Results for the Year Ended 31 December 2016

RNS Number : 7371E

Oracle Coalfields PLC

10 May 2017

 

10 May 2017

 

Oracle Coalfields PLC

("Oracle", the "Company" or the "Group")

Results for the Year Ended 31 December 2016

Oracle Coalfields PLC (AIM:ORCP), the UK energy developer of a combined lignite mineral resource and mine mouth power plant located in the Thar desert in the south-east of Sindh Province, Pakistan, today announces its audited results for  the  year ended 31 December 2016.

 2016/17 Highlights:

·     Determination by the Thar Coal and Energy Board of Oracle's coal price, based on its feasibility study, at US$60.23/tonne;

·     Board changes, Adrian Loader and Roderick Stead leaving the board and Yves Mordacq joining;

·     Status in the China-Pakistan Economic Corridor raised from the "active" to the "Priority" list;

·     Progress in critical areas to bring the project to financial close, including water access, power evacuation with the National Grid and power purchase with the Central Power Purchasing Agency.

Planned Work Programme for 2017

In 2017 Oracle will concentrate on formalising agreements and contracts to bring the project to full implementation along with working to secure all project financing arrangements, including its future project equity funding share.

Chairman's Statement

I am pleased to present the results for Oracle Coalfields PLC (the "Company" or "Oracle") for the year ended 31 December 2016.

It has been a year of detailed work with potential Chinese partners, support from the governments of China and Pakistan, manifested through our elevation from the "Active" list to the "Priority" list of the China-Pakistan Economic Corridor, has been affirmed.  We have been in discussions with several Chinese groups and shareholders will be kept informed with progress in this respect.

Meanwhile, we have made good progress in all the critical areas needed to bring the Thar Block VI project to financial close.  We have updated our registration to the Private Power Investment Board to reflect the full size of our eventual power plant, 1,320MW.  Water supply has been confirmed by the Energy Department of the Government of Sindh, at 38 cusecs; a detailed water agreement should follow.  The National Grid (the National Transmission and Despatch Company) who are constructing power evacuation lines to link Thar electricity output to the national grid has confirmed that our power generated will be evacuated.  As the first step in the resettlement of people who will be displaced by the project, we have carried out a detailed census of the affected population as part of the resettlement process. The power plant Environmental and Social Impact Assessment ("ESIA") has been submitted to the Sindh Environmental Protection Agency; the mine ESIA, originally completed in 2013, has also been updated.  The coal price regulator, (the Thar Coal and Energy Board) has made an initial price determination, at US$60.23MT. Also, it has been encouraging that the part Government owned neighbouring Block II have reached financial close during 2016 and are making good progress in opening up their mine and in the construction of a 660MW power plant; their work to date demonstrates the validity of the Thar feasibility studies.

The world environment for mining and for coal has improved, with increases now in internationally traded metallurgical and thermal coal prices. Our project remains a purely Pakistan play, the only integrated mine and power project in Pakistan on the London Stock Exchange.  Whilst Pakistan still presents investors with challenges, there is a growing atmosphere of stability in the country.  Its economic growth is drawing widespread plaudits, notably from the IMF and the World Bank.  There has been an improving degree of political stability.  There are still security incidents, but a greater sense of unity is now apparent between the people, army and politicians in addressing security matters.  Oracle's team regularly visits Pakistan, and we feel the commentary of Christine Lagarde, Managing Director of the IMF, hits the mark; "I congratulate Pakistan on having successfully completed its IMF-supported economic reform program. Improved macroeconomic stability as well as strengthened external buffers and public finances will provide a solid foundation for the economy".

Our project plays a vital role in contributing to Pakistan's economic improvement.  The acute shortage of electricity in Pakistan continues, and, in our view, the development of Thar will go a substantial way to address this shortage.  At present 40% of Pakistan's electricity is generated from imported fuel and the use of indigenous fuel will substantially reduce this onerous call on foreign exchange.  More than this, economic growth has been stifled by the lack of power in recent years; removing this constraint should lead to growth rates of 6% or more in the near term, as forecast by the World Bank.

Oracle is looking into diversifying its portfolio of activity and we are seeking wider opportunities in Pakistan and internationally.

We are most grateful to the Pakistani Authorities at both Federal and Provincial levels for the constructive way in which they have supported and continue to support our project. 

I would like to thank my Board and management colleagues for their hard work in 2016, which resulted in the considerable progress described above.  There have been some changes to the Board during 2016.  May I first pay tribute to the two members of the Board who have left during the year, Adrian Loader and Roderick Stead.  Both have contributed highly valued expertise to the Company. I thank them and wish them both well for the future.  I welcome Yves Mordacq to our Board. He brings extensive experience in international capital markets and asset management, with particular emphasis in the natural resources sector.

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

Anthony Scutt

Chairman

Chief Executive's Statement

The economic growth and overall development of Pakistan continues to be restricted because of electricity supply shortfalls throughout the country. In its State of Industry Report 2015 The National Electricity Pricing and Regulatory Authority ("NEPRA") projects that in order to meet peak demand that some 8,000MW needs to be added today to the existing system and that there is 17,200MW of new capacity anticipated in the coming years. To accommodate this increase a significant improvement in the grid distribution network will also have to be constructed. The Government is committed to eradicating the shortfall and to supporting the development of indigenous fuel supplies for electricity generation.

In December 2014, the Government of Sindh enacted the Thar Coal Tariff Determination Rules which set out how the Thar Coal and Energy Board ("TCEB") will review and agree a coal tariff for developers in Thar incorporating the fiscal incentives for project developments. The Company submitted its Tariff application in July 2015 and the Tariff was determined by TCEB in June 2016 at $60.23 per tonne. Further Tariff Petitions are expected to be submitted prior to financial close and the Government has adopted a cost plus mechanism for tariff determination with a review process over time as the projects proceed.

The Block VI integrated project has been elevated to the list of Priority Projects of the China Pakistan Economic Corridor ("CPEC"). CPEC is a bilateral arrangement between China and Pakistan which has been set up to fast track Chinese financing of energy and infrastructure projects across Pakistan. The inclusion of our project in the CPEC should assist in progressing the various approvals required both at Federal and Provincial level in Pakistan and also with the Chinese financial institutions.  Progress with potential Chinese partners is taking longer than we might have hoped, but detailed discussions are at present underway with several State-owned Enterprises, as financing partners and as EPC contractors.

Thar Electricity (Private) Limited ("TEPL") has registered the Thar Block VI Power Plant with the Private Power and Infrastructure Board ("PPIB") for a plant up to 1,320MW capacity and has made the application to construct initially a 660MW plant at the site.

The PPIB is the division of the Ministry of Water and Power, Government of Pakistan which regulates Independent Power Producers ("IPP") and approves applications to build, own and operate private power plants in Pakistan. The process entails agreeing an electricity tariff with NEPRA and a Power Purchase Agreement ("PPA") with the Central Power Purchasing Authority ("CPPA"), a division of the National Transmission and Despatch Company ("NTDC") which owns and operates the high voltage transmission lines throughout the country. In addition to agreeing a PPA, an Implementation Agreement ("IA")," which guarantees payments under the PPA, is to be entered into with the Government of Pakistan.

The Central Power Purchasing Agency issued a "Letter of No Objection" for the 660MW power plant in November 2015 and NTDC also confirmed that power from the project will be accommodated within the planned high voltage transmission line.

The next stage of the process is for PPIB to issue a Letter of Intent ("LOI") for the project which then requires the PPA application to be made along with the electricity tariff application and a generation licence application.  Work is continuing to complete the Environmental Impact Assessment ("EIA") for the Power Plant as part of the application process.

In addition, on site preparation work is underway for development in particular to establish land ownership so that land acquisition and resettlement can be undertaken in accordance with the Resettlement Policy Framework published by the Sindh Coal Authority Energy Department in May 2015 which has been written to conform to international best practice.  In March 2017, we conducted a census of the six villages in Block VI to establish population and livestock numbers. In addition we are working to implement a Corporate Social Responsibility Programme ("CSR") to provide early benefits to the local community in terms of water, basic healthcare, education and veterinary support.

Our work in 2017 will concentrate on formalising agreements and contracts to bring the project to full implementation, in line with the fiscal incentives including the continuing project Internal Rate of Return, along with securing all the financing arrangements.

I am most grateful to both the Provincial Government of Sindh and the Federal Government of Pakistan for their continuing support for developments in the Thar Coalfield and our Block VI project in particular which will be a major contributor to alleviating the electricity shortfall in the country. The Company again extends its thanks to the shareholders for their continued patience and support.

Shahrukh Khan

Chief Executive Officer

Consolidated income Statement

for the year ended 31 December 2016

	2016 £	2015 £
CONTINUING OPERATIONS
Revenue	-	-
Other operating income	-	768
Administrative expenses	(919,190)	(980,819)
OPERATING LOSS	(919,190)	(980,051)
Finance income	5,726	7,275
LOSS BEFORE INCOME TAX	(913,464)	(972,776)
Income tax	-	-
LOSS FOR THE YEAR	(913,464)	(972,776)
Loss attributable to:
Owners of the parent	(913,258)	(972,190)
Non-controlling interests	(206)	(586)
	(913,464)	(972,776)
Earnings per share expressed in pence per share:
Basic	(0.10)	(0.12)
Diluted	(0.10)	(0.12)

 Consolidated Statement of Comprehensive Income

for the year ended 31 December 2015

	2016 £	2015 £
LOSS FOR THE YEAR	(913,464)	(972,776)
OTHER COMPREHENSIVE INCOME
Exchange difference on consolidation	278,662	11,572
Income tax relating to components of other comprehensive income	-	-
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX	278,662	11,572
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	(634,802)	(961,204)
Total comprehensive income attributable to:
Owners of the parent	(624,574)	(960,618)
Non-controlling interests	(10,228)	(586)
	(634,802)	(961,204)

 Consolidated Statement of Financial Position

31 December 2016

	2016 £	2015 £
ASSETS
NON-CURRENT ASSETS
Intangible assets	4,779,496	4,170,073
Property, plant and equipment	23,790	23,532
Loans and other financial assets	405,446	338,676
	5,208,732	4,532,281
CURRENT ASSETS
Trade and other receivables	98,851	87,604
Cash and cash equivalents	505,904	1,860,662
	604,755	1,948,266
TOTAL ASSETS	5,813,487	6,480,547
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital	911,783	911,783
Share premium	10,900,723	10,900,723
Translation reserve	143,326	(132,534)
Share scheme reserve	109,588	149,782
Retained earnings	(6,417,391)	(5,534,399)
	5,648,029	6,295,355
Non-controlling interests	17,667	5,143
TOTAL EQUITY	5,665,696	6,300,498
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	147,791	180,049
TOTAL LIABILITIES	147,791	180,049
TOTAL EQUITY AND LIABILITIES	5,813,487	6,480,547

 Consolidated Statement of Changes in Equity

for the year ended 31 December 2016

	Called up share capital £	Retained earnings £	Share premium £	Translation Reserve £
Balance at 1 January 2015	389,009	(4,562,209)	8,346,733	(144,106)
Issue of share capital	522,774	-	2,640,702	-
Loss for the year	-	(972,190)	-	-
Equity-settled share-based payment transactions	-	-	(86,712)	-
Other comprehensive income	-	-	-	11,572
Balance at 1 January 2016	911,783	(5,534,399)	10,900,723	(132,534)
Loss for the year	-	(913,258)	-	-
Other comprehensive income	-	-	-	288,684
Increased investment in subsidiary	-	(9,928)	-	(12,824)
Share options expired	-	40,194	-	-
Balance at 31 December 2016	911,783	(6,417,391)	10,900,723	143,326
	Share Scheme Reserve £	Total £	Non-controlling interests £	Total Equity £
Balance at 1 January 2015	63,070	4,092,497	5,729	4,098,226
Issue of share capital	-	3,163,476	-	3,163,476
Loss for the year	-	(972,190)	(586)	(972,776)
Equity-settled share-based payment transactions	86,712	-	-	-
Other comprehensive income	-	11,572	-	11,572
Balance at 1 January 2016	149,782	6,295,355	5,143	6,300,498
Loss for the year	-	(913,258)	(206)	(913,464)
Other comprehensive income		288,684	(10,022)	278,662
Increased investment in subsidiary		(22,752)	22,752	-
Share options expired	(40,194)	-	-	-
Balance at 31 December 2016	109,588	5,648,029	17,667	5,665,696

 Consolidated Statement of Cash Flows

for the year ended 31 December 2016

	2016 £	2015 £
Cash flows from operating activities
Cash generated from operations	(1,028,337)	(958,952)
Net cash from operating activities	(1,028,337)	(958,952)
Cash flows from investing activities
Purchase of intangible fixed assets	(334,044)	(351,000)
Purchase of tangible fixed assets	(1,663)	(22,975)
Purchase of financial assets	-	(332,116)
Interest received	5,726	7,275
Net cash from investing activities	(329,981)	(698,816)
Cash flows from financing activities
Proceeds of share issue	-	3,369,500
Cost of share issue	-	(234,553)
Net cash from financing activities	-	3,134,947
Increase/((Decrease) in cash and cash equivalents	(1,358,318)	1,477,179
Cash and cash equivalents at beginning of year	1,860,662	383,063
Effect of exchange rate changes	3,560	420
Cash and cash equivalents at end of year	505,904	1,860,662

The financial information set out above does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.

The consolidated statement of financial position at 31 December 2016, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Company's statutory financial statements upon which the auditor's opinion is unqualified, includes an emphasis of matter paragraph, and does not include any statement under Section 498 (2) or (3) of the Companies Act 2006. The emphasis of matter concerns the raising of finance for the opening up of the mine and construction of the power plant. 

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), as adopted by the European Union (EU), this announcement does not in itself contain sufficient information to comply with IFRSs. 

The statutory accounts for the year ended 31 December 2016 will be delivered to the Registrar of Companies following the Annual General Meeting.  The statutory accounts, Notice of Annual General Meeting and Proxy Forms will be posted to shareholders shortly and will be available for download on the Company's website at www.oraclecoalfields.com.

For further information:

Oracle Coalfields PLC Shahrukh Khan	[phone]
Brandon Hill Capital Limited Oliver Stansfield	[phone]
Peterhouse Corporate Finance Charles Goodfellow	[phone]
Grant Thornton UK LLP (Nominated Adviser) Salmaan Khawaja, Richard Tonthat, Daniel Bush	[phone]
Blytheweigh                                                   Tim Blythe, Camilla Horsfall, Megan Ray	[phone]
Fortbridge                                                 Matt Beale, Bill Kemmery	[phone]

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

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