Audited Results for the year ended 31 Dec 2021

RNS Number : 0459Q

Oracle Power PLC

24 June 2022

 

24 June 2022

Oracle Power PLC

("Oracle" or the "Company")

Audited Results for the year ended 31 December 2021

Notice of AGM

Oracle Power PLC (AIM:ORCP),  the international natural resources project developer, is pleased to announce its audited results for the 12 months ended 31 December 2021. The Company's Annual Report, which includes an unqualified audit report and audited Financial Statements for the year ended 31 December 2021, together with the Notice of AGM, will be made available on the Company's website at  www.oraclepower.co.uk/investor-relations/financial-reports/ and are being posted to shareholders today.

For further information on Oracle Power PLC, visit the Company's website   http://www.oraclepower.co.uk   or contact:

Oracle Power PLC

Naheed Memon - CEO  [phone]

Strand Hanson Limited (Nominated Adviser & Broker)

Rory Murphy, Rob Patrick    [phone]

St Brides Partners Limited (Financial PR)

Susie Geliher, Catherine Leftley                                                                 [phone]

CHAIRMAN'S STATEMENT

I am pleased to present the financial statements for Oracle Power PLC for the year ended 31 December 2021.

Despite COVID-19 and the consequential limitations on travel, we have managed to grow the size and value of our project portfolio.

During the year, we continued to progress our Thar Block VI project. Notwithstanding the general move towards more environmentally friendly forms of power generation, with the advent of the conflict in Ukraine, the cost of energy has risen dramatically and the global energy position has changed. Pakistan's Minister of Energy announced in a recent press conference that he wants the delayed Thar Block VI project developed and PowerChina International Group Ltd ("PowerChina") remains uncertain as to whether it will move the project forward. The original Thar Block VI project plan was to build a mine with an associated 1,320 MW power station to provide base load electricity to Pakistan. The project has now expanded to include production of coal to gas. We are further exploring the possibility of using lignite to make a humic or organic material that enhances soil health and can be used to turn barren land into fertile land. Interest in the whole Thar Block VI project has therefore increased.

The two gold prospects in Western Australia (Jundee East and the Northern Zone projects), in which we invested in 2019 are progressing. The geological surveys and test drilling reports are all looking encouraging, and we have been approached by other mining companies in the area, which are looking to form joint ventures to advance the projects.

In 2021, we started a project with the objective to manufacture a green hydrogen production facility in Pakistan. To this end, we signed a non-exclusive co-operation agreement with PowerChina and, in March 2022, we formed a new Special Purpose Vehicle SPV called Oracle Energy Ltd specifically to develop this project. Oracle Energy Ltd is jointly owned by Oracle Power PLC (30%) and by His Highness Sheikh Ahmed Dalmook Al Maktoum, through his wholly owned company Kaheel Energy FZE (70%).

In terms of our funding position, just prior to the period end, the Company received £632,500 from the exercise of warrants and then post year end, in April 2022, we raised an additional £800,000 before expenses through an equity placing to finance the development of the green hydrogen project.

Operational highlights of 2021 are described in the Chief Executive's Report.

As you will have read in the newspapers, Imran Khan has been replaced as Prime Minister of Pakistan by Shebaz Sharif. The Pakistan Government remains supportive of the development of the Thar coal project and of relations with China. The broad parameters of security remain as last year: there have been no major incidents and, overall, the army has maintained order. 

We are most grateful to the Pakistani Authorities, to the Chinese Authorities through China Coal and the Joint Cooperation Committee (JCC) of CPEC for their support. 

Above all, I wish to thank our shareholders for their continued confidence, patience and support, enabling us to move the project towards realisation.

Mark W Steed

Chairman

CHIEF EXECUTIVE'S REPORT

I am pleased to present a report on the Company's progress for the year ended 31 December 2021. 
 
This year has been one of very significant and valuable progress for Oracle. During the early part of the year, we mainly focused on the active development of the Company's existing projects in Pakistan and in Western Australia, and in both jurisdictions notable progress was achieved. Then, in the last quarter of 2021, we launched our green hydrogen project, with the objective to become a developer of green and new energy as well and as a result, further expanded our portfolio of projects. 

In Pakistan, we continued to actively pursue the development of our Thar Block VI, for power as well as for CTG/L (coal to gas/liquid).  We maintained an active dialogue with the Power Division, Ministry of Energy, throughout the year, to secure permission for development of the Company's 1,320MW, coal to power project under the China-Pakistan Economic Corridor ("CPEC"). In September 2021, the Government of Pakistan published its annual Indicative Generation Capacity Expansion Plan (the "IGCEP"), a demand-supply policy guidance chart for Pakistan. Although, demand from Oracle's plant did not appear in the 2021 plan, the power sector regulator, the National Electric Power Regulatory Authority ("NEPRA"), has ruled that the Thar project of 1,320MW, should be included in the next annual review in 2022. 

Furthermore, following subsequent discussions with government and regulators, consultants were engaged in Q1 2021, to draft a government policy proposal for CTG/L, based on input received from China Coal. The draft policy for CTG/L was then jointly submitted by Oracle and China Coal, to the Petroleum Division, Ministry of Energy, for due consideration in March 2021.

We subsequently sponsored a consultative session for stakeholders, to discuss the policy draft, with a view to finalising it, so that feasibilities could commence. The session held on 10 March 2021 in Karachi, was hosted by the Petroleum Division, Ministry of Energy, Government of Pakistan, and presided over by the Energy Minister of Sindh, Mr. Imtiaz Ahmed Shaikh and the Special Assistant to the Prime Minister for Petroleum, Mr. Nadeem Babar. The Company continued to engage with the Petroleum Division for further action subsequent to this meeting. In parallel, in order to mitigate CTG/L development risk, we also initiated discussions with other potential off-takers.

By Q4 2021, the Company was in advanced talks with Sui Southern Gas Company Limited ("SSGC"), the semi government public gas distribution company, based on the understanding that a buy back arrangement with SSGC would trigger required government policy formulation, as well as provide necessary guarantees to lenders. This arrangement was secured post period. Further, by the end of 2021, we had also set out the scope and parameters of a detailed feasibility study for CTG/L in conjunction with China Coal, pending policy announcement. I can also confirm that generally, Oracle received tremendous encouragement, and support from the Government of Pakistan for an enhanced development plan at Block VI, during the course of 2021. To this end, the Government of Pakistan has had extensive dialogue with us on different occasions, for initiation of the feasibility study and mobilisation of CTG/L development, given Pakistan's gas crisis. 
 
I am also very pleased to report that despite all COVID-19 related challenges in West Australia, Oracle continued to conduct active exploration at both the tenements. At the Company's Northern Zone project, 25 km from Kalgoorlie, processing and interpretation of the available magnetic and induced polarisation ("IP") geophysical datasets was completed. The maiden drill programme targeting felsic intrusives porphyry bodies commenced in September 2021 and was completed within the calendar year. The samples were submitted to laboratories and significantly positive results were received post period end. In parallel, we were finally granted the exploration licence for Jundee East in May 2021. We proceeded to conduct a more extensive geochemical sampling survey and then planned a five target drilling programme based on the geophysical and extensive geochemical investigations, which established the presence of an unrecognised greenstone belt similar to the Jundee mine, one of Australia's largest, a few kilometres away. By Q4 2021, we had secured clearance for drilling at Jundee East, and sourced a rig, with drilling to commence post period end. The results of the work on both tenements, established good prospects for gold systems and further work plans for 2022 were set out at the year end 2021, subject to expected results post period. Given the low priced acquisition of the assets in Western Australia, quick exploration work, and early signs of favourable mineralisation, we expect to realise a significant increase in company value on account of the outcome of work undertaken in Western Australia. 
 

In October 2021, Oracle launched its transformational pivot to green energy by signing a non-exclusive co-operation agreement with PowerChina, to jointly develop the first green hydrogen production facility in Pakistan. The signing ceremony held at the Energy Department, Government of Sindh in Karachi was hosted by Pakistan's Minister of Energy, Sindh, Mr. Imtiaz Ahmed Shaikh. Mr. Li Bijian, the Consul General of China in Karachi, also witnessed the signing ceremony, providing assurance of the support of Chinese government for this project. Soon after our project launched, we appointed Dr. Naveed Akhtar, a hydrogen scientist as Chief Technology Officer for Hydrogen.  Dr Akhtar is an expert in hydrogen fuel cells with more than 20 years' experience.

We also engaged land surveyors and consultants to identify suitable land in the designated wind corridor in Sindh, for the development of a 400 MW capacity green hydrogen project with an annual production capacity of 55,000 tonnes. Subsequent to land identification, we applied to the Government for allotment of land for the development of the green hydrogen project. The process is expected to conclude in 2022 when we expect to start to progress of one of the larger green hydrogen projects in the region. 

In December 2021, PowerChina completed a preliminary feasibility study for production of green hydrogen, and the Company published an information memorandum for prospective investors. We also initiated conversations with domestic and international off takers as well as technology suppliers and lenders. By the end of 2021, I can confirm that significant progress had been achieved to date and we expect to make quick progress on the ground with regard to this important project. I can also say with confidence that the Government is fully supportive of this development, and is also working on a support policy for green hydrogen production, and Oracle's views as a pioneer of this initiative in Pakistan, have been taken into consideration, by those reviewing possible future policy mechanisms, and we remain a part of this conversation. 

During 2021, we remained well placed financially, and our cash balance was further enhanced on account of the exercise of warrants by multiple shareholders, including His Highness Sheikh Ahmed Dalmook Al Maktoum just prior to the period end.

The Company remains committed to all its projects, adding value through achieving target milestones. The addition of our green hydrogen project to our portfolio places us in a very strong position as developers of important global fuel and commodity projects, in strategic jurisdictions, with an ability to mitigate commodity risk across our portfolio. 

We would be unable to develop these projects without the commitment to our teams in the UK, Australia and in Pakistan. I am thankful to them for their commitment to the Company.  I would also like to express my gratitude to all those who support Oracle in the UK, and help us to manage regulatory affairs, public relations, accounting compliance, brokerage and market trading.
 
I also extend my greatest thanks to the shareholders for their support and belief in the Company, and for placing their trust in its management.

Ms Naheed Memon,

Chief Executive Officer

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

FOR THE YEAR ENDED 31 DECEMBER 2021

		2021		2020
		Notes	£			£
CONTINUING OPERATIONS
Revenue		-	-			-
Administrative expenses			(881,973)			(1,011,531)
OPERATING LOSS		(881,973)		(1,011,531)
Finance costs	5	-		-
Finance income	5	94		380
LOSS BEFORE INCOME TAX	6	(881,879)		(1,011,151)
Income tax	7	-		-
LOSS FOR THE YEAR		(881,879)		(1,011,151)
Loss attributable to:
Owners of the parent		(881,879)		(1,011,151)
Non-controlling interests		-		-
		(881,879)		(1,011,151)
Loss per share expressed
in pence per share:	8
Basic		(0.04)		(0.05)
Diluted		(0.04)		(0.05)

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2021

		2021		2020
	Notes	£		£
LOSS FOR THE YEAR		(881,879)		(1,011,151)
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to profit or loss:
Exchange difference on consolidation		(130,361)		(154,070)
Income tax relating to items of other comprehensive income		-		-
OTHER COMPREHENSIVE LOSS FOR THE YEAR, NET OF INCOME TAX		(130,361)		(154,070)
TOTAL COMPREHENSIVE LOSS FOR THE YEAR		(1,012,240)		(1,165,221)
Total comprehensive income/(loss) attributable to:
Owners of the parent		(1,012,240)		(1,165,221)
Non-controlling interests		-		-
		(1,012,240)		(1,165,221)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2021

			2021		2020
	Notes		£		£
ASSETS
NON-CURRENT ASSETS
Intangible assets	9		5,403,066		5,256,313
Property, plant and equipment	10		5,856		8,288
Loans and other financial assets	12		369,390		365,949
			5,778,312		5,630,550
CURRENT ASSETS
Trade and other receivables	13		50,108		32,520
Cash and cash equivalents	14		872,000		1,554,424
			922,108		1,586,944
TOTAL ASSETS			6,700,420		7,217,494
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital	15		2,650,325		2,146,862
Share premium	16		17,853,012		16,908,975
Translation reserve	16		(816,666)		(686,305)
Share scheme reserve	16		66,733		180,229
Retained earnings	16		(13,223,305)		(12,454,922)
TOTAL EQUITY			6,530,099		6,094,839
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	17		170,321		322,655
Borrowings	18		-		800,000
TOTAL LIABILITIES			170,321		1,122,655
TOTAL EQUITY AND LIABILITIES			6,700,420		7,217,494

COMPANY STATEMENT OF FINANCIAL POSITION

31 DECEMBER 2021

			2021			2020
	Notes		£			£
ASSETS
NON-CURRENT ASSETS
Intangible assets	9		3,978,851			3,978,851
Property, plant and equipment	10		479			684
Investments	11		3,703,047			3,703,047
Loans and other financial assets	12		1,985,987			1,640,353
			9,668,364			9,322,935
CURRENT ASSETS
Trade and other receivables	13		230,070			199,691
Cash and cash equivalents	14		850,442			1,535,665
			1,080,512			1,735,356
TOTAL ASSETS			10,748,876			11,058,291
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital	15		2,650,325			2,146,862
Share premium	16		17,853,012			16,908,975
Share scheme reserve	16		66,733			180,229
Retained earnings	16		(10,730,957)			(10,049,674)
TOTAL EQUITY			9,839,113			9,186,392
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	17		909,763			1,071,899
Borrowings	18		-			800,000
TOTAL LIABILITIES			909,763			1,871,899
TOTAL EQUITY AND LIABILITIES			10,748,876			11,058,291

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

	Called up share capital		Retained earnings		Share premium		Translation reserve		Share Scheme reserve		Total		Non-controlling interests		Total equity
	£		£		£		£		£		£		£		£
Balance at 1 January 2020	1,759,751		(11,512,373)		15,512,025		(532,235)		190,653		5,417,821		-		5,417,821
Loss for the year	-		(1,011,151)		-		-		-		(1,011,151)		-		(1,011,151)
Other comprehensive income
Exchange difference on consolidation	-		-		-		(154,070)		-		(154,070)		-		(154,070)
Total comprehensive loss	-		(1,011,151)		-		(154,070)		-		(1,165,221)		-		(1,165,221)
Transactions with owners
Issue of share capital	387,111		-		1,396,950		-		-		1,784,061		-		1,784,061
Share warrants exercised	-		68,602		-		-		(68,602)		-		-		-
Share warrants granted	-		-		-		-		58,178		58,178		-		58,178
Total transactions with owners	387,111		68,602		1,396,950		-		(10,424)		1,842,239		-		1,842,239
Balance at 31 December 2020	2,146,862		(12,454,922)		16,908,975		(686,305)		180,229		6,094,839		-		6,094,839
Loss for the year	-		(881,879)		-		-		-		(881,879)		-		(881,879)
Other comprehensive income
Exchange difference on consolidation	-		-		-		(130,361)		-		(130,361)		-		(130,361)
Total comprehensive loss	-		(881,879)		-		(130,361)		-		(1,012,240)		-		(1,012,240)
Transactions with owners
Issue of share capital	503,463		-		944,037		-		-		1,447,500		-		1,447,500
Share warrants exercised/lapsed	-		113,496		-		-		(113,496)		-		-		-
Total transactions with owners	503,463		(768,383)		944,037		(130,361)		(113,496)		435,260		-		435,260
Balance at 31 December 2021	2,650,325		(13,223,305)		17,853,012		(816,666)		66,733		6,530,099		-		6,530,099

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2021

	Called up share capital		Retained earnings		Share premium		Share Scheme reserve		Total equity
	£		£		£		£		£
Balance at 1 January 2020	1,759,751		(9,067,436)		15,512,025		190,653		8,394,993
Loss for the year	-		(1,050,840)		-		-		(1,050,840)
Total comprehensive loss	-		(1,050,840)		-		-		(1,050,840)
Transactions with owners
Issue of share capital	387,111		-		1,396,950		-		1,784,061
Share warrants exercised	-		68,602		-		(68,602)		-
Share warrants granted	-		-		-		58,178		58,178
Total transactions with owners	387,111		68,602		1,396,950		(10,424)		1,842,239
Balance at 31 December 2020	2,146,862		(10,049,674)		16,908,975		180,229		9,186,392
Loss for the year	-		(794,779)		-		-		(794.779)
Total comprehensive loss	-		(794,779)		-		-		(794,779)
Transactions with owners
Issue of share capital	503,463		-		944,037		-		1,447,500
Share warrants exercised	-		113,496		-		(113,496)		-
Total transactions with owners	503,463		(681,283)		944,037		(113,496)		652,721
Balance at 31 December 2021	2,650,325		(10,730,957)		17,853,012		66,733		9,839,113

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

		2021		2020
	Notes	£		£
Cash flows from operating activities
Cash generated from operations	1	(1,043,308)		(807,883)
Interest paid		-		-
Net cash from operating activities		(1,043,308)		(807,883)
Cash flows from investing activities
Purchase of Australia exploration fixed assets		(190,599)		(129,740)
Purchase of Pakistan project fixed assets		(94,317)		(90,030)
Purchase of tangible fixed assets		-		(2,513)
Interest received		94		380
Net cash from investing activities		(284,822)		(221,903)
Cash flows from financing activities
Proceeds of share issue		647,500		1,370,811
Proceeds from borrowings		-		800,000
Net cash from financing activities		647,500		2,170,811
(Decrease) / Increase in cash and cash equivalents		(680,630)		1,141,025
Cash and cash equivalents at beginning of year	2	1,554,424		413,858
Effect of foreign exchange rate changes		(1,794)		(459)
Cash and cash equivalents at end of year	2	872,000		1,554,424

COMPANY STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2020

		2021		2020
	Notes	£		£
Cash flows from operating activities
Cash generated from operations	1	(1,332,817)		(909,288)
Interest paid
Net cash from operating activities		(1,332,817)		(909,288)
Cash flows from investing activities
Purchase of Australia exploration fixed assets		-		(90,030)
Purchase of Pakistan project fixed assets		-		(20,266)
Interest received		94		380
Net cash from investing activities		94		(109,916)
Cash flows from financing activities
Proceeds of share issue		647,500		1,370,811
Proceeds from borrowings		-		800,000
Net cash from financing activities		647,500		2,170,811
(Decrease) / Increase in cash and cash equivalents		(685,223)		1,151,607
Cash and cash equivalents at beginning of year	2	1,535,665		384,058
Effect of foreign exchange rate changes		-		-
Cash and cash equivalents at end of year	2	850,442		1,535,665

NOTES TO THE STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

1.	RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS

Group
		2021		2020
		£		£
Loss before income tax		(881,879)		(1,011,151)
Depreciation charges		1,942		336
(Gain) / Loss on foreign exchange movement		(7,206)		27,871
Finance costs		-		-
Finance income		(94)		(380)
Taxes paid		46		-
Loss/(Profit) on disposal of tangible assets		-		1,761
		(887,191)		(981,563)
(Increase) / Decrease in trade and other receivables		(45,174)		57,387
(Decrease) / Increase in trade and other payables		(110,943)		116,293
Cash generated from operations		(1,043,308)		(807,883)
Company
		2021		2020
		£		£
Loss before income tax		(794,779)		(1,050,840)
Depreciation charges		205		336
Impairment of loans		20,070		71,652
(Gain) / Loss on foreign exchange movement		(7,242)		30,258
Finance income		(17,058)		(19,542)
(Profit) / Loss on disposal of tangible assets		-		1,761
		(798,804)		(966,375)
(Increase) / Decrease in trade and other receivables		(6,173)		86,210
(Decrease) / Increase in trade and other payables		(162,136)		89,703
Increase in loans to subsidiaries		(365,704)		(118,826)
Cash generated from operations		(1,332,817)		(909,288)

2.  CASH AND CASH EQUIVALENTS

The amounts disclosed on the Statements of Cash Flows in respect of cash and cash equivalents are in respect of these Statements of Financial Position amounts:

	Group				Company
Year ended 31 December 2021	31/12/21		1/1/21		31/12/21		1/1/21
	£		£		£		£
Cash and cash equivalents	872,000		1,554,424		850,442		1,535,665
Year ended 31 December 2020	31/12/20		1/1/20		31/12/20		1/1/20
	£		£		£		£
Cash and cash equivalents	1,554,424		413,858		1,535,665		384,058

NOTES TO THE STATEMENTS OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2021

3.	RECONCILIATION OF CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES

Group

	Trade and other payables	Borrowings	Total
	£	£	£
Balance at 1 January 2020	173,835	-	173,835
Cash flows	148,820	800,000	948,820
Balance at 31 December 2020	322,655	800,000	1,122,655
Cash flows	(152,334)	-	(152,334)
Non-cash changes
Issue of share capital	-	(800,000)	(800,000)
Balance at 31 December 2021	170,321	-	170,321

Company

	Trade and other payables	Borrowings	Amounts owed to group undertakings	Total
	£	£	£	£
Balance at 1 January 2020	112,480	-	804,516	916,996
Cash flows	154,703	800,000	200	954,903
Balance at 31 December 2020	267,183	800,000	804,716	1,871,899
Cash flows	(162,036)	-	(100)	(162,136)
Non-cash changes
Issue of share capital	-	(800,000)	-	(800,000)
Balance at 31 December 2021	105,147	-	804,616	909,763

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2021

1.   STATUTORY INFORMATION

Oracle Power PLC is a public company, limited by shares and registered and domiciled in England and Wales. It is the ultimate holding company of the Oracle Power Plc Group. The Group is primarily involved in an energy project, based on the exploration and development of coal and building a mine-mouth power plant in Pakistan.  The Group also has two gold prospects in Western Australia and a green hydrogen project in Pakistan.  The presentation currency of the financial statements is the Pound Sterling (£). The Company's registered number and registered office address can be found on the General Information page.

2.   ACCOUNTING POLICIES

Going concern

During the year under review, the Group experienced net cash outflows from operating activities which it financed from existing cash resources held at the start of the year and cash received from the issue of new equity share capital. The Directors have considered the cash flow requirements of the Group over the next 12 months and believe that additional funding will be required to meet the Group's cash requirements over that period. This additional cash requirement creates a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern.  However, the Directors expect to be able to meet the funding requirements for the Group to continue as a going concern for at least 12 months from the date of the approval of these financial statements, and consequently, the Directors consider it appropriate to adopt the going concern basis in the preparation of the financial statements.

Compliance with accounting standards

These financial statements have been prepared in accordance with UK adopted International Financial Reporting Standards and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to reporting groups under IFRS.

The financial statements have been prepared under the historical cost convention.

Significant accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the amounts reported for revenues and expenses during the year and the amounts reported for assets and liabilities at the statement of financial position date. However, the nature of estimation means that the actual outcomes could differ from those estimates.

The key sources of estimation uncertainty that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are the measurement of any impairment on intangible assets and the estimation of share-based payment costs.

The principal risk and uncertainty of the intangible assets (exploration assets) is that the Group may not reach financial close - as disclosed in Note 9. The board have tested the intangible assets for impairment. For this test, the board considered market values of the assets (where applicable); results from technical and feasibility studies and reports; and the possibility of future project options available. Based on this, the board have concluded that no impairment provision is required.

The Group determines whether there is any impairment of intangible assets on an annual basis.

At the balance sheet date, the intangible assets are carried forward at their cost of £5,403,066.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities.

Business acquisitions have been accounted for in accordance with IFRS 3, 'Business Combinations'. Fair values are attributed to the Group's share of net assets. Where the cost of acquisition exceeds the fair values attributed to such assets, the difference is treated as purchased goodwill and is capitalised. In the case of subsequent acquisitions of minority interests, the difference between the consideration payable for the additional interest in the subsidiary and the minority interest's share of the assets and liabilities reflected in the consolidated statement of financial position at the date of acquisition of the minority interest has been treated as goodwill.

Intangible fixed assets - Australia exploration costs

Expenditure on the acquisition costs, exploration and evaluation of interests in licences, including related finance and administration costs, are capitalised.  Such costs are carried forward in the statement of financial position under intangible assets and amortised over the minimum period of the expected commercial production of gold in respect of each area of interest where:

a)   such costs are expected to be recouped through successful development and exploration of the area of interest or alternatively by its sale;

b)   exploration activities have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves and active operations in relation to the areas are continuing.

An annual impairment review is carried out by the Directors to consider whether any exploration or development costs have suffered impairment in value where a site has been abandoned or confirmed as no longer technically feasible. Accumulated costs in respect of areas of interest that have been abandoned are written off to the profit and loss account in the year in which the area is abandoned.  Australia exploration costs are carried at cost less any provision for impairment.

Intangible fixed assets - Pakistan project costs

Expenditure on the Pakistan project to achieve final project approval prior to the start of mine operations including related finance and administration costs are capitalised.  Such costs are carried forward in the statement of financial position under intangible assets and amortised over the minimum period of the expected commercial production of coal in respect of each area of interest

An annual impairment review is carried out by the Directors to consider whether the project costs have suffered impairment in value where the commercial outlook for the project is assessed to have deteriorated.  Pakistan project costs are carried at cost less any provision for impairment.

Property, plant and equipment

Property, plant and equipment is stated at historical cost less accumulated depreciation. Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful life.

	Fixtures and fittings	-	15% on reducing balance
	Motor vehicles	-	20% on reducing balance
	Computer equipment	-	30% on reducing balance

Investments

Fixed asset investments are stated at cost. The investments are reviewed annually and any impairment is taken directly to the statement of profit or loss. Investments in subsidiaries are fully consolidated within the Group financial statements.

Financial instruments

Financial assets and liabilities are recognised on the statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

-		Cash and cash equivalents comprise cash held at bank and short term deposits
-		Trade payables are not interest bearing and are stated at their nominal value
-		Receivables denominated in foreign currency are retranslated at the balance sheet date
-		Equity instruments issued by the Company are recorded at the proceeds received except where those proceeds appear to be less than the fair value of the equity instruments issued, in which case the equity instruments are recorded at fair value. The difference between the proceeds received and the fair value is reflected in the share based payments reserve.

Taxation

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantially enacted by the statement of financial position date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the statement of financial position date.  Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result.

Profit and losses of overseas subsidiary undertakings are translated into sterling at average rates for the year. The statements of financial position of overseas subsidiary undertakings are translated at the rate ruling at the statement of financial position date. Differences arising from the translation of Group investments in overseas subsidiary undertakings are recognised as a separate component of equity.

Net exchange differences classified as equity are separately tracked and the cumulative amount disclosed as a translation reserve.

The principal place of business of the Group is the United Kingdom with sterling being the functional currency. Funds are advanced to Pakistan as required to finance the exploration costs which are payable locally.

Leasing commitments

All leases held are either short-term leases or are for low value assets. The rentals paid are charged to the statement of profit or loss on a straight line basis over the period of the lease.

Employee benefit costs

The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to the income statement in the period to which they relate.

Share-based payment transactions

Where equity settled share warrants are awarded to employees, the fair value of the warrants at the date of grant is charged to the statement of profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each statement of financial position date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of warrants that eventually vest. Market vesting conditions are factored into the fair value of all warrants granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of whether market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to achieve a market vesting condition.

Where terms and conditions of warrants are modified before they vest, the increase in the fair value of the warrants, measured immediately before and after the modification, is also charged to the statement of profit or loss over the remaining vesting period.

Where equity instruments are granted to persons other than employees, the statement of profit or loss is charged with the fair value of goods and services received.

Cash and cash equivalents

Cash and cash equivalents for the purpose of the cash flow statement comprise cash and bank balances.

New standards and interpretations applied

In preparing these financial statements the Company has reviewed all new standards and interpretations.

New Standards, Interpretations and Amendments effective from 1 January 2021

The following new and revised Standards and Interpretations have been adopted in these financial statements but their adoption has not had any significant impact on the amounts reported in these financial statements:

- IAS 37 Provisions, Contingent Liabilities and Contingent Assets (amended 2020)

- IFRS 9 Financial Instruments (amended August 2020)

- IFRS 7 Financial Instruments: Disclosures (amended 2020)

- IFRS 16 Leases (amended August 2020)

The other new and revised Standards and Interpretations are not considered to be relevant to the Company's financial reporting and operations and are not detailed in these financial statements.

New Standards, Interpretations and Amendments that are not yet effective and have not been adopted early

The following new and revised Standards and Interpretations are relevant to the Company but not yet effective for the year commencing 1 January 2022 and have not been applied in preparing these financial statements:

- IFRS 3 Business Combinations (amended 2021)

- IAS 1 Presentation of Financial (amended 2021)

- IAS 37 Provisions, contingent liabilities and contingent assets (amended 2021)

- Property, plant and equipment (amended 2021)

The Directors do not consider that the implementation of any of these new standards will have a material impact upon reported income or reported net assets.

3.   SEGMENTAL REPORTING

Based on risks and returns, the Directors consider that the primary business reporting format is by business segment which are currently 1) the principal activity of the Group is an energy project, based on the exploration and development of coal mining and building a mine-mouth power plant in Pakistan; and 2) an investment in Western Australia for the exploration and future extraction of gold.  The segments are not yet revenue generating and the primary financial reporting metrics are the value of intangible assets relating to the projects and total spend to date.

Group intangible non-current assets of £4,593,369 (2020: £4,629,855) are attributable to the project in Pakistan. The remaining Group intangible non-current assets of £809,697 (2020: £626,458) relate to an investment in Western Australia for the exploration and future extraction of gold.

To-date the Group has raised a total £22m and spent £17.9m on Thar Block VI and £0.8m on the Western Australia gold project.

 

END

 

 

FR BKNBQDBKBFAB