REG - Oracle Power PLC - Audited Results for the year ended 31 Dec 2021
24/06/2022 07:00
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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/
(http://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 (http://www.oraclepower.co.uk/) or
contact:
Oracle Power PLC
Naheed Memon -
CEO
+44 (0) 203 580 4314
Strand Hanson Limited (Nominated Adviser & Broker)
Rory Murphy, Rob
Patrick
+44 (0) 20 7409 3494
St Brides Partners Limited (Financial PR)
Susie Geliher, Catherine Leftley
+44 (0) 20 7236 1177
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 Share Translation Share Total Non-controlling Total
earnings premium reserve Scheme interests equity
reserve
£ £ £ £ £ £ £ £
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 Share Share Total
earnings premium Scheme equity
reserve
£ £ £ £ £
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.
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