Corporate Governance

13 Report on Remuneration

15 Independent Auditor’s Report

17 Principle Accounting Policies

25 Consolidated Statement of Comprehensive Income

26 Consolidated Statement of Changes in Equity

27 Consolidated Statement of Financial Position

28 Consolidated Cash Flow Statement

29 Notes to the Financial Statements

43 Company Statutory Financial Statements (prepared under UK GAAP – FRS 102)

52 Notice of Annual General Meeting

47 Form of Proxy

Corporate AdvisersFOR THE YEAR ENDED 30 SEPTEMBER 2008


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Company registration number 05181462

Registered office 42 Berkeley SquareLondon W1J 5AW

Directors J Pryde ChairmanO Kuti Chief Executive OfficerC Neal Non-Executive Director

Company secretary L Jessup

Nominated adviser and broker Cantor Fitzgerald Europe2 Churchill PlaceCanary WharfLondon E14 5RB

Registrars Capita Asset Services LtdThe Registry34 Beckenham RoadBeckenhamKent BR3 4TU

Bankers HSBC Bank plcUnit 6CBorehamwood Shopping ParkBorehamwood WD6 4PR

Solicitors Fladgate LLP16 Great Queen StreetLondon WC2B 5DG

Auditors Grant Thornton UK LLPRegistered AuditorChartered AccountantsThe Colmore Building20 Colmore CircusBirmingham B4 6AT

Chairman’s & CEO’s StatementFOR THE YEAR ENDED 31 DECEMBER 2016


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We report on the progress of Sirius Petroleum plc (“Sirius”, “the Group” or “the Company”) for the twelve-monthperiod ended 31 December 2016.

The Board of Sirius has continued to make significant progress on the multi well campaign of the Ororo (OML95)marginal field (“Ororo”). We believe that we are now in a strong position to conclude our negotiations and tocommence the drilling and extraction programme in the second half of 2017.

Significant milestones achieved during 2016 included the following:

l Entered into another important contract for the provision of Well Engineering and Operations Management(“Well Management Contract”) with Add Energy Group Limited (“Add Energy”), for a multi well campaign aspart of Sirius’ shallow offshore development strategy in Nigeria, commencing in 2017.

l Entered into a key vendor financed offshore drilling contract (“Vendor Finance Contract”) with COSL DrillingPan-Pacific Limited (“COSL”), for the provision of a high specification jack-up rig that will be utilised by theCompany to drill the multi well campaign.

l Entered into a contract for the provision of an integrated services management (ISM) contract withSchlumberger, the world’s leading oilfield services company. Schlumberger will provide Sirius with acomprehensive package of managed and integrated products and services including directional drillingservices, logging, completion and production fluids, cementing and pumping services, well intervention andstimulation products and services, well testing services, wellsite communications and data and softwaresolutions.

l Commissioned a Competent Person’s Report (“CPR”) for the Ororo Field by independent petroleumconsultants, Rockflow Resources Limited (“Rockflow). This valuation, subsequent to the technical volumetricdescription was commissioned to assist the Company with potential funding and vendor finance proposals.The CPR indicated a Mid Case Net Present Value (NPV10) of the asset of $49.2m

l Obtained a three-year extension to the Ororo Field Licence (OML 95) (“Licence”) from the Nigerian FederalMinistry of Petroleum Resources (FMPR) with effect from 1 May 2016.

l The Company raised a total of £1.85 million ($2.43 million) by way of placings at an average of 0.34p pershare and a further £625,000 ($830,000) in loans.

l Board changes: This year saw Simon Hawkins leave the Board due to a short term health problem.

Post 2016 eventsl Executed a contract with Polaris Consulting Company (“Polaris”) to undertake a Seabed Survey around the

Ororo field licence area. This activity is a geophysical and geotechnical marine survey, ahead of the rigmobilisation, which will provide data and analysis for the rig positioning prior to drilling and assess any marinegeohazards to ensure safe operations and transportation of equipment. Following the analysis of thebathymetry results from the Seabed Survey, COSL has confirmed and identified the “COSL Power” as theJack-up rig which will be utilised for Ororo field.

l The Company has appointed Peter Gregory as Chief Operating Officer (‘COO’) with primary responsibility forall operational areas of the Ororo field.

l Arranged for the provision of Offshore Service Vessels (“OSVs”) through Tidewater Marine International, Inc,with the signing of an OSV Contract

l The Company raised a further £2 million ($2.5 million) by way of a placing at 0.75p per share and a further£70,000 ($88,000) in loans, which were converted into shares at 0.5p. These funds were mainly required topay the initial deposits on key equipment and long lead items and to cancel a loan agreement with CalvetInternational Limited.

Chairman’s & CEO’s StatementCONTINUED


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BP offtake and pre-payment facilityOn 12 June the Company announced that it was in discussions with BP regarding an offtake and pre-paymentfacility to support the financing of the Company’s proposed drilling programme on the Ororo Field. The Boardintends to make a further announcement on this project in the near future.

Financial summaryThe loss after tax has been reduced to $2,172,000 in 2016 from $4,052,000 in 2015, with a reduction inadministrative expenses of $951,000, a reduction in share-based payments of $895,000 and a reduction infinance charges of $43,000. Total assets have increased from $4,057,000 in 2015 to $5,658,000 in 2016, withliabilities rising from $4,102,000 to $5,547,000 and total equity has increased by $156,000. Net cash hasincreased from $45,000 in 2015 to $830,000 in 2016.

Nigeria oil sectorPresident Buhari’s administration initiated many structural reforms within the Nigerian National PetroleumCorporation Ltd (“NNPC”) and the Ministry of Petroleum Resources (“MPR) to provide clarity, transparency, andaccountability within the Nigerian Oil & Gas Industry.

These reforms continue to support indigenous projects and the Company’s partnership with the Ondo Stategovernment, through Owena Oil & Gas Limited which is owned 100% by the Ondo State government, providesvaluable access to proven oil discoveries located within Ondo State.

Efficient monetisation of associated gas, which could replace flaring and help develop the country’s power sector,is a key focus of the Federal Government. The managing director of the NNPC reiterated their commitment toincreasing Nigeria’s gas production which is in line with our strategy to commercialise the gas on the Ororo fieldand generate additional sources of revenue.

On 25 May 2017, The Nigerian Senate passed the Petroleum Industry Governance Bill (PIGB). This is the first offive oil & gas-related bills, part of the Petroleum Industry Bill (PIB), which is core to President Buhari’s reforms.

Overview of the Bill1. Introduction of a new regulator – named the Nigerian Petroleum Regulatory Commission (“NPRC” or “the

commission”), to serve as the supervisory body for the Nigeria oil & gas industry. The NPRC will replace thePetroleum Inspectorate, the Department of Petroleum Resources (DPR) and the Petroleum Products PriceRegulatory Agency (PPPRA), and carry out their functions. This is slightly different from the provision in theprevious version of the “complete” PIB, in which two regulatory bodies called the Upstream PetroleumInspectorate (“the Inspectorate”) and the Downstream Petroleum Regulatory Agency (“the Agency”) wereproposed.

2. The Petroleum Equalization Fund (PEF) will continue to exist. However, the PEF Act will be repealed, and thePIGB will serve as the relevant legislation for the existence of the PEF.

3. Establishment of three Commercial Entities – The Nigeria Petroleum Liability Management Company (“LiabilityManagement Company”), the Nigerian Petroleum Assets Management Company Limited (“the managementcompany”) and the National Petroleum Company (NPC). These entities will replace the Nigerian NationalPetroleum Corporation (NNPC).

The management company will hold and manage assets under Production Sharing Contracts (PSCs) and Back-in Rights assets on behalf of the government of the Federation, while the NPC will be responsible for allother assets currently held by NNPC. Both companies will be 20% owned by the Bureau of Public Enterprises(BPE), 40% by the Ministry of Finance Incorporated (MOFI), and 40% by the Ministry of Petroleum Incorporated(MOPI). 10% of the shares of the NPC will be divested within 5 years of incorporating the company, while anadditional 30% will be divested within 10 years. There are no plans in the bill for the asset and liabilitymanagement companies to be divested.

Chairman’s & CEO’s StatementCONTINUED


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The Liability Management Company will assume “certain” liabilities of the NNPC and the pension liabilities of theDPR, so as not to encumber the newly formed companies. The shares of the Liability Management Companyshall be held by the management company, the NPC and the NPRC, in ratio of their respective liabilities. TheMinister of Petroleum Resources (“The Minister”) shall initiate the winding down of this entity once the liabilitieshave been settled.

The Oil and gas industry is emphasising that large, offshore oil projects are competitive at below US$50/bbl andNigeria offers many such opportunities. Overall the industry feels that there is an improving operating environmentin Nigeria, which could present a number of compelling investment opportunities.

Global oil outlookAfter the volatility in the oil price during the course of 2014-15, as prices declined significantly we were pleasedto see a recovery in 2016, and the oil consensus is forecasting future price rises in 2017 through to 2019.

Loss of capitalThe financial statements show that the Company’s net assets are less than half its called up share capital. In these circumstances, the Directors of the Company are obliged by section 656 of the Companies Act 2006 toconvene a General Meeting for the purpose of considering whether any and, if so, what, steps should be takento deal with the Company’s current financial position. The Directors will consider this issue at the Company’sforthcoming Annual General Meeting.

Going concernThe Directors have undertaken a detailed review of the Group’s cash flow forecast. We believe that the Group willhave sufficient cash resources to meet its liabilities as they fall due for a period of at least 12 months from the datethat the financial statements are signed. A full going concern report can be found in the Strategic Report on pages 6 and 7. The auditor’s reports in the Group and Company’s financial statements contain an emphasis ofmatter in respect of going concern.

Annual general meetingDetails of the Annual General Meeting will be sent separately to shareholders in due course and an announcementwill be made when this has been done.

We have made significant progress over the past year to ensure the Company has all the necessary skills andresources to develop its pipeline of assets. The Board is excited with the progress made towards the multi wellcampaign as part of Sirius’ shallow offshore development strategy in Nigeria

Finally, I would like to thank our shareholders for their support as we continue to develop the business.

J PrydeChairman

28 June 2017

Strategic ReportFOR THE YEAR ENDED 31 DECEMBER 2016


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Business reviewThe results of the Group are shown on page 25. The Directors do not recommend the payment of a dividend.

The results represent the costs of developing our strategy and reviewing interests in both potential oil and gasblocks and individual marginal field opportunities. Total comprehensive loss for the year amounted to $2,135,000(2015: $4,066,000). Finance costs on loans decreased from $837,000 in 2015 to $794,000 in 2016, and share-based payments decreased from $895,000 to $Nil.

Since the end of the period, Sirius has issued a further 283,999,999 new ordinary shares for cash, and now has2,542,029,522 shares in issue. Sirius does not hold any shares in treasury and, hence, the total number of votingrights in the Company is 2,542,029,522. This figure may be used by shareholders as the denominator for thecalculations by which they will determine if they are required to notify their interest in, or a change to their interestin, the Company under the Financial Conduct Authority’s Disclosure and Transparency Rules.

Aims and objectivesThe Company’s core corporate strategy is to work alongside financial and technical industry partners on a jointfarm-in basis to exploit larger oil blocks (typically, marginal fields that have flowed oil in the past) in Nigeria, andour objective for 2017 is to finalise plans in order to commence the drilling programme on the Company’s firstmarginal field, the Ororo Field, located in OML95.

Key performance indicatorsAt this stage in the Group’s development, the key performance indicator is the loss after tax. As the Group hasnot undertaken any trade in the year it has no other key financial or non-financial performance indicators. Thiswill be reviewed in the forthcoming year.

Principal risks and uncertaintiesThe Group’s overall approach to risk management is to employ suitably skilled personnel and implementappropriate policies and procedures. The risks we face have evolved over the course of the year as the businesshas developed and external factors have impacted the environment in which we operate.

Responsibility for reviewing the system of Risk Management rests with the Audit Committee of the Board, whichhas reviewed and approved the measures that are being taken to mitigate the most significant risks.

The principal risks faced by Sirius during 2016 relate to political risks in respect of the situation in Nigeria andstrategic risks associated with the growth of the organisation and the economic climate.

Exploration riskExploration activities can be capital intensive and may involve a high degree of risk. Thus, budgets are producedby experienced individuals and reviewed to ensure best practice exists. Exploration programmes are approvedby the Board.

Oil price riskThe oil price is subject to market conditions which are outside of the Group’s control. The decision to invest inany oil drilling will be made based on the latest and forecasted oil prices and approved by the Board.

Nigeria country risksPolitical instability in this developing economy could result in the loss of the business. Ongoing monitoring andclose liaison on the ground are utilised to monitor the situation.

Loss of key employeesLoss of knowledge and skills to the Group in particular countries of operation is a key risk. In response to thisrisk, remuneration policies are designed to incentivise, motivate and retain key employees.

Strategic ReportCONTINUED


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Taxation and other legislation changesOperating in developing countries has the additional risk of significant changes in taxation legislation on oil fieldprofits or other legislation. Maintenance of good open working relationships with local authorities in the countriesof operation is therefore critical.

Going concernThe Group is currently at an advanced stage in negotiations with various parties to raise the funds required tobring the Ororo Field into production, however at the date of signing these financial statements these negotiationshave not been concluded. Therefore the Directors have prepared two versions of cash flow projections for theperiod up to 30 June 2018.

The first of these projections only takes account of the on-going management costs of the Group, and theclearance of all payables which the Directors consider are currently due as at the date of this report. The paymentof accrued Directors’ remuneration and certain of the Directors’ remuneration payable in respect of the currentyear has been excluded as the Directors have agreed to defer payment until such time as funds are available.The projections also do not assume any costs in relation to bringing the Ororo field into production or assumeany oil extraction or income from oil trading, nor do they assume any acquisitions take place or that any additionalassessment of the prospective resources is undertaken over and above that authorised as at the date of thisreport. These projections show that the Group will require additional financing in 2017.

The second version of the projections assumes that the Group will conclude its negotiations to raise the fundsrequired to bring the Ororo Field into production. These projections forecast revenue streams and costs basedon the Competent Person’s Report produced, and demonstrate the total funding level required.

On the basis that cash is expected to be available in one or other of the scenarios, and following a detailed reviewby the Directors of the Group’s cash flow forecasts, the Directors believe that the Group will have sufficient cashresources to meet its liabilities as they fall due for a period of at least 12 months from the date that the financialstatements are signed. These conditions indicate the existence of a material uncertainty which may castsignificant doubt about the Group’s ability to continue as a going concern. Consequently, the financial statementshave been prepared on a going concern basis. The Group financial statements do not include the adjustmentsthat would result if the group was unable to continue as a going concern.

FundraisingThe Board continues to review potential project finance to bring the Ororo Field into production. We will seek toconclude funding which maximises value for shareholders.

Future prospectsThe Board is pleased with the progress made during 2016 and the first half of 2017, and anticipates being in aposition to commence the extraction of both oil and gas from the Ororo Field in the second half of 2017.

The Board also continues to review additional asset opportunities, as well as distressed producing opportunities,that require funding.

The Chairman’s and CEO’s statement is an integral part of the strategic report.

O KutiChief Executive Officer

28 June 2017

Report of the DirectorsFOR THE YEAR ENDED 31 DECEMBER 2016


8

The Directors present their annual report together with the audited consolidated financial statements of the Groupfor the year ended 31 December 2016.

Principal activityThe Group is actively seeking to acquire and develop offshore proven oil discoveries (‘marginal fields’) in Nigeria.

Domicile and principal place of businessSirius Petroleum plc is domiciled in the United Kingdom, which is currently also its principal place of business. It is expected that the Group’s activities will become focused in Nigeria once the Ororo field has been brought toproduction.

Financial risk management objectives and policiesThe Group’s principal financial instruments comprise cash and loans. The main purpose of these financialinstruments is to raise finance for the Group’s operations. The Group has various other financial instruments suchas trade and other receivables and trade payables, which arise directly from its operations. The Group does notenter into derivative transactions.

It is, and has been throughout the year under review, the Group’s policy that no trading in financial instrumentsshall be undertaken. The main risk currently arising from the Group’s financial instruments is liquidity risk. TheBoard reviews and agrees policies for managing this and other risks and these are summarised below.

Liquidity riskThe Group’s cash flow has historically been constrained as the Group has developed its business proposition.As a consequence, the Board of Directors continually review the cash available to the Group and seek to managefinancial risk by ensuring sufficient liquidity is available to meet foreseeable needs. Please see note 15 for furtherdetails.

Interest rate riskThe Group has not been exposed to significant interest rate risk. As the Group evolves, this exposure is likely toincrease and the Directors will introduce appropriate policies to deal with this risk at that point in time. Please seenote 15 for further details.

Credit riskCredit risk refers to the risk that a counterparty will default on its contractual obligations resulting in a financialloss to the Group. The Group reviews the credit risk of the entities with whom it enters into contractualarrangements. Please see note 15 for further details.

The Company maintains directors’ and officers’ liability insurance which gives appropriate cover for any legalaction brought against its directors. In accordance with section 236 of the Companies Act 2006, qualifying third-party indemnity provisions are in place for the directors in respect of liabilities incurred as a result of theiroffice, to the extent permitted by law. Both the insurance and the indemnities applied throughout the financialyear ended 31 December 2016 and through to the date of this report.

Subsequent eventsOn 26 January 2017, 14,000,000 ordinary shares of 0.25p were issued at 0.5p to repay a loan of £70,000.

On 22 February 2017, 266,666,666 ordinary shares on 0.25p were issued at 0.75p for cash proceeds of £2,000,000before costs, and 3,333,333 ordinary shares of 0.25p were issued at 0.75p in payment of fees of £25,000.

Following this share issue, there are 2,542,029,522 ordinary shares of 0.25p in issue, each of which is a voting share.

Report of the DirectorsCONTINUED


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DirectorsThe current membership of the Board and those directors who served during the year is set out below.

J PrydeO KutiS Hawkins (resigned 17 November 2016)C Neal

Substantial shareholdingsInterests in excess of 3% of the issued share capital of the Company which had been notified to the Companyas at 11 May 2017 were as follows:

Ordinary shares Percentageof 0.25p each of capital

Number %

Hargreaves Lansdown (Nominees) Limited 398,659,487 15.68%Barclayshare Nominees Limited 245,078,670 9.64%TD Direct Investing Nominees (Europe) Limited 182,577,804 7.18%Spreadex Limited 168,780,923 6.64%Jim Nominees Limited 139,554,097 5.49%HSDL Nominees Limited 120,980,829 4.76%Investor Nominees Limited 110,281,910 4.34%Vidacos Nominees Limited 108,977,455 4.29%Lawshare Nominees Limited 91,865,022 3.61%HSBC Global Custody Nominee (UK) Limited 82,875,060 3.26%

Payment to suppliersIt is the Group’s policy to agree on appropriate terms and conditions for its transactions with suppliers by meansranging from standard terms and conditions to individually negotiated contracts and pay suppliers according toagreed terms and conditions, provided that the supplier meets those terms and conditions. The Group does nothave a standard or code dealing specifically with the payment of suppliers.

Directors’ responsibilities statementThe Directors are responsible for preparing the Group’s Annual Report and the Group and parent companyfinancial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law theDirectors have elected to prepare the Consolidated financial statements in accordance with InternationalFinancial Reporting Standards (“IFRSs”) as adopted by the European Union and to prepare the parent companyfinancial statements in accordance with United Kingdom Generally Accepted Accounting Practice “UnitedKingdom Accounting Standards and applicable laws”, including FRS 102, the Financial Reporting Standardapplicable in the UK and Republic of Ireland. Under company law the Directors must not approve the financialstatements unless they are satisfied they give a true and fair view of the state of affairs and profit or loss of thecompany and group for that period.

Report of the DirectorsCONTINUED


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In preparing these financial statements, the Directors are required to:

l select suitable accounting policies and then apply them consistently;

l make judgements and estimates that are reasonable and prudent;

l state whether applicable IFRSs/FRS 102s have been followed, subject to any material departures disclosedand explained in the financial statements; and

l prepare the financial statements on the going concern basis unless it is inappropriate to presume that thecompany will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explainthe company’s transactions and disclose with reasonable accuracy at any time the financial position of thecompany and enable them to ensure that the financial statements comply with the Companies Act 2006. Theyare also responsible for safeguarding the assets of the company and hence for taking reasonable steps for theprevention and detection of fraud and other irregularities.

The Directors confirm that:

l so far as each Director is aware there is no relevant audit information of which the Company’s auditor areunaware; and

l the Directors have taken all steps that they ought to have taken as directors in order to make themselvesaware of any relevant audit information and to establish that the Company’s auditors are aware of thatinformation.

The Directors are responsible for the maintenance and integrity of the corporate and financial informationincluded on the Company’s website. Legislation in the United Kingdom governing the preparation anddissemination of financial statements may differ from legislation in other jurisdictions.

AuditorsGrant Thornton UK LLP has expressed willingness to continue in office. In accordance with section 489(4) of theCompanies Act 2006, a resolution to reappoint Grant Thornton UK LLP will be proposed at the Annual GeneralMeeting.

By order of the board

L JessupCompany Secretary

28 June 2017

Company Number: 05181462

Corporate GovernanceFOR THE YEAR ENDED 31 DECEMBER 2016


11

We are not required to comply with the UK Corporate Governance Code and at this time, given the currentnature and scope of the Company’s operations, do not comply with the UK Corporate Governance Code.However, we have reported on our Corporate Governance arrangements by drawing upon best practiceavailable, including those aspects of the UK Corporate Governance Code we consider to be relevant to theCompany and best practice.

DirectorsThe Company supports the concept of an effective board leading and controlling the Company. The Board isresponsible for approving Company policy and strategy. It meets on a regular basis and has a schedule ofmatters specifically reserved to it for decision. Management supply the Board with appropriate and timelyinformation and the Directors are free to seek any further information they consider necessary. All Directors haveaccess to advice from the Company Secretary and independent professional advice at the Company’s expense.

The Board consists of three Directors, who bring a breadth of experience and knowledge and will be enhancedby additional appointments when the Company commences operations in Nigeria. The structure of the Boardis intended to provide a balance whereby the Board’s decision making cannot be dominated by any oneindividual.

Relations with shareholdersThe Company values the views of its shareholders and recognises their interest in the Group’s strategy andperformance. The Annual General Meeting will be used to communicate with private investors and they areencouraged to participate. A number of the Directors will be available to answer questions. Separate resolutionswill be proposed on each issue so that they can be given proper consideration and there will be a resolution toapprove the annual report and accounts.

Internal controlThe Board is responsible for maintaining a strong system of internal controls to safeguard shareholders’investment and the Group’s assets and for reviewing its effectiveness. The system of internal financial control isdesigned to provide reasonable, but not absolute, assurance against material misstatement or loss.

Terms of reference for an audit committee have been established but, due to the current small number ofdirectors, the Audit Committee’s activities have been taken over by the Board as a whole until furtherappointments of non-executive directors are made. On re-establishment, it is intended that the Audit Committeewill meet at least half yearly and will be responsible for ensuring that the financial performance of the Group isproperly monitored and reported on, as well as meeting the auditors and reviewing any reports from the auditorsregarding accounts and internal control systems.

The Board is committed to maintaining a reputation for honesty and integrity in all its business dealings and seeksto avoid the appearance of impropriety in its actions. Accordingly, an Anti-Bribery and Corruption Policy has beenestablished and a hard copy is held at the Group’s head office.

The Board has considered the need for an internal audit function but has decided that the size of the Group doesnot justify it at present. The Company will, however, keep this under annual review.

Corporate GovernanceCONTINUED


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Going concernThe Group is currently at an advanced stage in negotiations with various parties to raise the funds required tobring the Ororo Field into production, however at the date of signing these financial statements these negotiationshave not been concluded Therefore the Directors have prepared two versions of cash flow projections for theperiod up to 30 June 2018.



On the basis that cash is expected to be available in one or other of the scenarios, and following a detailed reviewby the Directors of the Group’s cash flow forecasts, the Directors believe that the Group will have sufficient cashresources to meet its liabilities as they fall due for a period of at least 12 months from the date that the financialstatements are signed. These conditions indicate the existence of a material uncertainty which may castsignificant doubt about the Group’s ability to continue as a going concern. Consequently, the financial statementshave been prepared on a going concern basis. The Group financial statements do not include the adjustmentsthat would result if the group was unable to continue as a going concern.

Report on RemunerationFOR THE YEAR ENDED 31 DECEMBER 2016


13

Directors’ remunerationThe Board recognises that Directors’ remuneration is of legitimate concern to shareholders and is committed tofollowing current best practice. The Group operates within a competitive environment and performance dependson the individual contributions of the Directors and employees. The Board believes in rewarding vision andinnovation.

Policy on executive Directors’ remunerationThe policy of the Board is to provide executive remuneration packages designed to attract, motivate and retainDirectors of the calibre necessary to maintain the Group’s position and to reward them for enhancing shareholdervalue and return. It aims to provide sufficient levels of remuneration to do this, but avoid paying more than isnecessary. The remuneration will also reflect the Directors’ responsibilities and contain incentives to deliver theGroup’s objectives. The Company has established terms of reference for a remuneration committee which will beput into place once additional non-executive directors have been appointed.

The remuneration of the Directors was as follows:

C Neal O Kuti S Fletcher S Hawkins J Pryde A Kejriwal Total(resigned (resigned (resigned

30 September 17 November 2 November2015) 2016) 2015)

$ $ $ $ $ $ $

Short-term employment benefits:Year to 31 December 2016Salary and fees 32,341 129,825 – 51,240 64,704 – 278,110 Benefits in kind – 2,958 – – – – 2,958 Share based payments – – – – – – –

Total 32,341 132,783 – 51,240 64,704 – 281,068

Employers NI – 16,006 – – 7,666 – 23,672

Year to 31 December 2015Salary and fees 5,967 183,330 99,094 4,811 131,004 181,483 605,689 Benefits in kind – 3,187 – – – – 3,187 Share based payments – – 32,892 3,828 – 49,338 86,058

Total 5,967 186,517 131,986 8,639 131,004 230,821 694,934

Employers NI – 23,439 – – 16,521 – 39,960

The above table includes amounts due but undrawn in respect of current and former directors remuneration andNational Insurance as at 31 December 2016 (and so are shown as liabilities within accruals) as follows:

J Pryde $327,247O Kuti $174,319M Hirschfield $342,160 (resigned 25 September 2013)T Hayward $370,236 (resigned 25 September 2013)G Porter $109,837 (resigned 26 November 2012)S Hawkins $3,799 (resigned 17 November 2016)

The amount due to S Hawkins was paid in January 2017. Under the service agreements for O Kuti and J Prydethese amounts are not due to be paid until the Group generates oil revenues. The former directors have agreedto defer payments until funds are available.

Report on RemunerationCONTINUED


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PensionsThe Group does not make pension contributions on behalf of the Directors.

Benefits in kindThe Group provides medical and dental insurance to certain Directors.

BonusesNo amounts were payable for bonuses in respect of the years ended 31 December 2016 nor 31 December 2015.

Notice periodsThe Directors all have three month rolling notice periods.

Share option incentivesAt 31 December 2016 the following share options were held by the Directors.

Number of Date of grant Exercise price options/warrants

O Kuti Options 28 February 2011 5p 3,000,000O Kuti Options 11 October 2011 5p 7,000,000J Pryde Options 28 February 2011 5p 5,000,000J Pryde Options 11 October 2011 5p 2,000,000

Options granted 28 February 2011The share options for J Pryde are exercisable 12 months after the date of grant. The share options for O Kuti areexercisable after the latest of 12 months after the date of grant or the completion of a reverse transaction, asdefined by the AIM rules, by the Company.

Options granted 11 October 2011All of the share options are exercisable on the earlier of the first anniversary of the date of grant or a change ofcontrol of the Company or reverse transaction, as defined by the AIM rules, by the Company.

The highest and lowest share prices for the year were 0.65p and 0.176p respectively. The share price at 31 December 2016 was 0.625p.

Independent Auditor’s ReportTO THE MEMBERS OF SIRIUS PETROLEUM PLC


15

We have audited the group financial statements of Sirius Petroleum plc for the year ended 31 December 2016which comprise the principal accounting policies, the consolidated statement of comprehensive income, theconsolidated statement of changes in equity, the consolidated statement of financial position, the consolidatedcash flow statement and the related notes. The financial reporting framework that has been applied in theirpreparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by theEuropean Union.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006. Our audit work has been undertaken so that we might state to the company’s membersthose matters we are required to state to them in an auditor’s report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyone other than the company and thecompany’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Directors’ Responsibilities Statement set out on pages 9 and 10, the directors areresponsible for the preparation of the group financial statements and for being satisfied that they give a true andfair view. Our responsibility is to audit and express an opinion on the group financial statements in accordancewith applicable law and International Standards on Auditing (UK and Ireland). Those standards require us tocomply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’swebsite at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statementsIn our opinion the group financial statements:

l give a true and fair view of the state of the group’s affairs as at 31 December 2016 and of the group’s lossfor the year then ended;

l have been properly prepared in accordance with IFRSs as adopted by the European Union; and

l have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matter – going concernIn forming our opinion on the consolidated financial statements, which is not modified, we have considered theadequacy of the disclosure made in ‘Principal Accounting Policies – Going Concern’ on page 17 to the groupfinancial statements concerning the group’s ability to continue as a going concern.

The group incurred a net loss of $2,172,000 during the year ended 31 December 2016 and, at that date, thegroup had total current assets of $995,000 and current liabilities of $5,547,000. These conditions, along with theother matters explained in ‘Principal Accounting Policies – Going Concern’ on page 17 to the group financialstatements, indicate the existence of a material uncertainty which may cast significant doubt about the group’sability to continue as a going concern. The group financial statements do not include the adjustments that wouldresult if the group was unable to continue as a going concern.


CONTINUED


16

Opinion on other matters prescribed by the Companies Act 2006In our opinion , based on the work undertaken in the course of the audit:

l the information given in the Strategic Report and the Report of the Directors for the financial year for whichthe financial statements are prepared is consistent with the financial statements; and

l the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legalrequirements.

Matter on which we are required to report under the Companies Act 2006In the light of the knowledge and understanding of the group and its environment obtained in the course of theaudit, we have not identified material misstatements in the Strategic Report and the Report of the Directors.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us toreport to you if, in our opinion:

l certain disclosures of directors’ remuneration specified by law are not made; or

l we have not received all the information and explanations we require for our audit.

Other matterWe have reported separately on the parent company financial statements of Sirius Petroleum plc prepared inaccordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted AccountingPractice), including FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland forthe year ended 31 December 2016. That report contains an emphasis of matter relating to going concern.

David MuntonSenior Statutory Auditorfor and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered AccountantsBirmingham

28 June 2017

Principle Accounting PoliciesFOR THE YEAR ENDED 31 DECEMBER 2016


17

Basis of preparationThe Consolidated financial statements have been prepared under the historical cost convention and inaccordance with International Financial Reporting Standards as adopted by the European Union (IFRS). TheCompany’s shares are listed on the AIM market of the London Stock Exchange. Separate financial statementsof Sirius Petroleum plc (the Company) have been prepared on pages 43 to 57.

The principal accounting policies of the Group are set out below.

Going concernThe Group is currently at an advanced stage in negotiations with various parties to raise the funds required to bringthe Ororo Field into production, however at the date of signing these financial statements these negotiations havenot been concluded Therefore the Directors have prepared two versions of cash flow projections for the period upto 30 June 2018.

The first of these projections only takes account of the on-going management costs of the Group, and theclearance of all payables which the Directors consider are currently due as at the date of this report. The paymentof accrued Directors’ remuneration and certain of the Directors’ remuneration payable in respect of the currentyear has been excluded as the Directors have agreed to defer payment until such time as funds are available. Theprojections also do not assume any costs in relation to bringing the Ororo field into production or assume any oilextraction or income from oil trading, nor do they assume any acquisitions take place or that any additionalassessment of the prospective resources is undertaken over and above that authorised as at the date of thisreport. These projections show that the Group will require additional financing in 2017.

The second version of the projections assumes that the Group will conclude its negotiations to raise the fundsrequired to bring the Ororo Field into production. These projections forecast revenue streams and costs based onthe Competent Person’s Report produced, and demonstrate the total funding level required.

On the basis that cash is expected to be available in one or other of the scenarios, and following a detailed reviewby the Directors of the Group’s cash flow forecasts, the Directors believe that the Group will have sufficient cashresources to meet its liabilities as they fall due for a period of at least 12 months from the date that the financialstatements are signed. These conditions indicate the existence of a material uncertainty which may cast significantdoubt about the Group’s ability to continue as a going concern. Consequently, the financial statements have beenprepared on a going concern basis. The Group financial statements do not include the adjustments that wouldresult if the group was unable to continue as a going concern.

Basis of consolidationThe Consolidated financial statements consolidate those of the Company and all of its subsidiary undertakingsdrawn up to the statement of financial position date. Subsidiaries are entities which are controlled by the Group.Control is achieved when the Group has power over the investee, has the right to variable returns from the investeeand has the power to affects its returns. The Group obtains and exercises control through voting rights and controlis reassessed if there are indications that the status of any of the three elements has changed.

Unrealised gains on transactions between the Group and its subsidiary undertakings are eliminated. Unrealisedlosses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.Amounts reported in the financial statements of subsidiary undertakings have been adjusted where necessary toensure consistency with the accounting policies adopted by the Group.

Principle Accounting PoliciesCONTINUED


18

Acquisitions of subsidiary undertakings are recorded under the acquisition method of accounting. The acquisitionmethod involves the recognition at fair value of all identifiable assets and liabilities, including contingent liabilities ofthe subsidiary undertakings, at the acquisition date, regardless of whether or not they were recorded in the financialstatements of the subsidiary undertaking prior to acquisition. Acquisition costs are expensed as incurred. On initialrecognition, the assets and liabilities of the subsidiary undertaking are included in the Consolidated Statement ofFinancial Position at their fair values, which are also used as the basis for subsequent measurement in accordancewith the Group accounting policies. Goodwill is stated after first allocating consideration to identifiable intangibleassets. Goodwill represents the excess of the consideration transferred to the vendor over the fair value of theGroup’s share of the identifiable net assets of the acquired subsidiary undertaking at the date of acquisition.

Other incomeOther income represents the total value, excluding VAT, of income receivable from professional services. Incomeis recognised as the services are provided.

TaxationCurrent income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relatingto the current or prior reporting period, that are unpaid at the Consolidated Statement of Financial Position date.They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate,based on the taxable result for the period. All changes to current tax assets or liabilities are recognised as acomponent of tax expense in the statement of comprehensive income.

Deferred income taxes are calculated using the liability method on temporary differences. This involves thecomparison of the carrying amounts of assets and liabilities in the consolidated financial statements with theirrespective tax bases. In addition, tax losses available to be carried forward as well as other income tax creditsto the Group are assessed for recognition as deferred tax assets.

Deferred tax liabilities are provided for in full. Deferred tax assets are recognised to the extent that it is probablethat they will be able to be offset against future taxable income. Deferred tax assets and liabilities are calculated,without discounting, at tax rates that are expected to apply to their respective period of realisation, provided theyare enacted or substantively enacted at the Statement of Financial Position date.

Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statementof comprehensive income. Only changes in deferred tax assets or liabilities that relate to a change in value ofassets or liabilities that is charged or credited directly to equity or other comprehensive income are charged orcredited directly to equity or other comprehensive income.

Intangible exploration and evaluation assetsThe Group follows the successful efforts method of accounting for intangible exploration and evaluation (“E&E”)costs. Licence costs are initially capitalised as intangible assets, along with any directly attributable costs ofevaluation, as these are recoverable if prospects are deemed successful.

If prospects are deemed to be impaired (‘unsuccessful’) on completion of the evaluation, the associated costsare charged to the statement of comprehensive income. If the field is determined to be commercially viable, thelicence costs are transferred to property, plant and equipment.

The intangible assets are initially recognised at cost and are reviewed for impairment. The asset is carried at initialvalue less accumulated impairment losses.

Exploration and evaluation assets are tested for impairment whenever facts and circumstances suggest they areimpaired, which includes when a licence is approaching the end of its term and is not expected to be renewed,there are no substantive plans for continued exploration or evaluation of an area, the Group decides to abandonan area, or where development is likely to proceed in an area there are indications that the exploration andevaluation costs are unlikely to be recovered in full either by development or through sale. Any impairment lossis recognised before reclassification.



19

Financial assetsThe Group’s financial assets comprise cash, loans receivable and trade and other receivables.

All financial assets are recognised when the Group becomes party to the contractual provisions of the instrument.All financial assets are initially recognised at fair value, plus transaction costs.

Financial assets categorised as loans and receivables are measured subsequent to initial recognition at amortisedcost using the effective interest rate method.

Interest and other cash flows resulting from holding financial assets are recognised in the statement ofcomprehensive income using the effective interest rate method, regardless of how the related carrying amountof financial assets is measured.

Trade and other receivables are provided against when objective evidence is received that the Group will not beable to collect all amounts due to it in accordance with the original terms of the receivables. The amount of thewrite-down is determined as the difference between the asset’s carrying amount and the present value ofestimated future cash flows, calculated by discounting using the original discounted rate.

Financial assets are derecognised when the rights to receive cash flows for the asset expire or the financial assetsare transferred and the Group has transferred substantially all the risks and rewards of ownership of the financialasset. On derecognition of a financial asset, the difference between the assets carrying amount and the sum ofthe consideration is recognised in the statement of comprehensive income.

Cash and cash equivalentsCash and cash equivalents include cash at bank and in hand, bank deposits repayable on demand, and othershort-term highly liquid investments that are readily convertible into known amounts of cash and which aresubject to an insignificant risk of changes in value, less advances from banks repayable on demand from the dateof the advance if the advance forms part of the Group’s cash management.

Classification as financial liabilities or equityFinancial instruments or their component parts are classified according to the substance of the contractualarrangements entered into.

A financial liability exists where there is a contractual obligation to deliver cash or another financial asset toanother entity or to exchange financial assets or financial liabilities under potentially unfavourable conditions. Inaddition, contracts which result in the entity delivering a variable number of its own equity instruments arefinancial liabilities.

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deductingall of its liabilities. Dividends and distributions relating to equity instruments are debited directly to equity.

A compound instrument is a non-derivative financial instrument which contains both a liability and an equitycomponent. These components are accounted for separately as financial liabilities and equity components, andare presented separately in the statement of financial position.



20

EquityShare capital is determined using the nominal value of shares that have been issued.

The share premium account represents premiums received on the initial issuing of the share capital. Anytransaction costs associated with the issuing of shares are deducted from share premium, net of any relatedincome tax benefits. Where warrants have been issued for services in relation to procuring subscribers, therelevant fair value charge has been set against share premium as a cost of issue.

The share-based payment reserve represents the cumulative amount which has been expensed in the statementof comprehensive income in connection with share-based payments, less any amounts transferred to retainedearnings on the exercise of share options or warrants.

Other reserves comprise the amounts arising on the initial recognition of compound instruments.

Translation reserves are amounts in respect of translation of overseas subsidiaries, and unrealised exchangedifferences.

Retained earnings include all current and prior year results as disclosed in the statement of comprehensiveincome.

Financial liabilitiesThe Group’s financial liabilities comprise trade and other payables and loans payable.

Financial liabilities are recognised when the Group becomes a party to the contractual provisions of theinstrument. All interest related charges are recognised as an expense in finance costs in the statement ofcomprehensive income using the effective interest method.

Trade and other payables are recognised initially at fair value, net of direct issue costs, and are subsequentlyrecorded at amortised cost using the effective interest method with interest related charges recognised as anexpense in the statement of comprehensive income.

Loans payable are recognised initially at fair value, net of direct issue costs and subsequently measured atamortised cost using the effective interest method, with interest-related charges recognised as an expense infinance costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs,are recognised in the statement of comprehensive income on an accruals basis using the effective interestmethod and are added to the carrying amount of the instrument to the extent that they are not settled in theperiod in which they arise.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged,cancelled or expires. The difference between the carrying amount of the financial liability derecognised and theconsideration paid is recognised in the statement of comprehensive income.

Compound instrumentsOn initial recognition, the fair value of the consideration for the liability component of the instrument is determinedbased on the fair value of a similar instrument that does not have an equity conversion option and recognised asa financial liability. Subsequent measurement is in accordance with the financial liabilities accounting policy.

The equity component is recognised initially as the residual value remaining when the fair value of the debtcomponent is compared to the fair value of the compound instrument as a whole. The equity component is notremeasured after initial recognition except on expiry.



21

Other provisions, contingent liabilities and contingent assetsProvisions are measured at the estimated expenditure required to settle the present obligation, based on themost reliable evidence available at the Statement of Financial Position date, including the risks and uncertaintiesassociated with the present obligation. Any reimbursement expected to be received in the course of settlementof the present obligation is recognised, if virtually certain as a separate asset, not exceeding the amount of therelated provision. Where there are a number of similar obligations, the likelihood that an outflow will be requiredin settlement is determined by considering the class of obligations as a whole. In addition, long-term provisionsare discounted to their present values, where the time value of money is material. All provisions are reviewed ateach Statement of Financial Position date and adjusted to reflect the current best estimate.

In those cases where the possible outflow of economic resource as a result of present obligations is consideredimprobable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognised inthe statement of financial position. Probable inflows of economic benefits to the Group that do not yet meet therecognition criteria of an asset are considered contingent assets.

Share-based paymentsOptionsThe Group issues equity-settled share-based payments to certain employees (including directors) in the form ofoptions. Equity-settled share-based payments are measured at fair value at the date of grant. The fair valuedetermined at the grant date of the equity-settled share-based payments is expensed on a straight-line basisover the vesting period, together with a corresponding increase in equity, based upon the Group’s estimate ofthe shares that will eventually vest.

Fair value is measured using the Black-Scholes model. The expected life used in the model has been adjusted,based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behaviouralconsiderations.

Non-market vesting conditions are included in assumptions about the number of options that are expected tobecome exercisable. Estimates are subsequently revised if there is any indication that the number of shareoptions expected to vest differs from previous estimates.

No adjustment is made to the expense recognised in prior periods if fewer share options are, ultimately exercisedthan originally estimated. Upon exercise of share options, the proceeds received net of any directly attributabletransaction costs up to the nominal value of shares issued are allocated to share capital with any excess beingrecorded as share premium.

WarrantsThe Group has also issued equity settled share-based payments to certain employees (including directors), andin respect of services provided by external consultants in the form of warrants. The share-based payment ismeasured at fair value of the services provided at the grant date, or if the fair value of the services cannot bereliably measured using the Black-Scholes model. The expense is allocated over the vesting period. Whereservices provided relate to the issue of shares the expense has been charged to share premium.

Fees and loans settled in sharesWhere shares have been issued as consideration for services provided or loans outstanding they are measuredat the fair value of the services provided. The difference between the carrying amount of the financial liability (or part thereof) extinguished and the fair value of the shares is recognised in the statement of comprehensiveincome.



22

Property, plant and equipment(i) Measurement basis

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Thecost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to theworking condition and location for its intended use. Subsequent expenditure relating to property, plant andequipment is added to the carrying amount of the assets only when it is probable that future economicbenefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

All other costs, such as repairs and maintenance are charged to the statement of comprehensive incomeduring the period in which they are incurred.

When assets are sold, any gain or loss resulting from their disposal, being the difference between the netdisposal proceeds and the carrying amount of the assets, is included in the statement of comprehensiveincome.

(ii) DepreciationDepreciation is calculated so as to write off the cost of property, plant and equipment, less its estimatedresidual value, over its useful economic life as follows:

Computer equipment – within the current financial yearOffice equipment – straight-line over 3 yearsVehicles – straight-line over 5 years

Operating leasesLeases in which substantially all the risks and rewards of ownership are retained by the lessor are classified asoperating leases.

Payments, including prepayments, made under operating leases (net of any incentives received from the lessor)are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.

Foreign currenciesIn the individual financial statements of the consolidated entities, foreign currency transactions are translated intothe functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities in foreigncurrencies are translated at the rates of exchange ruling at the reporting date. Non-monetary items that aremeasured at historic cost in a foreign currency are translated at the exchange rate at the date of the transactionand are not re-translated. Non-monetary assets that are measured at fair value in a foreign currency are translatedinto the functional currency using the exchange rates at the date when the fair value was determined.

Any exchange differences arising on the settlement of monetary items or on translating monetary items at ratesdifferent from those at which they were initially recorded are recognised in the statement of comprehensive incomein the period in which they arise.

In the consolidated financial statements all individual financial statements that are originally presented in a currencydifferent from the Group’s presentational currency have been converted into USD. Assets and liabilities have beentranslated into USD at the closing rates at the reporting date. Income and expenses have been converted intoUSD at the exchange rates ruling at the transaction dates, or at the average rates over the reporting periodprovided that the exchange rates do not fluctuate significantly. Any differences arising from this process have beenrecognised in other comprehensive income and accumulated separately in the currency exchange reserve inequity.

The average GBP exchange rate used during the year was USD 1.35549 (2015: 1.52867). The closing exchangerate at 31 December 2016 was USD 1.23412 (2015: 1.48040).



23

Segmental reportingAn operating segment is a distinguishable component of the Group that engages in business activities fromwhich it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group’schief operating decision maker to make decisions about the allocation of resources and assessment ofperformance and about which discrete financial information is available.

The chief operating decision maker has defined that the Group’s only reportable operating segment during theyear is oil extraction and related activities. The Group has not traded and has not generated any revenue fromexternal customers during the period.

Critical accounting estimates and judgementsEstimates and judgements are continually evaluated and are based on historical experience and other factors,including expectations of future events that are believed to be reasonable under the circumstances.

(i) Critical accounting estimates and assumptionsThe Group makes estimates and assumptions concerning the future. The resulting accounting estimateswill, by definition, seldom equal the related actual results. The estimates and assumptions that have asignificant risk of causing a material adjustment to the carrying amounts of assets and liabilities within thenext accounting year are discussed below:

Going concernIn view of the losses during the year, the Directors have carefully considered the appropriateness ofpreparing the financial statements on a going concern basis. Details of the Directors’ review and conclusionare detailed under the heading ‘Going Concern’ on page 17 above.

Intangible exploration and evaluation assetsManagement is required to assess impairment in respect of intangible exploration and evaluation assets.Note 5 discloses the carrying value of such assets. The triggering events are defined in IFRS 6. In makingthe assessment, management is required to make judgements on the status of each project and the futureplans towards finding commercial reserves. The nature of exploration and evaluation activity is such thatonly a proportion of projects are ultimately successful and some assets are likely to become impaired infuture periods.

Share-based paymentManagement has made a number of assumptions in calculating the fair value of the share options asdetailed in note 10.

(ii) Critical judgments in applying the Group’s accounting policiesSirius Taglient Petro Limited (STPL) In applying the accounting policies, which are described above, management considers that the mostsignificant judgement they have had to make is whether STPL should be consolidated as a subsidiaryundertaking. The Company owns 50% of STPL’s issued share capital but has the right to buy the remaining50% for a nominal sum and has management and operating control of that company. The 50%shareholders have waived their right to receive profit distributions from the company and are holding theshares as nominee of the Group. On this basis the Group consider it is a subsidiary undertaking and,therefore, has consolidated 100% of the company’s results for the period. The Directors have assessed fairvalue of the option to buy the remaining 50% of the share capital to be £Nil (2015: £Nil).



24

Adoption of new or amended IFRSThe Directors anticipate that the adoption of new standards which are in issue but not yet effective and have notbeen early adopted by the Group will be relevant to the Group but will not result in significant changes to theGroup’s accounting policies. These are:

l IFRS 9 Financial Instruments (IASB effective date 1 January 2018, EU endorsed)

l IFRS 14 Regulatory Deferral Accounts (IASB effective 1 January 2016, EU endorsement deferred until finalstandard released)

l IFRS 15 Revenue from Contracts with Customers (IASB effective 1 January 2018, EU endorsed)

l IFRS 16 Leases (IASB effective 1 January 2019, EU not yet endorsed)

l Sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments to IFRS10 and IAS 28 (deferred indefinitely)

l Amendments to IAS 12: Recognition of Deferred Tax assets for Unrealised Losses (IASB effective 1 January2017, EU not yet endorsed)

l Disclosure Initiative: Amendments to IAS 7 Statement of Cash Flows (IASB effective 1 January 2017, EU notyet endorsed)

l Clarifications to IFRS 15 Revenue from Contracts with Customers (IASB effective 1 January 2018, EU not yetendorsed)

l Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (IASB effective1 January 2018, EU not yet endorsed)

l Annual Improvements to IFRS 2014-2016 Cycle – Relating to IFRS 1 First time adoption of IFRS and IAS 28Investment in Associates and Joint Ventures (IASB effective 1 January 2017, EU not yet endorsed)

l Annual Improvements to IFRS 2014-2016 Cycle – Relating to IFRS 12 Disclosure of interest in other entities(IASB effective 1 January 2018, EU not yet endorsed)

l IFRIC Interpretation on foreign currency transactions and advance considerations (IASB effective 1 January2018, EU not yet endorsed)

The Group is currently evaluating whether the new standards will have an impact, and at this time the Group doesnot believe that the new standards will have a significant impact.

Consolidated Statement of Comprehensive IncomeFOR THE YEAR ENDED 31 DECEMBER 2016


25

Year ended Year ended31 December 31 December

2016 2015Note $000 $000

Other income 69 78Share based payments – (895)Administrative expenses (1,447) (2,398)

Total administrative expenses (1,447) (3,293)

Loss from operations (1,378) (3,215)

Finance cost 2 (794) (837)

Loss before and after taxation, and loss attributable to the equity holders of the Company 3 (2,172) (4,052)

Other comprehensive income/(loss)Exchange differences on translating foreign operations 37 (14)

Other comprehensive income/(loss) for the period, net of tax 37 (14)

Total comprehensive loss for the year, attributable to owners of the company (2,135) (4,066)

Total loss per ordinary shareBasic and diluted loss per share (cents) 4 (0.11) (0.30)

All of the activities of the Group are classed as continuing.

The accompanying principal accounting policies and notes form an integral part of these financial statements.

Consolidated Statement of Changes in EquityFOR THE YEAR ENDED 31 DECEMBER 2016


26

Sharebased

Share Share payment Other Exchange Retained Totalcapital premium reserve reserves reserve earnings equity$000 $000 $000 $000 $000 $000 $000

Balance at 1 January 2015 4,733 20,622 9,299 305 (252) (35,750) (1,043)

Share based payments – – 895 – – – 895 Share issue 2,411 4,801 (1,558) – – – 5,654 Share issue costs – (171) – – – – (171)Transfer on lapse of share options/warrants – – (1,411) – – 1,411 –Issue of loan fees equity instruments (note 9) – – – 802 – – 802 Settlement of loan fees equity instruments (note 9) – – – (1,107) – (1,009) (2,116)

Transactions with owners 2,411 4,630 (2,074) (305) – 402 5,064

Exchange difference on translating foreign operations – – – – (14) – (14)Loss for the year – – – – – (4,052) (4,052)

Total comprehensive loss for the year – – – – (14) (4,052) (4,066)

Balance at 31 December 2015 7,144 25,252 7,225 – (266) (39,400) (45)

Share issue 1,783 648 – – – – 2,431 Share issue costs – (151) – – – – (151)Transfer on lapse of share options/warrants – – (4,629) – – 4,629 –Issue of loan fees equity instruments (note 9) – – – 11 – – 11

Transactions with owners 1,783 497 (4,629) 11 – 4,629 2,291 Exchange difference on translating foreign operations – – – – 37 – 37 Loss for the year – – – – – (2,172) (2,172)

Total comprehensive loss for the year – – – – 37 (2,172) (2,135)

Balance at 31 December 2016 8,927 25,749 2,596 11 (229) (36,943) 111


Consolidated Statement of Financial PositionAS AT 31 DECEMBER 2016


27

31 December 31 December2016 2015

Note $000 $000

ASSETSNon-current assetsIntangible exploration and evaluation assets 5 4,643 3,862 Property, plant and equipment 6 20 40

4,663 3,902

Current assetsCash and cash equivalents 830 45 Trade and other receivables 7 165 110

Total current assets 995 155

Total assets 5,658 4,057

LIABILITIESCurrent liabilitiesTrade and other payables 8 4,440 3,584 Loans payable 9 1,107 518

Total liabilities 5,547 4,102

EQUITYShare capital 11 8,927 7,144 Share premium 25,749 25,252 Share-based payment reserve 2,596 7,225 Other reserves 11 –Exchange reserve (229) (266)Retained earnings (36,943) (39,400)

Equity attributable to equity holders of the Company 111 (45)

Total equity and liabilities 5,658 4,057

The consolidated financial statements were approved by the Board and authorised for issue on 28 June 2017.

O KutiDirector

28 June 2017


Consolidated Cash Flow StatementFOR THE YEAR ENDED 31 DECEMBER 2016


28

Year ended Year ended31 December 31 December

2016 2015$000 $000

Cash flow from operating activitiesContinuing operationsLoss after taxation (2,172) (4,052)Depreciation (see Note 6) 6 4 Finance cost 794 837 Decrease in trade and other receivables (183) (95)Equity settled share-based payments – 895 Expenses settled in shares – 479 (Decrease)/increase in trade and other payables (8) 906

Net cash outflow from operating activities from continuing operations (1,563) (1,026)

Cash flows from investing activitiesInvestment in intangibles (see Note 5) (781) (1,551)Purchase of property, plant and equipment – (44)

Net cash outflow from investing activities (781) (1,595)

Cash flows from financing activitiesProceeds from issue of share capital 2,431 1,708 Share issue costs (151) (171)Finance cost (138) (34)Loans received 830 1,142 Loans repaid (see Note 9) (125) –

Net cash inflow from financing activities 2,847 2,645

Net change in cash and cash equivalents 503 24 Cash and cash equivalents at beginning of period 45 19 Exchange differences on cash and cash equivalents 282 2

Cash and cash equivalents at end of period 830 45


Notes to the Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2016


29

1 Revenue, loss before taxation and segmental informationLoss before taxationThe loss before taxation is attributable to the principal activities of the Group.

The loss before taxation is stated after charging:Year ended Year ended

31 December 31 December2016 2015$000 $000

Staff costs (see note 17) 420 940 Depreciation of owned fixed assets 6 4Operating lease rentals: land and buildings 64 52Fees payable to the Company’s auditor for the audit of the financial statements 39 43Fees payable to the Company’s auditor and its associates for other services:Other services relating to taxation compliance 4 4

Segmental informationAn operating segment is a distinguishable component of the Group that engages in business activities fromwhich it may earn revenues and incur expenses, whose operating results are regularly reviewed by theGroup’s chief operating decision maker to make decisions about the allocation of resources andassessment of performance and about which discrete financial information is available.

The chief operating decision maker has defined that the Group’s only reportable operating segment duringthe year is oil extraction and related activities. The Group has not traded and has not generated any revenuefrom external customers during the period.

In respect of non-current assets $Nil (2015: $Nil) arise in the UK and $4,663,000 (2015: $3,902,000) arisein Nigeria.

2 Finance costs Year ended Year ended31 December 31 December

2016 2015$000 $000

Finance costsFinance fees 177 827 Settlement of loan 617 – Late payment interest – 10

794 837

Finance fees of $177,000 (2015: $803,000) are in respect of the short-term loans received fromunconnected third parties. Further information in respect of these loans is disclosed in note 9.

The directors recognised at 31 December 2016 that they may need to cancel part, or all, of the remainingconvertible drawdown facility with Calvet International Limited, which amounted to £700,000, prior toarranging finance for drilling. They have therefore provided £500,000 (USD$617,000), being the directorsbest estimate of the likely cost of such cancellation.

Notes to the Financial StatementsCONTINUED


30

3 TaxationThere is no tax charge for the year (year ended 31 December 2015: $nil).

Unrelieved tax losses of approximately $18,600,000 (2015: $17,720,000) remain available to offset againstfuture taxable trading profits. The unprovided deferred tax asset at 31 December 2016 is $8,018,000 (2015: $7,842,000) which has not been provided on the grounds that it is uncertain when or in what taxjurisdiction taxable profits will be generated by the Group to utilise those losses.

The tax assessed for the year differs from the standard rate of corporation tax in the UK as follows:

2016 2016 2015 2015$000 % $000 %

Loss before taxation (2,172) (4,052)

Loss multiplied by standard rateof corporation tax in the UK (434) (20.00) (820) (20.25)

Effect of:Expenses not deductible for tax purposes 166 427 Overseas loss not recognised 92 103 Deferred tax asset not recognised 176 (20.00) 290 (20.25)

Total tax charge for year – –

4 Loss per share 2016 2015$000 $000

(Loss) attributable to owners of the Company (2,172) (4,052)

2016 2015Number Number

Weighted average number of shares for calculating basic loss per share 1,945,424,787 1,349,954,048

2016 2015Cents Cents

Basic and diluted loss per share (0.11) (0.30)

There are 63,000,000 share options and 329,000,000 warrants outstanding as at 31 December 2016, asdetailed in note 10. Their effect is anti-dilutive, but is potentially dilutive against future profits.



31

5 Intangible exploration and evaluation assetsCost of oil and gas exploration

$000

CostAt 1 January 2015 2,311 Additions 1,551

At 31 December 2015 3,862 Additions 781

At 31 December 2016 4,643

Amortisation and impairmentAt 1 January 2015, 31 December 2015 and 31 December 2016 –

Net book value at 31 December 2016 4,643

Net book value at 31 December 2015 3,862

Net book value at 1 January 2015 2,311

During the year ended 31 December 2011 Sirius Ororo OML95 Limited entered into an agreement withGuarantee Petroleum Company Limited and Owena Oil & Gas Limited which gives it the right to acquire a40% interest in the Ororo Oil Field.

The consideration for the 40% interest in the field was $1,000,000 paid on the date of the agreement witha further $500,000 due on the commencement of the operation of the well. At the time of signing theagreement, the Directors considered the fair value of the liability in respect of the additional $500,000payable. Based on an assessment of how likely it would be that this would be paid discounted at 15%, theDirectors considered the amount to be immaterial and did not, therefore, recognise a liability at that time.

At 31 December 2012, the Directors reassessed their estimate of the future cash flows in accordance withthe Group’s accounting policies. Following the additional work as noted below and the completion of thefeasibility report along with the ongoing funding negotiations, the Directors were confident ofcommencement of the operation of the well. As a result, this liability was now expected to become payable.The Directors have reviewed the assumptions made and consider that the liability should now be providedin full as it is expected to be paid in 2017, therefore, the carrying value of the liability has been assessed at$500,000 and is included in other payables (2015: $318,000).

The Group has undertaken certain works including commissioning the preparation of a Competent PersonsReport and has conducted an environmental impact assessment. It has also commenced planningappropriate community projects and site surveys to finalise the subsequent drilling programme and will alsocover certain operational costs related to the field. Under the agreement with our partners, the Group will coverall costs of this phase of the project. Costs plus interest of LIBOR+3% will be recoverable on the productionof oil before the profit interest split is applied; these costs are being added to the costs of the asset.

The Directors have reviewed the investment for impairment. On 8 September 2016, the Companyannounced that an independent valuation of the Ororo field prepared by Rockflow Resources Limited, gavea mid case net present value of the asset of $49.2m based on a $50 per barrel flat real oil price for the lifeof the field, and a low case net present value of $8.5m. These valuations support the value of the investmentheld on the Statement of Financial Position and support the view that no impairment triggering events haveoccurred.

The Group intends investing further amounts into the Ororo Oil Field, as part of its strategic developmentplans. The costs of the capital and operating costs will be covered by either separate funding facilities or byfinancial and technical industry partners on a joint farm-in basis.



32

6 Property, plant and equipment Computer Office Motorequipment equipment vehicles Total

$000 $000 $000 $000

CostAt 1 January 2015 47 29 – 76 Additions 3 – 41 44

At 31 December 2015 50 29 41 120 Exchange difference – – (14) (14)

Cost at 31 December 2016 50 29 27 106

DepreciationAt 1 January 2015 47 29 – 76 Charge for the year 3 – 1 4

At 31 December 2015 50 29 1 80 Charge for the year – – 6 6

At 31 December 2016 50 29 7 86

Net book valueBalance at 31 December 2016 – – 20 20

Balance at 31 December 2015 – – 40 40

Balance at 1 January 2015 – – – –

7 Trade and other receivables 31 December 31 December2016 2015$000 $000

CurrentTrade receivables – 9Other receivables (see Note 15) 139 72Prepayments and accrued income (see Note 15) 26 29

165 110

The fair value of these short-term financial assets is not individually determined as the carrying amount is areasonable approximation of fair value. All trade and other receivables have been reviewed for indicators ofimpairment.



33

8 Trade and other payables 31 December 31 December2016 2015$000 $000

Trade payables (see Note 15) 395 335 Other payables (see Note 15) 573 531 Accruals (see Note 15) 3,472 2,718

4,440 3,584

Included in accruals is a liability to Havoc Services Pty Ltd of $520,000 (2015: $454,000) for technicalservices provided. Payment of this amount is deferred until:

(a) the Company secures project funding for the next phase of Ororo field development; or

(b) acquires an interest in a significant oil discovery offshore Nigeria; or

(c) accepts any proposal resulting in a change of control of the Company; or

(d) as may otherwise be mutually agreed between Havoc Services Pty Ltd and Sirius.

There are also other amounts in both accruals and other payables which are due on commencement of drilling.

The fair value of trade and other payables has not been disclosed as, due to their short duration,management consider the carrying amounts recognised in the Statement of Financial Position to be areasonable approximation of their fair value.

9 Loans payableDuring the year the Company received loans from several unconnected parties to fund working capitalamounting to $830,000 (2015: $1,142,000), which incurred initial loan fees of $83,000 (2015: $1,142,000).Of these loans $669,000 plus interest of $67,000 are convertible at 0.35p. The loans are unsecured.

Some of the loan agreements and initial loan fees represent compound instruments. The fair value of thefinancial liability component of these loans and arrangement fees was initially recognised at $657,000 (2015: $348,000). Associated finance charges of $23,000 (2015: $803,000) have been recognised during theperiod in accordance with the effective interest method. During the year $Nil (2015: $1,352,000) of the debt wasrepaid in shares, and $125,000 was repaid in cash. At 31 December 2016, the carrying value of the financialliability is $947,000 (2015: $518,000), including a $126,000 (2015: $19,000) exchange movement and isincluded within loans payable. Also included within loans payables are loans received during the year which arenot convertible, amounting to $160,000 and $16,000 of interest was recognised on these loans during the year.

The initial loan fees may be settled, at the Lendor’s discretion, in cash or as a fixed number of shares, to beissued at 0.35p per share. This component represents an equity instrument and has been recognised withinother reserves at the residual value of $12,000 (2015: $794,000), being the difference between the$669,000 (2015: $1,142,000) cash consideration received and the initial fair value of the financial liabilitycomponent of $657,000 (2015: $348,000). There was an exchange movement of $1,000 recognised onthe reserve and the carrying value is $11,000.

During the year ended 31 December 2016 $124,655 of initial loans were repaid in cash and an additional$91,718 finance charge was paid on this loan dating back to 2012, which has been included in finance costin 2016. Additionally $46,000 of commissions paid on loans received has been included in finance costs in 2016.

During the year ended 31 December 2015 $2,117,000 of the initial and additional loan fees were settled bythe issue of 108,804,348 ordinary shares at between 1p and 2.88p. This resulted in a debit to otherreserves of $1,107,000, and a debit to the profit and loss reserve of $1,009,000, representing the differencebetween the value of loan fees which were settled and the carrying value of the equity instruments in respectof these fees. There was an exchange movement of $9,000 in the carrying value of the other reserves.



34

10 Share-based paymentsThe Group operates share option schemes for certain employees (including directors). Options are exercisableat the option price agreed at the date of grant. The options are settled in equity once exercised. The optionsare exercisable from the date of a sale of the business or a reverse acquisition until the fifth anniversary of thatdate, or until ten years from the grant date. The expected life of the options varies from six months to threeyears. Options granted to employees are forfeited if the employee leaves the Group before the options vest.

The options have the following exercise prices and fair values at the date of grant:

First exercise date Assumed Exercise Fair value at 31 December 31 December(when vesting vesting price grant date 2016 2015conditions are met) Grant date period £ £ Number Number

At the earlier of an exit 28-Feb-11 12 months 0.05 0.015628 41,000,000 41,000,000event and 12 months after readmission to AIMAt the earlier of an exit 28-Feb-11 12 months 0.09 0.006962 2,000,000 2,000,000event and 12 months after readmission to AIMThe later of 12 months 28-Feb-11 – 0.05 – 3,000,000 3,000,000after readmission to AIM and an exit eventAt the earlier of the first 11-Oct-11 6 months 0.05 0.015007 17,000,000 17,000,000anniversary date of the date of grant or an exit event

63,000,000 63,000,000

The share options can be exercised up to between five years after the date first exercisable, and ten yearsfrom the grant date.

At 31 December 2016, 63,000,000 options were exercisable.

For those options granted to employees and directors, the fair values were calculated using the Black-Scholes model. The inputs into the model were as follows:

11 October 28 February2011 2011

Risk free rate 0.50% 0.50%Share price volatility 80% 80%Expected life Between 6 months 1 year and

and 3 years 3 yearsShare price at date of grant £0.0479 £0.0500

Expected volatility was determined by calculating the historical volatility of the Company’s share price. Theexpected life used in the model has been adjusted, based on management’s best estimate, for the effectsof non-transferability, exercise restrictions and behavioural considerations.

The following assumptions were used with regards to the vesting period:

l The options granted on 28 February 2011 with a vesting date of 24 March 2013, were assumed to vestin 12 months on their vesting date as the share price was expected to rise above 5p by that time.

l The options granted on 11 October 2011 were assumed to vest in 6 months on their vesting date as atransaction was expected to complete in March 2013.

The Group recognised a charge of $Nil (year ended 31 December 2015: $Nil) relating to these equity-settledshare-based payment transactions during the year. Although the options have not yet vested theassumptions made have not been changed as the effect was not considered to be material.



35

10 Share-based payments continuedWarrants On 30 January 2013, the Company entered into an agreement with Strand Hanson Limited in respect offunding arrangements. Under this agreement 300,000,000 warrants would be issued at 4p, 300,000,000at 6p and 300,000,000 warrants at 10p to Strand Hanson Limited or their advisors upon successfullyprocuring funding of $65 million. These warrants were issued on 4 May 2013 after signing an off-takeagreement with Glencore Limited.

On 3 March 2014, the Company granted Cantor Fitzgerald Europe 1,000,000 warrants at 5p, oncommencement of their services as Broker to the Company. These warrants may be exercised, in whole orin part or parts, at any time and from the date of grant until the second anniversary of the grant date.

On 7 April 2014, 5,000,000 warrants were issued to S Fletcher and 7,500,000 were issued to A Kejriwal at5p for services performed as directors. These warrants may be exercised, in whole or in part or parts, atany time between 1 October 2015 and 31 October 2024.

On 1 May 2015, 10,000,000 warrants at 2p were issued to Juniper Capital Partners Limited Partnership forstrategic and financial advice provided to the Company. These warrants may be exercised, in whole or inpart or parts, at any time from the date of grant until the fifth anniversary of the date of grant.

On 11 June 2015, 3,000,000 warrants at 2p were issued to Cairn Financial Advisers LLP, the Company’sNomad. These warrants may be exercised, in whole or in part or parts, at any time from the date of grantuntil the third anniversary of the date of grant.

On 11 August 2015, 100,000,000 warrants at 2p were issued to Havoc Services Pty Ltd, on the signing ofthe Technical Services Agreement. These warrants may be exercised, in whole or in part or parts, at anytime from the date of grant until the third anniversary of the date of grant.

On 30 November 2015, 5,000,000 warrants at 2p were issued to S Hawkins on his appointment as adirector. These warrants may be exercised, in whole or in part or parts, at any time from the date of grantuntil the third anniversary of the date of grant.

On 3 December 2015, the 900,000,000 warrants issued to Strand Hanson Limited on 30 January 2013were cancelled and 185,000,000 warrants were concurrently granted to various parties at 2p. Thesewarrants may be exercised, in whole or in part or parts, at any time from the date of grant until the thirdanniversary of the date of grant.

At 31 December 2016, a total of 329,000,000 warrants were exercisable. The weighted average share priceat the date of exercise of the warrants was 1.53 pence. The weighted average exercise price is 2.23 penceand a weighted average remaining contractual life of 2.09 years.

At 31 December 2016, the following share warrants granted for services are outstanding in respect of theordinary shares:

2016 2015Weighted Weightedaverage average

exercise price exercise price Number (pence) Number (pence)

Outstanding at 1 January 399,000,000 3.63 1,003,500,000 6.84Surrendered during the year – – (300,000,000) 4.00Surrendered during the year – – (300,000,000) 6.00Surrendered during the year – – (300,000,000) 10.00Lapsed during the year (70,000,000) 10.00 (7,500,000) 5.00Granted during the year – – 303,000,000 2.00

Outstanding and exercisable at 31 December 329,000,000 2.23 399,000,000 3.63



36

10 Share-based payments continuedWarrants continuedEach warrant is governed by the provisions of warrant instruments representing the warrants which havebeen adopted by the Company. The rights conferred by the warrants are transferable in whole or in partsubject to and in accordance with the transfer provisions set out in the Articles. The holders of warrantshave no voting right, pre-emptive right or other right attaching to Ordinary Shares. All warrants issued vestin full.

The fair value of the services received is considered to be comparable to the fair value of the warrants issuedin 2011 to 2015. These have been valued using the Black-Scholes valuation model. The inputs into theBlack-Scholes model for calculating estimated fair value were:

Share price Fair valueRisk free Share price Exercise at date at date

rate volatility price of grant of grant

24 March 2011 0.50% 80% £0.0025 £0.0500 £0.04750124 March 2011 0.50% 80% £0.10 £0.0500 £0.00000611 October 2011 0.50% 80% £0.05 £0.0479 £0.15007003 March 2014 0.50% 59.81% £0.055 £0.0275 £0.00368407 April 2014 0.50% 61.24% £0.05 £0.0288 £0.01712501 May 2015 0.50% 76.65% £0.02 £0.0105 £0.00506811 June 2015 0.50% 79.99% £0.02 £0.0078 £0.00232411 August 2015 0.50% 81.05% £0.02 £0.0063 £0.00157030 November 2015 0.50% 87.74% £0.02 £0.0033 £0.00050403 December 2015 0.50% 88.80% £0.02 £0.0033 £0.000602

Expected volatility was determined by calculating the historical volatility of the Company’s share price usinghistorical share prices. The warrants issued in March 2011 were expected to vest immediately, and thoseissued in October 2011 were expected to vest in 12 months from date of grant. The warrants issued inMarch 2014 were expected to vest in 10 months and those issued in April 2014 were expected to vest in12 months from date of grant. All of the warrants issued in 2015 were expected to vest immediately.Although some have not yet vested the assumptions made have not been changed as the effect was notconsidered to be material.

The Group recognised total expenses of $Nil (2015: $587,000) relating to these equity-settled share-basedpayment transactions during the year.

Fees for paid in shares The Group recognised a charge of $Nil (2015: $308,000) in respect of shares issued for services received.



37

11 Share capital 31 December 31 December2016 2015$000 $000

Allotted, issued and fully paid2,258,029,523 (2015: 1,721,362,856) ordinary shares of 0.25p 8,927 7,144

The movement in share capital is analysed as follows:Ordinary shares

Number $000

Allotted and issuedAt 31 December 2014 1,098,737,213 4,733Shares issued for fees due 286,441,848 1,107 Shares issued for cash 275,000,000 1,067 Loan repayments 61,183,795 237

At 31 December 2015 1,721,362,856 7,144Shares issued for cash 536,666,667 1,783

At 31 December 2016 2,258,029,523 8,927

On 17 March 2016, 166,666,667 ordinary shares of 0.25p were issued at 0.3p for cash raising £500,000before costs.

On 25 July 2016, 200,000,000 ordinary shares of 0.25p were issued at 0.25p for cash raising £500,000before costs.

On 19 December 2016, 170,000,000 ordinary shares of 0.25p were issued at 0.5p for cash raising£850,000 before costs.

The ordinary shares carry one vote each and on winding up of the Company the balance of assets availablefor distribution will, subject to any relevant restrictions, be divided amongst the shareholders.

12 Contingent liabilitiesThere were no contingent liabilities at 31 December 2016 or at 31 December 2015.

13 Capital commitmentsThere were no capital commitments at 31 December 2016 or at 31 December 2015.

14 Operating lease commitmentsThere were no commitments under non-cancellable operating leases at 31 December 2016 or at 31 December 2015.



38

15 Financial instrumentsThe Group is exposed to a variety of financial risks which result from both its operating and investingactivities. The Board is responsible for co-ordinating the Group’s risk management and focuses on activelysecuring the Group’s short to medium term cash flows.

The Group does not actively engage in the trading of financial assets and has no financial derivatives. Themost significant risks to which the Group is exposed are described below:

(a) Credit riskThe Group’s credit risk is primarily attributable to its trade receivables. At 31 December 2016, the Grouphad $Nil of trade receivables and, therefore, minimal risk.

Generally, the Group’s maximum exposure to credit risk is limited to the carrying amount of the financialassets recognised at the Statement of Financial Position date, as summarised below:

31 December 2016 31 December 2015Statement Statement

Non of financial Non of financialLoans and financial position Loans and financial position receivables assets total receivables assets total

$000 $000 $000 $000 $000 $000

Trade receivables – – – 9 – 9 Other receivables 139 – 139 72 – 72 Prepayments and accrued income – 26 26 – 29 29 Cash and cash equivalents 830 – 830 45 – 45

Total 969 26 995 126 29 155

The credit risk on liquid funds is limited due to the level of cash held and because the Group only placesdeposits with leading financial institutions in the United Kingdom.

(b) Liquidity riskThe Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeableneeds and to invest cash assets safely and profitably. The Directors prepare rolling cash flow forecastsand seek to raise additional equity funding whenever a shortfall in funding is forecast. Details of the goingconcern basis of preparing the financial statements are included in the principal accounting policies.

(c) Market riskInterest rate riskThe Company bears negligible interest rate risk at 31 December 2016.

(d) Foreign currency riskThe Group operates in the UK and Nigeria and carries out transactions in US dollars, Sterling andNigerian Naira. The Group does not have a policy to hedge but will continue to keep this under review.The Group operates foreign currency bank accounts to help mitigate the foreign currency risk.



39

15 Financial instruments continued(e) Financial liabilities

The Group’s financial liabilities are classified as follows:

31 December 2016 31 December 2015Other Other

financial Liabilities financial Liabilitiesliabilities at not within liabilities at not withinamortised the scope amortised the scope

cost of IAS 39 Total cost of IAS 39 Total$000 $000 $000 $000 $000 $000

Trade payables 395 – 395 335 – 335Other payables 573 – 573 531 – 531Loans 1,107 – 1,107 518 – 518Accruals 3,472 – 3,472 2,718 – 2,718

Total 5,547 – 5,547 4,102 – 4,102

Maturity of financial instrumentsAll financial liabilities in the table above at 31 December 2016 and 31 December 2015 mature in lessthan one year.

Included in the table above is $500k relating to additional consideration for the Ororo field being theexpected cash outflow on commencement of the operation of the well. This has been included in theStatement of Financial Position at 31 December 2016 at a fair value of $500k (2015: $318k).

Borrowing facilities for the year ended 31 December 2016The Group has £700,000 of undrawn committed borrowing facilities at 31 December 2016 (2015: $Nil).A provision has been made to cancel this facility.

(f) Capital risk managementThe Group’s objectives when managing capital are:

l to safeguard the Group’s ability to continue as a going concern, so that it continues to providereturns and benefits for the shareholders;

l to support the Group’s stability and growth; and

l to provide capital for the purpose of strengthening the Group’s risk management capability.

The Group actively and regularly reviews and manages its capital structure to ensure an optimal capitalstructure and equity holder returns, taking into consideration the future capital requirements of theGroup and capital efficiency, prevailing and projected profitability, projected operating cash flows,projected capital expenditures and projected strategic investment opportunities. Management regardstotal equity as capital and reserves, for capital management purposes.

The financial statements show that the Company’s net assets are less than half its called up sharecapital. In these circumstances, the Directors of the Company are obliged by section 656 of the CA 2006 to convene a general meeting for the purposes of considering whether any and if so what,steps should be taken to deal with the Company’s current financial position. The Directors will considerthis issue at the Company’s forthcoming Annual General Meeting.



40

16 Related party transactionsAt 31 December 2016, O Kuti was owed $1,451 in expenses by the Group (2015: $1,480 owed by O Kuti),J Pryde was owed $Nil (2015: $414) in expenses and S Hawkins was owed $Nil (2015: $248) in expenses.At the year end undrawn salaries were due to J Pryde of $327,247 (2015: $294,847), O Kuti of $174,319(2015: $153,591), C Neal $Nil (2015: $2,961) and S Hawkins $3,799 (2015: $4,811).

S Hawkins additionally charged $6,114 for Company Secretarial fees (2015: $740). At 31 December 2016$Nil was unpaid in respect of these fees (2015: $740).

17 Employee remunerationThe expense recognised for employee benefits, including the Directors’ emoluments, is analysed below:

2016 2015$000 $000

Wages and salaries 328 866 Redundancy payments 24 – Social security 57 62 Benefits in kind 11 12

420 940

The Directors are the Key Management Personnel of the Group. Details of Directors’ remuneration areincluded in the Report on Remuneration on pages 13 and 14.

The average number of employees during the year was:2016 2015

Number Number

Directors 4 4Other 6 7

10 11

18 Subsequent eventsOn 26 January 2017, 14,000,000 ordinary shares of 0.25p were issued at 0.5p to repay a loan of £70,000.

On 22 February 2017, 266,666,666 ordinary shares on 0.25p were issued at 0.75p for cash proceeds of£2,000,000 before costs, and 3,333,333 ordinary shares of 0.25p were issued at 0.75p in payment of feesof £25,000.

Following this share issue, there are 2,542,029,522 ordinary shares of 0.25p in issue, each of which is avoting share.



41

19 SubsidiariesThe following subsidiaries have been consolidated in these accounts:

Proportion of ordinary share

Subsidiary capital held Nature of business Country of incorporation

Sirius Oil & Gas Limited 100% Dormant England and Wales

Sirius Taglient Petro Limited 50% Management services Nigeria

Sirius Trading Nigeria Limited 100% Trading of oil Nigeria

Sirius Ororo OML95 Limited 100% Exploration for Nigeriamineral resources

SRS Petroleum Nigeria Limited 100% Exploration for Nigeriamineral resources

Sirius 2012 Limited 100% Exploration for Nigeriamineral resources


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Company StatutoryFinancial Statements

(prepared under UK GAAP – FRS 102)

for the year ended 31 December 2016

Independent Auditor’s Report TO THE MEMBERS OF SIRIUS PETROLEUM PLC


44

We have audited the parent company financial statements of Sirius Petroleum plc for the year ended 31 December 2016 which comprise the principal accounting policies, the statement of financial position, thestatement of changes in equity and the related notes. The financial reporting framework that has been applied intheir preparation is applicable law and United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice), including FRS 102: The Financial Reporting Standard applicable in the UK andRepublic of Ireland.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of theCompanies Act 2006. Our audit work has been undertaken so that we might state to the company’s membersthose matters we are required to state to them in an auditor’s report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyone other than the company and thecompany’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditorAs explained more fully in the Directors’ Responsibilities Statement set out on pages 9 and 10, the directors areresponsible for the preparation of the parent company financial statements and for being satisfied that they givea true and fair view. Our responsibility is to audit and express an opinion on the parent company financialstatements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Thosestandards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statementsA description of the scope of an audit of financial statements is provided on the Financial Reporting Council’swebsite at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statementsIn our opinion the parent company financial statements:

l give a true and fair view of the state of the company’s affairs as at 31 December 2016;

l have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice;and

l have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matter – going concernIn forming our opinion on the parent company financial statements, which is not modified, we have consideredthe adequacy of the disclosure made in ‘Principal Accounting Policies – Going Concern’ on page 46 to the parentcompany financial statements concerning the parent company’s ability to continue as a going concern.

The parent company incurred a net loss of $2,644,784 during the year ended 31 December 2016 and, at thatdate, the parent company had total current assets of $987,000 and current liabilities of $3,976,000. Theseconditions, along with the other matters explained in ‘Principal Accounting Policies – Going Concern’ on page 46 to the parent company financial statements, indicate the existence of a material uncertainty which maycast significant doubt about the parent company’s ability to continue as a going concern. The financialstatements do not include the adjustments that would result if the parent company was unable to continue as agoing concern.


45

Opinion on other matters prescribed by the Companies Act 2006In our opinion, based on the work undertaken in the course of the audit:

l the information given in the Strategic Report and the Report of the Directors for the financial year for whichthe financial statements are prepared is consistent with the financial statements; and

l the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legalrequirements.

Matter on which we are required to report under the Companies Act 2006In the light of the knowledge and understanding of the company and its environment obtained in the course ofthe audit, we have not identified material misstatements in the Strategic Report and the Report of the Directors.

Matters on which we are required to report by exceptionWe have nothing to report in respect of the following matters where the Companies Act 2006 requires us toreport to you if, in our opinion:

l adequate accounting records have not been kept by the parent company, or returns adequate for our audithave not been received from branches not visited by us; or

l the parent company financial statements are not in agreement with the accounting records and returns; or

l certain disclosures of directors’ remuneration specified by law are not made; or

l we have not received all the information and explanations we require for our audit.

Other matterWe have reported separately on the group financial statements of Sirius Petroleum plc prepared in accordancewith International Financial Reporting Standards (IFRSs) as adopted by the European Union for the year ended31 December 2016. That report contains an emphasis of matter relating to going concern.

David MuntonSenior Statutory Auditorfor and on behalf of Grant Thornton UK LLPStatutory Auditor, Chartered AccountantsBirmingham

28 June 2017


CONTINUED

Principle Accounting PoliciesFOR THE YEAR ENDED 31 DECEMBER 2016


46

Basis of preparationThe financial statements have been prepared under the historical cost convention and in accordance with UnitedKingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including FinancialReporting Standard 102, and in accordance with the Companies Act 2006.

The individual accounts of Sirius Petroleum plc have also adopted the following disclosure exemptions:

l the requirement to present a statement of cash flows and related notes

Going concernThe Group is currently at an advanced stage in negotiations with various parties to raise the funds required tobring the Ororo Field into production, however at the date of signing these financial statements these negotiationshave not been concluded Therefore the Directors have prepared two versions of cash flow projections for theperiod up to 30 June 2018.



On the basis that cash is expected to be available in one or other of the scenarios, and following a detailed reviewby the Directors of the Group’s cash flow forecasts, the Directors believe that the Group will have sufficient cashresources to meet its liabilities as they fall due for a period of at least 12 months from the date that the financialstatements are signed. These conditions indicate the existence of a material uncertainty which may castsignificant doubt about the Parent Company’s ability to continue as a going concern. Consequently, the financialstatements have been prepared on a going concern basis. The Parent Company financial statements do notinclude the adjustments that would result if the group was unable to continue as a going concern.

Other incomeOther income represents the total value, excluding VAT, of income receivable from professional services. Incomeis recognised as the services are provided.



47

TaxationCurrent income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relatingto the current or prior reporting period, that are unpaid at the Statement of Financial Position date. They arecalculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based onthe taxable result for the period. All changes to current tax assets or liabilities are recognised as a component oftax expense in the statement of comprehensive income.

Deferred income taxes are calculated using the liability method on temporary differences. This involves thecomparison of the carrying amounts of assets and liabilities in the financial statements with their respective taxbases. In addition, tax losses available to be carried forward as well as other income tax credits to the Companyare assessed for recognition as deferred tax assets.

Deferred tax liabilities are always provided for in full. Deferred tax assets are recognised to the extent that it isprobable that they will be able to be offset against future taxable income. Deferred tax assets and liabilities arecalculated, without discounting, at tax rates that are expected to apply to their respective period of realisation,provided they are enacted or substantively enacted at the Statement of Financial Position date.

Most changes in deferred tax assets or liabilities are recognised as a component of tax expense in the statementof comprehensive income. Only changes in deferred tax assets or liabilities that relate to a change in value ofassets or liabilities that is charged or credited directly to equity or other comprehensive income are charged orcredited directly to equity or other comprehensive income.

Financial assetsThe Company’s financial assets comprise cash, loans receivable and trade and other receivables.

All financial assets are recognised when the Company becomes party to the contractual provisions of theinstrument. All financial assets are initially recognised at fair value, plus transaction costs.

Financial assets categorised as loans and receivables are measured subsequent to initial recognition at amortisedcost using the effective interest rate method.

Trade and other receivables are provided against when objective evidence is received that the Company will notbe able to collect all amounts due to it in accordance with the original terms of the receivables. The amount ofthe write-down is determined as the difference between the asset’s carrying amount and the present value ofestimated future cash flows, calculated by discounting using the original discounted rate.

Financial assets are derecognised when the rights to receive cash flows for the asset expire or the financial assetsare transferred and the Company has transferred substantially all the risks and rewards of ownership of thefinancial asset. On derecognition of a financial asset, the difference between the assets carrying amount and thesum of the consideration is recognised in the statement of comprehensive income.

Cash and cash equivalentsCash and cash equivalents include cash at bank and in hand, bank deposits repayable on demand, and othershort-term highly liquid investments that are readily convertible into known amounts of cash and which aresubject to an insignificant risk of changes in value, less advances from banks repayable on demand from the dateof the advance if the advance forms part of the Company’s cash management.



48

Classification as financial liabilities or equityFinancial instruments or their component parts are classified according to the substance of the contractualarrangements entered into.

A financial liability exists where there is a contractual obligation to deliver cash or another financial asset toanother entity or to exchange financial assets or financial liabilities under potentially unfavourable conditions. Inaddition, contracts which result in the entity delivering a variable number of its own equity instruments arefinancial liabilities.

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deductingall of its liabilities. Dividends and distributions relating to equity instruments are debited directly to equity.

A compound instrument is a non-derivative financial instrument which contains both a liability and an equitycomponent. These components are accounted for separately as financial liabilities and equity components, andare presented separately in the statement of financial position.

EquityShare capital is determined using the nominal value of shares that have been issued.

The share premium account represents premiums received on the initial issuing of the share capital. Anytransaction costs associated with the issuing of shares are deducted from share premium, net of any relatedincome tax benefits. Where warrants have been issued for services in relation to procuring subscribers, therelevant fair value charge has been set against share premium as a cost of issue.

The share-based payment reserve represents the cumulative amount which has been expensed in the statementof comprehensive income in connection with share-based payments, less any amounts transferred to retainedearnings on the exercise of share options or warrants.

Other reserves comprise the amounts arising on the initial recognition of compound instruments.

Translation reserves are amounts in respect of unrealised exchange differences

Retained earnings include all current and prior year results as disclosed in the statement of comprehensive income.

Financial liabilitiesThe Company’s financial liabilities comprise trade and other payables and loans payable. The Company hasadopted IAS39 for the recognition and measurement of these financial instruments.

Financial liabilities are recognised when the Company becomes a party to the contractual provisions of theinstrument. All interest related charges are recognised as an expense in finance costs in the statement ofcomprehensive income using the effective interest method.

Trade and other payables are recognised initially at fair value, net of direct issue costs, and are subsequentlyrecorded at amortised cost using the effective interest method with interest related charges recognised as anexpense in the statement of comprehensive income.

Loans payable are recognised initially at fair value, net of direct issue costs and subsequently measured atamortised cost using the effective interest method, with interest-related charges recognised as an expense infinance costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs,are recognised in the statement of comprehensive income on an accruals basis using the effective interestmethod and are added to the carrying amount of the instrument to the extent that they are not settled in theperiod in which they arise.

Financial liabilities are derecognised when the obligation specified in the relevant contract is discharged,cancelled or expires. The difference between the carrying amount of the financial liability derecognised and theconsideration paid is recognised in the statement of comprehensive income.



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Compound instrumentsOn initial recognition, the fair value of the consideration for the liability component of the instrument is determinedbased on the fair value of a similar instrument that does not have an equity conversion option and recognised asa financial liability. Subsequent measurement is in accordance with the financial liabilities accounting policy.

The equity component is recognised initially as the residual value remaining when the fair value of the debtcomponent is compared to the fair value of the compound instrument as a whole. The equity component is notremeasured after initial recognition except on expiry.

Other provisions, contingent liabilities and contingent assetsProvisions are measured at the estimated expenditure required to settle the present obligation, based on themost reliable evidence available at the Statement of Financial Position date, including the risks and uncertaintiesassociated with the present obligation. Any reimbursement expected to be received in the course of settlementof the present obligation is recognised, if virtually certain as a separate asset, not exceeding the amount of therelated provision. Where there are a number of similar obligations, the likelihood that an outflow will be requiredin settlement is determined by considering the class of obligations as a whole. In addition, long-term provisionsare discounted to their present values, where time value of money is material. All provisions are reviewed at eachStatement of Financial Position date and adjusted to reflect the current best estimate.

In those cases where the possible outflow of economic resource as a result of present obligations is consideredimprobable or remote, or the amount to be provided for cannot be measured reliably, no liability is recognised inthe statement of financial position. Probable inflows of economic benefits to the Company that do not yet meetthe recognition criteria of an asset are considered contingent assets.

Share-based paymentsOptionsThe Company issues equity-settled share-based payments to certain employees (including directors) in the formof options. Equity-settled share-based payments are measured at fair value at the date of grant. The fair valuedetermined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis overthe vesting period, together with a corresponding increase in equity, based upon the Company’s estimate of theshares that will eventually vest.

Fair value is measured using the Black-Scholes model. The expected life used in the model has been adjusted,based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behaviouralconsiderations.

Non-market vesting conditions are included in assumptions about the number of options that are expected tobecome exercisable. Estimates are subsequently revised, if there is any indication that the number of share optionsexpected to vest differs from previous estimates.

No adjustment is made to the expense recognised in prior periods if fewer share options are ultimately exercisedthan originally estimated. Upon exercise of share options, the proceeds received net of any directly attributabletransaction costs up to the nominal value of shares issued are allocated to share capital with any excess beingrecorded as share premium.

WarrantsThe Company has also issued equity settled share-based payments to certain employees (including directors),and in respect of services provided by external consultants in the form or warrants. The share-based payment ismeasured at fair value of the services provided at the grant date, or if the fair value of the services cannot bereliably measured using the Black-Scholes model. The expense is allocated over the vesting period. Whereservices provided relate to the issue of shares the expense has been charged to share premium.



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Fees and loans settled in sharesWhere shares have been issued as consideration for services provided or loans outstanding they are measuredat the fair value of the services provided. The difference between the carrying amount of the financial liability (orpart thereof) extinguished, and the fair value of the shares, is recognised in the statement of comprehensiveincome.

Property, plant and equipmentMeasurement basisProperty, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The costof an asset comprises its purchase price and any directly attributable costs of bringing the asset to the workingcondition and location for its intended use. Subsequent expenditure relating to property, plant and equipment isadded to the carrying amount of the assets only when it is probable that future economic benefits associatedwith the item will flow to the Company and the cost of the item can be measured reliably.

All other costs, such as repairs and maintenance are charged to the statement of comprehensive income duringthe period in which they are incurred.

When assets are sold, any gain or loss resulting from their disposal, being the difference between the net disposalproceeds and the carrying amount of the assets, is included in the statement of comprehensive income.

DepreciationDepreciation is calculated so as to write off the cost of property, plant and equipment, less its estimated residualvalue, over its useful economic life as follows:

Computer equipment – within the current financial yearOffice equipment – straight-line over 3 years

Operating leasesLeases in which substantially all the risks and rewards of ownership are retained by the lessor are classified asoperating leases.

Payments, including prepayments, made under operating leases (net of any incentives received from the lessor)are charged to the statement of comprehensive income on a straight-line basis over the period of the lease.



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Foreign currenciesIn the individual financial statements of the consolidated entities, foreign currency transactions are translated intothe functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities inforeign currencies are translated at the rates of exchange ruling at the reporting date. Non-monetary items thatare measured at historic cost in a foreign currency are translated at the exchange rate at the date of transactionand are not re-translated. Non-monetary assets that are measured at fair value in a foreign currency aretranslated into the functional currency using the exchange rates at the date when the fair value was determined.

Any exchange differences arising on the settlement of monetary items or on translating monetary items at ratesdifferent from those at which they were initially recorded are recognised in the statement of comprehensiveincome in the period in which they arise.

In the financial statements all individual financial statements that are originally presented in a currency differentfrom the Company’s presentational currency have been converted into USD. Assets and liabilities have beentranslated into USD at the closing rates at the reporting date. Income and expenses have been converted intoUSD at the exchange rates at the transaction dates, or at the average rates over the reporting period providedthat the exchange rates do not fluctuate significantly. Any differences arising from this process have beenrecognised in other comprehensive income and accumulated separately in the currency exchange reserve inequity.

The average GBP exchange rate used during the year was USD 1.35549 (2015: 1.52867). The closing exchangerate at 31 December 2016 was USD 1.23412 (2015: 1.4804).

Segmental reportingAn operating segment is a distinguishable component of the Group that engages in business activities fromwhich it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group’schief operating decision maker to make decisions about the allocation of resources and assessment ofperformance and about which discrete financial information is available.

The chief operating decision maker has defined that the Group’s only reportable operating segment during theyear is oil extraction and related activities. The Group has not traded and has not generated any revenue fromexternal customers during the period.

Statement of Financial PositionAS AT 31 DECEMBER 2016


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31 December 31 December2016 2015

Note $000 $000

ASSETSCurrent assets Cash and cash equivalents 828 42 Trade and other receivables 2 159 105

Total current assets 987 147

Total assets 987 147

LIABILITIESCurrent liabilitiesTrade and other payables 3 2,869 2,384 Loans payable 3 1,107 518

Total liabilities 3,976 2,902

EQUITYShare capital 5 8,927 7,144 Share premium 25,749 25,252 Share-based payment reserve 2,596 7,225 Other reserves 11 –Exchange reserve 117 (2)Retained earnings (40,389) (42,374)

Equity attributable to equity holders of the Company (2,989) (2,755)

Total equity and liabilities 987 147

The Company’s loss for the year was $2,644,784 (year ended 31 December 2015: $4,879,000).

The financial statements were approved by the Board and authorised for issue on 28 June 2017.

O KutiDirector

28 June 2017

Company number: 05181462



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Statement of Changes in EquityFOR THE YEAR ENDED 31 DECEMBER 2016

Sharebased

Share Share payment Other Exchange Retained Totalcapital premium reserve reserves reserve earnings equity$000 $000 $000 $000 $000 $000 $000

Balance at 1 January 2015 4,733 20,622 9,299 305 – (37,897) (2,938)

Share based payments – – 895 – – – 895 Share issue 2,411 4,801 (1,558) – – – 5,654 Share issue costs – (171) – – – – (171)Transfer on lapse of share options/warrants – – (1,411) – – 1,411 –Issue of loan fees equity instruments (note 3) – – – 802 – – 802 Settlement of loan fees equity instruments (note 3) – – – (1,107) – (1,009) (2,116)

Transactions with owners 2,411 4,630 (2,074) (305) – 402 5,064

Exchange difference on translating foreign operations – – – – (2) – (2)Loss for the year – – – – – (4,879) (4,879)

Total comprehensive loss for the year – – – – (2) (4,879) (4,881)

Balance at 31 December 2015 7,144 25,252 7,225 – (2) (42,374) (2,755)

Share issue 1,783 648 – – – – 2,431 Share issue costs – (151) – – – – (151)Transfer on lapse of share options/warrants – – (4,629) – – 4,629 –Issue of loan fees equity instruments (note 3) – – – 11 – – 11

Transactions with owners 1,783 497 (4,629) 11 – 4,629 2,291

Exchange difference on translating foreign operations – – – – 119 – 119 Loss for the year – – – – – (2,644) (2,644)

Total comprehensive loss for the year – – – – 119 (2,644) (2,525)

Balance at 31 December 2016 8,927 25,749 2,596 11 117 (40,389) (2,989)


Notes to the Financial StatementsFOR THE YEAR ENDED 31 DECEMBER 2016


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1 Fixed asset investments Investmentin group

undertakingsCompany $000

CostAt 31 December 2015 and 31 December 2016 19,260

Amounts written offAt 31 December 2015 and 31 December 2016 19,260

Net book value at 31 December 2015 and 31 December 2016 –

At 31 December 2016 the Company holds ordinary share capital in the following subsidiary undertakings:

Proportion ofordinary share Nature of Country of

Subsidiary capital held business incorporation Registered Office

Sirius Oil & Gas Limited 100% Dormant England 16 Great Queen Street,and Wales London WC2B 5DG, UK

Sirius Taglient Petro 50% Management Nigeria 3 Jerry Iriabe Street, Limited services Lekki Scheme 1, Lagos,

Nigeria

Sirius Trading Nigeria 100% Trading of oil Nigeria 3 Jerry Iriabe Street, Limited Lekki Scheme 1, Lagos,

Nigeria

Sirius Ororo OML95 100% Exploration Nigeria 3 Jerry Iriabe Street, Limited for mineral Lekki Scheme 1, Lagos,

resources Nigeria

SRS Petroleum Nigeria 100% Exploration Nigeria 3 Jerry Iriabe Street, Limited for mineral Lekki Scheme 1, Lagos,

resources Nigeria

Sirius 2012 Limited 100% Exploration Nigeria 3 Jerry Iriabe Street, for mineral Lekki Scheme 1, Lagos,resources Nigeria

At 31 December 2016 the Company owned 50% of the shares in Sirius Taglient Petro Limited, a companyincorporated in Nigeria, to operate in the oil and gas sector. The Company has the right to acquire theremaining 50% shares for a nominal sum and has management and operating control of that company.

2 Debtors 31 December 31 December2016 2015$000 $000

Trade debtors – 9 Other debtors 133 68 Amounts owed by Group undertakings – – Prepayments and accrued income 26 28

159 105

Given the uncertainty of the recoverability of the amounts owed by Group undertakings management haveprovided in full for the outstanding balance of $7,059,000 (2015: $6,128,000).



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3 Creditors: amounts falling due within one year 31 December 31 December2016 2015$000 $000

Trade creditors 180 285 Social security and other taxes 19 10 Other creditors – – Loans 1,107 518 Accruals and deferred income 2,670 2,089

3,976 2,902

Included in accruals is a liability to Havoc Services Pty Ltd of $521,000 (2015: $454,000) for technicalservices provided. Payment of this amount is deferred until:

(a) the Company secures project funding for the next phase of Ororo field development; or

(b) acquires an interest in a significant oil discovery offshore Nigeria; or

(c) accepts any proposal resulting in a change of control of the Company; or

(d) as may otherwise be mutually agreed between Havoc Services Pty Ltd and Sirius.

There are also other amounts in both accruals and other payables which are due on commencement ofdrilling.

The fair value of trade and other payables has not been disclosed as, due to their short duration,management consider the carrying amounts recognised in the Statement of Financial Position to be areasonable approximation of their fair value.

During the year the Company received loans from several unconnected parties to fund working capitalamounting to $822,000 (2015: $1,142,000), which incurred initial loan fees of $87,000 (2015: $1,142,000).Of these loans $669,000 plus interest of $67,000 are convertible at 0.35p. The loans are unsecured. Duringthe year ended 31 December 2015 $1,352,000 of the debt was repaid in shares at between 1p and 2.88p.

During the year ended 31 December 2016 $124,655 of initial loans were repaid in cash and an additional$91,718 finance charge was paid on this loan dating back to 2012, which has been included in finance costin 2016. During the year ended 31 December 2015 $2,117,000 of the initial and additional loan fees weresettled by the issue of 108,804,348 ordinary shares at between 1p and 2.88p. For details of the treatmenton these loans see note 9 in the consolidated group accounts.

4 Share-based paymentsDetails of share-based payments are disclosed on pages 34 to 36 of the consolidated group accounts.



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5 Share capital 31 December 31 December2016 2015$000 $000

Allotted, issued and fully paid2,258,029,523 (2015: 1,721,362,856) ordinary shares of 0.25p 8,927 7,144

The movement in share capital is analysed as follows:Ordinary shares

Number $000

Allotted and issuedAt 31 December 2014 1,098,737,213 4,733Shares issued for fees due 286,441,848 1,107 Shares issued for cash 275,000,000 1,067 Loan repayments 61,183,795 237

At 31 December 2015 1,721,362,856 7,144Shares issued for cash 536,666,667 1,783

At 31 December 2016 2,258,029,523 8,927

On 17 March 2016, 166,666,667 ordinary shares of 0.25p were issued at 0.3p for cash raising £500,000before costs. On 25 July 2016, 200,000,000 ordinary shares of 0.25p were issued at 0.25p for cash raising£500,000 before costs. On 19 December 2016, 170,000,000 ordinary shares of 0.25p were issued at 0.5pfor cash raising £850,000 before costs.

The ordinary shares carry one vote each and on winding up of the Company the balance of assets availablefor distribution will, subject to any relevant restrictions, be divided amongst the shareholders.

6 Loss for the financial yearThe Company has taken advantage of the exemption under the Companies Act 2006 and has not includedits own profit and loss account in these financial statements. The Company’s loss for the year was$2,644,784 (2015: $4,879,198).

31 December 31 December2016 2015$000 $000

Fees payable to the Company’s auditor for the audit of the financial statements 39 43 Fees payable to the Company’s auditor and its associates for other services:Other services relating to taxation compliance 4 4

7 Directors remuneration and employee numbersDetails of the Directors’ remuneration is disclosed within the Report on Remuneration on pages 13 and 14.

The average number of employees during the year was:2016 2015

Number Number

Directors 4 4Other 1 2

5 6



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8 Contingent liabilitiesThere were no contingent liabilities at 31 December 2016 nor at 31 December 2015.

9 Capital commitmentsThere were no capital commitments at 31 December 2016 nor at 31 December 2015.

10 Related party transactionsAt 31 December 2016, O Kuti was owed $1,451 in expenses by the Group (2015: $1,480 owed by O Kuti), J Pryde was owed $Nil (2015: $414) in expenses and S Hawkins was owed $Nil (2015: $248) inexpenses. At the year end undrawn salaries were due to J Pryde of $327,247 (2015: $294,847), O Kutiof $174,319 (2015: $153,591), C Neal $Nil (2015: $2,961) and S Hawkins $3,799 (2015: $4,811).

S Hawkins additionally charged $6,105 for Company Secretarial fees (2015: $740). At 31 December 2016$Nil was unpaid in respect of these fees (2015: $740).

During the year, the Company made loans of $273,599 (2015: $493,288) to Sirius Taglient Petro Limited(a subsidiary undertaking) for cash advances to cover operating expenses and invoices paid on theirbehalf. At 31 December 2016, Sirius was owed $3,384,480 (2015: $3,110,881) from Sirius Taglient PetroLimited, which has been provided for in full.

During the year, the Company made loans of $657,740 (2015: $793,747) to Sirius Ororo (OML95) Limited(a subsidiary undertaking) for cash advances to cover operating expenses and invoices paid on theirbehalf. At 31 December 2016, Sirius was owed $3,583,473 (2015: $2,925,733) from Sirius Ororo (OML95)Limited, which has been provided for in full.

During the year, the Company made loans of $Nil (2015: $50,000) to Sirius 2012 Limited (a subsidiaryundertaking) for cash advances to cover operating expenses and invoices paid on their behalf. At 31 December 2016, Sirius was owed $91,367 (2015: $91,367) from Sirius 2012 Limited, which has beenprovided for in full.

11 Subsequent eventsOn 26 January 2017, 14,000,000 ordinary shares of 0.25p were issued at 0.5p to repay a loan of £70,000.

On 22 February 2017, 266,666,666 ordinary shares on 0.25p were issued at 0.75p for cash proceeds of£2,000,000 before costs, and 3,333,333 ordinary shares of 0.25p were issued at 0.75p in payment of feesof £25,000.

Following this share issue, there are 2,542,029,522 ordinary shares of 0.25p in issue, each of which is avoting share.

Shareholder NotesCONTINUED


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Shareholder NotesCONTINUED


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Printed by Michael Searle & Son Limited

www.siriuspetroleum.com3rd Floor

13 Charles II StreetLondon SW1Y 4QU

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