TIDMSAC
RNS Number : 0767O
SacOil Holdings Limited
16 September 2013
SACOIL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1993/000460/06)
JSE share code: SCL
AIM share code: SAC
ISIN: ZAE000127460
("SacOil" or "the Company" or "the Group")
AUDITED RESULTS
for the year ended 28 February 2013
SacOil Holdings Limited is pleased to announce its results
for the year ended 28 February 2013.
KEY HIGHLIGHTS
- For the year under review
- Another geography and asset is added in Malawi
- Posting of performance bond on OPL 233 in Nigeria
- Extension of OPL 233 exploration phase by the Nigerian
National Petroleum Corporation
- Approval of OPL 233 extension work programme and budget
- Renegotiation of farm-in and joint operating terms for OPL
233
- Total acquires a further 6.67% interest in Block III from
SacOil's partner in Semliki
- Airborne gravity and magnetic survey acquired for Block
III
Subsequent to the year under review
- Appointment of Tito Mboweni to the SacOil Board as the
independent non-executive Chairman
- Appointments of Vusumzi Pikoli Mzuvukile Maqetuka and
Stephanus Muller to the SacOil Board as independent non-executive
directors
- Appointments of Ignatius Sehoole as non-executive director-
Appointments of Roger Rees as Chief Executive Officer and Tariro
Mudzimuirema as Finance Director
- Constitution of various Board committees
- Planned recapitalisation of the Company through a renounceable
Rights Offer
- Planned equity settlement of Gairloch loans
- Request for tender for OPL 233 seismic survey
Commenting, Roger Rees, Chief Executive of SacOil said: "With
the successful recapitalisation of the Company, it will be
debt-free and in a significantly stronger position to be able to
move its existing asset portfolio forward and as such create value
for shareholders. The Company has a management team with a strong
track record of developing resource assets and the portfolio itself
holds significant potential. It is a strong balance of high-impact
exploration licences, along with lower risk appraisal and near-term
production prospects, all of which are in highly prospective areas,
such as the DRC Lake Albert Area, part of the proven East African
Rift System, and the Niger Delta, in Nigeria."
OVERVIEW
For the year ended 28 February 2013 the Group reported a
reduction in the loss from continuing operations to R70,1 million
(2012: R104,1 million). Contributing towards this positive trend
were the disposal of the loss-making Greenhills Manganese plant,
the farm-out profit on the Block III exploration and evaluation
asset, an increase in investment income by 59%, a 76% reduction in
taxation and a 46% reduction in finance costs.
Although the Group's audit report contains an emphasis of matter
paragraph about the Group's ability to continue as a going concern,
the directors are confident that, upon completion of the proposed
recapitalisation of the Company by way of the planned Rights Offer
and the equity settlement of the Gairloch loans, the Group will be
able to continue its operations for the foreseeable future, that is
for a period of at least 12 months.
FINANCIAL PERFORMANCE
Other income
During the period under review the Group generated other income
of R123,2 million (2012: R248,6 million) comprising:
- A profit of R71,1 million (2012: loss of R83,4 million
included under "other operating costs") realised by Semliki Energy
SPRL ("Semliki") on disposal of a 6.67% (2012: 60%) interest in
Block III to Total RDC ("Total") in March 2012 (2012: March 2011)
for a cash consideration of R76,0 million (US$10 million) (2012:
R143,5 million (US$15 million)) and a future contingent
consideration of R26,8 million (2012: R219,1 million). The
transaction was initiated by and benefited SacOil's partner in
Semliki. SacOil's effective interest in Block III has remained
unchanged at 12.5%;
- Foreign exchange gains totalling R32,1 million (2012: R6,2
million). The Group's foreign exchange gains arise on translation
of US dollar denominated loans receivable from Energy Equity
Resources (Norway) Limited ("EERNL"), as well as on the cash that
is collateralised as security on the performance bond for OPL 233;
and A transaction break fee of R7,9 million (2012: nil) received
from a third party and various other income items totalling R12,1
million (2012: nil).
The decrease in other income primarily reflects a decrease in
the Group's farm-out activity offset by increases in foreign
exchange gains.
Other operating costs
Other operating costs totalled R175,6 million (2012: R162,0
million) for the year under review. These costs primarily
include:
- The write-down of R129,9 million (2012: nil) of future
expected cash flows from the contingent consideration for the Block
III farm-outs in March 2011 and March 2012. The write-down was
necessitated by the change in timelines impacting the receipt of
the contingent consideration and is reflective of the time value of
money;
- Remuneration costs of R15,9 million (2012: R13,4 million);
- Audit fees of R4 million (2012: R0,3 million);
- Consulting fees totalling R3,7 million (2012: R11
million);
- Legal fees of R4,1 million (2012: R9,3 million); and
- Corporate costs totalling R4,6 million (2012: R8,6
million).
Included in the 2012 other operating costs were the loss of
R83,4 million on the farm-out of Block III in March 2011 and the
one-off AIM listing costs of R21,9 million.
Investment income
During the reporting period the Group generated investment
income of R46,9 million (2012: R29,5 million) primarily
comprising:
- Interest income of R37,6 million (2012: R15,6 million) earned
on the loans receivable from EERNL. These loans increased to R177,4
million (2012: R66,2 million) in the current year due to EERNL's
share of the performance bond cash collateral and related costs,
interest and foreign exchange gains;
- Interest income of R8,5 million (2012: R13,4 million) accruing
to the Group as a result of the unwinding of the time value
discount applied to the contingent consideration for Block III
pursuant to the farm-outs in March 2011 and March 2012.
Finance costs
In order to fund the cash collateral of R79,4 million (US$10
million) required to post the performance bond on OPL 233, the
Group secured borrowings from Renaissance BJM Securities
(Proprietary) Limited ("Rencap") and Yorkville Advisors LLP
("Yorkville"). This additional funding requirement increased
finance costs to R58,9 million (2012: R44,4 million). Of these
costs, finance costs amounting to R35,1 million (2012: nil) have
been capitalised to the OPL 233 asset, under exploration and
evaluation assets, as they are directly attributable to the
acquisition of a qualifying asset (2012: nil).
Taxation
The Group achieved a 76% reduction in taxation. Taxation was
significantly higher in 2012 as a result of deferred tax of R105,3
million on the initial recognition of the contingent consideration
and capital gains tax of R41,0 million, on the farm-out of Block
III in March 2011. The farm-out in the current year resulted in
capital gains tax of R28,5 million (2012: R41,0 million). The
current year net deferred tax credit was R32,7 million (2012:
charge of R105,3 million) which comprised the following:
- Recognition of a deferred tax charge of R10,7 million (2012:
R105,3 million) associated with the current contingent
consideration;
- Recognition of a deferred tax credit of R67,3 million
corresponding to the write-down of the prior contingent
consideration; and
- Recognition of a deferred tax charge of R23,9 million
associated with the unwinding of the discount and foreign exchange
gains
on the contingent consideration.
Other tax charges included withholding tax on foreign dividends
of R8,1 million (2012: R10,2 million) and foreign taxes amounting
to R36,9 million (2012: R10,2 million).
FINANCIAL POSITION
Non-current assets
Non-current assets increased by 9% as a result of increases in
other financial assets and exploration and evaluation assets,
offset by a decrease in property, plant and equipment. The US
dollar-based long-term loan due from EER, included in other
financial assets, increased to R93,5 million (2012: R66,2 million)
in the current year due to the weakening of the Rand and
accumulated interest. The Group also re-classified as long term,
under other financial assets, a receivable of R56,7 million,
following the re-negotiation of the terms of settlement of this
financial asset during February 2013. This receivable, which is due
for settlement by February 2016, has been discounted to reflect the
present value of the future receivable of R75,5 million. Other
loans due from operating partners also increased to R35,3 million
(2012: R1,9 million) due to increases in activity in our
operations.
The contingent consideration, under other financial assets,
decreased to R181,5 million (2012: R263,3 million) as a result of
the write-down outlined above offset by the contingent
consideration from the farm-out of Block III in March 2012 of R26,8
million (2012: R219,1 million) and interest income and foreign
exchange gains amounting to R21,3 million.
The farm-out of Block III in March 2012 resulted in the
derecognition of a portion of exploration and evaluation assets
amounting to R27,0 million (2012: R242,1 million). This decrease
was offset by the capitalisation of borrowing costs amounting to
R35,1 million to exploration and evaluation assets, in respect of
the OPL 233 asset.
The disposal of the Greenhills plant resulted in the recognition
of an impairment loss of R1,0 million (2012: nil) on the
remeasurement of property, plant and equipment to fair value less
costs to sell, and the derecognition of R4,3 million of buildings,
plant and equipment.
Current assets
Current assets increased by 85% as a result of increases in
other financial assets and cash and cash equivalents, offset by
decreases in inventory and trade and other receivables. Cash and
cash equivalents as at 28 February 2013 included the revalued cash
collateral of R89,1 million (US$10 million) (2012: nil) held as
security for the performance bond on OPL 233. Other financial
assets included the short-term loan due from EERNL of R83,8 million
(2012: nil) which relates to EERNL's 50% share of costs relating to
the cash collateral. The reclassification of a receivable of R75,5
million follows the re-negotiation of the settlement of this
financial asset as outlined above. The disposal of the Greenhills
Manganese plant in September 2012 eliminated inventories (2012:
R2,5 million) and trade receivables
(2012: R3,6 million).
Non-current liabilities
Non-current liabilities decreased by 32% reflective of the
decrease in deferred tax on the contingent consideration which
decreased to R181,5 million (2012: R263,3 million).
Current liabilities
In order to fund the cash collateral of R79,4 million (US$10
million) required to post the performance bond on OPL 233, the
Group secured borrowings from Rencap and Yorkville during April
2012. The Yorkville loan was settled in November 2012 through the
issue of equity in SacOil Holdings Limited and a cash payment of
US$1,0 million.
As announced on 31 December 2012, the Rencap loan was novated to
Gairloch in December 2012. The loans due to Gairloch at 28 February
2013 were R129,0 million (2012: nil). On 12 September 2013, the
Company concluded an agreement with Gairloch for the settlement of
the loan through an issue of equity in SacOil, subject to
shareholders approval. The loans continue to incur interest at 8%
and 10% per month, respectively, until 30 September 2013, being the
calculation date agreed with Gairloch under the Subscription and
Settlement Agreement. A circular providing details of the loan
conversion incorporating a Notice of General Meeting, will be
issued as soon as practicable.
The Group is also indebted to Nigdel for operating costs of R2,4
million on OPL 233 (2012: nil).
Taxes payable increased to R94,0 million (2012: R20,5 million)
as a result of the capital gains tax on the 6.67% farm-out of Block
III of R28,5 million, withholding tax on foreign dividends of R8,1
million and foreign taxes amounting to R36,9 million (2012: R20,5
million).
FINANCING OF THE GROUP'S ACTIVITIES
Total cash generated during the year was R83,3 million (2012:
utilisation of R7,1 million) resulting in a year-end balance of
R94,0 million (2012: R10,8 million). This cash is currently held as
collateral for the performance bond on OPL 233 and will be utilised
to fund future exploration activities of the Group.
Net cash from financing activities of R101,5 million (2012:
R51,7 million) is reflective of the loans acquired by the Group to
fund the R79,4 million (US$10 million) cash collateral required to
post the performance bond on OPL 233. Further loans were also
acquired to fund the working capital requirements of the Group.
These loans were acquired as follows:
- R63,5 million (US$8 million) was acquired from Renaissance BJM
Securities (Proprietary) Limited ("Rencap") in April 2012 to part
fund the cash collateral.
- The Rencap loan was novated to Gairloch Limited ("Gairloch")
on 28 December 2012. The novated loan was R96 million (US$11,25
million).
- R30 million (US$3,4 million) was acquired from Yorkville
Advisors LLP in April 2012 to part fund the cash collateral. This
loan was repaid in November 2012.
- R8,2 million (US$1 million) was acquired from Gairloch in
September 2012 to fund working capital requirements.
- R8,8 million (US$1 million) was acquired from Gairloch in
October 2012 to part fund work programme commitments and
working
capital requirements.
RECAPITALISATION OF THE COMPANY AND EQUITY SETTLEMENT OF
GAIRLOCH LOANS
SacOil concluded an agreement dated 12 September 2013 with
Gairloch for the conversion of R238,5 million (US$24,1 million) of
debt and accrued interest provided by Gairloch to equity in SacOil
by no later than 31 January 2014 ("the Specific Issue"), thereby
leaving SacOil debt free, reducing finance costs and significantly
improving its balance sheet position.
Furthermore, the Company intends to raise additional capital of
R570 million by way of a renounceable rights offer of 2 111 111 111
SacOil shares ("Right Offer Shares") at an issue price of R0,27 per
share ("the Rights Offer"), which will be supported by one of the
Company's largest shareholders, the Public Investment Corporation
(SOC) Limited ("the PIC"), to the extent of circa R329 million. The
ratio of rights offered for existing SacOil shares will be in
proportion to each shareholder's respective shareholding in the
Company.
The Specific Issue and the Rights Offer ("the Transactions") are
interconditional and will result in a recapitalisation of the
Company enabling it to actively pursue and develop its oil and gas
prospects. It is expected that the Transactions will be concluded
by 31 January 2014.
OUTLOOK
The successful completion of the Transactions will see the
Company recapitalised and able to fund its existing assets to June
2015.
The Group's underlying assets remain attractive. The proceeds of
the Rights Offer will be applied to moving these assets up the
value curve. Our stronger balance sheet will further allow us to
pursue value enhancing opportunities on the African continent.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Restated*
-------------------------------------------------------------- ------ -------------- --------------
2013 2012
-------------------------------------------------------------- ------ -------------- --------------
Notes R R
-------------------------------------------------------------- ------ -------------- --------------
Other income 123 222 360 248 612 642
-------------------------------------------------------------- ------ -------------- --------------
Other operating costs (175 626 093) (161 990 719)
-------------------------------------------------------------- ------ -------------- --------------
(Loss)/profit from operations (52 403 733) 86 621 923
-------------------------------------------------------------- ------ -------------- --------------
Share-based payment expense - (8 891 216)
-------------------------------------------------------------- ------ -------------- --------------
Operating (loss)/profit (52 403 733) 77 730 707
-------------------------------------------------------------- ------ -------------- --------------
Investment income 46 940 839 29 455 933
-------------------------------------------------------------- ------ -------------- --------------
Finance costs (23 837 213) (44 402 672)
-------------------------------------------------------------- ------ -------------- --------------
(Loss)/profit before taxation (29 300 107) 62 783 968
-------------------------------------------------------------- ------ -------------- --------------
Taxation (40 785 309) (166 884 559)
-------------------------------------------------------------- ------ -------------- --------------
Loss for the year from continuing operations (70 085 416) (104 100 591)
-------------------------------------------------------------- ------ -------------- --------------
Discontinued operation
-------------------------------------------------------------- ------ -------------- --------------
(Loss)/profit for the year from discontinued operation 5 (1 526 959) 2 791 163
-------------------------------------------------------------- ------ -------------- --------------
Loss for the year (71 612 375) (101 309 428)
-------------------------------------------------------------- ------ -------------- --------------
Other comprehensive loss:
-------------------------------------------------------------- ------ -------------- --------------
Release of revaluation reserve on impairment/depreciation
-------------------------------------------------------------- ------ -------------- --------------
of property, plant and equipment (1 045 359) (340 000)
-------------------------------------------------------------- ------ -------------- --------------
Taxation related to components of other comprehensive income - 95 200
-------------------------------------------------------------- ------ -------------- --------------
Other comprehensive loss for the year net of taxation (1 045 359) (244 800)
-------------------------------------------------------------- ------ -------------- --------------
Total comprehensive loss for the year (72 657 734) (101 554 228)
-------------------------------------------------------------- ------ -------------- --------------
Loss attributable to:
-------------------------------------------------------------- ------ -------------- --------------
Equity holders of the parent (55 627 404) (101 294 322)
-------------------------------------------------------------- ------ -------------- --------------
Non-controlling interest (15 984 971) (15 106)
-------------------------------------------------------------- ------ -------------- --------------
(71 612 375) (101 309 428)
-------------------------------------------------------------- ------ -------------- --------------
Total comprehensive loss attributable to:
-------------------------------------------------------------- ------ -------------- --------------
Equity holders of the parent (56 672 763) (101 539 122)
-------------------------------------------------------------- ------ -------------- --------------
Non-controlling interest (15 984 971) (15 106)
-------------------------------------------------------------- ------ -------------- --------------
(72 657 734) (101 554 228)
-------------------------------------------------------------- ------ -------------- --------------
Loss per share from continuing operations
-------------------------------------------------------------- ------ -------------- --------------
Basic (cents) 6 (5,93) (14,51)
-------------------------------------------------------------- ------ -------------- --------------
Diluted (cents) 6 (5,93) (14,43)
-------------------------------------------------------------- ------ -------------- --------------
Loss per share from continuing and discontinued
-------------------------------------------------------------- ------ -------------- --------------
operations
-------------------------------------------------------------- ------ -------------- --------------
Basic (cents) 6 (6,10) (14,12)
-------------------------------------------------------------- ------ -------------- --------------
Diluted (cents) 6 (6,09) (14,04)
-------------------------------------------------------------- ------ -------------- --------------
* Due to a change in accounting policy certain amounts shown
here do not correspond to the 2012 financial statements and reflect
adjustments made as detailed in note 3.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Restated*
------------------------------------------------- ----- -------------- --------------
2013 2012
------------------------------------------------- ----- -------------- --------------
Note R R
------------------------------------------------- ----- -------------- --------------
ASSETS
------------------------------------------------- ----- -------------- --------------
Non-current assets
------------------------------------------------- ----- -------------- --------------
Property, plant and equipment 317 008 6 148 362
------------------------------------------------- ----- -------------- --------------
Exploration and evaluation assets 162 859 167 153 056 333
------------------------------------------------- ----- -------------- --------------
Other intangible assets 161 760 -
------------------------------------------------- ----- -------------- --------------
Other financial assets 371 719 195 331 430 863
------------------------------------------------- ----- -------------- --------------
Total non-current assets 535 057 130 490 635 558
------------------------------------------------- ----- -------------- --------------
Current assets
------------------------------------------------- ----- -------------- --------------
Inventories - 2 540 131
------------------------------------------------- ----- -------------- --------------
Other financial assets 84 803 036 -
------------------------------------------------- ----- -------------- --------------
Trade and other receivables 3 665 149 85 219 043
------------------------------------------------- ----- -------------- --------------
Cash and cash equivalents 94 032 416 10 774 298
------------------------------------------------- ----- -------------- --------------
Total current assets 182 500 601 98 533 472
------------------------------------------------- ----- -------------- --------------
Total assets 717 557 731 589 169 030
------------------------------------------------- ----- -------------- --------------
EQUITY AND LIABILITIES
------------------------------------------------- ----- -------------- --------------
Shareholders' equity
------------------------------------------------- ----- -------------- --------------
Stated capital 7 534 172 123 486 184 423
------------------------------------------------- ----- -------------- --------------
Reserves 26 681 469 29 743 531
------------------------------------------------- ----- -------------- --------------
Accumulated loss (219 700 074) (188 602 491)
------------------------------------------------- ----- -------------- --------------
Equity attributable to equity holders of parent 341 153 518 327 325 463
------------------------------------------------- ----- -------------- --------------
Non-controlling interest 22 298 155 109 943 833
------------------------------------------------- ----- -------------- --------------
Total shareholders' equity 363 451 673 437 269 296
------------------------------------------------- ----- -------------- --------------
Liabilities
------------------------------------------------- ----- -------------- --------------
Non-current liabilities
------------------------------------------------- ----- -------------- --------------
Deferred tax liability 72 588 101 105 304 059
------------------------------------------------- ----- -------------- --------------
Provisions - 1 065 972
------------------------------------------------- ----- -------------- --------------
Total non-current liabilities 72 588 101 106 370 031
------------------------------------------------- ----- -------------- --------------
Current liabilities
------------------------------------------------- ----- -------------- --------------
Other financial liabilities 175 574 827 12 496 195
------------------------------------------------- ----- -------------- --------------
Current tax payable 93 962 655 20 495 100
------------------------------------------------- ----- -------------- --------------
Trade and other payables 11 980 475 12 538 408
------------------------------------------------- ----- -------------- --------------
Total current liabilities 281 517 957 45 529 703
------------------------------------------------- ----- -------------- --------------
Total liabilities 354 106 058 151 899 734
------------------------------------------------- ----- -------------- --------------
Total equity and liabilities 717 557 731 589 169 030
------------------------------------------------- ----- -------------- --------------
Number of shares in issue 953 340 791 832 225 699
------------------------------------------------- ----- -------------- --------------
Net asset value per share (cents) 38,12 52,54
------------------------------------------------- ----- -------------- --------------
Net tangible asset value per share (cents) 21,04 34,15
------------------------------------------------- ----- -------------- --------------
* Due to a change in accounting policy certain amounts shown
here do not correspond to the 2012 financial statements and reflect
adjustments made as detailed in note 3.
CONSOLIDATED STATEMENT OF CASH FLOWS
2013 2012
----------------------------------------------------- ------------- --------------
R R
----------------------------------------------------- ------------- --------------
Cash flows from operating activities
----------------------------------------------------- ------------- --------------
Cash used in operations (18 156 924) (133 918 365)
----------------------------------------------------- ------------- --------------
Interest income 843 988 (1 447 623)
----------------------------------------------------- ------------- --------------
Finance costs - (44 402 672)
----------------------------------------------------- ------------- --------------
Tax paid (33 714) (40 990 200)
----------------------------------------------------- ------------- --------------
Net cash used in operating activities (17 346 650) (220 758 860)
----------------------------------------------------- ------------- --------------
Cash flows from investing activities
----------------------------------------------------- ------------- --------------
Purchase of property, plant and equipment (8 200) (504 209)
----------------------------------------------------- ------------- --------------
Purchase of exploration and evaluation assets (8 478 078) (508 907)
----------------------------------------------------- ------------- --------------
Purchase of other intangible assets (184 869) -
----------------------------------------------------- ------------- --------------
Sale of exploration and evaluation assets 75 997 000 143 465 700
----------------------------------------------------- ------------- --------------
(Increase)/decrease in loans and receivables (68 190 699) 19 493 215
----------------------------------------------------- ------------- --------------
Net cash (used in)/from investing activities (864 846) 161 945 799
----------------------------------------------------- ------------- --------------
Cash flows from financing activities
----------------------------------------------------- ------------- --------------
Proceeds on share issue - 80 000 000
----------------------------------------------------- ------------- --------------
Proceeds from other financial liabilities 150 617 203 23 580 182
----------------------------------------------------- ------------- --------------
Acquisition of non-controlling interest (24 573 795) -
----------------------------------------------------- ------------- --------------
Finance lease payments - (90 508)
----------------------------------------------------- ------------- --------------
Dividends paid to NCI (24 573 794) (51 801 149)
----------------------------------------------------- ------------- --------------
Net cash from financing activities 101 469 614 51 688 525
----------------------------------------------------- ------------- --------------
Total movement in cash and cash equivalents for the
year 83 258 118 (7 124 536)
----------------------------------------------------- ------------- --------------
Cash and cash equivalents at the beginning of the
year 10 774 298 17 898 834
----------------------------------------------------- ------------- --------------
Cash and cash equivalents at the end of the year 94 032 416 10 774 298
----------------------------------------------------- ------------- --------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Total equity
attributable
to
equity Non-
Share-based Restated* holders controlling
Stated Revaluation payment Total Accumulated of the interest Total
capital reserve reserve reserves loss parent (NCI) Equity
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
R R R R R R R R
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Balance at 1 374 029 2 055 27 932 29 988 (96 199 307 818 161 760 469 578
March 2011 488 747 584 331 385) 434 088 522
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Changes in
equity:
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Loss for the (101 294 (101 294 (101 309
year - - - - 322) 322) (15 106) 428)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Other
comprehensive
loss
for the year - (244 800) - (244 800) - (244 800) - (244 800)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Total
comprehensive
loss (101 294 (101 539 (101 554
for the year - (244 800) - (244 800) 322) 122) (15 106) 228)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
112 154 112 154 112 154
Issue of shares 935 - - - - 935 - 935
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Share options 8 891
issued - - 8 891 216 216 - 8 891 216 - 8 891 216
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Share options (8 891 (8 891
lapsed - - 216) 216) 8 891 216 - - -
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
(51 801 (51 801
Dividends - - - - - - 149) 149)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
112 154 (92 403 (51 816 (32 309
Total changes 935 (244 800) - (244 800) 106) 19 507 029 255) 226)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Balance at 29
February 486 184 1 810 27 932 29 743 (188 602 327 325 109 943 437 269
2012 423 947 584 531 491) 463 833 296
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Changes in
equity:
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Loss for the (55 627 (55 627 (15 984 (71 612
year - - - - 404) 404) 971) 375)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Other
comprehensive
loss (1 045 (1 045 (1 045
for the year - 359) - 359) - (1 045 359) - 359)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Total
comprehensive
loss (1 045 (1 045 (55 627 (56 672 (15 984 (72 657
for the year - 359) - 359) 404) 763) 971) 734)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
47 987 47 987
Issue of shares 700 - - - - 47 987 700 - 700
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Share options (1 251 (1 251
lapsed - - 115) 115) 1 251 115 - - -
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Acquisition of
non-controlling 22 513 (47 086 (24 573
interest - - - - 118 22 513 118 913) 795)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Discontinued
operation - (765 588) - (765 588) 765 588 - - -
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
(24 573 (24 573
Dividends - - - - - - 794) 794)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
47 987 (1 810 (1 251 (3 062 (31 097 (87 645 (73 817
Total changes 700 947) 115) 062) 583) 13 828 055 678) 623)
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
Balance at 28
February 534 172 26 681 26 681 (219 700 341 153 363 451
2013 123 - 469 469 074) 518 22 298 155 673
----------------- -------- ------------ ------------ ---------- ------------ ------------- ------------ ----------
* Due to a change in accounting policy certain amounts shown
here do not correspond to the 2012 financial statements and reflect
adjustments made as detailed in note 3.
1. Basis of preparation
The consolidated annual financial statements of the Group for
the year ended 28 February 2013 have been prepared in accordance
with the Group's accounting policies, which comply with
International Financial Reporting Standards, IAS 34: Interim
Financial Reporting, as well as the Financial Reporting Guides as
issued by SAICA, the Listings Requirements of the JSE Limited and
the Companies Act of South Africa, and are consistent with those of
the previous period, except for the change in accounting policy as
detailed in note 3.
These consolidated annual financial statements have been
prepared on a going concern basis. All monetary information is
presented in the functional currency of the Group, being South
African Rand.
2. Auditor's audit report
The Group annual financial statements are the responsibility of
the directors of the Company. They have been prepared under the
supervision of Roger Rees CA (SA). These financial statements have
been audited by Ernst & Young Inc., the Group's auditors. The
unqualified audit report includes an emphasis of matter paragraph
which refers to the directors' disclosure in note 12 which
indicates conditions which give rise to a material uncertainty
which may cast significant doubt on the Company's ability to
continue as a going concern. The audit report is available for
inspection at the Company's registered office and is available in
the integrated annual report, the availability of which is detailed
in note 10.
3. Change in accounting policy
In the prior financial period the Group capitalised costs paid
by Total RDC ("Total") on behalf of Semliki Energy SPRL
("Semliki"), a subsidiary within the Group, in terms of a cost
carry arrangement under the farm-in agreement for Block III. These
costs increased the Block III exploration and evaluation asset
resulting in a corresponding increase in liabilities representing
the amounts owed to Total. To align its accounting practices with
comparable companies in the industry, the Group has decided not to
capitalise these costs but rather to use the requirements of IAS
37, Provisions, Contingent Liabilities and Contingent Assets, and
only recognise the liability and corresponding asset on the
occurrence of the contingent event (Refer note 8). Comparative
figures have been restated to reflect the change in accounting
policy. As a result of the change in accounting policy, the
following adjustments were made to the Group financial
statements:
Adjustments
---------------------------------------- -------------
As of and for the year ended R
29 February 2012
---------------------------------------- -------------
Decrease in exploration and evaluation
assets (28 939 490)
---------------------------------------- -------------
Decrease in long-term borrowings (28 939 490)
---------------------------------------- -------------
Increase in deferred tax liability 11 575 796
---------------------------------------- -------------
Decrease in non-controlling interest (5 787 898)
---------------------------------------- -------------
Increase in taxation 11 575 796
---------------------------------------- -------------
Increase in loss for the year 11 575 796
---------------------------------------- -------------
Increase in loss per share (cents) 0,81
---------------------------------------- -------------
Increase in diluted loss per
share (cents) 0,80
---------------------------------------- -------------
There were no adjustments required for the 2011 financial
year-end as the cost carry arrangement only commenced during the
2012 financial year. The reversal of the cost carry in the 2012
financial year results in the elimination of all costs capitalised
by the Group in terms of the old accounting policy. No adjustments
are therefore necessary in the current financial year.
4. Segmental reporting
The Group operates in four geographical locations which form the
basis of the information evaluated by the Group's chief
decision-maker. For management purposes the Group is organised and
analysed by these locations. These locations are: South Africa,
Nigeria, DRC and Malawi. Operations in South Africa relate to the
general management, financing and administration of the Group.
Nigeria DRC Malawi South Africa Consolidated
----------------------------------- ------------- -------------- -------- ------------- --------------
2013 R R R R R
----------------------------------- ------------- -------------- -------- ------------- --------------
Other income - 87 537 316 - 35 685 044 123 222 360
----------------------------------- ------------- -------------- -------- ------------- --------------
Investment income 742 237 8 510 118 - 37 688 484 46 940 839
----------------------------------- ------------- -------------- -------- ------------- --------------
Finance costs - - - (23 837 213) (23 837 213)
----------------------------------- ------------- -------------- -------- ------------- --------------
Other operating expenses (1 577 049) (130 320 152) - (43 728 892) (175 626 093)
----------------------------------- ------------- -------------- -------- ------------- --------------
Taxation (33 714) (32 628 727) - (8 122 868) (40 785 309)
----------------------------------- ------------- -------------- -------- ------------- --------------
Loss for the year from
----------------------------------- ------------- -------------- -------- ------------- --------------
continuing operations (868 526) (66 901 445) - (2 315 446) (70 085 416)
----------------------------------- ------------- -------------- -------- ------------- --------------
Loss from discontinued operation
(note 5) (1 526 959)
----------------------------------- ------------- -------------- -------- ------------- --------------
Loss for the year (71 612 375)
----------------------------------- ------------- -------------- -------- ------------- --------------
Segment assets - non-current 87 596 152 255 836 529 896 740 190 727 709 535 057 130
----------------------------------- ------------- -------------- -------- ------------- --------------
Segment assets - current 89 139 856 58 510 - 93 302 235 182 500 601
----------------------------------- ------------- -------------- -------- ------------- --------------
Segment liabilities - non-current - (72 588 101) - - (72 588 101)
----------------------------------- ------------- -------------- -------- ------------- --------------
(161 726
Segment liabilities - current (44 199 000) (75 592 235) - 722) (281 517 957)
----------------------------------- ------------- -------------- -------- ------------- --------------
Business segments
The operations of the Group comprise one class of business,
being oil and gas exploration and development.
5. Discontinued operation
The Greenhills manganese processing plant ("the Plant") was sold
on 1 October 2012 and met the criteria for a discontinued operation
in terms of IFRS 5.32. The Plant was not a discontinued operation
or classified as held for sale at 29 February 2012 as management
had not committed to a plan to dispose of the Plant. The
comparative statements of comprehensive income have been
re-presented to show the discontinued operation separately from
continuing operations. The Board committed to a plan to sell the
Plant early in 2012 following a strategic decision to focus the
Group's efforts and resources on the core oil and gas business.
2013 2012
------------------------------------------------------- ------------ -------------
Results of discontinued operation R R
------------------------------------------------------- ------------ -------------
Revenue 9 882 587 37 172 586
------------------------------------------------------- ------------ -------------
Cost of sales (7 261 686) (26 569 161)
------------------------------------------------------- ------------ -------------
Gross profit 2 620 901 10 603 425
------------------------------------------------------- ------------ -------------
Operating expenses (4 147 860) (7 812 262)
------------------------------------------------------- ------------ -------------
(Loss)/profit for the year (1 526 959) 2 791 163
------------------------------------------------------- ------------ -------------
Basic (loss)/earnings per share (cents) (0,17) 0,39
------------------------------------------------------- ------------ -------------
Diluted (loss)/earnings per share (cents) (0,17) 0,39
------------------------------------------------------- ------------ -------------
Cash flows used in discontinued operations
------------------------------------------------------- ------------ -------------
Net cash used in operating activities (322 989) (1 015 228)
------------------------------------------------------- ------------ -------------
The Plant was sold for R7 million payable as follows: R
------------------------------------------------------- ------------ -------------
1 October 2013 1 000 000
------------------------------------------------------- ------------ -------------
1 October 2014 2 000 000
------------------------------------------------------- ------------ -------------
1 October 2015 2 000 000
------------------------------------------------------- ------------ -------------
1 October 2016 2 000 000
------------------------------------------------------- ------------ -------------
Total consideration 7 000 000
------------------------------------------------------- ------------ -------------
The present value of these future cash receipts is R5 647 200
and is included under other financial assets.
6. (Loss)/earnings per share 2013 2012
------------------------------------------------------------------------- ------------- --------------
R R
------------------------------------------------------------------------- ------------- --------------
From continuing and discontinued operations
------------------------------------------------------------------------- ------------- --------------
Basic (cents) (6,10) (14,12)
------------------------------------------------------------------------- ------------- --------------
Diluted (cents) (6,09) (14,04)
------------------------------------------------------------------------- ------------- --------------
From discontinued operation
------------------------------------------------------------------------- ------------- --------------
Basic (cents) (0,17) 0,39
------------------------------------------------------------------------- ------------- --------------
Diluted (cents) (0,17) 0,39
------------------------------------------------------------------------- ------------- --------------
From continuing operation
------------------------------------------------------------------------- ------------- --------------
Basic (cents) (5,93) (14,51)
------------------------------------------------------------------------- ------------- --------------
Diluted (cents) (5,93) (14,43)
------------------------------------------------------------------------- ------------- --------------
Loss for the year used in the calculation of the basic and diluted
loss
------------------------------------------------------------------------- ------------- --------------
per share from continuing and discontinued operations (55 627 404) (101 294 322)
------------------------------------------------------------------------- ------------- --------------
Loss/(profit) for the year from discontinued operation 1 526 959 (2 791 163)
------------------------------------------------------------------------- ------------- --------------
Loss used in the calculation of basic and diluted loss per share
------------------------------------------------------------------------- ------------- --------------
from continuing operations (54 100 445) (104 085 485)
------------------------------------------------------------------------- ------------- --------------
Weighted average number of ordinary shares used in the calculation
------------------------------------------------------------------------- ------------- --------------
of basic loss per share 912 157 573 717 411 053
------------------------------------------------------------------------- ------------- --------------
Add: Dilutive share options 540 006 4 142 477
------------------------------------------------------------------------- ------------- --------------
Weighted average number of ordinary shares used in the calculation
------------------------------------------------------------------------- ------------- --------------
of diluted loss per share 912 697 579 721 553 530
------------------------------------------------------------------------- ------------- --------------
Headline loss per share
------------------------------------------------------------------------- ------------- --------------
Basic (cents) (8,10) (5,02)
------------------------------------------------------------------------- ------------- --------------
Diluted (cents) (8,10) (4,99)
------------------------------------------------------------------------- ------------- --------------
Reconciliation of headline loss
------------------------------------------------------------------------- ------------- --------------
Loss for the year from continuing and discontinued operations (55 627 404) (101 294 322)
------------------------------------------------------------------------- ------------- --------------
Adjust for:
------------------------------------------------------------------------- ------------- --------------
(Profit)/loss on sale of exploration and evaluation assets attributable
------------------------------------------------------------------------- ------------- --------------
to equity holders of the parent (18 290 947) 65 254 812
------------------------------------------------------------------------- ------------- --------------
(73 918 351) (36 039 510)
------------------------------------------------------------------------- ------------- --------------
7. Stated capital
Nature Number of Stated
------------------ -------------------- ---------------- ------------ ------------
Date Issued to of issue shares capital
------------------ -------------------- ---------------- ------------ ------------
Opening balance 832 225 699 486 184 423
---------------------------------------------------------- ------------ ------------
23 March 2012 Yorkville Advisors Specific issue 29 328 257 12 628 000
------------------ -------------------- ---------------- ------------ ------------
4 May 2012 Yorkville Advisors Specific issue 32 135 560 15 815 400
------------------ -------------------- ---------------- ------------ ------------
9 July 2012 Yorkville Advisors Specific issue 24 578 863 8 328 300
------------------ -------------------- ---------------- ------------ ------------
13 November 2012 Yorkville Advisors Specific issue 35 072 412 11 216 000
------------------ -------------------- ---------------- ------------ ------------
Closing balance 953 340 791 534 172 123
---------------------------------------------------------- ------------ ------------
8. Commitments and contingent liabilities
R R
---------------------------------------------------------- ------------ ------------
Commitments - Group 2013 2012
---------------------------------------------------------- ------------ ------------
Exploration and evaluation assets - work programme
commitments -
---------------------------------------------------------- ------------ ------------
due within 12 months 221 242 262 -
---------------------------------------------------------- ------------ ------------
Exploration and evaluation assets - work programme
commitments -
---------------------------------------------------------- ------------ ------------
due within 13 - 28 months 243 379 394 -
---------------------------------------------------------- ------------ ------------
Total 464 621 656 -
---------------------------------------------------------- ------------ ------------
Contingent liabilities - Group
---------------------------------------------------------- ------------ ------------
Performance bond on OPL 233 issued by Ecobank in respect
---------------------------------------------------------- ------------ ------------
of OPL 233 exploration activities 132 597 000 -
---------------------------------------------------------- ------------ ------------
Cost carry arrangement with Total 20 411 689 28 939 490
---------------------------------------------------------- ------------ ------------
Farm-in and transaction fees on receipt of title to
OPL 233 115 801 380 98 695 400
---------------------------------------------------------- ------------ ------------
Farm-in and transaction fees on receipt of title to
OPL 281 128 177 100 109 243 000
---------------------------------------------------------- ------------ ------------
Total 396 987 169 236 877 890
---------------------------------------------------------- ------------ ------------
Performance bond
In April 2012, the Group posted a $25 million performance bond
to support the work programme on OPL 233. This performance bond is
secured by a R89,1 million ($10 million) cash collateral, revalued
at year-end. The cash is held in the bank account of SacOil's
wholly-owned subsidiary, SacOil 233 Nigeria Limited. The remainder
of the performance bond, disclosed as a contingent liability, is
secured by a first ranking legal charge over SacOil's investment in
SacOil 233 Nigeria Limited.
Cost carry arrangement
The farm-in agreement between Semliki and Total provides for a
carry of costs by Total on behalf of Semliki. Total will be
entitled to recover these costs, being Semliki's share of the costs
on Block III, plus interest, from future oil revenues. The
contingency becomes probable when production of oil commences and
will be raised in full at that point. Only at 28 February 2013
Total has incurred R20,4 million (2012: R28,9 million) of costs on
behalf of Semliki. Should this liability be recognised, a
corresponding increase in assets will be recognised, which,
together with existing exploration and evaluation assets, will be
recognised as development infrastructure assets.
Farm-in and transaction fees
OPL 233
A farm-in fee of R93,7 million (2012: R79,9 million) (US$10,6
million) is due to Nigdel United Oil Company Limited upon the
formal approval by the Nigerian government of the assignment of
title to SacOil 233 Nigeria Limited in relation to OPL 233. A
transaction fee of R22,1 million (2012: R18,8 million) (US$2,5
million) is due to Energy Equity Resources (Norway) Limited upon
the receipt of title to OPL 233, pursuant to the provisions of the
Master Joint Venture Agreement.
OPL 281
A farm-in fee of R106,1 million (2012: R90,4 million) (US$12
million) is due to Transnational Corporation of Nigeria Limited
upon the formal approval by the Nigerian government of the
assignment of title to SacOil 281 Nigeria Limited in relation to
OPL 281. A transaction fee of R22,1 million (2012: R18,8 million)
(US$2,5 million) is due to Energy Equity Resources (Norway) Limited
upon the receipt of title to OPL 281, pursuant to the provisions of
the Master Joint Venture Agreement.
9. Dividends
The Board has resolved not to declare any dividends to
shareholders for the period under review.
10. Posting of integrated annual report and details of annual
general meeting Shareholders are advised that the integrated annual
report is available on the Company's website
(www.sacoilholdings.com) and will be posted to shareholders on 23
September 2013. The annual general meeting of SacOil will be held
on Friday, 29 November 2013 at 10:00 at 2nd Floor, The Gabba,
Dimension Data Campus, 57 Sloane Street, Bryanston.
The record date on which members must be recorded as such in the
register maintained by the transfer secretaries of the Company for
the purpose of being entitled to attend and vote at the annual
general meeting is Friday, 22 November 2013.
11. Events after the reporting period
The following event took place from the period 1 March 2013 to
the date of this report: Equity settlement of Gairloch loans
Subsequent to the year-end, Gairloch Limited ("Gairloch") exercised
its rights under the three loans agreements, to require SacOil to
equity settle loans owed to Gairloch. On 12 September 2013 SacOil
concluded an agreement with Gairloch for the conversion of debt to
equity in SacOil. Under terms of this agreement debt totalling
R238,5 million (US$24,1 million) will be converted into 883 449 144
new SacOil ordinary shares at R0,27 (US$0,0272876) per share. The
share issue price represents a 4,6% discount to the volume weighted
average traded price of the SacOil shares on the JSE over the 30
business days prior to the date of the suspension.
Shareholders are referred to the announcement dated 12 September
2013 issued on SENS and RNS for further details on the loan
conversion.
Rights Offer
Shareholders are advised that the Company intends to raise
additional capital of up to R570 million by way of a renounceable
rights offer of 2 111 111 111 SacOil shares at an issue price of
R0,27 per share (the "Rights Offer"). The Rights Offer will be
supported by one of the Company's largest shareholders, the Public
Investment Corporation (SOC) Limited, to the extent of circa R329
million. The ratio of rights offered for existing SacOil shares
will be in proportion to each shareholder's respective shareholding
in the Company. Shareholders are referred to the announcement dated
12 September 2013 issued on SENS and RNS for further details on the
Rights Offer.
Loan advanced to EERNL
The short-term loan due from EERNL became due and payable on 31
May 2013. As at the date of the release of the results EERNL has
not fulfilled its repayment obligations in respect of this loan.
Discussions are in progress to agree a repayment schedule for this
overdue amount. The Company is also considering its position in
respect of the default provisions of the loan agreement underlying
this receivable. The loan has not been impaired as the value of the
security exceeds the carrying value of the loan.
Acquisition of exploration licences
The Company announced on 9 May 2013 that its Botswana
subsidiary, Transfer Holdings (Proprietary) Limited, had been
advised by the Botswana Department of Mines that these exploration
licences were duly approved and ready for collection. The petroleum
exploration licences numbers 123/2013, 124/2013 and 125/2013 were
awarded to Transfer Holdings (Proprietary) Limited on 29 April
2013. A further announcement in relaton to these licences will be
released in due course.
Suspension of trade in the Company's shares on the JSE and
AIM
An application was made to the JSE and AIM for the trading of
the Company's shares to be suspended on both exchanges following
the resignations from the Board of two non-executive directors and
the Chief Executive Officer as announced on SENS and RNS on 31 May
2013, at which point the Company did not have a fully constituted
Board. Shareholders are further referred to the announcement issued
on SENS and RNS on 12 September 2013, regarding the progress made
in obtaining a lifting of the suspension on both the JSE and
AIM.
12. Going concern
SacOil incurred a total comprehensive loss for the year ended 28
February 2013 of R72.7 million (2012: R101.6 million). The group
continues to incur losses. The Company and Group are currently
experiencing liquidity challenges.
As indicated in the Statement from the Board of Directors, on
page 22 of the integrated annual report, the Board plans to
recapitalise the Company by way of a renounceable rights offer for
R570 million to be completed by 31 January 2014 ("the Rights
Offer"). The Board also plans to equity settle the Gairloch Loans
by 31 January 2014 under the terms of the Subscription and
Settlement Agreement concluded with Gairloch on 12 September 2013
("the Specific Issue). The completion of both transactions is
dependent upon future material uncertain events which are discussed
below. Furthermore, the Company's projected cash flows to 31 August
2014 include the following assumptions some of which are subject to
material uncertainties as discussed in further detail below:
-- A cash inflow from the loan receivable from Energy Equity
Resources (Norway) Limited ("EERNL") of $22.5 million;
-- Cash inflow arising from rights issue proceeds amounting to
R570million;
-- Cash outflows from farm-in fees payable to Nigdel and
Transcorp totalling $22.6 million the timing of which is
uncertain;
-- Cash outflows from seismic and operating costs for OPL233
amounting to $9.6 million; and
-- Settlement of the full debt payable to Gairloch Limited by
means of a conversion to capital rather than a settlement in
cash.
The features of these cash flows are further described
below:
Rights offer and equity settlement of Gairloch Loans
It is imperative that SacOil obtains shareholder approval for
both the Rights Offer and Gairloch debt conversion to equity. In
terms of section 41(3) of the Companies Act, as SacOil will be
issuing shares with voting power exceeding 30% of the voting power
of all the Company's shares immediately prior to both the Specific
Issue and the Rights Offer, approval by way of a special resolution
is also required from SacOil shareholders (the "Companies Act
Resolution"). Both these transactions require at least a 75% vote
in favor of the transactions.
Management has engaged with some of the Company's shareholders
to determine the levels of support and appetite for the Rights
Offer. To date, the Company has obtained support for 58% of the
Rights Offer value, representing an irrevocable undertaking by the
Public Investment Corporation ("PIC") to support the Rights Offer
to the extent of
circa
R329 million. Although the outcome of the shareholders' approval
and the extent of the subscription to the Rights Offer cannot be
determined with certainty at this stage, the Board is reasonably
confident that the approval of the Rights Offer will be successful.
The less certain element to this is the extent to which
shareholders will follow their rights giving rise to the raising of
the full R570million worth of capital. Furthermore, ongoing
communications with various shareholders have demonstrated a
general understanding of the immediate need to convert the Gairloch
Loans which continue to accrue onerous finance charges. Again, the
Board is reasonably confident that shareholders' approval for the
equity settlement of the Gairloch Loans will be obtained because
the Board believes that that the key factors that have previously
caused shareholders to vote against conversion have been
addressed.
Loan receivable from EERNL
As noted in note 33, EERNL has not met its repayment obligations
on the short term loan repayment, which became due and payable on
31 May 2013. The Company is in discussions with EERNL to
renegotiate payment terms and is also considering its rights in
terms of the default provisions underlying the loan agreement. It
is uncertain at this stage whether EERNL will meet its repayment
obligations on or before the proposed repayment date. Should
non-payment of the short term loan continue, SacOil will consider
enforcing the security provided by EERNL, being EERNL's shares in
its subsidiary EER 233 Nigeria Limited which owns a 20% interest in
OPL 233, through the disposal of this interest, to recover amounts
owed.
Farm-in and transaction fees
The payment of farm-in and transaction fees is dependent upon
the receipt of title to OPL233 and OPL281. These fees are payable
within 30 days of the receipt of title. As at the date of the
release of this annual report, the Company has been unable to
determine the likely timing of the receipt of title to both OPL233
and OPL281 as these are subject to regulatory approvals not within
the control of the company. The Board's current plan is to fund
these fees from the proceeds of the Rights Offer. Should title be
received prior to the completion of the Rights Offer, the Company
would be unable to fund these fees in the ordinary course of
business. It is management's intention to renegotiate the timing of
settlement of the fees should title be received before funds are
available.
OPL233 work programme costs
The Company needs to fund $9.6 million of seismic and operating
costs up to 31 January 2014. The current arrangement is that EERNL
will fund these costs on behalf of SacOil, as a repayment mechanism
for the amounts owed to SacOil. It is uncertain whether EERNL will
honour these payment obligations given that EERNL did not meet its
repayment obligations at 31 May 2013. Should EERNL continue to
default, SacOil will consider enforcing the security provided by
EERNL as noted above. SacOil would nevertheless in the interim be
responsible to fund these costs in the event EERNL does not honour
their commitment. SacOil currently does not have the funds
available to make these payments.
The Board is however confident that the proposed conversion of
the Gairloch debt to equity and the Rights issue will be approved
by the shareholders, and that through this action SacOil will have
appropriately addressed the material uncertainties with respect to
going concern. It is on this basis that management have decided to
prepare the financial statements on a going concern basis. In the
interim SacOil needs to secure access to interim funding facilities
to be able to pay for its daily operational costs. Management have
sought to secure an interim overdraft facility with one of its
Financiers. A facility of R6m has been approved subject to the
following suspensive conditions:
1) The conclusion of the Gairloch Subscription and Settlement
Agreement confirming the conversion of the Gairloch debt to
equity;
2) The PIC providing an irrevocable undertaking to support R329m
of the rights offer (A condition which has been met); and
3) The company obtaining irrevocable undertakings from the
requisite number of shareholders to vote in favour of the
resolutions to give effect to the full Gairloch loan conversion and
rights offer, including the whitewash resolution in relation to the
PIC's holding.
These conditions give rise to material uncertainties which may
cast significant doubt about the company's ability to continue as a
going concern and, therefore that it may be unable to realise its
assets and discharge its liabilities in the normal course of
business.
The financial statements are prepared on the basis of accounting
policies applicable to a going concern. This basis presumes that
funds will be available to finance future operations and that the
realisation of assets and settlement of liabilities, contingent
obligations and commitments will occur in the ordinary course of
business.
By order of the Board
Roger Rees
Chief Executive
Johannesburg
16 September 2013
CORPORATE INFORMATION
Registered office and physical address:
2nd Floor, The Gabba, Dimension Data Campus
57 Sloane Street, Bryanston, 2021
Postal address:
PostNet Suite 211, Private Bag X75, Bryanston, 2021
Contact details:
Tel: +27 (0) 11 575 7232
Fax: +27 (0) 11 576 2258
Email: info@sacoilholdings.com
Website: www.sacoilholdings.com
Directors:
Roger Rees (Chief Executive Officer), Tariro Mudzimuirema
(Finance Director), Tito Mboweni (Chairman)*, Mzuvukile Maqetuka*,
Gontse Moseneke**, Stephanus Muller*, Vusi Pikoli*, Ignatius
Sehoole*
* Independent non-executive directors ** Non-executive
Director
Advisers:
Company Secretary Fusion Corporate Secretarial Services (Proprietary) Limited
Transfer Secretaries South Link Market Services South Africa (Proprietary) Limited
Africa
Transfer Secretaries United Computershare Investor Services (Jersey) Limited
Kingdom
Corporate Legal Advisers Norton Rose South Africa
Auditors Ernst & Young Inc
JSE Sponsor Nedbank Capital
AIM Nominated Adviser and Broker finnCap Limited
This information is provided by RNS
The company news service from the London Stock Exchange
END
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