Oracle Power : Financial Report 2021

REGISTERED NUMBER: 05867160 (England and Wales)

GROUP STRATEGIC REPORT, REPORT OF THE DIRECTORS AND

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

FOR

ORACLE POWER PLC GROUP OF COMPANIES

ORACLE POWER PLC GROUP OF COMPANIES (REGISTERED NUMBER: 05867160)

CONTENTS OF THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2021

		Page
Company Information			1
Chairman's Statement			2
Chief Executive's Report	3	to	4
Group Strategic Report	5		to	13
Report of the Directors	1	4 to	16
Remuneration Report	17		to	18
Corporate Governance Report	19		to	21
Statement of Director Responsibilities			22
Report of the Independent Auditors	23		to	27
Consolidated Statement of Profit or Loss			28
Consolidated Statement of Profit or Loss and Other
Comprehensive Income			29
Consolidated Statement of Financial Position			30
Company Statement of Financial Position			31
Consolidated Statement of Changes in Equity			32
Company Statement of Changes in Equity			33
Consolidated Statement of Cash Flows			34
Company Statement of Cash Flows			35
Notes to the Statements of Cash Flows	36	to	37
Notes to the Consolidated Financial Statements	38		to	62

ORACLE POWER PLC GROUP OF COMPANIES

COMPANY INFORMATION

FOR THE YEAR ENDED 31 DECEMBER 2021

Oracle Power PLC is registered as a public company under English Law. Its shares are quoted on the AIM market of the London Stock Exchange. Oracle Power PLC is incorporated and domiciled in England and Wales and its registered number is 05867160.

DIRECTORS:	Mr M W Steed - Chairman
	Ms N Memon - CEO
	Mr A Migge
	Mr D Hutchins
SECRETARY:	Mr N Lee
REGISTERED OFFICE:	Tennyson House
	Cambridge Business Park
	Cambridge CB4 0WZ
REGISTERED NUMBER:	05867160 (England and Wales)
AUDITORS:	Price Bailey LLP	A. F. Ferguson & Co
	Tennyson House	Chartered Accountants
	Cambridge Business Park	State Life Building 1-C
	Cambridge CB4 0WZ	I. I. Chundrigar Road
		Karachi, Pakistan
	Pitcher Partners
	Level 11/12-14 The Esplanade
	Perth WA 6000, Australia
NOMINATED ADVISER	Strand Hanson Limited
and JOINT BROKER:	26 Mount Row
	London W1K 3SQ
REGISTRAR:	Neville Registrars Limited
	18 Laurel Lane, Halesowen
	West Midlands B63 3DA
SOLICITORS:	Charles Russell Speechlys LLP	Haider Mota BNR
	5 Fleet Place,	D-79, Block No. 5,
	London EC4M 7RD	Karachi 75600, Pakistan
BANKERS:	Royal Bank of Scotland plc	Habib Bank AG Zurich
	1st Floor, Conqueror House	Moorgate Branch,
	Vision Park, Histon	Habib House,
	Cambridge CB24 9NL	42 Moorgate,
	Habib Metropolitan Bank	London EC2R 6JJ
	Habib Bank Plaza,
	I.I.Chundrigar Road,
	Karachi-75650, Pakistan
PUBLIC RELATIONS:	St Brides Partners Ltd
	51 Eastcheap
	London EC3M 1JP

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ORACLE POWER PLC GROUP OF COMPANIES (REGISTERED NUMBER: 05867160)

CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2021

I am pleased to present the financial statements for Oracle Power PLC ("Oracle" or the "Company") 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 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-exclusiveco-operation agreement with PowerChina and, in March 2022, we formed a new 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

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ORACLE POWER PLC GROUP OF COMPANIES (REGISTERED NUMBER: 05867160)

CHIEF EXECUTIVE'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2021

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-PakistanEconomic 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.

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