Oracle Power Regulatory News (ORCP)

18 June 2019



Oracle Power PLC

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

Preliminary Results for the Year Ended 31 December 2018 and Notice of Annual General Meeting

Oracle Power PLC (AIM:ORCP), the UK energy developer of a combined lignite mineral resource and mine mouth power plant located in the Thar desert in the south-east of Sindh Province, Pakistan, today announces its audited results for the year ended 31 December 2018.

2018/19 Highlights:

· A new Memorandum of Understanding signed with two major Chinese power companies, to develop and operate the mine and power plant and to provide financing;

· Equity placings, totalling £1,000,000 in 2018 and £500,000 in March 2019. Short-term working capital facility of £250,000 announced in May 2019.

· Board changes; Mark Steed took over from Anthony Scutt as Chairman; Anthony Scutt left the board in June 2018; Naheed Memon joined the board and was appointed Chief Executive Officer in January 2019; Shahrukh Khan remains an Executive Director; and

· Continued support via the China-Pakistan Economic Corridor initiative of the Company's project, which is on the "Priority" list.

Planned Work Programme for 2019

In 2019, the Company will concentrate on formalising detailed agreements with its Chinese partners including securing of the financing for their share of the equity and all project debt. Some pre-development work will be undertaken to finalise detailed technical work programmes. Oracle will also work with relevant Pakistani Government bodies with regards to permissions, licences and other approvals that need to be obtained.

Chairman's Statement

I am pleased to present the results for Oracle Power PLC (the "Company" or "Oracle") for the year ended 31 December 2018.

Over the year Oracle has continued progressing its planned integrated lignite coal mine and mine mouth power plant located in Block VI of the Thar desert in the south-east of the Sindh Province of Pakistan (the "Project").

There has been a change in the partnership composition in the Memorandum of Understanding originally signed with Sichuan Provincial Investment Group Co. Limited ("SCIG") and with PowerChina International Group Limited ("PowerChina"). Beijing Jingneng Power Company Limited ("BJPC") has taken the position of SCIG. I take this opportunity to welcome BJPC, who bring significant expertise to the Project. PowerChina, through its subsidiary SEPCO, has been a partner to the Project since 2014 and we value their continued commitment.

The involvement of BJPC and PowerChina in the Project is under the general auspices of the China Pakistan Economic Corridor ("CPEC"). The Project was raised to a "Priority Listing" within the CPEC agenda in January 2017, and this underlines the importance of this project to China as well as to Pakistan.

Operational highlights of 2018 are described in the Chief Executive's Report. Our work in 2019 is concentrated on formalising detailed agreements with our Chinese partners, including the formalisation of financing arrangements for their share of the requisite equity investment, as well as all Project debt. We will also ensure that all Government, permissions, licences and other approvals are in place, further details of which are described in the Chief Executive's Report.

The Company has required, and will require, more funding ahead of reaching financial close. There have been equity placings, before costs, in March 2018 of £550,000, in August 2018 of £450,000 and, post-period end, in February 2019 of £500,000. In addition, in May 2019, we secured a short-term working capital loan facility with Brandon Hill Capital Limited for up to £250,000; further funding will be required thereafter. The remaining outstanding shares in our Pakistan mining subsidiary, Sindh Carbon Energy Limited, were acquired through a share exchange in January 2018 and, as a consequence, it is now 100% held by Oracle.

An orderly transition of power followed the general election in Pakistan in July 2018. The Government of Imran Khan remains supportive of the development of Thar coal 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 at both Federal and Provincial levels for the constructive way in which they have supported and continue to support our Project.

I took over as Chairman of the Board in January 2018 from Anthony Scutt. Regretfully he was not re-elected as a Director at the Annual General Meeting in June 2018. He has served the Company since 2006. My Board colleagues and I are profoundly appreciative of his invaluable contribution to the development of Oracle over this time.

The other major change is the appointment of Ms Naheed Memon, initially as a Non-Executive Director, before assuming the role of Chief Executive Officer, and an Executive Director, to manage the delivery of the Project on the ground in Pakistan. Shahrukh Khan, whom Naheed replaces, remains an Executive Director of the Company and will continue to assist in the development of the Thar project as it moves towards financial close. He has done a remarkable job in developing Oracle to its current position. Shahrukh is primarily responsible for the workings of the London office.

Our management is otherwise unchanged and I would also like to acknowledge their contribution to the Company.

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

Mark W Steed

Chairman

Chief Executive Officer's Report

Economic growth in Pakistan was 5.79% in the fiscal year 2018, according to the Finance Wing of the Government of Pakistan Economic Survey, in line with forecasts and stronger than the International Monetary Fund's global growth estimate of 3.9%. The Economic Survey reported inflation for Pakistan in 2018 as 3.78%. The country continues to suffer from a shortfall in electricity supply; also the distribution network is in need of substantial upgrade throughout the country. Since 2014, 12.2GW of generation capacity has been added so that, by February, there was a total installed generation capacity of 30.0GW. The population of Pakistan has increased to 207 million; 30% still do not have access to electricity

Under the China Pakistan Economic Corridor ("CPEC") agreement a number of energy projects are now in various stages of development throughout the country. Oracle's Block VI integrated coal mine and mine mouth power plant is on the Priority List of Energy Projects in the CPEC and continues to have support from both the Pakistan and Chinese governments. As announced in December 2018, we entered into a new Memorandum of Understanding ("MOU") with Beijing Jingneng Power Company Limited ("BJPC") and PowerChina International Group Limited ("PowerChina") to promote the project. BJPC will be the majority shareholder in the project and has replaced the Sichuan Provincial Investment Group Co. Limited in the MOU.

The parties to the MOU entered a new Consortium Agreement ("CA") and have made a new application to the Private Power Infrastructure Board ("PPIB") to build, own and operate a single 2x660MW supercritical plant in Block VI of the Thar coalfield. Once approved PPIB will issue a Letter of Intent ("LOI") along with a Notice to Proceed so that the applications for a Generation Licence and new Upfront Tariff can be made to the National Electric Power Regulatory Authority ("NEPRA") within 3 months of the issuance of the LOI. Following this PPIB would issue a Letter of Support so that the Power Purchase Agreement ("PPA") can be finalised with the Central Power Purchasing Authority, along with the Implementation Agreement ("IA") with the Government of Pakistan. The IA guarantees payment under the PPA. All of this will enable financial close to be achieved.

In addition to securing the requisite regulatory approvals we announced in January 2019 that the parties to the MOU had confirmed their willingness to proceed with pre-development work, proposed to be funded by the parties in proportion to their shareholdings as envisaged by the MOU. This work will involve additional site works and technical studies to provide more detailed information to enable financial close of the project to be achieved.

Work is continuing on site in preparation for development in particular to establish land ownership so that land acquisition and resettlement can be undertaken in accordance with the Resettlement Policy Framework published by the Sindh Coal Authority Energy Department in May 2015.

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

Ms Naheed Memon,

Chief Executive Officer

Consolidated Statement of Profit or Loss

for the year ended 31 December 2018

Consolidated Statement of Comprehensive Income

for the year ended 31 December 2018

 Consolidated Statement of Financial Position

31 December 2018

Consolidated Statement of Changes in Equity

for the year ended 31 December 2018

Consolidated Statement of Cash Flows

for the year ended 31 December 2018

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

The Directors have considered the cashflow requirements of the Group over the next 12 months. It will be necessary to raise additional funds to bring the project to financial close. The Directors expect to meet the funding requirements and therefore believe that the going concern basis is appropriate for the preparation of the financial statements.

The long-term viability of the Group at the moment depends on the successful delivery of the Thar project. This includes finding partners who are able to provide the finance that the project requires, raising cash on the London Stock Exchange, bringing the project to financial close, successfully constructing the mine and the power plant, successful operations and addressing all of the risks set out in the Annual Reports and Accounts.

The consolidated statement of financial position at 31 December 2018, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended have been extracted from the Company's statutory financial statements upon which the auditor's opinion is unqualified, includes an emphasis of matter paragraph, and does not include any statement under Section 498 (2) or (3) of the Companies Act 2006. The emphasis of matter concerns the raising of finance for the opening up of the mine and construction of the power plant. 

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

The statutory accounts for the year ended 31 December 2018 will be delivered to the Registrar of Companies following the Annual General Meeting. The statutory accounts, Notice of Annual General Meeting to be held at 116 Pall Mall, London SW1Y 5ED on Tuesday 16 July 2019 at 2.30pm and Proxy Forms will be posted to shareholders shortly and will be available for download on the Company's website at www.oraclepower.co.uk.

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

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