REG - Oracle Power PLC - Audited Results for the year ended 31 Dec 2022
29/06/2023 07:00
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RNS Number : 3052E Oracle Power PLC 29 June 2023
29 June 2023
Oracle Power PLC
("Oracle", the "Company" or the "Group")
Final Results for the year ended 31 December 2022
Posting of Annual Report
Notice of AGM
Oracle Power PLC (AIM:ORCP) is pleased to announce its audited results for the
12 months ended 31 December 2022. The Company's Annual Report for the year
ended 31 December 2022, together with formal Notice of the Company's 2023
Annual General Meeting ("AGM"), will be made available on the Company's
website at www.oraclepower.co.uk/investor-relations/aim-rule-26/
(http://www.oraclepower.co.uk/investor-relations/aim-rule-26/) and are being
posted to shareholders today.
The AGM will be held at the offices of Charles Russell Speechlys LLP, 5 Fleet
Place, London EC4M 7RD on Wednesday, 26 July 2023 at 11:00 a.m.
For further information:
Oracle Power PLC +44 (0) 203 580 4314
Naheed Memon - CEO
Strand Hanson Limited (Nominated Adviser & Joint Broker) +44 (0) 207 409 3494
Rory Murphy / Matthew Chandler / Rob Patrick
Global Investment Strategy UK Limited (Joint Broker)
+44 (0) 207 048 9432
Samantha Esqulant
Buchanan (Financial PR) +44 (0) 207 466 5000
Bobby Morse / Oonagh Reidy / Abigail Gilchrist
CHAIRMAN'S STATEMENT
I am pleased to present the financial statements for Oracle Power PLC
("Oracle" or the "Company") for the year ended 31 December 2022.
In December 2022, Andreas Migge, one of our non-executive directors left the
Company. It was then with sadness that we learnt that he had died in February
2023. We would like to offer our condolences to his friends and family.
The political tensions between the United States and China slowed down some
progress in the development of the mine and power project at Block VI in the
Thar desert. However, during the course of the year the Company continued to
advance its initiatives for the development of Block VI. The Government of
Pakistan established demand for 1,320 MW of Thar coal-based power in 2027,
allowing for potential development of the project. Subsequently, post period
we signed an agreement for potential offtake for 1,320 MW of coal generated
power as well as another agreement with PowerChina to develop, in parallel, a
1 GW solar farm at Thar.
During the year, we focused most of our attention on our Green Hydrogen ("GH")
project, which comprises the planned construction of a 400MW plant producing
55,000 tonnes of green hydrogen per annum backed by 1,200MW of hybrid
solar/wind, green hydrogen/power plants.
This project is being developed through Oracle Energy Limited. This company is
owned 70% by His Highness Sheikh Ahmed Dalmook Al Maktoum through his wholly
owned company Kaheel Energy FZE, and 30% by Oracle Power Plc. Oracle will be
primarily responsible for putting the project together and Kaheel Energy will
use its position and influence to facilitate market access and financing.
To that end, we have acquired a 7,000 acres site in the Thatta district in
Southeast Pakistan. This lease for this land has been granted to us by the
Government of Sindh and is for an initial period of 30 years. This lease is
now fully paid for and registered to Oracle Energy Limited.
We have been issued with a Letter of Intent ("LOI") from the Directorate of
Alternative Energy of the Government of Sindh (the "Directorate of Alternative
Energy"), relating to the establishment of a 1,200MW hybrid solar/wind, green
hydrogen/power project. In order to obtain formal approval of the LOI, we
needed to provide a $600,000 performance guarantee bond which has now been put
in place.
In addition to the above, we have an LOI from TUV SUD for the certification of
the hydrogen output. Thyssenkrupp Uhde is undertaking the various feasibility
studies, and post period land and renewable power studies have also been
commenced.
In terms of our funding position, we raised £1,200,000 before expenses
through two equity placings to finance the development of the green hydrogen
project.
The development of the green hydrogen project has advanced rapidly and it
should not be long before the project acheives bankability and Oracle can
benefit from potential transactions with one or more energy or fuel companies.
With regard to Western Australia, we decided not to carry out any more work on
the Jundee East project as we did not manage to find viable gold deposits.
Post year end, we signed a "farm-in" agreement for the Northern Zone with
Riversgold Ltd, the details of which can be found in our RNS dated 9 May
2023. We will retain a minority interest and be carried for the next phase
of its development.
Operational highlights of 2022 are described in the Chief Executive's Report.
The Pakistan Government remains supportive of both the development of the Thar
coal project and the GH project in Thatta. The broad parameters of security
remain as last year: there have been no major incidents and, overall, order
has been maintained.
We are most grateful to the Pakistani Authorities, to the Chinese Authorities
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 make progress on our projects.
Mark Steed
Chairman
CHIEF EXECUTIVE'S REPORT
I am pleased to present a report on the Company's progress for the year ended
31 December 2022.
This year has been one of very notable progress for the Company. During the
year, we focused on the development of the Company's significant GH project in
Pakistan and also continued to explore our Western Australia assets and
develop our Thar asset. I am happy to say that we have made significant
progress, and I provide an overview below.
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 2022, the Government of Pakistan published its annual Indicative
Generation Capacity Expansion Plan (the "IGCEP"), a demand-supply policy
guidance chart for Pakistan and the demand for 1,320 MW of local coal fired
power was stated as required in 2027. This inclusion which confirms demand for
1,320 MW coal-based power, allows for potential development of the project,
subject to financing and off-take. In 2022 Q4, and subsequent to the
publication of the IGCEP, we initiated dialogue with off takers other than the
Government of Pakistan. We signed an MOU post period, for an off-take with the
largest private power utility, along with the Government of Sindh as a
facilitator and potential investor, preparing a pathway for the development of
this important project.
Furthermore, following significant progress made in 2021 with respect to
CTG/L, the Company signed an MOU in January 2022, with Sui Southern Gas
Company Limited ("SSGC"), the 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. I can also confirm that generally, Oracle continued to receive
encouragement and support from the Government of Pakistan for mobilisation of
CTG/L development, given Pakistan's critical gas crisis.
In Western Australia, Oracle continued to conduct active exploration on both
the tenements. We began an extensive drilling programme at Jundee East ("JE")
in February 2022 which concluded in March 2022, covering 3830m in 54 holes.
Subsequently complete geochemical analysis for downhole data was done to
confirm gold mineralisation which was then followed by geochemical analysis of
surface data for lithium and rare earth elements. The results obtained were
not favourable and it was decided post period end not to undertake further
drilling at JE.
At the Company's Northern Zone ("NZ") project, 25 km from Kalgoorlie, the
results from the maiden drill programme targeting felsic intrusives porphyry
bodies which had concluded in September 2021, were received in January 2022.
The results established a low grade but potentially large mineralisation
across the tenement. The Company carried out further metallurgical tests to
confirm gold recovery rates. The results from these tests which were received
in June 2022, confirmed excellent gold recovery rate of up to 94.7%. The
Company proceeded to prepare a budget and plan for further drilling, opting
for a diamond drilling programme to establish a JORC resource at NZ. In
parallel the Company also started dialogue with potential JV partners. A
"farm-in" agreement for NZ with an ASX listed company was entered into post
period and work on NZ at minimum cost for the Company is expected to commence
post period.
In 2022, the Company accelerated the development of its GH project in the wind
corridor in Thatta in Pakistan. The project was launched in Q4 2021, and the
Company has achieved major developmental milestones in 2022, for the first GH
project in Pakistan and one of the largest in the region. The Company set up a
new company, Oracle Energy Limited, for the development of the GH project in
Pakistan in November 2021. In March 2022, the Company signed a JV agreement
between Oracle and Kaheel Energy, a company owned by HH Sheikh Ahmed Dalmook
Al Maktoum. The Company owns 30 percent of Oracle Energy with the balance
owned by Kaheel Energy. The Company has retained management and the project
has made good progress. In May 2022, a pre-feasibility study was completed by
Power China International for 400 MW of GH production and 1.2 GW of hybrid
power generation. Oracle Energy was issued an LOI from the Government of Sindh
for the production of 1.2 GW of hybrid renewable power.
Subsequently, a lease for 7,000 acres (28.3 sq km) of land in the Gharo-Keti
Wind Corridor was awarded to Oracle Energy for the project. In November 2022,
Oracle Energy then commissioned Thyssenkrupp to undertake the feasibility
study for green hydrogen and green ammonia, endorsing faith in the project by
introducing highly reputable stakeholders. Results from this study are
expected during the course of 2023. In parallel, Oracle Energy forged a
relationship with a highly credible certification company by signing an LOI
with TUV SUD for green hydrogen and green ammonia certification, across the
entire production value chain. Post period end the project has continued to
move quickly. Land studies were commenced, and non-binding arrangements have
been initiated with potential off takers and investors.
In summary, the Company has strengthened its portfolio and undertaken
significant development on all its projects. We have achieved exceptional
milestones especially for the GH project and concluded a joint development
agreement for one of our gold assets. We have also paved a way forward for
potential development of our Thar asset.
I remain grateful to all the relevant authorities in Pakistan and Western
Australia for supporting our initiatives. I am also thankful to the
authorities in China for continuing to support projects in CPEC. I wish to
also profoundly thank the Company's team in the UK, Pakistan and Australia,
for their work and dedication. Above all I thank our shareholders for their
continued confidence, patience and support, enabling us to grow our company.
The Company remains committed to increasing shareholder value and to becoming
a company of recognizable size and repute.
Ms Naheed Memon,
Chief Executive Officer
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Note £ £
CONTINUING OPERATIONS
(1,311,012) (881,973)
Administrative expenses
(1,311,012) (881,973)
LOSS FROM OPERATIONS
6 14,592 94
Finance income
6,762 -
Amounts written off and p/l on disposals
(1,289,658) (881,879)
LOSS BEFORE TAX
(1,289,658) (881,879)
LOSS FOR THE YEAR
2022 2021
Pence Pence
Earnings per share attributable to the ordinary equity holders of the parent
PROFIT OR LOSS
9 (0.04) (0.04)
Basic
9 (0.04) (0.04)
Diluted
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31
DECEMBER 2022
2022 2021
£ £
(1,289,658) (881,879)
Loss for the year
ITEMS THAT WILL OR MAY BE RECLASSIFIED TO PROFIT OR LOSS:
(178,459) (130,361)
Exchange gains arising on translation on foreign operations
(178,459) (130,361)
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF TAX
(130,361)
(178,459)
(1,468,117) (1,012,240)
TOTAL COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
2022 2021
Note £ £
Assets
NON‑CURRENT ASSETS
10 3,885 5,856
Property, plant and equipment
11 5,023,296 5,403,066
Intangible assets
13 668,782 -
Investments in equity‑accounted associates
14 580,079 369,390
Loans and other financial assets
6,276,042 5,778,312
CURRENT ASSETS
15 45,069 50,108
Trade and other receivables
25 150,905 872,000
Cash and cash equivalents
195,974 922,108
TOTAL ASSETS 6,472,016 6,700,420
Liabilities
CURRENT LIABILITIES
18 203,034 170,321
Trade and other payables
203,034 170,321
TOTAL LIABILITIES 203,034 170,321
Net assets 6,268,982 6,530,099
ISSUED CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE PARENT
17 3,078,297 2,650,325
Share capital
16 18,632,040 17,853,012
Share premium reserve
17 (995,125) (816,666)
Foreign exchange reserve
17 58,179 66,733
Share scheme reserve
17 (14,504,409) (13,223,305)
Retained earnings
TOTAL EQUITY
6,268,982 6,530,099
COMPANY STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2022
2022 2021
Note £ £
Assets
NON‑CURRENT ASSETS
10 274 479
Property, plant and equipment
11 3,665,622 3,978,851
Intangible assets
13 668,782 -
Investments in equity‑accounted associates
Investments 13 2,898,531 3,703,047
14 2,605,218 1,985,987
Loans and other financial assets
9,668,364
9,838,427
CURRENT ASSETS
15 40,731 230,070
Trade and other receivables
25 137,291 850,442
Cash and cash equivalents
178,022 1,080,512
10,016,449 10,748,876
TOTAL ASSETS
Liabilities
NON‑CURRENT LIABILITIES
CURRENT LIABILITIES
18 175,961 909,763
Trade and other liabilities
175,961
909,763
175,961 909,763
TOTAL LIABILITIES
Net assets 9,840,488 9,839,113
ISSUED CAPITAL AND RESERVES ATTRIBUTABLE TO OWNERS OF THE PARENT
17 3,078,297 2,650,325
Share capital
18,632,040 17,853,012
Share premium reserve
58,179 66,733
Financial liabilities at FVTPL credit risk reserve
(11,928,028) (10,730,957)
Retained earnings
TOTAL EQUITY 9,840,488 9,839,113
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
2022
Share capital Share premium Share scheme reserve Foreign exchange reserve Retained earnings Total attributable to equity holders of parent Total equity
£ £ £ £ £ £ £
2,650,325 17,853,012 66,733 (816,666) (13,223,305) 6,530,099 6,530,099
At 1 January 2022
Comprehensive income for the year
- - - - (1,289,658) (1,289,658) (1,289,658)
Loss for the year
- - - (178,459) - (178,459) (178,459)
Other comprehensive income
- - - (178,459) (1,289,658) (1,468,117) (1,468,117)
Total comprehensive income for the year
Contributions by and distributions to owners
427,972 779,028 - - - 1,207,000 1,207,000
Issue of share capital
- - (8,554) - 8,554 - -
Transfer to/from retained earnings
427,972 779,028 (8,554) - 8,554 1,207,000 1,207,000
Total contributions by and distributions to owners
3,078,297 18,632,040 58,179 (995,125) (14,504,409) 6,268,982
6,268,982
At 31 December 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER
2022
Share capital Share premium Share scheme reserve Foreign exchange reserve Retained earnings Total attributable to equity holders of parent Total equity
£ £ £ £ £ £ £
2,146,862 16,908,975 180,229 (686,305) (12,454,922) 6,094,839 6,094,839
At 1 January 2021
Comprehensive income for the year
- - - - (881,879) (881,879) (881,879)
Loss for the year
- - - (130,361) - (130,361) (130,361)
Other comprehensive income
- - - (130,361) (881,879) (1,012,240) (1,012,240)
Total comprehensive income for the year
Contributions by and distributions to owners
503,463 944,037 - - - 1,447,500 1,447,500
Issue of share capital
- - (113,496) - 113,496 - -
Transfer to/from retained earnings
503,463 944,037 (113,496) - 113,496 1,447,500 1,447,500
Total contributions by and distributions to owners
2,650,325 (816,666)
At 31 December 2021 17,853,012 66,733
6,530,099
(13,223,305) 6,530,099
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2022
Share capital Share premium Share scheme reserve Retained earnings Total equity
£ £ £ £ £
2,650,325 17,853,012 66,733 (10,730,957) 9,839,113
At 1 January 2022
Comprehensive income for the year
- - - (1,205,625) (1,205,625)
Loss for the year
- - - (1,205,625) (1,205,625)
Total comprehensive income for the year
Contributions by and distributions to owners
427,972 779,028 - - 1,207,000
Issue of share capital
- - (8,554) 8,554 -
Share warrants exercised
427,972 779,028 (8,554) 8,554 1,207,000
Total contributions by and distributions to owners
3,078,297 18,632,040 58,179 (11,928,028)
9,840,488
At 31 December 2022
COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2021
Share capital Share premium Share scheme reserve Retained earnings Total equity
£ £ £ £ £
2,146,862 16,908,975 180,229 (10,049,674) 9,186,392
At 1 January 2021
Comprehensive income for the year
- - - (794,779) (794,779)
Loss for the year
- - - (794,779) (794,779)
Total comprehensive income for the year
Contributions by and distributions to owners
503,463 944,037 - - 1,447,500
Issue of share capital
- - (113,496) 113,496 -
Share warrants exercised
503,463 944,03 (113,496) 113,496 1,447,500
Total contributions by and distributions to owners
At 31 December 2021
2,650,325 17,853,012 66,733 (10,730,957) 9,839,113
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Note £ £
CASH FLOWS FROM OPERATING ACTIVITIES
(1,289,658) (881,879)
Loss for the year
ADJUSTMENTS FOR
10 205 1,942
Depreciation of property, plant and equipment
11 579,728 -
Impairment losses on intangible assets
25,785 -
Impairment loss recognised on loans to associates
6 (14,592) (94)
Finance income
(6,762) -
Gain on disposal of subsidiary undertaking
10,300 (7,206)
Net foreign exchange loss/(gain)
- 46
Income tax expense
(694,994) (887,191)
MOVEMENTS IN WORKING CAPITAL:
(38,025) (45,174)
Increase in trade and other receivables
25,305 (110,943)
Increase/(decrease) in trade and other payables
(1,043,308)
CASH GENERATED FROM OPERATIONS (707,714)
(707,714)
NET CASH USED IN OPERATING ACTIVITIES (1,043,308)
CASH FLOWS FROM INVESTING ACTIVITIES
11 (238,245) (190,599)
Purchase of Australia exploration fixed assets
11 (140,718) (94,317)
Purchase of Pakistan project fixed assets
13 (668,782) -
Payments for investments in associates
Issue of loans 6 (184,929) -
Interest received 6 14,592 94
NET CASH USED IN INVESTING ACTIVITIES (1,218,082) (284,822)
CASH FLOWS FROM FINANCING ACTIVITIES
16 1,207,000 647,500
Issue of ordinary shares
NET CASH FROM FINANCING ACTIVITIES
1,207,000 647,500
NET CASH DECREASE IN CASH AND CASH EQUIVALENTS
(718,796) (680,630)
872,000 1,554,424
Cash and cash equivalents at the beginning of year
(2,299) (1,794)
Exchange loss on cash and cash equivalents
25
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR
150,905 872,000
COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2022
2022 2021
Note £ £
CASH FLOWS FROM OPERATING ACTIVITIES
(1,205,625) (794,779)
Loss for the year
ADJUSTMENTS FOR
10 205 205
Depreciation of property, plant and equipment
11 313,229 -
Amortisation of intangible fixed assets
301,462 20,070
Impairment loss recognised on other receivables
(804,516) -
Forgiveness of other loan
6 (66,938) (17,058)
Finance income
804,516 -
Loss on sale of discontinued operations, net of tax
47,944 (7,242)
Net foreign exchange loss/(gain)
(609,723) (798,804)
MOVEMENTS IN WORKING CAPITAL:
(665) (6,173)
Increase in trade and other receivables
(733,801) (162,136)
Decrease in trade and other payables
78,228 (365,704)
Decrease in loans to subsidiaries
CASH GENERATED FROM OPERATIONS (1,265,961) (1,332,817)
(1,332,817)
NET CASH USED IN OPERATING ACTIVITIES (1,265,961)
CASH FLOWS FROM INVESTING ACTIVITIES
(668,782) -
Payments for investments in associates
14,592 94
Interest received
NET CASH (USED IN)/FROM INVESTING ACTIVITIES (654,190)
94
CASH FLOWS FROM FINANCING ACTIVITIES
1,207,000 647,500
Issue of ordinary shares
NET CASH FROM FINANCING ACTIVITIES 1,207,000
647,500
(713,151)
NET CASH DECREASE IN CASH AND CASH EQUIVALENTS (685,223)
850,442 1,535,665
Cash and cash equivalents at the beginning of year
25
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 137,291 850,442
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER
2022
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
2.1 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. Post year end in
February 2023 and June 2023 the Company raised £500,000 and £363,000
supporting that cash requirement. 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.
2.2 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.
2.3 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
11. 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 other than for the Jundee East Tenement in
Western Australia that has been determined to be uneconomic to develop
further.
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 £5,603,024 (2021: £5,403,066) less impairment of £579,728.
2.4 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.
2.5 Intangible assets
(i) 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 when specific
facts and circumstances indicate that an impairment test is required, such as:
(1) the period for which the entity has the right to explore in the specific
area has expired during the period or will expire in the near future, and is
not expected to be renewed.
(2) substantive expenditure on further exploration for and evaluation of
mineral resources in the specific area is neither budgeted nor planned.
(3) exploration for and evaluation of mineral resources in the specific area
have not led to the discovery of commercially viable quantities of mineral
resources and the entity has decided to discontinue such
activities in the specific area.
(4) sufficient data exist to indicate that, although a development in the
specific area is likely to proceed, the carrying amount of the exploration and
evaluation asset is unlikely to be recovered in full from successful
development or by sale.
In any such case, or similar cases, the entity shall perform an impairment
test in accordance with IAS 36. Any impairment loss is recognised as an
expense in accordance with IAS 36
Australia exploration costs are carried at cost less any provision for
impairment.
(ii) 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.
The Pakistan project costs are tested annually for impairment by comparing the
carrying amount to the recoverable amount Pakistan project costs are carried
at cost less any provision for impairment.
2.6 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
2.7 Investments
Investments in subsidiaries 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.
2.8 Investments in associates
An associate is an entity over which the Group has significant influence.
Significant influence is the power to participate in the financial and
operating policy decisions of the investee but is not control or joint control
over those policies.
The results and assets and liabilities of associates are incorporated in these
consolidated financial statements using the equity method of accounting,
except when the investment, or a portion thereof, is classified as held for
sale, in which case it is accounted for in accordance with IFRS 5. Under the
equity method, an investment in an associate or a joint venture is initially
recognised in the consolidated statement of financial position at cost and
adjusted thereafter to recognise the Group's share of the profit or loss and
other comprehensive income of the associate or joint venture. When the Group's
share of losses of an associate exceeds the Group's interest in that associate
or joint venture (which includes any long‑term interests that, in substance,
form part of the Group's net investment in the associate, the Group
discontinues recognising its share of further losses. Additional losses are
recognised only to the extent that the Group has incurred legal or
constructive obligations or made payments on behalf of the associate.
An investment in an associate is accounted for using the equity method from
the date on which the investee becomes an associate or a joint venture. On
acquisition of the investment in an associate , any excess of the cost of the
investment over the Group's share of the net fair value of the identifiable
assets and liabilities of the investee is recognised as goodwill, which is
included within the carrying amount of the investment. Any excess of the
Group's share of the net fair value of the identifiable assets and liabilities
over the cost of the investment, after reassessment, is recognised immediately
in profit or loss in the period in which the investment is acquired.
The requirements of IAS 36 are applied to determine whether it is necessary to
recognise any impairment loss with respect to the Group's investment in an
associate or joint venture. When necessary, the entire carrying amount of the
investment (including goodwill) is tested for impairment in accordance with
IAS 36 Impairment of Assets as a single asset by comparing its recoverable
amount (higher of value in use and fair value less costs of disposal) with its
carrying amount. Any impairment loss recognised forms part of the carrying
amount of the investment. Any reversal of that impairment loss is recognised
in accordance with IAS 36 to the extent that the recoverable amount of the
investment subsequently increases.
The Group discontinues the use of the equity method from the date when the
investment ceases to be an associate or joint venture, or when the investment
is classified as held for sale. When the Group retains an interest in the
former associate or joint venture and the retained interest is a financial
asset, the Group measures the retained interest at fair value at that date and
the fair value is regarded as its fair value on initial recognition in
accordance with IFRS 9. The difference between the carrying amount of the
associate or joint venture at the date the equity method was discontinued, and
the fair value of any retained interest and any proceeds from disposing of a
part interest in the associate or joint venture is included in the
determination of the gain or loss on disposal of the associate or joint
venture. In addition, the Group accounts for all amounts previously recognised
in other comprehensive income in relation to that associate or joint venture
on the same basis as would be required if that associate or joint venture had
directly disposed of the related assets or liabilities. Therefore, if a gain
or loss previously recognised in other comprehensive income by that associate
or joint venture would be reclassified to profit or loss on the disposal of
the related assets or liabilities, the Group reclassified the gain or loss
from equity to profit or loss (as a reclassification adjustment) when the
equity method is discontinued.
The Group continues to use the equity method when an investment in an
associate becomes an investment in a joint venture or an investment in a joint
venture becomes an associate. There is no remeasurement to fair value upon
such changes in ownership interests.
When the Group reduces its ownership interest in an associate or a joint
venture but the Group continues to use the equity method, the Group
reclassifies to profit or loss the proportion of the gain or loss that had
previously been recognised in the other comprehensive income relating to that
reduction in ownership interest if that gain or loss would be reclassified to
profit or loss on the disposal of the related assets or liabilities.
When a group entity transacts with an associate or a joint venture of the
Group, profits and losses resulting from the transactions with the associate
or joint ventures are recognised in the Group's consolidated financial
statements only to the extent of interests in the associate or joint venture
that are not related to the Group.
2.9 Leasing
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.
2.10 Foreign currency
In preparing the financial statements of each individual group entity,
transactions in currencies other than the entity's functional currency
(foreign currencies) are recognised at the rates of exchange prevailing at the
dates of the transactions. At the end of each reporting period, monetary items
denominated in foreign currencies are retranslated at the rates prevailing at
that date. Non‑monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing at the date when
the fair value was determined. Non‑monetary items that are measured in terms
of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the
period in which they arise except for exchange differences on foreign currency
borrowings relating to assets under construction for future productive use,
which are included in the cost of those assets when they are regarded as an
adjustment to interest costs on those foreign currency borrowings;
For the purposes of presenting these consolidated financial statements, the
assets and liabilities of the Group's foreign operations are translated into
pounds using exchange rates prevailing at the end of each reporting period.
Income and expense items are translated at the average exchange rates for the
period, unless exchange rates fluctuate significantly during that period, in
which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognised in other comprehensive
income and accumulated in equity (and attributed to non‑controlling
interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group's entire
interest in a foreign operation, a disposal involving loss of control over a
subsidiary that includes a foreign operation, or a partial disposal of an
interest in a joint arrangement or an associate that includes a foreign
operation of which the retained interest becomes a financial asset), all of
the exchange differences accumulated in equity in respect of that operation
attributable to the owners of the Company are reclassified to profit or loss.
In addition, in relation to a partial disposal of a subsidiary that includes a
foreign operation that does not result in the Group losing control over the
subsidiary, the proportionate share of accumulated exchange differences are
re‑attributed to non‑controlling interests and are not recognised in
profit or loss. For all other partial disposals (i.e. partial disposals of
associates or joint arrangements that do not result in the Group losing
significant influence or joint control), the proportionate share of the
accumulated exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments to identifiable assets acquired and
liabilities assumed through acquisition of a foreign operation are treated as
assets and liabilities of the foreign operation and translated at the rate of
exchange prevailing at the end of each reporting period. Exchange differences
arising are recognised in other comprehensive income.
2.11 Employee benefits
Retirement benefit costs and termination benefits
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.
2.12 Share‑based payments
Share‑based payment transactions of the Company
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.
2.13 Financial instruments
Financial assets and financial liabilities are recognised in the Group's
statement of financial position when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair
value, except for trade receivables that do not have a significant financing
component which are measured at transaction price. Transaction costs that are
directly attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted from the fair
value of the financial assets or financial liabilities, as appropriate, on
initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through
profit or loss are recognised immediately in profit or loss.
Financial Assets:
The Group classifies its financial assets other than investments in
subsidiaries and associates as financial assets at amortised cost, at fair
value through other comprehensive income (FVOCI) or at fair value through
profit or loss (FVTPL). The classification depends on the purpose for which
the financial assets were acquired. Management determines the classification
of its financial assets at initial recognition.
A financial asset is measured at amortised cost if it is held within a
business model whose objective is to collect contractual cash flows and its
contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
A financial asset is measured at FVOCI if it is held within a business model
whose objective is achieved by collecting contractual cash flows and selling
financial assets and its contractual terms give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.
A financial asset is measured at FVTPL if it is not measured at amortised cost
or at FVOCI.
All of the group financial assets are currently classified as at amortised
cost.
Financial assets at amortised cost are subsequently measured at amortised cost
using the effective interest method. The amortised cost id reduced by
impairment losses. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date. These are classified as
non-current assets.
Trade receivables, with standard payment terms of between 30 to 65 days, are
recognised and carried at the lower of their original invoiced and recoverable
amount.
A loss allowance is recognised on initial recognition of financial assets held
at amortised cost, based on expected credit losses, and is re-measured
annually with changes appearing in profit or loss. Where there has been a
significant increase in credit risk of the financial instrument since initial
recognition, the loss allowance is measured based on lifetime expected losses.
In all other cases, the loss allowance is measured based on 12-month expected
losses. For assets with a maturity of 12 months or less, including trade
receivables, the 12-month expected loss allowance is equal to the lifetime
expected loss allowance.
The Group's financial assets are disclosed in notes 14 and 15.
Financial Liabilities:
The Group classifies its financial liabilities as at amortised cost or at
FVTPL. A financial liability is measured at FVTPL if it is classified as held
for trading, it is a derivative or it is designated as such on initial
recognition, otherwise it is classified as at amortised cost.
All of the group financial liabilities are currently classified as at
amortised cost.
Financial liabilities at amortised cost are subsequently measured at amortised
cost using the effective interest method. They are classified as non-current
when the payment falls due greater than 12 months after the year end date.
2.14 Cash and cash equivalents
Cash and cash equivalents for the purpose of the cash flow statement comprise
cash and bank balances.
2.15 New Standards and Interpretations applied
There are no IFRSs or IFRIC interpretations that are effective for the first
time for the financial year beginning 1 January 2022 that would be expected to
have a material impact on the Group.
New and revised standards not yet effective
Certain new accounting standards and interpretations have been issued but have
not been applied by the Group in preparing these financial statements as they
are not as yet effective. These standards are not expected to have a material
impact on the Group in the current or future periods and on foreseeable future
transactions.
3. SEGMENT INFORMATION
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 which is an energy project, based on
the exploration and development of coal mining and building a mine‑mouth
power plant in Pakistan ("Pakistan Energy Project");
2) an investment in Western Australia for the exploration and future
extraction of gold ("Australia Gold Project"); and
3) a green hydrogen project in Pakistan ("Pakistan Green Hydrogen Project").
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. The Pakistan Green Hydrogen Project is carried out
through the Company's investment in associates which is not included in the
analysis below.
To‑date the Group has raised a total £23.2m and spent £18.0m on Thar Block
VI and £0.5m on the Western Australia gold project net of impairment of
£0.6m.
The following is an analysis of the Group's results by reportable segment in
the year under review:
2022 2021
£ £
Pakistan Energy Project (9,318) (5,277)
Australia Gold (630,945) (78,168)
Project
Total (640,263) (83,445)
Central administration costs (670,749) (798,528)
Finance income 14,592 94
Other gains and losses 6,762 -
Profit before (1,289,658) (881,879)
tax
The accounting policies of the reportable segments are the same as the Group's
accounting policies described in note 2. Segment profit represents the profit
earned by each segment without allocation of the share of profits of
associates and joint ventures, central administration costs including
directors' salaries, finance income, non‑operating gains and losses in
respect of financial instruments and finance costs, and income tax expense.
This is the measure reported to the Group's Chief Executive for the purpose of
resource allocation and assessment of segment performance.
Segment assets
2022 2021
£ £
Pakistan Energy 4,529,390 4,593,369
Project
Australia Gold 493,906 809,697
Project
Total segment 5,023,296 5,403,066
assets
Unallocated 3,885 5,856
assets
Consolidated total 5,027,181 5,408,922
assets
For the purposes of monitoring segment performance and allocating resources
between segments the
Group's Chief Executive monitors the tangible, intangible and financial assets
attributable to each
segment. All assets are allocated to reportable segments with the exception of
investments in associates, and other financial assets.
Other segment information
Depreciation & Amortisation Additions to non‑current*
assets*
2022 2021 2022 2021
£ £ £ £
Pakistan Energy 1,133 1,737 140,718 97,762
Project
Australia Gold - - 238,225 186,919
Project
1,133 1,737 378,943 284,681
*The amounts exclude additions to financial instruments.
In addition to the depreciation and amortisation reported above, impairment
losses of £579,727 (2021: £nil) were recognised in respect of non‑current
assets. These impairment losses were all attributable to the Australia Gold
Project.
NOTES SUPPORTING STATEMENT OF CASH FLOWS
25.
Group
2022 2021
£ £
32,795 34,378
Cash at bank available on demand
118,110 837,622
Short‑term deposits
150,905 872,000
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF FINANCIAL POSITION
150,905
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS 872,000
Company
2022 2021
£ £
19,181 12,820
Cash at bank available on demand
Short‑term deposits 118,110 837,622
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF FINANCIAL POSITION
137,291 850,442
CASH AND CASH EQUIVALENTS IN THE STATEMENT OF CASH FLOWS 850,442
137,291
26. RECONCILIATION OF CHANGES IN LIABILITIES ARISING FROM FINANCING ACTIVITIES
Group
Trade and other payables Borrowings Total
£ £ £
Balance at 1 January 2021 322,655 800,000 1,122,655
Cash (152,334) - (152,334)
flows
Non‑cash changes
Issue of share capital - (800,000) (800,000)
Balance at 31 December 2021 170,321 - 170,321
Cash 32,713 - 32,713
flows
Balance at 31 December 2022 203,034 - 203,034
Company
Trade and other payables Borrowings Amounts owed to group undertakings Total
£ £ £ £
Balance at 1 January 2021 267,183 800,000 804,716 1,871,899
Cash (162,036) - (100) (162,136)
flows
Non‑cash changes
Issue of share capital - (800,000) - (800,000)
Balance at 31 December 2021 105,147 - 804,616 909,763
Cash 70,814 - - 70,814
flows
Forgiveness of debt (804,616) (804,616)
Balance at 31 December 2022 175,961 - - 175,961
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