Annual Report 2010
For The YeAr ended 31 december 2010
report
Directory
contents
2
3
Company InformatIon
report of the DIreCtors
28 Company statement of
Changes In equIty
21 report of the InDepenDent auDItors
29 ConsolIDateD Cash flow statement
23 ConsolIDateD InCome statement
30 notes to the ConsolIDateD Cash
24 ConsolIDateD statement of
flow statement
ComprehensIve InCome
31 notes to the ConsolIDateD
25 ConsolIDateD statement of
fInanCIal statements
fInanCIal posItIon
50 notICe of annual general meetIng
26 Company statement of fInanCIal posItIon
53 agm proxy form
27 ConsolIDateD statement of
Changes In equIty
company
inFormation
DirectorS: Mr S Khan
SolicitorS to Trowers & Hamlins LLP
Mr A C R Scutt
the company: Sceptre Court
Mr M R Stead
Secretary: Mr E Taylor
40 Tower Hill
London
EC3N 4DX
regiStereD Richmond House
reporting Price Bailey LLP
oFFice: Broad Street
accountantS: The Quorum
Ely, Cambridgeshire
Barnwell Road
CB7 4AH
Cambridge CB5 8RE
regiStereD 05867160
regiStrar: Neville Registrars Limited
numBer:
(England & Wales)
Neville House
auDitorS: Price Bailey LLP
Chartered Accountants
18 Laurel Lane Halesowen
West Midlands B63 3DA
& Registered Auditors
BankerS: Royal Bank of Scotland plc
Richmond House
Ely, Cambridgeshire
CB7 4AH
1st Floor
Conqueror House
Vision Park, Histon
Cambridge CB24 9NL
aim corporate Libertas Capital Corporate Finance Limited
aDviSer: 16 Berkeley Street,
London, W1J 8DZ
page 2
report
oF the
DirectorS
The directors present their report with the financial statements of the Company and the Group
for the year ended 31 December 2010.
PRINCIPAL ACTIVITY
The principal activity of the Group in the year under review was that of the exploration for coal.
The exploration is primarily carried out in Pakistan, but the Group is controlled, financed and
administered within the United Kingdom which remains the principal place of business.
REVIEW OF BUSINESS: PERIOd HIgHLIgHTS
•
Placings raised £2 million during the course of 2010. This includes an investment of over
£1 million by Regency Mines PLC who now hold approximately 10% of the enlarged
share capital of the Company.
• Work continued throughout the year on the studies for the Bankable Feasibility Study
(BFS) on the Block VI licence, including the Environmental & Social Impact Assessment
(ESIA)
•
Appointment of internationally reputed independent consultants to oversee drilling pro-
gramme and completion of feasibility study to bankable standard
REVIEW
Over the past year, Oracle Coalfields (referred to as “the Company” or “Oracle Coalfields”)
continued to make good progress towards meeting its objective of delivering a cost-effective
coal mine on the Block VI coal deposit in the Thar Coalfield of Southern Pakistan.
The project has continued to attract strong support from the Pakistan Government and the
Government of Sindh Province. The Company’s progress continues to attract widespread
public attention because of the pressing need to increase local fuel production and address
the deficit in power generation. This is particularly important for Karachi, an industrial hub of
more than 15 million people located in the Sindh Province, which experiences at least 5-6
page 3
Typical topography at Block VI, Thar Coalfield
hours of load-shedding on a daily basis. Other population centre face similar interruptions in
power supply. The popular discontent and industrial disruption resulting from the power deficit
remains a key area of concern for the Pakistan authorities.
BLOCk VI, THAR COALFIELd, SINdH PROVINCE
Oracle Coalfields’ 80% owned Pakistan subsidiary, Sindh Carbon Energy Limited, was granted
the 66.1 square kilometre Block VI licence of the Thar Coalfield by the Mines and Mineral De-
velopment Department, Government of Sindh, in November 2007 for an initial period of three
years. During 2010 the licence was extended for a further year by the Coal & Energy Devel-
opment Department (formerly the Mines & Mineral Development Department). It is planned to
convert this into a Mining Lease during 2011.
Block VI is located in the Sindh desert:
• Situated 380 km east from Karachi, Sindh Province
• Block VI is some 32 km from the small town of Islamkot with close proximity to roads and
power networks
•
In 2006 China NE Geological Survey Bureau (CNGB) drilled 35 boreholes, a total of
9,852 metres, of which 5,986 metres are cored, validated by independent consultants to
take it to a JORC resource standard
•
All boreholes have been geophysically logged - log suite: natural gamma, density, resistiv-
ity, and caliper
• Good infrastructure including roads and a low voltage electricity grid.
As per the pre-feasibility study, the coal at Block VI has an average calorific value of 3,537
kcal/kg, a moisture content of 40%, which can be reduced to 14% by drying, a sulphur level
of 1.2%, and an ash content of 7.5%, which is low when compared with typical lignite coals.
Coal tests were carried out by TES Bretby Ltd in the UK, and the Fuel Research Centre, part
of Pakistan Council of Scientific and Industrial Research (PCSIR), Karachi and rock samples
were tested by Strata Surveys Ltd of the UK. The coal quality is suitable for power plants and
industry, particularly in the cement sector.
The work programme for developing the 1.4bn tonnes Block VI coal deposit is proceeding,
with the target of completing the Definitive Feasibility Study and the Bankable Feasibility Study
in 2011. Wardell Armstrong International (WAI) was appointed to prepare the Environmental
and Social Impact Statement which is now well advanced. In addition the Company appoint-
ed SRK Consulting (UK) Ltd. (SRK) to carry out an independent review of the technical work
on the feasibility studies carried out by our main technical consultants, Dargo Associates Ltd.
(Dargo). In addition SRK will prepare a definitive feasibility study to bankable standard. Aqua-
terra, an international water and environmental company is working with SRK on the hydrogeo-
logical assessment of the project.
page 4
The pre-feasibility study prepared by Dargo in 2008 confirmed that the proposed open pit min-
ing operation will require the dewatering of the two aquifers lying above the main coal seam
in Block VI. This will have the valuable potential to provide water for the project as well as the
local population.
Prior to the start of the Definitive Feasibility Study the Company completed a drilling pro-
gramme in 2008 to verify previous work done on Block VI and also enable the Company to
take the project to the internationally recognised JORC standard, all of which was overseen by
Dargo. Following is the summary resource table for Block VI:
LIgNITE COAL RESOURCES/RESERVES FOR BLOCk VI (JORC)
Note: Mt = Million tonnes
Overburden
Lignite coal
Lignite coal
measured resources
proved reserves
Block VI total area
Total Mine area
Phase I Open pit area
Phase II Open pit area
Mm3
10,200
3,673
885
1,685
Mt
1,423
653
-
-
Mt
-
-
128
243
Source: Dargo Associates Limited
During 2009 Oracle Coalfields entered into Memoranda of Understanding with the Karachi
Electric Supply Company (KESC) and Lucky Cement Limited. These two relationships are of
major importance to Oracle Coalfields as they potentially secure initial long term coal off-take
from the Company’s mine. Close cooperation has continued with those companies through-
out the year in preparation for the development of detailed sales agreements in 2011. The
Company seeks to minimise the lead time to early production from the mine and generate
early cash flow. Supplies to the cement industry, especially to Lucky Cement Limited, of coal
for use as industrial fuel will facilitate early production. Coal production could be expanded to
fuel one or more power plants from the time that they are commissioned. This will also diversify
the income sources for the Company. Subject to the satisfactory completion of the feasibility
studies, raising the necessary capital and taking a Final Investment Decision, production levels
for the coal mine are currently projected at 1.0 million tonnes from 2013 to a target level of 4.0
million tonnes over a three year period.
The mine remains based on an open pit design and the most cost-effective way to operate
the mine initially has been projected as a truck and shovel operation. This does not preclude
the use of bucketwheel equipment at a later stage when production has increased to 4 million
tonnes per year at the time of power plant commissioning.
page 5
The Company was able to raise additional funds of over £2 million on the London market to
fund the on-going costs of the feasibility studies during the year and at the close of the year
had a balance of over £1.5 million cash in hand.
kARACHI ELECTRIC SUPPLY COmPANY (kESC)
Oracle Coalfields signed a Memorandum of Understanding in December 2009 under which
KESC would develop a mine-mouth power station which would be owned and operated by
a separate power generating company. Technical discussions with KESC have continued
throughout 2010 and KESC have confirmed their commitment to this parallel development.
The intention would be for KESC to take a Final Investment Decision on the power plant at the
same time as the Company takes a Final Investment Decision on the mine development.
KESC is a major local power utility in the Sindh Province and third largest power utility in Paki-
stan.
•
A public listed power company with financial backing from leading Middle-Eastern private
equity firm Abraaj Capital
• Current capacity of 1,611 MW, mostly through increasingly expensive gas and oil-fired
power stations
• Seeking to increase installed capacity to address demand growth of 7-8% pa
LUCkY CEmENT LImITEd
In addition, Oracle Coalfields is looking for additional income with the intention to generate
early cash flow for the Company and shorten the lead time to coal production. The Company
therefore explored the opportunity to enter potential agreements with local cement companies.
Pakistan’s cement sector is large and is a major user of coal, mainly imported, to support its
cement works. A Memorandum of Understanding with Lucky Cement was executed in De-
cember 2009. The company is the largest cement manufacturer in Pakistan and can expect
significant savings from being less dependent on costlier imported fuel. A number of other
cement manufacturers are also keen to switch to domestic coal supplies.
A brief on Lucky Cement:
•
•
The largest Portland cement producer in Pakistan with market share of 19%
Production was affected in 2010 by the Indus valley floods and a drop in exports to the
GCC countries following a reduction in construction activities in the Gulf
• Capacity of 7.75 mtpa with annual production of 5.9 mt
•
58% of annual production volume is exported and 42% supplied to the domestic con-
struction industry
•
Largest cost of production is energy (for oil, gas and coal) which constitutes 72% of total
production costs.
(Source: Lucky Cement Annual Report 2009 and interim (unaudited) results for 2010)
page 6
Entering relationships with Lucky Cement and KESC is an essential step to our objective
of becoming a leading supplier of coal in Pakistan. Oracle Coalfields is also able to enter
relationships with additional power and cement companies as the Company would be able to
increase coal supply from its Block VI mine to meet demand.
dRILLINg PROgRAmmE
The programme of field work as part of the Bankable Feasibility Study (BFS) on Block VI Thar
Coalfield has progressed well.
A programme of 27 geological boreholes and 8 water boreholes have been drilled to further
identify the nature of the overburden, the thickness of the main lignite seam and dewatering
requirements respectively for the purpose of Mine Design, part of the feasibility study. During
this period the Company appointed local drilling contractors, Deep Rock Drilling (Pvt) Limited
and for hydrogeology the local dewatering contractors, Geoscience Associates. The drilling
programme is overseen by Dargo in consultation with SRK and the hydrogeology programme
is being overseen by Aquaterra.
Since the start of the field work programme, visits have been made by the team of SRK,
Dargo and Aquaterra. The first was a preliminary visit held with project geologists appointed
by Oracle, Deep Rock Drilling (Pvt) Limited and Geoscience Associates. The purpose of the
first visit was to obtain an understanding of the logistical and general site conditions and proj-
ect parameters, to discuss the planned drilling programme and sampling requirements for the
open pit geotechnical study and to discuss the integration of the geotechnical and hydrogeo-
logical disciplines. On site, SRK inspected the location of all the Phase 1 geotechnical holes
and the preferred site for the dewatering test boreholes was also identified by Aquaterra.
gEOTECHNICAL ANd SUB-CROP dRILLINg
In the second visit, the drilling programme commenced and all geological boreholes have
been completed as well as lithologically and geophysically logged. Four fully cored bore-
holes for geotechnical testing were completed and sampled as part of the 27 geological
boreholes programme. The testing laboratory in the United Kingdom has been selected and
over 300 samples had been dispatched to the United Kingdom for further tests. This testing
programme set out represents a minimum requirement for a project of this size in Phase 1 as-
suming homogeneity of material properties across the deposit.
All past and current borehole locations and elevations are being surveyed and samples of the
lignite obtained from the boreholes have been sent for analysis to Bahria University in Karachi.
The coal quality tests are under ASTM standard.
page 7
Hydrogeology drilling at Block VI site
overseen by Oracle Coalfields’
independent consultants Aquaterra
October 2010.
page 8
PHASE 1 - mINE AREA
Within the Block VI covering an area of 66.1 square kilometres, the most prospective mining
area based on thickness of coal seam and favourable stripping ratio for the opencast mining
operation is to the south central and south west part of the block covering an area of ap-
proximately 20 square kilometres. This mining area is in two phases of development, Phase 1
and Phase 2. The focus at the moment is on Phase 1 covering an area of approximately 10
square kilometres where all the work programme is underway, i.e. the 27 geological boreholes
(4 geotechnical boreholes and 23 sub-crop drilling) and separately 8 water boreholes (4 test
wells and 4 observation wells). The mining in Phase 2 will commence after Phase 1 mining
has been fully exhausted. This will be detailed in the feasibility study.
HYdROgEOLOgY dRILLINg
Water is an important element of the project, as dewatering will be required to enable mining to
proceed and water supply will be required for both the power station and mine. Hydrogeologi-
cal studies have been commenced by Aquaterra for both the feasibility study and ESIA.
Meetings were held with KESC and Non-Governmental Organisations (NGOs) representing
local communities in the project area to discuss the scope of work, agree the approach and
volumes of water required for the power plant.
The first phase of work involves the drilling of boreholes to improve understanding of the hy-
drogeology of the site. Four test wells and four observation wells have been drilled success-
fully in total. GeoScience Associates had been commissioned to drill the boreholes under the
supervision of Aquaterra.
A study on the local village water supplies is being undertaken simultaneously.
Once testing is complete analysis will be undertaken to confirm the rate of dewatering and the
availability of water for the power plant and mine supplies.
ENVIRONmENTAL ANd SOCIAL ImPACT ASSESSmENT (ESIA)
During the period a visit was made by the team from Wardell Armstrong International for the
purpose of the ESIA. Wardell Armstrong had meetings with relevant government agencies,
NGOs and local communities at Block VI site. The team also met a local environmental consul-
tant to work under the supervision of Wardell Armstrong. The meeting with the local operating
NGOs in District of Tharparkar enabled Wardell Armstrong to collect additional data for the
ESIA and also was an important forum for Oracle Coalfields with the opportunity to reaffirm the
Company’s commitment to the project and to operate in accordance with the principles of
corporate responsibility and in line with national and international requirements. This is driven
by both moral and commercial imperatives. The tone of the meeting was open and amicable,
and the attendees were receptive to the explanations provided, and gave constructive com-
page 9
mentary on pertinent local issues that should be taken into account as part of the assessment.
Overall, there was support for the project, and the benefits that it would bring, particularly with
regard to poverty alleviation through direct and indirect employment. Comments generally
related to the need for local employment prioritisation, protection of water supplies and their
desire to see the project expeditiously executed.
Senior members of the KESC team also visited the Block VI site for field inspection as part of
their power plant feasibility study for the construction of a mine-mouth 300MW power plant on
the Block VI area. Liaison with KESC as the principal customer for the Block VI lignite is ongo-
ing.
A house with secure grounds in Islamkot, nearest township to Block VI site, has been rented
for the site geologists to use as accommodation/office and provide security for geological
samples. A separate base camp has also been set up at site.
gOVERNmENT SUPPORT
During the year the Company continued to meet with senior officials from the Government of
Sindh, Coal & Energy Development Department (CEDD) and ministers at the Federal level.
From these meetings and discussions, it was very evident that official support for our project
continues to grow. Amongst other things, the Government is giving active consideration to
funding the construction of a canal to provide additional water to the project area, undertaking
the groundwork needed to link the project to the national rail system, and upgrading the exist-
ing grid to 500KW. As in the past, all infrastructure investment is continuing to be undertaken
by government funding.
Oracle Coalfields had meetings with the Thar Coal Energy Board (TCEB), an entity set up at
the federal level that comprises federal and provincial level ministers and secretaries. The ob-
jective of TCEB is to ‘fast-track’ procedures for implementation of projects in Thar. The TCEB
is implementing a program to convert the Thar Coalfield area into a Special Economic Zone
(SEZ). The SEZ would be investor-friendly with particular emphasis on tax-breaks.
A committee has been formed by TCEB/CEDD to fast-track infrastructure development
relevant to the Thar coal field area, at their cost, by overseeing the work to be done by local
contractors and agencies. Oracle Coalfields has been placed on this committee not only to
provide input but also jointly with Sindh Government monitor the progress on infrastructure
development work programme. Presently, the work involves upgrading the road network,
electricity grid, construction of airstrip in Mithi/Islamkot and establishing a canal and railway link
to the Thar coal mine area.
page 10
kHOREWAH, INdUS EAST, SINdH PROVINCE
In early February 2007 the Company’s subsidiary, Sindh Carbon Energy Limited, was granted
an exploration licence over 100 square kilometres of the KhoreWah coalfield in the Indus East
region of the Sindh Province of Pakistan. The depth of the coal seam is such that underground
mining would be necessary in order to make the project economic.
The granting of the more advanced and geologically attractive Block VI project in the Thar
Coalfield has seen the development of the KhoreWah licence deferred in order to utilise avail-
able funds on the Thar Coalfield. However, whilst available resources have been focussed on
the development of Block VI, it remains the Company’s intention to further develop the Khore-
Wah licence at a suitable point in the future.
OTHER INITIATIVES
Oracle Coalfields continue to monitor other possible industrial uses of Thar coal, in addition to
power generation and in the domestic cement industry. With new technologies being devel-
oped outside Pakistan to convert lignite coal into more valuable end products, the Company
intends to monitor closely these initiatives for possible future applications in Pakistan. This
includes established processes of liquefaction and gasification which can be used to convert
lignite coal into liquefied fuels and synthetic gas.
THE PAkISTAN POWER mARkET
Currently, the country is short of 3,000-3,500 MW to meet immediate demand. The govern-
ment have put in place various initiatives to attract immediate development of power plants
as well as availability of rental power plants. These initiatives have generally resulted in a poor
response from the private sector, though a handful of small independent power plants came
into operation recently in different parts of the country.
If the Gross Domestic Product (GDP) of the country grows as forecast by an average 6-8%
per annum over the next 10 years, according to government sources, the country would
require approximately 50,000 MW in the next 10 years. There is certainly a major shortfall in
electricity supply. Coal has an important role to play in the country’s energy mix in the coming
years and it is forecast that coal would represent about 17% of all feedstock by 2025 (cur-
rently it is less than 1%).
page 11
PRINCIPAL RISkS ANd UNCERTAINTIES FACINg THE gROUP
As the feasibility studies for the mine are now well advanced, the principal risks and uncertain-
ties of the Company include those summarised below:
•
•
the ability to raise sufficient funds to continue to develop Block VI
the conclusion of production off-take agreements at requisite commercial rates to justify
the project investment
•
the prompt sourcing of specialist mining equipment to ensure earliest project realisa-
tion
•
the stabilisation of the on-going political situation so as to ensure the vital interests and
support of major financial lenders for the project
•
the maintenance of current government legislation and regulations that have so far
favoured the development of the project as a flagship foreign investment necessary to
strengthen the country’s economy
•
infrastructure development plans for the Thar region being funded and completed by the
relevant federal and/or provincial government authorities
•
the mitigation of environmental and social concerns
FINANCIALS
The financial results for the twelve months to 31 December 2010 show a loss for Oracle
Coalfields Plc Group of Companies after taxation of £221,589 (2009: £235,230) (Company:
£217,614). At the period end, the Group had cash at bank and in hand of £1,506,475
(Company: £1,457,680) and total assets less current liabilities of £2,345,171 (Company:
£2,347,065). The basic loss per share was 0.15p (2009: loss 0.20p). The loss is attributable
to the development of the Company’s coal licences in Pakistan and administrative expenses.
POST-PERIOd dEVELOPmENT
The Company has been able to complete the drilling programme on schedule as part of the
feasibility study. A number of studies are underway for completion of the definitive feasibility to
bankable standard.
The Company is now considering listing on Alternative Investment Market (AIM) of the London
Stock Exchange. The purpose of the Company listing on AIM is to raise its profile and reach
out to a wider institutional investor audience in preparation for raising the larger investment
required to bring the Block VI coal mine to development.
page 12
OUTLOOk
The Board is pleased that the Block VI, Thar coal project Definitive Feasibility Study and the
Bankable Feasibility Study are progressing well. The objective is to reduce project risks
through these international quality feasibility studies. For this reason, independent international
consultants have been appointed with experience in developing coal mine operations of this
nature.
The continued rises in world energy prices have strengthened the economic rationale for this
project as the cost of alternative imported supplies of oil and coal increase.
Although the security situation in Pakistan has remained fragile due to political and economic
uncertainties, it is important to note that the Company’s project area in Tharparkar has re-
mained peaceful throughout. Geographically, the project area is distant from the north of the
country where most of the unrest is concentrated. Furthermore, the national economy is
being strengthened by substantial foreign aid in support of the Government’s efforts to stabilise
the political situation and boost investor confidence.
Finally, the Board is grateful for the patience shareholders have shown in supporting the Com-
pany’s management team during the feasibility phase. The Company also extends its thanks
to the Mines and Minerals Development Department and Coal & Energy Development Depart-
ment, Government of Sindh, the Thar Coal Energy Board and the Sindh Coal Authority for their
continued assistance.
The Company will continue to update the market on its progress.
NGO and local stakeholders meeting held in Mithi, Tharparkar on 19th October 2010
arranged by Oracle Coalfields and joined in by KESC team
page 13
dIVIdENdS
No dividends will be distributed for the year ended 31 December 2010.
dIRECTORS
The directors during the year under review were:
Mr S Khan
Mr A C R Scutt
Mr M R Stead
The beneficial interests of the directors holding office on 31 December 2010 in the issued
share capital of the company were as follows:
Ordinary 0.1p shares
31.12.10
1.1.10
Mr S Khan
Mr A C R Scutt
Mr M R Stead
29,530,791
29,530,791
113,000
20,000
113,000
20,000
In addition to the above, in his capacity as a joint honorary trustee, Mr A C R Scutt also holds
225,000 shares for The Acumen Brigade Investment Club and 165,000 shares for The Ridge-
way Investors Group. Mr A C R Scutt is not a beneficial member of these investment clubs
and has no beneficial interest in the shareholdings.
Ordinary 0.1p shares under option
Number
Exercise price
Expiry date
Mr S Khan
Mr A C R Scutt
Mr M R Stead
6,000,000
2,000,000
200,000
5p
5p
5p
31.03.2012
31.03.2012
15.11.2012
page 14
InformatIon on DIreCtors
SHAHRUkH kHAN
Chairman and Chief Executive Officer
Mr Khan was educated in the USA (at Harvard University) and in the UK. He was awarded a
BA in Business administration and Economics (finance and international business) at Rich-
mond, the American International University in London. Mr Khan has over nine years’ experi-
ence in project finance, with a particular focus upon the natural resource and infrastructure
related sector. He has worked on a number of international assignments, predominantly in the
Middle East, South Asia and China. He has specialist expertise in large and complex projects,
including project valuation and investment appraisal, financial modelling, feasibility studies and
other project finance related services. Mr Khan is the Non-Executive Director of All Star Miner-
als plc, which commenced trading on PLUS in April 2006. He is also a director of Al Nasr
Europe Limited, a London-based trading and finance company (a sister company of Al Nasr
Trading and Industrial Corporation of Saudi Arabia), which is involved in the metals and miner-
als industries and the energy sector.
ANTHONY SCUTT
Non-executive Director
Mr Scutt is a qualified Chartered Secretary and a Certified Internal Auditor with the US Institute
of Internal Auditors. He has over 30 years of financial management expertise with Shell Interna-
tional Petroleum and has worked in many parts of the world, including the Malagasy Republic,
East and Central Africa, South Vietnam, Cambodia, the Philippines, Gabon and latterly as the
Chief Internal Auditor of Shell UK. Mr Scutt then went on to become an investment analyst,
writer and investor. Mr Scutt is a Non-Executive director of AIM-listed Starvest plc and Beowulf
Mining plc, and of PLUS-quoted Agricola Resources plc.
ROdERICk STEAd
Non-executive Director
Mr Stead was awarded BSc in Economics from the London School of Economics and is qual-
ified accountant, FCCA. He brings considerable experience in a wide variety of management
roles in the oil, gas, coal, mining and forestry industries in different environments. This includes
Board experience in over 25 companies. Particular experience in corporate governance is-
sues, strategic business analysis and the management of major joint venture relationships
and strategic alliances. Between 1967 and 2003, Mr Stead worked in several international
locations for the Royal Dutch Shell Group of Companies. His positions included working as
the Finance Controller for Shell Expro, the operator of the Shell/Exxon North Sea joint venture
between 1984-1987, before moving to Chile, where he was Finance Director and a board
page 15
member of 18 Chilean Shell subsidiaries between 1987-1991. From 1991-1996 Mr Stead
worked as Group Advisor on Acquisition and Divestments for Shell International Petroleum
Company Ltd. From 1996-1999 he was based in the Sultanate of Oman, where he worked
as leader of the financing team for Oman LNG LLC, prior to becoming leader of the financing
team for Nigeria LNG Ltd between 1999-2003. Mr Stead has extensive experience in proj-
ect finance negotiations with investment banks, multilateral agencies, export credit agencies,
commercial banks, law firms and accountants. Wide experience in structuring international and
cross border acquisitions, mergers and divestments.
EdWARd TAYLOR
Company Secretary
Mr Taylor has worked in various accounting, human resources, administration and Company
Secretarial positions in the natural resources sector. He has worked for Hardy Oil & Gas (now
British Borneo Oil and Gas plc), Enterprise Oil plc and LASMO (now AGIP (UK) plc). Presently
he has assignments with Yukos Services (UK) Ltd, All Star Minerals plc, and U3O8 Energy
Limited, as well as serving as a Non-Executive Director of AIM-listed Beowulf Mining plc.
Geotechnical drilling at Block VI site overseen by Oracle Coalfields’ independent consultants
SRK Consulting and Dargo Associates, 13th October 2010
page 16
gROUP’S POLICY ON PAYmENT OF CREdITORS
The Group abides by its policy to pay suppliers within their credit terms. At the statement of
financial position date, the trade payables outstanding represented 38 days.
FINANCIAL INSTRUmENTS
The Group’s financial instruments comprise cash and cash equivalents, loan investments and
financial assets and various items such as trade receivables, trade payables, accruals and
prepayments that arise directly from its operations.
The main purpose of these financial instruments is to finance the Group’s operations. The
Board regularly reviews and agrees policies for managing the level of risk arising from the
Group’s financial instruments which are summarised as follows
LIqUIdITY RISk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they
fall due. The Group’s policy throughout the year has been to ensure that it has adequate
liquidity to meet its liabilities when due by careful management of its working capital.
CREdIT RISk
The Group’s principal financial assets are the cash and cash equivalents and taxation receiv-
able as recognised in the statement of financial position, and which represent the Group’s
maximum exposure to credit risk in relation to financial assets.
CAPITAL mANAgEmENT
The Company’s capital consists wholly of ordinary shares. The Board’s policy is to preserve
a strong capital base in order to maintain investor, creditor and market confidence and to
safeguard the future development of the business, whilst balancing these objectives with the
efficient use of capital.
mARkET RISk
Market risk is the risk that changes in market prices, such as commodity prices, foreign ex-
change rates, interest rates and equity prices will affect the Group’s and Company’s income or
value of its holdings in financial instruments.
COmmOdITY PRICE RISk
The principal activity of the Group is the development of a coal mining property in Pakistan and
the principal market risk facing the Group is an adverse movement in the commodity price of
coal. Any long term adverse movement in this price would affect the commercial viability of the
project.
page 17
remuneratIon report
INTROdUCTION
This report has been prepared in accordance with the requirements of Schedule 2 Part 1 to
the Companies Act 2006 (the Schedule) and also meets the requirements of the Listing Rules
of the Financial Services Authority and describes how the Board has applied the Principles of
Good Governance relating to Directors’ Remuneration. In accordance with Section 439 of the
Companies Act 2006 (the Act), a resolution to approve the report will be proposed at the An-
nual General Meeting of the Company at which the Financial Statements are to be approved.
Section 495 of the Act requires the auditors to report to the Company’s members on the
‘auditable part’ of the Directors Report and to state whether, in their opinion, that part of the
report has been properly prepared in accordance with Part 3 of the Schedule. This report has
therefore been divided into separate sections for unaudited and audited information.
UNAUdITEd INFORmATION: REmUNERATION POLICY
Executive remuneration packages are prudently designed to attract, motivate and retain Direc-
tors of the necessary calibre and to reward them for enhancing value to shareholders. The
performance measurement of the Executive Director and key members of senior management
and the determination of their annual remuneration package is undertaken by the Remunera-
tion Committee. The remuneration of Non-executive Directors is determined by the Board
within limits set in the Articles of Association.
Executive Directors are entitled to accept appointments outside the Company providing the
Board’s permission is sought.
NON-ExECUTIVE dIRECTORS’ TERmS OF ENgAgEmENT
The Non-executive Directors have specific terms of engagement. Their remuneration is de-
termined by the Board. In the event that a Non-executive undertakes additional assignments
for the Company, the Non-executive’s fee will be agreed by the Company in respect of each
assignment.
page 18
AUdITEd INFORmATION
Aggregate Directors’ Remuneration
The remuneration paid to the Directors, in accordance with the service contracts, during the
year ended 31 December 2010 was as follows:
Salary
& Fees
£
£
Pensions Termination Share based 2010
benefits
payments
Total
Executive
Mr S Khan
47,000
-
Non-executive
Mr A C R Scutt
Mr M R Stead
15,000
15,000
Mr C Windham (1)
-
-
-
-
Note - (1) resigned 15 May 2009
£
-
-
-
-
£
-
-
-
-
2009
Total
£
£
47,000
47,000
15,000
15,000
15,000
15,000
-
12,969
SUBSTANTIAL SHAREHOLdINgS
The directors are aware of the following who were interested, directly or indirectly, in 3% or
more of the Group’s ordinary shares on 31 December 2010:
Mr S Khan
Starvest plc
Sunvest Corporation Limited
Regency Mines plc
Mr R Rowan
Shareholding
% holding
29,530,791
21,003,333
20,000,000
18,500,000
16.0%
11.4%
10.9%
10.0%
10,000,000
5.4%
STATEmENT OF dIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Report of the Directors and the financial state-
ments in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year.
Under that law the directors have elected to prepare the financial statements in accordance
with International Financial Reporting Standards as adopted for use in the European Union.
Under company law the directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the company and the group
and of the profit or loss of the group for that period. In preparing these financial statements,
the directors are required to:
page 19
•
select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
•
state that the financial statements comply with IFRS;
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to
show and explain the company’s and the group’s transactions and disclose with reasonable
accuracy at any time the financial position of the company and the group and enable them
to ensure that the financial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the company and the group and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial
information included on the company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
STATEmENT AS TO dISCLOSURE OF INFORmATION TO AUdITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section
418 of the Companies Act 2006) of which the group’s auditors are unaware, and each direc-
tor has taken all the steps that he ought to have taken as a director in order to make himself
aware of any relevant audit information and to establish that the group’s auditors are aware of
that information.
AUdITORS
The auditors, Price Bailey LLP, have expressed their willingness to continue in office and a
resolution to re-appoint them will be proposed at the Group’s forthcoming Annual General
Meeting.
ON BEHALF OF THE BOARd:
S Khan - Director
Date: 4 April 2011
page 20
report
oF the
inDepenDent
auDitorS
We have audited the financial statements of Oracle Coalfields plc Group of Companies for
the year ended 31 December 2010 which comprise the Consolidated Income Statement, the
Consolidated Statement of Financial Position, the Company Statement of Financial Position,
the Consolidated Cash Flow Statement, the Statement of Recognised Income and Expense
and the related notes. The financial reporting framework that has been applied in their prepa-
ration is applicable law and International Financial Reporting Standards (IFRSs) as adopted
for use in the European Union, and as regards the parent company financial statements, as
applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we
might state to the company’s members those matters we are required to state to them in a
Report of the Auditors and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the company and the company’s
members as a body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF dIRECTORS ANd AUdITORS
As explained more fully in the Statement of Directors’ Responsibilities set out on page four-
teen, the directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view. Our responsibility is to audit the financial statements
in accordance with applicable law and International Standards on Auditing (UK and Ireland).
Those standards require us to comply with the Auditing Practices Board’s Ethical Standards
for Auditors.
SCOPE OF THE AUdIT OF THE FINANCIAL STATEmENTS
An audit involves obtaining evidence about the amounts and disclosures in the financial
statements sufficient to give reasonable assurance that the financial statements are free from
material misstatement, whether caused by fraud or error. This includes an assessment of:
whether the accounting policies are appropriate to the group’s and the parent company’s
circumstances and have been consistently applied and adequately disclosed; the reasonable-
ness of significant accounting estimates made by the directors; and the overall presentation of
the financial statements.
OPINION ON FINANCIAL STATEmENTS
In our opinion:
•
the financial statements give a true and fair view of the state of the group’s and the par-
ent company’s affairs as at 31 December 2010 and of the group’s loss for the year then
ended;
•
the group financial statements have been properly prepared in accordance with IFRSs as
adopted for use in the European Union;
•
the parent company financial statements have been properly prepared in accordance
with IFRSs as adopted for use in the European Union and as applied in accordance with
page 21
the provisions of the Companies Act 2006; and
•
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
OPINION ON OTHER mATTER PRESCRIBEd BY THE
COmPANIES ACT 2006
In our opinion the information given in the Report of the Directors for the financial year for which
the financial statements are prepared is consistent with the financial statements.
mATTERS ON WHICH WE ARE REqUIREd TO REPORT
BY ExCEPTION
We have nothing to report in respect of the following matters where the Companies Act 2006
requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns
adequate for our audit have not been received from branches not visited by us; or
•
the parent company financial statements are not in agreement with the accounting re-
cords and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Martin Clapson FCA (Senior Statutory Auditor)
for and on behalf of Price Bailey LLP
Chartered Accountants & Statutory Auditors
Richmond House
Ely
Cambridgeshire
CB7 4AH
Date: 7 April 2011
page 22
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2010
CONTINUING OPERATIONS
Revenue
Other operating income
Administrative expenses
OPERATING LOSS
Finance income
LOSS BEFORE INCOME TAX
Income tax
LOSS FOR THE YEAR
Loss attributable to:
Owners of the parent
Earnings per share expressed
in pence per share:
Basic
Diluted
Notes
2
4
5
6
8
2010
£
-
-
(222,674)
(222,674)
1,085
(221,589)
-
2009
£
-
111
(236,157)
(236,046)
816
(235,230)
-
(221,589)
(235,230)
(221,589)
(235,230)
-0.15
-0.13
-0.20
-0.16
The notes form part of these financial statements
page 23
Page 16
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2010
LOSS FOR THE YEAR
(221,589)
(235,230)
2010
£
2009
£
OTHER COMPREHENSIVE INCOME
Exchange difference on consolidation
Income tax relating to other comprehensive income
OTHER COMPREHENSIVE INCOME FOR THE YEAR,
NET OF INCOME TAX
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
1,724
-
1,724
(219,865)
(219,865)
-
(16,143)
-
(16,143)
(251,373)
(251,373)
-
The notes form part of these financial statements
Page 17
page 24
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2010
Notes
10
11
12
13
14
15
17
18
18
18
16
19
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investments
Loans and other financial assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital
Share premium
Translation reserve
Retained earnings
Non-controlling interests
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
2010
£
855,830
2,814
-
63,645
922,289
36,093
1,506,475
1,542,568
2,464,857
184,211
3,284,291
(4,563)
(1,134,797)
2,329,142
16,029
2,345,171
119,686
119,686
2,464,857
2009
£
492,131
3,072
-
63,186
558,389
12,322
5,859
18,181
576,570
122,360
1,309,043
(6,287)
(913,208)
511,908
16,029
527,937
48,633
48,633
576,570
The financial statements were approved and authorised for issue by the Board of Directors on 4 April 2011 and
were signed on its behalf by:
S Khan - Director
The notes form part of these financial statements
Page 18
page 25
COMPANY STATEMENT OF FINANCIAL POSITION
31 DECEMBER 2010
Notes
10
11
12
13
14
15
17
18
18
19
ASSETS
NON-CURRENT ASSETS
Intangible assets
Property, plant and equipment
Investments
Loans and other financial assets
CURRENT ASSETS
Trade and other receivables
Cash and cash equivalents
TOTAL ASSETS
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital
Share premium
Retained earnings
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
2010
£
370,184
-
64,115
479,365
913,664
48,826
1,457,680
1,506,506
2,420,170
184,211
3,284,291
(1,121,437)
2,347,065
73,105
73,105
2,420,170
2009
£
241,399
-
64,115
244,365
549,879
21,652
4,066
25,718
575,597
122,360
1,309,043
(903,823)
527,580
48,017
48,017
575,597
The financial statements were approved and authorised for issue by the Board of Directors on 4 April 2011 and
were signed on its behalf by:
S Khan - Director
The notes form part of these financial statements
Page 19
page 26
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
Balance at 1 January 2009 – as previously reported
Prior year adjustment
As restated
Changes in equity
Issue of share capital
Total comprehensive income
Called up
share
capital
£
114,046
-
Profit
and loss
account
£
(668,122)
(9,856)
Share
premium
£
1,068,406
-
114,046
(677,978)
1,068,406
8,314
-
-
(235,230)
240,637
-
Balance at 31 December 2009 – as restated
122,360
(913,208)
1,309,043
Balance at 1 January 2010 – as previously reported
Prior year adjustment
122,360
-
(919,495)
6,287
1,309,043
-
As restated
Changes in equity
Issue of share capital
Total comprehensive income
122,360
(913,208)
1,309,043
61,851
-
-
(221,589)
1,975,248
-
Balance at 31 December 2010
184,211
(1,134,797)
3,284,291
Balance at 1 January 2009 – as previously reported
Prior year adjustment
-
9,856
Translation
reserve
£
Total
£
514,330
-
Non-controlling
interests
£
16,029
-
Total
equity
£
530,359
-
As restated
9,856
514,330
16,029
530,359
Changes in equity
Issue of share capital
Total comprehensive income
-
(16,143)
248,951
(251,373)
-
-
248,951
(251,373)
Balance at 31 December 2009 – as restated
(6,287)
511,908
16,029
527,937
Balance at 1 January 2010 – as previously reported
Prior year adjustment
-
(6,287)
511,908
-
16,029
-
527,937
-
As restated
(6,287)
511,908
16,029
527,937
Changes in equity
Issue of share capital
Total comprehensive income
-
1,724
2,037,099
(219,865)
-
-
2,037,099
(219,865)
Balance at 31 December 2010
(4,563)
2,329,142
16,029
2,345,171
Page 20
page 27
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2010
Called up
share
capital
£
Profit
and loss
account
£
Share
premium
£
Total
equity
£
9002 yraunaJ 1 ta ecnalaB
640,411
)977,176(
604,860,1
376,015
Changes in equity
latipac erahs fo eussI
emocni evisneherpmoc latoT
413,8
-
-
)440,232(
736,042
-
159,842
)440,232(
9002 rebmeceD 13 ta ecnalaB
063,221
)328,309(
340,903,1
085,725
Changes in equity
latipac erahs fo eussI
emocni evisneherpmoc latoT
158,16
-
-
)416,712(
842,579,1
-
990,730,2
)416,712(
0102 rebmeceD 13 ta ecnalaB
112,481
)734,121,1(
192,482,3
560,743,2
page 28
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
Cash flows from operating activities
Cash generated from operations
Exchange rate fluctuation on cash held
Net cash from operating activities
Notes
1
Cash flows from investing activities
Purchase of intangible fixed assets
Purchase of tangible fixed assets
Interest received
Net cash from investing activities
Cash flows from financing activities
Proceeds of share issue
Cost of share issue
Net cash from financing activities
Increase/(Decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of
year
2
Cash and cash equivalents at end of year
2010
£
(174,777)
37
(174,740)
(361,776)
(437)
470
(361,743)
2,318,040
(280,941)
2,037,099
1,500,616
5,859
2009
£
(294,282)
(421)
(294,703)
(91,682)
-
139
(91,543)
249,401
(450)
248,951
(137,295)
143,154
2
1,506,475
5,859
The notes form part of these financial statements
Page 22
page 29
NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2010
1.
RECONCILIATION OF LOSS BEFORE INCOME TAX TO CASH GENERATED FROM OPERATIONS
Loss before income tax
Finance income
(Increase)/Decrease in trade and other receivables
Increase/(Decrease) in trade and other payables
2010
£
(221,589)
(1,085)
(222,674)
(23,156)
71,053
2009
£
(235,230)
(816)
(236,046)
14,199
(72,435)
Cash generated from operations
(174,777)
(294,282)
2.
CASH AND CASH EQUIVALENTS
The amounts disclosed on the statement of cash flow in respect of cash and cash equivalents are in respect
of these statement of financial position amounts:
Year ended 31 December 2010
Cash and cash equivalents
Year ended 31 December 2009
Cash and cash equivalents
31/12/10
£
1,506,475
1/1/10
£
5,859
31/12/09
£
5,859
1/1/09
£
143,154
The notes form part of these financial statements
Page 23
page 30
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2010
1.
ACCOUNTING POLICIES
Reporting entity
Oracle Coalfields Group is a group domiciled in United Kingdom. The address of the Group's registered
office is Richmond House, Broad Street, Ely, Cambridgeshire, CB7 4AH. The Group primarily is involved in
the exploration for coal.
Going concern
The directors have considered the cashflow requirements of the Group over the next 18 months. If the
Group is to continue its explorations it may be necessary to raise additional funds. Whilst it is difficult in the
current economic downturn to generate the extra funds required, 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.
Compliance with accounting standards
These financial statements have been prepared in accordance with 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 Group determines
whether there is any impairment of intangible assets on an annual basis. The estimation of share-based
payment costs requires the selection of an appropriate model, consideration as to the inputs necessary for
the valuation model chosen and the estimation of the number of awards that will ultimately vest.
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.
Changes in accounting policies
The board of directors have reviewed the Group's accounting policy regarding the treatment of exchange
differences arising on the consolidation of overseas subsidiary undertakings. The policy has been amended
so that net exchange differences classified as equity are separately tracked in a translation reserve rather
than being included in retained earnings.
Page 24
page 31
continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
Intangible fixed assets - 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 coal 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.
Exploration costs are carried at cost less any provision for impairment.
Property, plant and equipment
Depreciation is provided at the following annual rates in order to write off each asset over its estimated useful
life.
Motor vehicles
Computer equipment
- 20% on reducing balance
- 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 profit and loss account.
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
- 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.
Page 25
page 32
continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
1.
ACCOUNTING POLICIES - continued
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 in
Rupees.
Share-based payment transactions
Where equity settled share options are awarded to employees, the fair value of the options at the date of
grant is charged to the income statement 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 options that eventually vest. Market vesting conditions are factored into the fair value of all options
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 options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to the income statement
over the remaining vesting period.
Where equity instruments are granted to persons other than employees, the income statement 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.
Page 26
page 33
continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
1.
ACCOUNTING POLICIES - continued
New standards and interpretations applied
In preparing these financial statements the Group has reviewed all new standards and interpretations, but
there are no standards effective for the year commencing 1 January 2010 requiring new interpretations to be
applied.
New Standards and Interpretations adopted with no effect on the financial statements
The following new and revised Standards and Interpretations have also been adopted in these financial
statements. Their adoption has not had any significant impact on the amounts reported in these financial
statements but may affect the accounting for future transactions or arrangements:
- IAS 1 Presentation of Financial Statements (revised 2009) - annual review of IFRSs
- IAS 7 Statement of Cash Flows (revised 2009) - annual review of IFRSs
- IAS 17 Leases (amended 2009) - annual review of IFRSs
- IAS 36 Impairment of Assets (amended 2009) - annual review of IFRSs
- IAS 39 Financial Instruments (amended 2008) - amendments for eligible hedged items
- IAS 39 Financial Instruments (amended 2009) - amendments for embedded derivatives and the annual
review of IFRSs
- IFRS 2 Share-based Payments (amended 2009) - amendments relating to annual review of IFRSs and
group cash-settled share-based payment transaction
- IFRS 3 Business Combinations (amended 2008) - comprehensive revision on applying the acquisition
method
- IFRS 5 Non-current Assets Held for Sale and Discontinued Operations (amended 2008) - annual
review of IFRSs
IFRS 3 Non-current Assets Held for Sale and Discontinued Operations (amended 2009) - annual review
of IFRSs
- IFRS 8 Operating Segments (amended 2009) - annual review of IFRSs
- IFRIC 9 Reassessment of Embedded Derivatives - annual review of IFRSs
- IFRIC 16 Hedges of a Net Investment in a Foreign Operation - annual review of IFRSs
- IFRIC 17 Distributions of Non-cash Assets to Owners
- IFRIC 18 Transfers of Assets from Customers
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not yet effective for the year
commencing 1 January 2010 and have not been applied in preparing these financial statements:
- IAS 1 Presentation of Financial Statements (amended 2010)
- IAS 12 Income Taxes (amended 2010)
- IAS 24 Related Party Disclosures (amended 2009)
- IAS 27 Consolidated and Separate Financial Statements (amended 2010)
- IAS 32 Financial Instruments (amended 2010)
- IAS 34 Interim Financial Reporting (amended 2010)
- IFRS 3 Business Combinations (amended 2010)
- IFRS 7 Financial Instruments (amended 2010)
- IFRS 9 Financial Instruments (amended 2009)
- IFRIC 13 Customer Loyalty Programmes (amended 2010)
- IFRIC 14 AS19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction (amended 2009)
- IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments
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.
2.
SEGMENTAL REPORTING
The principal activity of the group is the exploration for coal in Pakistan. All expenses are in respect of this
one activity and there are no business segments requiring separate disclosure.
Page 27
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
3.
EMPLOYEES AND DIRECTORS
Wages and salaries
Social security costs
The average monthly number of employees during the year was as follows:
Directors
Directors' remuneration
4.
NET FINANCE INCOME
Finance income:
Deposit account interest
Other loan interest
5.
LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging:
Depreciation - owned assets
Auditors' remuneration
2010
£
77,000
5,781
2009
£
89,969
8,590
82,781
98,559
2010
2009
3
3
2010
£
77,000
2009
£
89,969
2010
£
470
615
1,085
2009
£
139
677
816
2010
£
758
9,800
2009
£
768
11,100
The depreciation charges shown above have been capitalised as exploration costs by the subsidiary
company in accordance with the accounting policy.
6.
INCOME TAX
Analysis of the tax charge
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2010 nor for
the year ended 31 December 2009.
Page 28
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
6.
INCOME TAX - continued
Factors affecting the tax charge
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is
explained below:
Loss on ordinary activities before tax
Loss on ordinary activities
multiplied by the standard rate of corporation tax
in the UK of 28% (2009 - 28%)
Effects of:
Interest capitalised in subsidiary
Potential deferred taxation on losses for year
Effect of change of rate of tax
Expenses disallowed for tax purposes
Total income tax
Tax effects relating to effects of
other comprehensive income
Exchange difference on consolidation
Exchange difference on consolidation
2010
£
(221,589)
2009
£
(235,230)
(62,045)
(65,864)
1,113
60,932
-
-
892
78,210
(13,436)
198
-
-
Gross
1,724
1,724
Gross
(16,143)
(16,143)
2010
Tax
-
-
2009
Tax
-
-
Net
1,724
1,724
Net
(16,143)
(16,143)
The Group and Company has estimated losses of £1,120,729 (2009 - £903,115) to carry forward against
future trading profits. The overseas subsidiary has not yet generated profits or losses and there is no charge
for foreign taxation for the year (2009 - nil).
7.
LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent company
is not presented as part of these financial statements. The parent company's loss for the financial year was
£(217,614) (2009 - £(232,044)).
Page 29
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
8.
EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume
the conversion of all dilutive potential ordinary shares.
Reconciliations are set out below.
2010
Weighted
average
number
of
shares
Per-share
amount
pence
Earnings
£
(221,589) 145,644,977
-0.15
-
23,122,384
-
(221,589) 168,767,361
-0.13
2009
Weighted
average
number
of
shares
Per-share
amount
pence
Earnings
£
(235,230) 120,492,015
-0.20
-
26,242,054
-
(235,230) 146,734,069
-0.16
Basic EPS
Earnings attributable to ordinary shareholders
Effect of dilutive securities
Options granted
Diluted EPS
Adjusted earnings
Basic EPS
Earnings attributable to ordinary shareholders
Effect of dilutive securities
Options granted
Diluted EPS
Adjusted earnings
9.
PRIOR YEAR ADJUSTMENT
The board of directors have reviewed the Group's accounting policy regarding the treatment of exchange
differences arising on the consolidation of overseas subsidiary undertakings. The policy has been amended
so that net exchange differences classified as equity are separately tracked in a translation reserve rather
than being included in retained earnings.
As a result of the change of policy, the opening retained earnings as at 1 January 2009 have been reduced
by £9,856 with a translation reserve being created for the same amount. The exchange translation difference
of £16,143 included in the retained earnings in 2009 has now been re-classified to the translation reserve to
create an opening negative translation reserve of £6,287 as at 1 January 2010 with the opening retained
earnings increased by an equivalent amount.
Page 30
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
10.
INTANGIBLE ASSETS
Group
COST
At 1 January 2010
Additions
Exchange differences
At 31 December 2010
NET BOOK VALUE
At 31 December 2010
COST
At 1 January 2009
Additions
Exchange differences
At 31 December 2009
NET BOOK VALUE
At 31 December 2009
Company
COST
At 1 January 2010
Additions
At 31 December 2010
NET BOOK VALUE
At 31 December 2010
At 31 December 2009
Exploration
costs
£
492,131
358,307
5,392
855,830
855,830
Exploration
costs
£
409,722
124,551
(42,142)
492,131
492,131
Exploration
costs
£
241,399
128,785
370,184
370,184
241,399
Page 31
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
10.
INTANGIBLE ASSETS - continued
Company
COST
At 1 January 2009
Additions
At 31 December 2009
NET BOOK VALUE
At 31 December 2009
11.
PROPERTY, PLANT AND EQUIPMENT
Group
COST
At 1 January 2010
Additions
Exchange differences
At 31 December 2010
DEPRECIATION
At 1 January 2010
Charge for year
Exchange differences
At 31 December 2010
NET BOOK VALUE
At 31 December 2010
Exploration
costs
£
181,006
60,393
241,399
241,399
Motor
vehicles
£
Computer
equipment
£
5,999
-
124
6,123
2,927
627
61
3,615
-
437
-
437
-
131
-
131
Totals
£
5,999
437
124
6,560
2,927
758
61
3,746
2,508
306
2,814
Page 32
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
11.
PROPERTY, PLANT AND EQUIPMENT - continued
Group
COST
At 1 January 2009
Exchange differences
At 31 December 2009
DEPRECIATION
At 1 January 2009
Charge for year
Exchange differences
At 31 December 2009
NET BOOK VALUE
At 31 December 2009
12.
INVESTMENTS
Company
COST
At 1 January 2010
and 31 December 2010
NET BOOK VALUE
At 31 December 2010
COST
At 1 January 2009
and 31 December 2009
NET BOOK VALUE
At 31 December 2009
Motor
vehicles
£
7,310
(1,311)
5,999
2,632
768
(473)
2,927
3,072
Shares in
group
undertakings
£
64,115
64,115
Shares in
group
undertakings
£
64,115
64,115
Page 33
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
12.
INVESTMENTS - continued
Company
The group or the company's investments at the statement of financial position date in the share capital of
companies include the following:
Subsidiary
Sindh Carbon Energy Limited
Country of incorporation: Pakistan
Nature of business: Coal exploration and mining
Class of shares:
Ordinary
Aggregate capital and reserves
%
holding
80.00
2010
£
80,144
2009
£
80,144
The subsidiary company was incorporated in Pakistan on 23 January 2007 for the exploration and future
extraction of coal in Pakistan. This company was formed under a joint venture arrangement whereby Oracle
Coalfields plc agreed to acquire 80% of the ordinary share capital at par, fully paid by cash.
The investment in share capital for the 80% holding amounted to £64,115.
13.
LOANS AND OTHER FINANCIAL ASSETS
Group
At 1 January 2010
Exchange movement
At 31 December 2010
At 1 January 2009
Exchange movement
At 31 December 2009
Other
loans
£
63,186
459
63,645
Other
loans
£
68,029
(4,843)
63,186
Page 34
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
13.
LOANS AND OTHER FINANCIAL ASSETS - continued
Group
Oracle Coalfields plc entered into a joint venture agreement with Sindh Koela Limited for the exploration of
coal through a project company, Sindh Carbon Energy Limited incorporated in Pakistan, dated 6 September
2006 and amended on 17 June 2008. Under the terms of the agreement Sindh Koela Limited is entitled to
receive 20% of the issued shares in Sindh Carbon Energy Limited and these shares are funded by a loan
from Oracle Coalfields plc. The obligation to fund the 20% shareholding is capped at 5,000,000 shares of
PKR 10 per share. The loan accrues interest on a daily basis at a rate of 9% per annum. The loan is
unsecured and repayable from 50% of dividends due to Sindh Koela Limited from Sindh Carbon Energy
Limited, when the joint venture starts to generate revenues, or repayable in full on any early transfer of shares
by Sindh Koela Limited in Sindh Carbon Energy Limited.
There is a loan of PKR 2,000,000, amounting to £16,029 (2009 - £16,029) made by Oracle Coalfields plc
to Sindh Koela Limited, representing Sindh Koela Limited's initial 20% shareholding of 200,000 shares of
PKR 10 per share.
Further loans were made to Sindh Koela Limited to fund initial expenditure in Pakistan on behalf of the Group
as follows:
At the statement of financial position date there is a loan of £25,000 (2009 - £25,000) from Oracle
Coalfields plc to Sindh Koela Limited. The loan is interest free, unsecured and is not due for repayment
until the joint venture starts to generate revenues.
At the statement of financial position date there is a loan of PKR 3,000,000, amounting to £22,616 (2009
- £22,157) from Sindh Carbon Energy Limited to Sindh Koela Limited. The loan is interest free, unsecured
and is not due for repayment until the joint venture starts to generate revenues.
Company
At 1 January 2010
New in year
Loans to
group
undertakings
£
203,336
235,000
Other
loans
£
41,029
-
Totals
£
244,365
235,000
At 31 December 2010
438,336
41,029
479,365
At 1 January 2009
New in year
Loans to
group
Other
undertakings loans
Totals
£
172,356
30,980
£
41,029
-
£
213,385
30,980
At 31 December 2009
203,336
41,029
244,365
In addition to the loans made by Oracle Coalfields plc to Sindh Koela Limited as detailed above, Oracle
Coalfields plc made loans of £235,000 (2009 - £30,980) to Sindh Carbon Energy Limited, its subsidiary
company during the period and the amount outstanding at the statement of financial position date was
£438,336 (2009 - £203,336). Interest accrues on a daily basis at a rate of 1% over the Bank of England
base rate. The loan is unsecured and although it is repayable on demand, it is unlikely to be repaid until the
project becomes successful and the subsidiary starts to generate revenue.
Page 35
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
14.
TRADE AND OTHER RECEIVABLES
Current:
Other receivables
VAT
Prepayments and accrued income
15. CASH AND CASH EQUIVALENTS
Bank deposit account
Bank accounts
16. NON-CONTROLLING INTERESTS
Group
Company
2010
£
5,186
25,602
5,305
2009
£
3,497
2,753
6,072
2010
£
18,417
25,602
4,807
2009
£
12,827
2,753
6,072
36,093
12,322
48,826
21,652
Group
Company
2010
£
1,447,680
58,795
2009
£
-
5,859
2010
£
1,447,680
10,000
2009
£
-
4,066
1,506,475
5,859
1,457,680
4,066
The minority interest of £16,029 represents 20% of the issued share capital of the subsidiary which is held
by Sindh Koela Limited, a company in which the Group is involved in a joint venture arrangement. Since the
subsidiary was incorporated for the joint venture, there are no pre-acquisition reserves or goodwill.
17. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid
184,211,000 (2009 - 122,359,668) Ordinary shares of 0.1p each
2010
£
2009
£
184,211
122,360
43,351,332 Ordinary shares of 0.1p each were allotted as fully paid for cash at a premium of 2.9p per share
during the year.
18,500,000 Ordinary shares of 0.1p each were allotted as fully paid for cash at a premium of 5.4p per share
during the year.
The number of shares in issue are as follows:
At 1 January 2010
Issued during the year
At 31 December 2010
2010
No.
2009
No.
122,359,668 114,046,334
8,313,334
61,851,332
184,211,000 122,359,668
Page 36
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
18.
RESERVES
Group
At 1 January 2010 – as previously reported
Prior year adjustment
Retained
earnings
£
(919,495)
6,287
Share
premium
£
1,309,043
-
Translation
reserve
£
-
(6,287)
Totals
£
389,548
-
As restated
(913,208)
1,309,043
(6,287)
389,548
Deficit for the year
Cash share issue
Cost of share issue
Exchange translation difference
(221,589)
-
-
-
2,256,189
(280,941)
-
-
-
1,724
(221,589)
2,256,189
(280,941)
1,724
At 31 December 2010
(1,134,797)
3,284,291
(4,563)
2,144,931
At 1 January 2009 – as previously reported
Prior year adjustment
Retained
earnings
£
(668,122)
(9,856)
Share
premium
£
1,068,406
-
Translation
reserve
£
-
9,856
Totals
£
400,284
-
As restated
(677,978)
1,068,406
9,856
400,284
Deficit for the year
Cash share issue
Cost of share issue
Exchange translation difference
(235,230)
-
-
-
241,087
(450)
-
-
-
(16,143)
(235,230)
241,087
(450)
(16,143)
At 31 December 2009 – as restated
(913,208)
1,309,043
(6,287)
389,548
Company
At 1 January 2010
Deficit for the year
Cash share issue
Cost of share issue
Retained
earnings
£
(903,823)
(217,614)
-
-
Share
premium
£
1,309,043
2,256,189
(280,941)
Totals
£
405,220
(217,614)
2,256,189
(280,941)
At 31 December 2010
(1,121,437)
3,284,291
2,162,854
At 1 January 2009
Deficit for the year
Cash share issue
Cost of share issue
Retained
earnings
£
(671,779)
(232,044)
-
-
Share
premium
£
1,068,406
241,087
(450)
Totals
£
396,627
(232,044)
241,087
(450)
At 31 December 2009
(903,823)
1,309,043
405,220
page 44
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
19.
TRADE AND OTHER PAYABLES
Current:
Trade payables
Social security and other taxes
Other payables
Accruals and deferred income
Group
Company
2010
£
60,367
1,434
904
56,981
2009
£
20,409
-
17,219
11,005
2010
£
60,367
1,434
904
10,400
2009
£
20,409
-
17,219
10,389
119,686
48,633
73,105
48,017
page 45
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
20.
FINANCIAL INSTRUMENTS
The Group and Company financial instruments comprise cash and cash equivalents, loan investments and
financial assets and various items such as trade receivables, trade payables, accruals and prepayments that
arise directly from its operations.
The main purpose of these financial instruments is to finance the Group's operations. The Board regularly
reviews and agrees policies for managing the level of risk arising from the Group's financial instruments which
are summarised as follows
Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group's policy throughout the year has been to ensure that it has adequate liquidity to meet its liabilities
when due by careful management of its working capital.
The following tables illustrate the contractual maturity profiles of its financial liabilities, all of which are
repayable within one year, as at 31 December:
Group
Trade and other payables
Tax liabilities
Company
Trade and other payables
Tax liabilities
2010
£
118,252
1,434
2009
£
48,633
-
119,686
48,633
71,671
1,434
48,017
-
73,105
48,017
Credit Risk
The Group's principal financial assets are the cash and cash equivalents and taxation receivable as
recognised in the statement of financial position, and which represent the Group's maximum exposure to
credit risk in relation to financial assets.
The Company has made an unsecured loan of £438,336 (2009 - £203,336) to its subsidiary Sindh Carbon
Energy Limited. Although it is repayable on demand, it is unlikely to be repaid until the project becomes
successful and the subsidiary starts to generate revenue.
Capital Management
The Company's capital consists wholly of ordinary shares. The Board's policy is to preserve a strong capital
base in order to maintain investor, creditor and market confidence and to safeguard the future development
of the business, whilst balancing these objectives with the efficient use of capital.
Market Risk
Market risk is the risk that changes in market prices, such as commodity prices, foreign exchange rates,
interest rates and equity prices will affect the Group's and Company's income or value of it's holdings in
financial instruments.
Commodity Price Risk
The principal activity of the Group is the development of a coal mining property in Pakistan and the principal
market risk facing the Group is an adverse movement in the commodity price of coal. Any long term adverse
movement in this price would affect the commercial viability of the project.
Page 39
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continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
21.
RELATED PARTY DISCLOSURES
During the year, Oracle Coalfields plc has accrued interest receivable of £3,975 (2009 - £3,186) and £615
(2009 - £677) in respect of loans made to Sindh Carbon Energy Limited and Sindh Koela Limited
respectively. The interest was outstanding at the year end and is included within other receivables.
Key management personnel compensation
The directors' and key management personnel of the Group during the year were are follows:
Mr S Khan (Chairman and chief executive officer)
Mr A C R Scutt (Non-executive director)
Mr M R Stead (Non-executive director)
The aggregate compensation made to key management personnel of the Group is set out below:
Short-term employee benefits
Post-employment benefits
Termination benefits
Share-based benefits
2010
£
77,000
-
-
-
2009
£
89,969
-
-
-
77,000
89,969
Details of key management personnel compensation are disclosed in the Remuneration Report included in
the Directors Report.
Key management personnel equity holdings
Details of key management personnel beneficial interests in the fully paid Ordinary shares of the Company
and share options held are unchanged during the year and are disclosed in the Directors Report.
22.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Group
Loss for the financial year
Proceeds of share issue
Cost of share issue
Exchange translation difference
Net addition/(reduction) to shareholders' funds
Opening shareholders' funds
Closing shareholders' funds
2010
£
(221,589)
2,318,040
(280,941)
1,724
2009
£
(235,230)
249,401
(450)
(16,143)
1,817,234
511,908
(2,422)
514,330
2,329,142
511,908
Page 40
page 47
continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
22.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS - continued
Company
Loss for the financial year
Proceeds from issue of shares
Cost of share issue
Net addition to shareholders' funds
Opening shareholders' funds
Closing shareholders' funds
2010
£
(217,614)
2,318,040
(280,941)
2009
£
(232,044)
249,401
(450)
1,819,485
527,580
16,907
510,673
2,347,065
527,580
Page 41
page 48
continued...
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued
FOR THE YEAR ENDED 31 DECEMBER 2010
23.
SHARE-BASED PAYMENT TRANSACTIONS
The Company has a share option programme that entitles the holders to purchase shares in the Company
with the options exercisable at the price determined at the date of granting the option. The terms and
conditions of the grants are as follows; there are no vesting conditions to be met and all options are to be
settled by the issue of shares:
Grant date
13 February 2007
Number of
instruments
Contractual
life of options
20,080,000
5 years
The number and weighted average exercise prices of share options is as follows:
Weighted
average
exercise price
Weighted
average
exercise price
Number of
options
2010
2010
2009
Number of
options
2009
Outstanding at 1 January
Expired during the period
6.89p
14.00p
25,742,054
(5,662,054)
6.89p
-
25,742,054
-
Outstanding at 31 December
5.00p
20,080,000
6.89p
25,742,054
Exercisable at 31 December
5.00p
20,080,000
6.89p
25,742,054
No share options were exercised during the year (2009 - nil). During the year 5,662,054 (2009 - nil) share
options expired unexercised with a weighted average exercise price of 14p. The options outstanding at 31
December 2010 have an exercise price of 5p (2009 - range of 5p to 14p), and a weighted average
remaining contractual life of 1.27 years (2009 - 1.85 years).
The fair value of services received and commission payable in return for share options granted is based on
the fair value of share options granted, measured using a binomial lattice model, with the following inputs:
Services
Fair value at grant date
Share price
Exercise price
Expected volatility
Option life
Risk-free interest rate
2007
0.0003p
1p
5p
20%
5 years
5%
The expected volatility was determined by reviewing the actual volatility of the company's share price since
its listing on PLUS to the date of granting the option. In calculating the fair value, consideration was given to
the market trends at the grant date of the option.
There were no equity-settled share-based payment transactions during the year and therefore no charges to
include in the financial statements (2009 - £nil).
Page 42
page 49
notICe of annual general meetIng
Notice is hereby given that the Annual General Meeting (Meeting) of Oracle Coalfields plc (the Company) will be held
at Sceptre Court, 40 Tower Hill, London EC3N 4DX on Tuesday 21 June 2011 at 2.30 pm to transact the following
business:
aS orDinary BuSineSS
To consider and if thought fit, to pass the following resolutions which will be proposed as ordinary resolutions:
1.
To receive and adopt the Company’s audited accounts for the period from 1 January 2010 to 31 December
2010 and the directors’ and auditors’ reports thereon;
2.
To re-elect Martin Roderick Stead as a director of the Company; and
3.
To re-appoint Price Bailey LLP as auditors to hold office from the conclusion of the meeting to the conclusion
of the next meeting at which the accounts are laid before the Company and authorise the directors to fix the
auditors’ remuneration.
Special BuSineSS
To consider and if thought fit, to pass the following resolutions, of which resolution 4 will be proposed as an ordinary
resolution and resolution 5 will be proposed as a special resolution:
4.
THAT, for the purposes of section 551 of the Companies Act 2006 (the Act) the directors of the Company be
and are hereby generally and unconditionally authorised to exercise all powers of the Company to allot equity
securities (within the meaning of section 560 of the Act) up to an aggregate nominal amount of £100,000
provided that this authority shall expire (unless previously renewed, varied or revoked by the Company in gen-
eral meeting) at the conclusion of the next annual general meeting of the Company, save that the Company
may before such expiry make an offer or agreement which would or might require relevant securities to be
allotted after such expiry and the directors of the Company may allot relevant securities in pursuance of such
an offer or agreement as if the authority conferred hereby had not expired.
This authority is in substitution for any and all authorities previously conferred upon the directors for the
purposes of section 551 of the Act, without prejudice to any allotments made pursuant to the terms of such
authorities.
5.
THAT, subject to the passing of resolution 4 above the directors of the Company be and are hereby empow-
ered pursuant to section 570 of the Act to allot equity securities (within the meaning of section 560 of the
Act) pursuant to the authority conferred by resolution 4 above as if section 561 of the Act did not apply to any
such allotment provided that the power conferred by this resolution shall be limited to:
5.1.
the allotment of equity securities for cash in connection with an issue or offer of equity securities (including,
without limitation, under a rights issue, open offer or similar arrangement) to holders of equity securities in pro-
portion (as nearly as may be practicable) to their respective holdings of equity securities subject only to such
exclusions or other arrangements as the directors of the Company may consider necessary or expedient to
page 50
deal with fractional entitlements or legal or practical problems under the laws of any territory, or the require-
ments of any regulatory body or stock exchange in any territory; and
5.2.
the allotment (otherwise than pursuant to resolution 5.1) of equity securities for cash up to an aggregate
nominal value of £100,000.
The power conferred by this resolution 5 shall expire (unless previously renewed, revoked or varied by the
Company in general meeting), at such time as the general authority conferred on the directors of the Com-
pany by resolution 4 above expires, except that the Company may at any time before such expiry make any
offer or agreement which would or might require equity securities to be allotted after such expiry and the
directors of the Company may allot equity securities in pursuance of such an offer or agreement as if the
authority conferred hereby had not expired.
By order of the Board
Edward Taylor
Company secretary
Oracle Coalfields PLC
Richmond House
Broad Street
Ely, Cambridgeshire CB7 4AD
Community meeting near Block VI, Thar Coalfield, Sindh Province
page 51
notes to the notICe of annual general meetIng
appointment oF proxieS
1 Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those
members registered on the Company’s register of members at 2.30 pm on Friday 17 June 2011 or, if this Annual
General Meeting is adjourned, 48 hours (excluding bank holidays and weekends) prior to the time fixed for the ad-
journed meeting, shall be entitled to attend and vote at the Annual General Meeting.
2 As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak
and vote at the Meeting and you should have received a proxy form with this notice of meeting. You can only appoint a
proxy using the procedures set out in these notes and the notes to the proxy form.
3 A proxy does not need to be a member of the Company but must attend the Annual General Meeting to represent
you. Details of how to appoint the Chairman of the Annual General Meeting or another person as your proxy using
the proxy form are set out in the notes to the proxy form. If you wish your proxy to speak on your behalf at the An-
nual General Meeting you will need to appoint your own choice of proxy (not the Chairman) and give your instructions
directly to them.
4 You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares.
You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than one
proxy, please contact the Company’s Registrars, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen,
West Midlands B63 3DA to obtain another hard copy form.
5 A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or
against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion.
Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the
Annual General Meeting.
6 The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote. To
appoint a proxy using the proxy form, the form must be completed and signed, sent or delivered to the Company’s
Registrars, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA by no later
than 2.30 pm on Friday 17 June 2011. Completion and return of the form of proxy will not preclude a member from
attending and voting in person at the Annual General Meeting.
7
8
In the case of a member which is a company, the proxy form must be executed under its common seal or signed on
its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority
under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the
proxy form.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment
submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the
joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being the
most senior).
9 To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note
that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any
amended proxy appointment received after the relevant cut-off time will be disregarded. Where you have appointed a
proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy form,
please contact the Company’s Registrars, Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West
Midlands B63 3DA. If you submit more than one valid proxy appointment, the appointment received last before the
latest time for the receipt of proxies will take precedence.
page 52
oraCle CoalfIelDs plC
annual general meetIng proxy form
Before completing this form, please read the explanatory notes overleaf.
I /we (BloCK CapItals please)……….…………….............................................................................…. (name(s)) of
……………………………………………………………………………………………………………………
……………………………………….……............................................................................………….(address(es))
being (a) member(s) of the Company appoint the Chairman of the meeting or (see note 3) as my/our proxy to attend, speak and
vote on my/our behalf at the annual general meeting of the Company to be held on tuesday 21st June 2011 at 2.30pm and at
any adjournment of the meeting.
I/we direct my/our proxy to vote on the following resolutions as I/we have indicated by marking the appropriate box with an ‘x’.
If no indication is given, my/our proxy will vote or abstain from voting at his or her discretion and I/we authorise my/our proxy to
vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.
for
against
vote
withheld
reSolutionS
1 Ordinary Resolution
to receive and adopt the Company’s audited accounts for the year
ended 31 December 2010
2 Ordinary Resolution
to re-elect martin roderick stead as a Director of the Company
3 Ordinary Resolution
to reappoint price Bailey llp as auditors of the Company
4 Ordinary Resolution
to authorise the Directors to allot relevant securities up to an aggregate
nominal amount of £100,000
5 Special Resolution
to disapply pre-emption rights in relation to the allotment of securities
up to an aggregate nominal amount of £100,000
signature
Date
page 53
noteS to the proxy Form
1 As a member of the Company you are entitled to appoint a proxy to exercise all or any of your rights to attend, speak and
vote at a general meeting of the Company. You can only appoint a proxy using the procedures set out in these notes.
2 Appointment of a proxy does not preclude you from attending the meeting and voting in person. If you have appoint-
ed a proxy and attend the meeting in person, your proxy appointment will automatically be terminated.
3 A proxy does not need to be a member of the Company but must attend the meeting to represent you. To appoint
as your proxy a person other than the Chairman of the meeting, insert their full name in the box. If you sign and return
this proxy form with no name inserted in the box, the Chairman of the meeting will be deemed to be your proxy.
Where you appoint as your proxy someone other than the Chairman, you are responsible for ensuring that they
attend the meeting and are aware of your voting intentions. If you wish your proxy to make any comments on your
behalf, you will need to appoint someone other than the Chairman and give them the relevant instructions directly.
4
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different
shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more than
one proxy, you may photocopy this form. Please indicate the proxy holder’s name and the number of shares in rela-
tion to which they are authorised to act as your proxy (which, in aggregate, should not exceed the number of shares
held by you). Please also indicate if the proxy instruction is one of multiple instructions being given. If you wish to
appoint the Chairman as one of your multiple proxies, simply write “the Chairman of the Meeting”. All forms must be
signed and should be returned together in one envelope.
5
To direct your proxy how to vote on the resolutions mark the appropriate box with an ‘X’. To abstain from voting on a
resolution, select the relevant “Vote withheld” box. A vote withheld is not a vote in law, which means that the vote will
not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will
vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in
relation to any other matter which is put before the meeting.
6
To appoint a proxy using this form, the form must be:
• completed and signed;
• sent or delivered to Neville Registrars Limited, Neville House, 18 Laurel Lane, Halesowen, West Midlands B63 3DA;
• and received by Neville Registrars Limited no later than Friday 17 June 2011 at 2.30 pm.
7
In the case of a member which is a company, this proxy form must be executed under its common seal or signed on
its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority
under which this proxy form is signed (or a duly certified copy of such power or authority) must be included with the
proxy form.
8
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appoint-
ment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names
of the joint holders appear in the Company’s register of members in respect of the joint holding (the first-named being
the most senior).
9 CREST members who wish to appoint a proxy or proxies by using the CREST electronic appointment service may do
so by using the procedures described in the CREST Manual. To be valid, the appropriate CREST message, regard-
less of whether it constitutes the appointment of a proxy or an amendment to the instructions given to a previously
appointed proxy, must be transmitted so as to be received by our agent Neville Registrars Limited 7RA11 by Sunday
19 June 2011 at 2.30 pm.
10 You may not use any electronic address provided in this proxy form to communicate with the Company for any pur-
poses other than those expressly stated.
11
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the
receipt of proxies will take precedence.
12 For details of how to change your proxy instructions see the notes to the notice of meeting.
page 54
NOTES
page 55